The recent Texas construction case Ewing Construction v. Amerisure Insurance Company has been getting a lot of headlines lately. The Fifth Circuit Court of Appeals, which oversees federal courts in Texas, Mississippi, and Louisiana, recently withdrew its opinion in which it found that contractors, who agreed by contract to perform their work in a good and workmanlike manner, did not have coverage under their CGL insurance policy if it was sued for failing to perform its work according to the terms of a contract with the owner.
In an interesting twist, the judges writing the Fifth Circuit’s opinion unanimously decided to withdraw the opinion and asked the Texas Supreme Court to weigh in on two questions of state law. The two questions are whether a contractor’s contractual obligation to perform its work in a good and workmanlike manner is a contractual liability that is excluded by the standard “contractual liability” exclusion in most CGL policies, and, (2) if so, are separate negligence claims alleged also excluded by the “contractual liability” exclusion.
This case demonstrates the real uncertainty in the coverage arena for contractors. This case will be closely followed and either the insurers or contractors will be singing the Texas Supreme Court’s praises and the application of the Texas Supreme Court’s decision in state courts around the country.