Facts: Insured served as the MEP for a 244 unit condo project, under 3 separate contracts. The insured was advised that condensation was forming on windows in several units. The HOA claimed damages in excess of $15,000,000.
Claim against the insured: It was alleged that the units did not receive enough fresh air from the outside, which resulted in increased humidity and condensation on the windows. Allegations that the insured’s design was not code compliant and that new air ducts should be put in every unit.
Defenses: Insured was one of 2 mechanical engineering firms who worked on the project. He was not responsible for, and did not design the residential units’ primary ventilation. Units’ ventilation complied with the code requirements. The alleged failures of the units’ ventilation could not have caused the alleged condensation or leaks, which instead were primarily attributable to defective windows and a failed curtain wall system.
Policy Limit: $3,000,000 per limit, $35,000 deductible.
Resolution: HOA settled around the insured (only design professional not named on the WRAP policy) for $7,750,000 with an assignment of claims. This increased the insured’s exposure and settlement was achieved for $280,000.