Kitchen Gallery v. AmGUARD Insurance Co. CA2/4

BACKGROUND

I. Construction Project and Damage

This case arises from appellant Villa Madrid’s development of a 22-unit apartment building in Lakewood. The project had a target completion date of July 2017, to allow Villa Madrid to take advantage of the summer rental market and refinance its construction loan at a lower rate available for completed projects. In May 2016, Villa Madrid hired appellant Kitchen Gallery as the general contractor on the project. Kitchen Gallery in turn hired subcontractor E&W to perform “rough plumbing” work specified in the plans and requirements of the project. E&W began work in July 2016 and was contracted to complete it by December 31, 2016, or face a $200 penalty for each day it was late. In November 2016, Kitchen Gallery notified E&W that it had installed the wrong type of drain piping and demanded E&W replace it by December 12, 2016. E&W corrected the error to Kitchen Gallery’s satisfaction in December 2016. Also in December 2016, E&W obtained a businessowner’s insurance policy from respondent, effective December 16, 2016 to December 16, 2017. The policy, which we discuss in more detail below, covered “property damage” caused by an…