Court confirms the impact of Supreme Court decision; overturns jury verdict against insurer

The Hastings Mutual Insurance Company's long battle to avoid any contractual obligation to its insured building contractor, Mosher Dolan Cataldo & Kelly, Inc., appears to have come to a final and successful conclusion.  Several years ago, the contractors obtained a decision against Hastings Mutual, after the contractor was sued by a customer who claimed that negligence by the contractor resulted in catastrophic fungus problems in a new home.  Hastings had refused to provide a defense or pay any damages and filed a Declaratory Judgment action seeking confirmation that it owed nothing to its insured.

Hastings Mutual argued that it had excluded from its insurance contract any damages resulting from fungus or mold problems, and that it also owed no coverage for damages resulting from its insured's defective workmanship.  It also argued that there was no "occurence" to bring the policy into play. From 2004 until today, the cases arising out of Hastings' denial of coverage have wound through the appellate court system, resulting in severe restrictions on what the contractor could recover.  A few months ago, however, the Michigan Supreme Court ruled that Hastings' exclusions from coverage would be enforced, and this week the Court of Appeals applied that decision to overturn the underlying decision in the contractor's favor. It ruled that the contractor did not have any coverage, even coverage for fungi damage to the purchaser's personal belongings in the home, and it awarded Hastings the right to restitution.