Judge Rules Insurance Company Not Liable for Faulty Courthouse Window Installation

General liability insurance policies are designed to protect businesses from various possible calamities. But should they protect window companies from their own shoddy workmanship?

To close a case, a judge had to answer who was fiscally responsible for a failed window installation. The case, Employers Mutual Casualty Company v. Knipp Equipment Inc. et al., centered around a project involving the replacement of more than 100 windows in the nearly 100-year-old Edwards County Courthouse in Kansas.

Windows Must be Removed

According to court documents, Edwards County and Knipp entered a contract for the window replacement on May 20, 2016. Knipp proceeded to remove and replace 113 windows in the courthouse. However, several windows leaked during a rainstorm three weeks after the installation. Four years later, Edwards County filed a claim against Knipp with the American Arbitration Association, stating that Knipp breached its duty under the contract to perform the work and “render the services owed in a good and workmanlike manner.” Due to Knipp’s breach, the county alleged that the windows must be removed, re-sized and re-installed at an estimated cost of $420,000.

As part of that legal suit, Edwards County indicated that it did not attribute any damage to any personal property from the leaking windows. This prompted Knipp to inquire whether Edwards County was alleging any other damages attributable to the construction claim or construction defect claim. The answer, court documents say, was, “The windows were defectively designed … and improperly installed by Knipp. The damages sought are the costs of properly replacing and installing the defective windows, so the courthouse windows do not leak.”

Entitled to Damages

Employers Mutual defended Knipp in the summer of 2021. In October of that year, the American Arbitration Association found that Edwards County was entitled to recover damages for the cost of correcting all 113 windows. Even though the damages awarded to Edwards County were eventually reduced, Knipp never paid.

Nearly a year later, Edwards County filed a new petition alleging that Knipp had paid no part of the award. Throughout the arbitration and state court litigation, Employers Mutual sent Knipp’s designated representative various letters “consistently denying a duty to indemnify,” court documents said, leading to the October 2023 filing of the suit against Knipp and Edwards County.

Employers Mutual and Knipp entered into a settlement agreement five months later, stipulating that the policy provides no applicable coverage for the award, and Employers Mutual has no duty to indemnify Knipp.

Edwards County still never received payment, leading the county to file a countersuit against Employers Mutual on April 1, 2024. The government asserted its rights as a third-party beneficiary to Knipp’s insurance agreement and claimed that Employers Mutual breached its duty to indemnify Knipp for the damages Knipp caused.

Judge Sides with Insurer

Last summer, Employers Mutual sought a declaratory judgment that Knipp’s breach of contract with Edwards County does not fall within the policy’s insuring agreement. It argued that resolving these issues simultaneously resolves Edwards County’s counterclaim. Conversely, Edwards County claims that “Knipp’s poor judgment does not constitute an intentional act because Knipp did not intend to cause Edwards County injury.”

Judge Eric F. Melgren, a Chief United States District Judge with the United States District Court for the District of Kansas, disagreed with the local government. He ruled that Employers Mutual is entitled to summary judgment on the issue and has no duty to indemnify Knipp for its $410,120.01 in damages awarded to Edwards County.

As a result, the insurance company’s motion for a hearing is moot, and the case is closed.