NO COVERAGE FOR COST TO REPLACE INFERIOR LUMBER

Commercial General Liability	Occurrence
Property Damage	Breach of Contract

Forrec Construction Company and Bruce Evans, Ltd, successor in interest (Forrec/Evans) was a subcontractor for the general contractor, Centrex Rooney Construction Company (Centrex) on a portion of the Animal Kingdom Lodge Resort project at Walt Disney World in Florida. Forrec/Evans obtained bids and limited quantities of cedar from West Orange Lumber Company, Inc. (West Orange) for completion of its subcontract. Forrec Evans requested "C" select or better cedar. West Orange submitted a quote and described the product as "No Hole Select Cedar." The Forrec/Evans purchase orders described the quality of lumber as "C" select or better and West Orange delivered lumber it described as "No Hole Select Cedar."

Disney questioned the grade of cedar being installed. Centrex directed Forrec/Evans to stop the installation, remove what had been installed and take corrective action to secure the "C" or better grade of cedar as required in the specifications. Forrec/Evans did so and then filed a complaint against West Orange alleging that the cedar supplied by them did not meet required specifications. It also claimed damages in replacing the cedar including, but not limited to, higher material cost, increased labor, subcontractor and transportation costs and additional overhead and legal fees, for a total of over $850,000.

West Orange turned to their insurer, Indiana Lumbermens Mutual Insurance Company (ILMIC), to defend them In a declaratory judgment proceeding ILMIC argued that they had no duty to defend or indemnify West Orange for the damages alleged in the complaint because there were no allegations of property damage that would be covered in the Commercial General Liability Policy. They argued that it was a breach of contract and not a tort. The trial court agreed with ILMIC and West Orange appealed.

The appellate court agreed with the trial court decision because this was a case where, through error, mistake or negligence, a good product was sold and delivered and then rejected only for failure to meet contract specifications.

The trial court decision was affirmed.

West Orange Lumber Company, Inc., Appellant, v. Indiana Lumbermens Mutual Insurance Company, et al., Appellees. Florida District Court of Appeal. Case No. 5D04-1429. Filed April 1, 2005. Appeal from the Circuit Court, Orange County. Affirmed. 2005 CCH Personal and Commercial Liability Cases. Paragraph 8096.