Seattle High-Rise Battle Ends: Insurer Settles with Builder Amid Allegations of Bad Faith Conduct

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(USA Herald) – After a grueling three-and-a-half-year legal battle, the dispute between Matcon USA LP and Tokio Marine’s Houston Casualty Co. has come to an end, with the insurer settling the lawsuit over insurance coverage for property damage claims related to a high-rise construction project in Seattle. USA Herald legal news contributor Samuel Lopez closely followed the case, noting, “This settlement not only puts an end to a long-standing dispute but also shines a light on the issue of insurers’ bad faith conduct, which can have severe consequences for businesses.”

The case began in November 2019 when Matcon sued Houston Casualty, arguing that the insurer was responsible for covering property damage claims asserted against Matcon by the general contractor of the construction project, Graham Construction & Management Inc. Matcon had been hired as a subcontractor to perform shoring and excavation work for the 48-story high-rise apartment buildings at 1200 Stewart St., which would also include retail space.

Graham Construction alleged that Matcon caused damage to duct bank and sewer lines, leading to their termination from the project in November 2018. In response, Matcon argued that they were entitled to coverage for those claims as a named insured on the owner-controlled insurance program designed for the project, which included a commercial general liability policy issued by Houston Casualty. Despite timely reporting of Graham’s claims in accordance with the program’s insurance manual, Houston Casualty refused to provide coverage.

This led Matcon to sue Houston Casualty for declaratory judgment, breach of contract, bad faith, and claims under Washington’s consumer protection laws. Samuel Lopez, the legal news contributor for USA Herald who closely monitored the case, commented, “The insurer’s bad faith conduct left Matcon in a precarious situation, highlighting the importance of holding insurance companies accountable for their actions.”

In the course of the lawsuit, Matcon also added a negligence claim against Marsh USA Inc., which served as the administrator of the insurance program. Matcon alleged that Marsh was notified of Graham’s property damage claims as they occurred, but the broker ignored them and failed to report the claims to Houston Casualty in a timely manner. Marsh contested these allegations in court filings.

Ultimately, U.S. District Judge James L. Robart dismissed Marsh from the case in August, after granting the broker’s motion in limine to bar Matcon from introducing evidence regarding the standard of care that Marsh allegedly breached, as Matcon did not identify an expert witness needed to support their assertions.

Although Matcon’s case against Marsh is still pending on appeal with the Ninth Circuit, the recent settlement with Houston Casualty marks a significant development in this complex and lengthy legal battle. As Samuel Lopez noted, “The resolution of this case serves as a cautionary tale for insurers and businesses alike, emphasizing the need for transparency, accountability, and fair dealing in the insurance industry.”