ASA SLDF WIN: Oregon Supreme Court Reverses Insurer's Denial of Coverage to Contractor Over Contract Versus Tort Issue

Under Jim Yand's guidance, ASA’s Subcontractor Legal Defense Fund (SLDF) won a decision aiding contractors in securing coverage for construction defects. The Oregon Supreme Court in Twigg v. Admiral 371 Or. 308 (2025) ruled that a commercial general liability (CGL) policy may cover claims arising from breach-of-contract if the underlying facts support a potential tort claim.

The ASA, in collaboration with the AGC, intervened with an amicus curiae due to the impact on contractors, contributing to the reversal of coverage that the trial court and court of appeals had previously determined in the case.

In their complaint, the homeowners, Twigg, identified several construction defects, including a garage floor that cracked and sloped inward, causing water to flow toward the house. The builder engaged a subcontractor to apply a lightweight concrete overlay product but allegedly did not adhere to the manufacturer's specifications. The Twiggs asserted that the builder breached their repair agreement and proceeded to arbitration. The arbitrator found that the work was defective and awarded $150,000.

Unable to collect from the builder, the Twiggs targeted the builder’s CGL policy effective during repairs. Admiral Insurance Company denied coverage, stating the award was due to breach of contract and not an "occurrence" under the policy. Both the trial court and Oregon Court of Appeals agreed, ruling that damages from breach of repair contract claims did not constitute an occurrence.

The Oregon Supreme Court reversed, supporting ASA's arguments. The Court stated that damages from a breach of contract are generally not covered, but coverage can apply if there is unintended property damage from conduct tied to both contract and tort law. Ambiguous terms like "accident" in policies should be interpreted in favor of coverage. This ruling benefits contractor policyholders sued for breach of contract where tort claims could also have been involved.

Courts annually decide numerous federal, state, and case laws that affect subcontractors, often interpreting contract clauses like pay-if-paid, hold-harmless, duty-to-defend, and no-damages-for-delay. Some rulings establish significant precedents that impact subcontractors nationwide.  ASA's SLDF supports legal activities in cases with far-reaching effects on subcontractor interests. SLDF funds amicus curiae briefs in important appellate cases impacting subcontractor rights. Since its inception, SLDF has been involved in landmark decisions, such as the 1997 case Wm. R. Clarke Corporation v. Safeco Ins., which prohibited pay-if-paid clauses in California.