McGuinness & Associates Won an $8.4 Million Dollar Verdict for Church in Construction
Defect/Mold/Insurance Bad Faith Case

In construction defect and related insurance actions on behalf of the First Southern Baptist Church of Walnut, McGuinness & Associates attorneys recently obtained an $8.4 million trial verdict against KO-AM.

Initially, KO-AM brought legal actions against the Church for payment claims. The Church had hired KO-AM Company to build a gymnasium and youth center. Upon examination by our experts, these new structures exhibited numerous defects, including the growth of a dangerous stachybotrys mold. McGuinness & Associates defended the Church against KO-AM’s payment claims. In addition, this firm brought defect claims against the general contractor and its subcontractors.

KO-AM then tendered coverage claims under several of its insurance policies. One of the insurers, agreed to defend the general contractor, but would not pay enough to correct the many construction defects. The remaining insurers refused to acknowledge any coverage for the Church's claims against the general contractor. Consequently, McGuinness & Associates attorneys negotiated a strategic settlement agreement with the defending insurer and subcontractors.

Pursuant to this agreement, the settling entities, collectively, paid the Church $800,000. In addition, the Church took an assignment of rights which allowed the Church to proceed to trial to prove its remaining damage claims. McGuinness & Associates's directed communications to the non-settling insurers providing a final opportunity for them to settle. The insurers refused.

At trial, the Church was awarded an $8.4 million judgment. This award was both for the construction defect damages, and for approximately $5 million in damages for lost revenue from declining Church membership. This firm then pursued an insurance bad faith action against the non-settling insurers. A $4 million settlement was ultimately obtained as a result of that bad faith action.

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