West Bend Mut.l Ins. Co v. Arbor Homes, LLC

Arbor builds homes in Indiana and contracted with Willmez Plumbing, which was to obtain insurance naming Arbor as an additional insured. Willmez subcontracted to Alarcon. After the work was ostensibly completed, the buyers noticed a foul odor and felt ill. Alarcon had not connected the plumbing to the main sewer line. Raw sewage had discharged into the crawl space. Willmez corrected the connection. Arbor contracted for cleanup that required excavation and decontamination and cost about $65,000. The owners demanded replacement of the house. Arbor told Willmez to notify its insurer West Bend. Hearing nothing, Arbor assumed the insurer had no objections and agreed to build a new home, pay closing costs and moving expenses, and to compensate for any increase in mortgage rate. Arbor sued Willmez, alleging negligence, breach of contract, slander of title, and constructive fraud, and sent West Bend a copy. The district court granted West Bend summary judgment, finding that it was relieved of duties to defend or indemnify by “fungi and bacteria exclusion” and “voluntary payments” provisions. The Seventh Circuit affirmed. Although Arbor’s quick and decisive action was laudable, failure to obtain West Bend’s consent to the settlement relieved it of any obligation. View "West Bend Mut.l Ins. Co v. Arbor Homes, LLC" on Justia Law