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Lexicon, Inc. v. ACE Am. Ins. Co., No. 10-1100

By FindLaw Staff on December 29, 2010 3:28 PM

Action Under Commercial Liability Policy

In Lexicon, Inc. v. ACE Am. Ins. Co., No. 10-1100, an action claiming that defendant-insurers were obligated under commercial general liability policies to cover certain property damage, the court affirmed in part summary judgment for defendants where the district court correctly held the insurers were not obligated to reimburse plaintiff for its reconstruction of its collapsed silo.  However, the court reversed in part where it was foreseeable that faulty subcontractor work would damage the silo, but not foreseeable that faulty subcontractor work would cause millions of dollars in collateral damage.

As the court wrote:  "Lexicon, Inc. built a battery of silos for Nu-Iron Unlimited in the West Indies. Months after completion, one of the silos collapsed because of faulty welding by Lexicon's subcontractor, Damus Limited. The collapse caused millions of dollars in property damage. Lexicon sued ACE American Insurance Co. and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (collectively, the Insurers), alleging the Insurers are obligated under commercial general liability (CGL) policies to cover the property damage."

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