Massachusetts Appeals Court holds that your work exclusion does not apply to trespass damages unrelated to a contractual relationship

In a recent post I discussed Porter v. Clarendon Nat'l Ins. Co., 76 Mass. App. Ct. 655 (2010), in which insurers argued that there was no coverage for a claim that its insured had built a retaining wall and two parking lots on an abutter's property, resulting in continuing trespass.

The insurers argued that the claim was excluded by the "your work" exclusion, because it was the insured who erected the retaining wall and paved the parking spaces. The Massachusetts Appeals Court disagreed.

The exclusion excludes work for "[w]ork or operations performed by you or on your behalf." The court noted that the exclusion "operates to exclude repair or replacement costs for faulty workmanship by the insured that it has been contracted or otherwise hired to perform." The reason for the exclusion is that the general liability policies in which it is found provide coverage "for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained."

The court held:

The complaint here was not brought by someone involved in a contract or project with the insured, seeking repair or replacement costs for faulty work on the damaged property. Rather, an abutter to the insured, with no contractual or other business relationship with the insured, sought trespass damages. Consequently, the exclusion does not apply.