Pennsylvania Manufacturers' Ass'n Ins. Co. v. Dargan Constr. Co. (Insurance Coverage)


Fourth Circuit Court of Appeals

NAHB Involvement

Dargan was the general contractor for three hotel construction projects. An underlying action claimed that the buildings were defectively built, which led to water intrusion that caused substantial water damage, in turn leading to deterioration, rot, rust, mold, mildew and corrosion of various parts of the buildings. Dargan's insurer had been defending Dargan under a reservation of rights when it sought a declaration that the buildings didn't sustain damage that could be considered "property damage" and that there was no "occurrence" within the meaning of the policy. The trial judge, finding for Dargan, found that allegations of water damage and deterioration arising from the construction defects amount to an "occurrence" resulting in "property damage" under the policy.

On July 9, 2007, NAHB joined the Home Builders of South Carolina in filing an amicus brief in support of Dargan. The goal in the Fourth Circuit is to preserve the victory in the lower court. On Aug. 15, 2007, the court granted our motion for leave to file an amicus brief and stayed the case because two cases forthcoming in the South Carolina Supreme Court dealing with the same issue in this case were expected to provide guidance as to the law of South Carolina on the issues before the court. The case settled in June 2008.