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Click here for the full text of this decision FACTS:Summit Custom Homes Inc. appeals the summary judgment granted in favor of Great American Lloyds Insurance Co. and Mid-Continent Casualty Co. (collectively the Insurers) and the denial of its summary judgment motion. Summit is a custom home builder. Great American issued Commercial General Liability (CGL) polices to Summit from Jan. 15, 1996, through Jan. 15, 2000, and Mid-Continent issued similar CGL policies to Summit from Jan. 15, 2000, to Jan. 15, 2005. In 1996, Summit and Stephen and Helen Lazarus signed an agreement for the construction of a residence. Summit completed the Lazaruses’ home that same year. In May 2003, the Lazaruses filed suit against STO Corp., Don’s Building Supply Inc., and William Anderson complaining about construction defects in their home. They asserted claims for negligence, breach of warranty, and breach of contract claiming there were defects in the exterior finishing of the home, referred to as an “Exterior Insulating and Finishing System” or “EIFS.” They further argued that the EIFS was defective and sought to have it removed and replaced. Although Summit built the home in 1996, the Lazaruses pleaded the discovery rule because EIFS-related problems were “inherently undiscoverable in that defects in EIFS are latent.” STO filed a third party petition alleging any liability it owed to the Lazaruses arose from Summit’s conduct. In response to STO’s claims, Summit filed a claim with both Great American and Mid-Continent; however, the Insurers denied any duty to defend or indemnity. The Lazaruses then filed a fourth amended petition adding Summit as a direct defendant in their suit. Summit later sued the insurers, seeking a declaration that both had breached their duties to defend against the suit. Thereafter, Summit filed a motion for partial summary judgment arguing that the underlying pleadings alleged “property damage” from an “occurrence” under the policies at issue. Mid-Continent and Great American also filed a joint motion for summary judgment arguing that STO failed to allege any facts triggering coverage under the policies. After a hearing, the trial court granted Mid-Continent and Great American’s motion for summary judgment and denied Summit’s motion. This appeal followed. HOLDING:The court affirms the trial court’s order granting Mid-Continent’s summary judgment, but reverses the trial court’s order granting summary judgment as to Great American’s duty to defend and duty to indemnify and remand for further proceedings. Summit encourages this court to revisit its holding in Dorchester Dev. Corp. v. Safeco Ins. Co., 737 S.W.2d 380 (Tex. App. Dallas 1987, no writ), in which the court held that “no liability exists on the part of the insurer unless the property damage manifests itself, or becomes apparent, during the policy period.” The court declines Summit’s invitation. Assuming the facts alleged are true, the Lazaruses have sufficiently pleaded physical injury to tangible property resulting in “property damage.” The Insurers’ arguments that defective construction can never constitute an “occurrence” is incorrect. Summit Homes intended to construct the Lazaruses’ home using the EIFS system, which was installed and applied by subcontractors. The Lazaruses underlying petition and STO’s third party petition assert various negligence causes of action involving the use of EIFS and the supervision of the workers applying the EIFS. Likewise, the Insurers deny that EIFS is defective; therefore, any damages were unintended because defendants believed they were using a superior cladding system that would perform well in residential construction. The court concludes that the underlying pleadings assert an “occurrence” within the meaning of Great American’s policies. The court cannot determine whether the 1996, 1997, 1998, 1999 or 2000 Great American policies may apply. Because a genuine issue of material fact exists, the trial court improperly granted Great American’s summary judgment. The EIFS exclusion is broad in its reach and clearly encompasses the allegations in the underlying pleadings. If the damage manifested prior to 2000, Mid-Continent would not have a duty to defend because Great American provided the relevant policies. If the damage manifested in 2000 or later, then the EIFS exclusion would bar coverage. Since Mid-Continent could never have a duty to defend under any alleged time-frame based on the eight corners rule, the trial court properly granted its summary judgment. Because Summit may still be adjudicated legally responsible for damages in the underlying suit and Great American may have a duty to indemnify it for the damages, the trial court improperly granted summary judgment on Great American’s possible duty to indemnify. Because coverage is impossible under Mid-Continent’s policies, the trial court properly concluded that it does not have a duty to indemnify. Summit alleges that the trial court erred in denying its motion for summary judgment with respect to Article 21.55 of the Texas Insurance Code. Article 21.55 is not applicable to an insured’s claim for a defense. OPINION:Wright, J.; Wright, Moseley and Lang, J.J.

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