According to Lauger, it tested the sample three times but that each time it supported less than 3,000 psi. Lauger asserted that the foundation flaked as it cured; that it hired engineers from T.S.I. Laboratories to take core samples from the foundation; and that of the 22 core samples, half were less than 3,000 psi. Lauger also said that it commissioned a petrographic analysis that determined that the concrete had 12 percent air content; concrete with a strength of 3,000 psi required four per cent air content, according to Lauger.

The warehouse owner asked Lauger to remove and replace the defective concrete. Lauger complied and then sued Cross Roads for the costs it had incurred from the defective concrete. Lauger was awarded $162,009.14; Cross Roads closed without paying the judgment.

Lauger sued Mid-Continent Casualty Company, which had issued a commercial general liability (“CGL”) insurance policy to Cross Roads. Lauger moved for summary judgment.

The District Court's Decision

The district court granted Lauger's motion.

In its decision, the district court explained that although the concrete was defective when it was poured, pouring defective concrete was not a covered physical injury under a CGL policy. The district court added that the concrete had not been destroyed, but had been removed because it was weak – and that the policy did not cover damages from demolishing the foundation and pouring the new foundation.

However, the district court continued, pouring the defective concrete had damaged the non-concrete elements of the foundation, including wooden forms, reinforcing bar, Visqueen, sub-slab fill, and angle iron that would have secured the structure to the foundation. As a consequence of their having been encased in bad concrete, their utility had been destroyed. These elements, the district court noted, had been repurchased and reinstalled for the new foundation.

The district court then found that the Mid-Continent policy covered these parts because they could not be repaired and had been “consumed by the faulty concrete.”

The district court concluded that Mid-Continent was obliged to pay for the following damages caused by pouring the defective concrete.

The case is Lauger Companies, Inc. v. Mid-Continent Casualty Co., No. Civil Action V-16-11 (S.D. Tex. Aug. 2, 2017). Attorneys involved include: For Lauger Companies, Inc., Plaintiff: David C Griffin, LEAD ATTORNEY, Marek Griffin Knaupp, Victoria, TX; Robert E McKnight, Jr, Marck Griffin Knaupp LLP, Victoria, TX. For Mid-Continent Casualty Company, Defendant: Robert J. Witmeyer, Cooper and Scully PC, Dallas, TX; R Brent Cooper, Cooper Scully PC, Dallas, TX.