SACRAMENTO — A California appeals court recently sided with an
insurer in a case involving Best Buy store contractors and flooring.
In late December, the court decided that in the case of Navigators
Specialty Ins. Co. v. Moorefield Const., the insurer was not
obligated to pay monetary penalties, since Best Buy store contractors
knowingly installed flooring over a defective slab that emitted too
According to the decision,
Moorefield Construction began work on a new Best Buy store in
Visalia, California, in partnership with D.B.O. Development, between
2002 and 2004. During the course of construction, Moorefield realized
that the concrete slab the store was built on didn’t comply with
code in regard to vapor emissions. The company nevertheless installed
floor tiles on top of the slab, completing the construction in 2003.
Early on, the floor began to fail and the issues continued for six
years. JSL Properties LLC, which had bought the building in 2004,
wanted reimbursement for repair costs and sued Moorefield.
Cross-claims were filed. The building was sold to another owner
during that time.
Eventually, the repair costs were $377,404. In 2010, litigation
started. Payment was sought from Moorefield, which in turn sought
payment from Navigators Specialty Insurance Company, which had
insured Moorefield under a commercial general liability policy. A
settlement was reached between the parties for $1.31 million.
Navigators paid out most of that, up to its policy limits of $1
million. Moorefield paid out $150,000 and the remaining amount was
covered by Best Buy and the subcontractors.
Navigators filed suit under a declaration of rights and duties,
asking the court to clarify if it needed to pay out the claim, since
the failure of the floor didn’t come about because of an accident.
Navigators won that lawsuit because the court found there was no
coverage. Moorefield Construction was then obligated to pay
Navigators back the money. However, the court found that under the
supplementary payments provision that Navigators had to pay
Moorefield. Moorefield Construction appealed that ruling.
The court found
that “Navigators had no duty to indemnify Moorefield under the
Policies. In all other respects, the judgment is reversed and the
matter is remanded for a new trial limited to the issue identified in
this opinion. In the interest of justice, no party shall recover
costs on appeal.”
The amount was limited to $1 million and didn’t include
attorney’s fees or the costs of filing suit. With the reversal of
the trial-court judgment, the matter was ordered to a new trial,
according to the opinion filing.
Valerie A. Moore, a partner with the firm of Haight Brown and
Bonesteel LLP, said she feels the owner chose not to fix the
emissions issue for monetary reasons.
“They got the agreement of the owner of the store to go ahead
and do it [put down the flooring despite the code issues] but of
course the original owner got out scot-free because they sold,” she
told The Northern California Record. “It was the subsequent owner
who sued, and who had a right to sue.”
“To me, the fact that they got the approval of the owner of the
building — Best Buy, I’m sure, was just a lessee — to go
ahead and do it anyway, that means they knowingly agreed to this
process despite the failure under the specifications,” she said.
Moore doesn't think the contractor who put down the floor should
have been held liable.
“I bet they got out as well because they were reticent to do it,
to the point where they said we’ve got to have a release for doing
it,” she said. “We’re not going to be responsible for failures
under any warranties because you’re doing this against