Irvine office partner Scott S. Thomas and Las Vegas partner Sarah J. Odia recently recovered almost $1,000,000 in insurance proceeds for a Fortune 500 homebuilder. Several liability insurers that insured the homebuilder as an additional-insured under policies issued to the homebuilder’s subcontractors refused to defend the homebuilder in two multi-plaintiff construction defect actions in Clark County, Nevada. One of the insurers filed a motion to dismiss the homebuilder’s insurance recovery complaints, citing the “ongoing operations” language in its additional insured endorsements as a defense to coverage.
The Court in both actions denied the insurer’s motion, holding that the insurer’s “ongoing operations” endorsement obligates the insurer to defend its additional insured so long as there is a potential for an award of damages for property damage “arising out of” the subcontractor’s operations. See Centex Homes v. Zurich American Ins. Co., 2017 WL 4349016 (D. Nev. Sept. 2017); Centex Homes v. Everest Nat’l Ins. Co., 2017 WL 4349017 (D. Nev. Sept. 2017). Payne & Fears recovered 100% of the homebuilder’s defense costs in the underlying action and 100% of Payne & Fears’ costs incurred pursuing the recovery actions.