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Insurer claims subcontractor for O'Fallon water tank project knew of sealant defects prior to policy period

MADISON - ST. CLAIR RECORD

Friday, November 22, 2024

Insurer claims subcontractor for O'Fallon water tank project knew of sealant defects prior to policy period

Federal Court
Jeremymacklin

Macklin

EAST ST. LOUIS — The insurer of a subcontractor who worked on the construction of a ground water storage tank for the City of O'Fallon and faced a suit over defects with the tank's sealant claims the defects were known prior to policy period.  

Union Insurance Company of Providence and Employers Mutual Casualty Company filed a complaint June 24 in the U.S. District Court for the Southern District of Illinois against Flo-Systems Inc., FSI Tanks & Silos Inc., and the City of O'Fallon, Missouri, alleging breach of contract. 

According to the plaintiffs' complaint, their insured, Flo-Systems, subcontracted with FSI to assist in the building of a two million gallon ground storage tank to the City of O'Fallon to supply drinking water for the city's residents. The suit states that a year after the completion of the water tank, an inspection showed a defective sealant on the tank, which caused the City of O'Fallon to file a breach of contract and breach of implied warranty claim. Flo-Systems was named as one of the defendants in the City of O'Fallon's suit. 

The plaintiffs claim it issued a commercial general liability policy to Flo-Systems that was in effect from Oct. 1, 2017, through Oct. 1, 2018, and that they are not required to name FSI as additional insured on Flo-Systems' policies or have a duty to defend Flo-Systems or FSI. They further claim the lawsuit against Flo-Systems/FSI does not constitute "property damage" or cover a subcontractor's "defective workmanship" and that the defective sealant issues were known by Flo-Systems prior to their insurance policy period.  

The plaintiffs seek monetary relief of more than $75,000 and all other just relief. They are represented by Jeremy Macklin of Traub Lieberman Straus & Shrewsberry in Chicago. 

U.S. District Court for the Southern District of Illinois case number 3:21-CV-00700-SPM 

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