The current choice in Carr v. Spinnaker Insurance coverage Firm, 1 is a protection interpretation case the place the policyholder tried to reframe the reason for a disputed loss into coated perils. It’s a case involving faulty workmanship being reframed into allegations of vandalism. I recommend that college students and people concerned with litigation of insurance coverage protection might wish to learn the competing trial court docket briefs as a result of they argue two very totally different causes at play, resulting in the outcome, which appears a standard incidence in lots of building eventualities.
The case arose after Karen Carr bought a trip rental dwelling in Sekiu, Washington. Shortly thereafter, she employed a painter, David Scott, whom she met on Fb. Carr alleged that Scott falsely claimed to be a licensed contractor and, as soon as inside her dwelling, carried out reckless and damaging portray work that broken her flooring, cupboards, fixtures, and different private property. She paid him partially earlier than discovering the harm and requested him to depart. She filed a declare together with her house owner’s insurer, Spinnaker Insurance coverage Firm, contending that the loss was coated beneath the coverage’s theft and vandalism or malicious mischief provisions.
Spinnaker denied the declare after an investigation, counting on the coverage’s “defective workmanship” exclusion. The exclusion, contained in Part I – Exclusions, said that the insurer did “not insure for loss to property described in Coverages A and B attributable to any of the next… Defective, insufficient or faulty… workmanship, restore, building, renovation, transforming… [or] supplies utilized in restore, building, renovation or transforming.”
Spinnaker maintained that the loss was the direct results of Scott’s imperfect and poor work, not any intentional destruction, and thus squarely fell inside this exclusion. The corporate additional pointed to the absence of proof that Scott stole any property from the house, undermining Carr’s theft concept, and argued that Washington regulation requires proof of willful and malicious conduct for vandalism protection—proof Carr didn’t have.
Carr tried to reframe the details by arguing that Scott was not a respectable contractor, however an imposter who gained entry beneath false pretenses, making him a trespasser. She claimed his conduct was so reckless that it amounted to vandalism or malicious mischief, and that the cost she made to him was successfully stolen by deception.
Carr cited instances during which Washington courts held that intentional acts inflicting harm, even when arising in nontraditional vandalism eventualities like meth labs or marijuana grows, might set off protection. She asserted that the defective workmanship exclusion didn’t apply as a result of this was not a easy “unhealthy job” dispute however a case of intentional or reckless property destruction.
Spinnaker famous one case specifically concerning the faulty workmanship exclusion with an ensuing loss clause much like Spinnaker’s coverage, which caught my consideration for this proposition:
[An] insurance coverage coverage with an exclusion of the sort earlier than us shouldn’t be interpreted as extending a guaranty of health to supplies utilized in building or restore or as an extending protection to property loss arising from the negligence of third events. 2
The district court docket rejected Carr’s arguments and granted abstract judgment to Spinnaker, a call the Ninth Circuit affirmed. The appellate court docket held that Carr’s losses from Scott’s portray didn’t fall inside the scope of theft or vandalism and malicious mischief. The court docket emphasised that beneath Washington regulation, an insured can’t keep away from a contractual exclusion merely by relabeling the reason for loss.
The court docket discovered that the file contained no affordable dispute of truth as as to if Scott acted in aware or intentional disregard of Carr’s property rights. Carr failed to point out that any of Scott’s work occurred with out her prior path or contemporaneous approval. The court docket additional concluded that the defective workmanship exclusion was unambiguous and enforceable, making use of to Scott’s imperfect portray work beneath the atypical meanings of “defective” and “faulty.”
For my fellow insurance coverage protection nerds learning this case and searching for classes, courts will typically look previous the labels utilized by policyholders and look at the precise reason for loss in relation to the coverage language. That is nonetheless a worthwhile train when looking for protection, though it failed on this occasion. Second, exclusions for defective workmanship are broadly enforced in some jurisdictions, and ensuing coated perils ought to all the time be examined. Third, some claims arising from poor or negligent contractor work are usually not excluded in some older coverage kinds, so all the time learn the total coverage. Fourth, a giant takeaway is that vandalism protection normally requires proof of willful or malicious acts. These want details with extra than simply substandard efficiency.
Many will simply consider this case as one other defective workmanship or faulty building exclusion case with out studying the underlying trial briefs. Once I learn the briefs, it reveals two very totally different eventualities that the decide resolved on the abstract judgment stage, with out the matter going to the jury to make the ultimate willpower about details. Some might recommend the trial and appellate judges ought to have allowed the jury to weigh the details.
Thought For The Day
“You should use an eraser on the drafting desk or a sledgehammer on the development website.”
—Frank Lloyd Wright
1 Carr v. Spinnaker Ins. Co., 3:23-cv-05252, 2025 WL 2170333 [Not Reported in Fed. Rptr.] (9th Cir. July 31, 2025).
2 McDonald v. State Farm Hearth & Cas. Co., 119 Wash. second 724, 735, 837 P.second 1000, 1005–06 (1992).
