Contractors across the nation will be watching the Mississippi Supreme Court on Oct. 5 to see if it upholds a Rankin County Circuit Court decision that ruled an insurer is not responsible for subcontractor performance under a contractor’s commercial general liability policy.

In Architex Association Inc. v. Scottsdale Insurance Co., Architex alleges that “an unintended construction defect by a subcontractor constitutes an occurrence that triggers coverage under a contractor’s CGL insurance policy,” according to a statement from the law firm of Burr & Forman LLP, Jackson, Miss., which represents Architex. The lawsuit alleges that Arizona-based Scottsdale has a “duty to investigate and defend” Architex in the matter. In short, the contractor says it wants Scottsdale to fulfill the terms of the policy it paid for.

The question is “whether a standard-form CGL policy, the type generally purchased by generals, provides coverage under any circumstances for defective work,” says Mike Kennedy, general counsel for the Associated General Contractors of America. “We are asking the insurance industry to stand behind the language.”

Hiring subs is not an accident or occurrence.

The Rankin County Circuit Court ruled the hiring of subcontractors by a prime contractor does not constitute an “occurrence” under state law, partly because it was not accidental. The definition of occurrence in Mississippi may be “too narrow,” the county court admitted, but “it is the controlling law.”

The suit resulted from damages sought by the owner of the Country Inn & Suites in Pearl, Miss. The decision could affect decisions yet to be reached in similar cases pending in Florida, Texas, Georgia, Minnesota and Tennessee.