Donovan Trust owned a vacant lot in Sandwich. In April 1997, the Trust entered into a contract with Ocean Sunset Real Estate and Construction for a single-family house on the lot.

The first requirement was the construction of a retaining wall, and Ocean entered into an agreement with RDI Landscaping for construction of the wall. While the house was still being built, it was found that the wall was bulging and buckling. The Trust supervised the dismantling and replacement in the latter part of 1998, at an alleged cost of $52,000.

The Trust sought reimbursement for this cost from RDI's liability company, which denied liability. A claim filed against Ocean Sunset's builders risk policy was also denied. Then the Trust filed a claim against Commercial Union which had issued a comprehensive general liability policy to Ocean Sunset. That policy, however, had an endorsement that denied liability for the cost of replacement necessitated by faulty workmanship on the part of a subcontractor. The trial court entered judgment in favor of Commercial Union, and the Trust appealed.

The endorsement which was made a part of the policy stated that the policy did not cover the restoration, repair or replacement of any property "which has been made or is necessary by reason of faulty workmanship thereon by or on behalf of the insured." In this case, the wall had to be replaced because of the defective work performed by the subcontractor (RDI) on behalf of the general contractor, Ocean Sunset.

The judgment entered in the trial court in favor of Commercial Union was affirmed.

John J. Donovan, Trustee, v. Commercial Union Insurance Company--No. 96-P-1443--Appeals Court of Massachusetts, Barnstable--April 15, 1998--692 North Eastern Reporter 2d 536.