The Eighth Circuit affirmed the district's granting of summary judgment to the insurer, finding that the exclusion for faulty workmanship was applicable despite the ensuing loss provision. Bob Robinson Commercial Flooring Inc. v. RLI Ins. Co., 2025 U.S. App. LEXIS 6369 (8th Cir. March 19, 2025).
The general contractor hired Bob Robinson Commercial Flooring, Inc. (BRCF) to install a vinyl gym floor with painted volleyball and basketball Iines at a middle school. BRCF installed the gym floor and subcontracted the painting portion of the project to Robert Liles Parking Lot Services (Liles). Liles's painting work was faulty by including crooked lines, incorrect markings, and smudges. The general contractor rejected the gym floor. Because the defective painting could not removed from the vinyl flooring, BRCF had to remove and replace the floor and paint new lines at a cost of $181,415.39.
BRCF submitted a claim for the loss to RLI Insurance Company seeking coverage for the total loss. RLI rejected the claim because of an exclusion providing it would not pay for defects, errors or omissions due to workmanship or construction. The exclusion included an ensuing loss provision, which read, "But if a defect, error or omissions as described above results in a covered peril, we do cover the loss or damage caused by that covered peril."
BRCF filed suit alleging that while the policy did not directly cover the subcontractor's negligent paint job, the ensuing loss clause did cover the irreparable damage caused to the vinyl gym floor as a result of the subcontractor's negligence. The district court granted RLI summary judgment, concluding that the policy excluded coverage for damage and loss resulting from defective workmanship, and the subcontractor's negligent paint job was the sole reason the gym floor was damaged.
BRCF appealed. BRCF conceded that its contract damage claim was limited to the cost of removing and replacing the vinyl floor, $134,188.95, and did not seek to recover the cost of painting the new floor.
BRCF argued that the policy's ensuing loss provision unambiguously provided coverage for the replacement cost of the vinyl gym floor. BRCF, however, did not identify a "covered peril," as the ensuing loss clause required, to restore coverage excluded by the faulty workmanship exclusion. All BRCF argued was that the cost of repainting the gym floor and the cost of replacing the floor were separate "perils." But they were not separate "perils." They were different types of damage to the covered property. If both types of damage occurred at the same time and were solely caused by an excluded peril such as faulty workmanship, the ensuing loss cause did not "restore" all or any part of the excluded coverage.
The policy defined a covered peril as a direct physical loss or damage not caused by an excluded event. The ensuing loss clause restored coverage if an excluded peril resulted in loss that was caused by a covered peril. By contrast, if all the loss was caused by the excluded peril, applying the ensuing loss clause to restore some but not all of the loss, as BRCF urged, would require RLI to pay for loss solely attributable to faulty construction, an excluded period. The court therefore read the ensuing loss provision as requiring that a separate non-excluded peril cause a restored loss.
Therefore, the district court did not err in finding the exclusion for faulty workmanship excluded coverage for the entire loss and damage to the gym floor resulting from Liles's defective painting.
