• December 23, 2013
Straw Man, Picture by Robin Ellis via Flickr Creative Commons

Straw Man, Picture by Robin Ellis via Flickr Creative Commons

We live in a strange new world where someone’s livelihood includes building and maintaining a website called The Homebuilder Implode-o-Meter, a database of notices and news about failed homebuilders.  But it makes sense.  Aggregate information or entertainment on the internet, give it away, and run advertisements next to it. (By the way, this post brought to you by Shepherd Data, Benchmark Court Reporting, and Computer Forensics Services.)

Wensmann Homes, a distinguished Minnesota builder forty years of experience, had the misfortune of making the Homebuilder Implode-o-Meter list just over five years ago.

The defunct builder makes a nice target, a straw man, if you will, for an insurer to avoid construction defect insurance claims by bringing a declaratory judgment action against the out-of-business builder claiming no insurance coverage and then fighting off intervention by the unfortunate building owners — that is, the only folks still around to have any claims on the insurance coverage.

It is irresistable, I suppose, to try to wriggle out of insurance coverage by such machinations.  But this is where courts of law come in to block the end-around.

Nevertheless, building owner, Diseworth at Somerby, may find itself without recourse for much of its claims even having survived the maneuver.

There is no question but what there were numerous cracks on different arches prior to April 1, 2007, [the effective date of the insurance policy at issue,] definitively establishing that there was a problem with the design of the arches (or a lack of any real design) of which [the insured, Wensmann,] was aware.

So the building owners will not get insurance coverage for the faulty brick arches that Wensmann had put in.

But the Wensmann construction project also appears to have had “water infiltration problems,” as well.  Fact issues, the Minnesota Court of Appeals held, precluded summary judgment for the insurer as to these claims.  All hope is not lost for the building owner, represented by Douglas A. Boese of Dunlap & Seeger, P.A. in Rochester, Minnesota.

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