Eighth Circuit Declines to Extend Contract Terms in Construction Defect Contract Claim
For construction contractors, damage from project failure can cause major headache. Particularly true is in the instance where a relatively minor aspect of the project is providing protection for the rest of the building.
Nowhere was this more true than the Vue Project, an apartment complex being constructed in Creve Coeur, Missouri. BCC Partners, LLC contracted with Ben F. Blanton Construction, LLC to construct the project. As with many construction agreements, BCC required Blanton to obtain insurance. Blanton did so, purchasing an insurance policy from Travelers. Within that policy, Blanton was the “Named Insured” and BCC was an “Additional Named Insured.”
In December 2015, during construction of the Vue Project, a retaining wall on site failed, which caused significant delays and damages. As a result of these damages, both BCC and Blanton filed a slew of lawsuits, as well as made claims to Travelers. Travelers, for its part, paid $1.3 million to an escrow account, which was divided between BCC and Blanton. BCC then received an award of $7.2 million from Blanton from an arbitration proceeding. Blanton proceeded to file for bankruptcy, but not before suing Travelers to collect costs associated with the removing and replacing the failed retaining wall, for which it received a verdict of more than $330,000.
Following all that, BCC filed another claim with Travelers in June 2016, for alleged loss of rental income and “soft costs” resulting from the delay caused by the failed retaining wall. BCC relied on its status as an “Additional Named Insured.” While Travelers initially cooperated, making an advance payment of $200,000, Travelers’ subsequent investigation resulted in it denying BCC coverage in 2019. In response, BCC demanded $1.4 million, or the remaining policy limits. Travelers denied.
In August 2022, BCC sued Travelers for breach of contract and vexatious refusal to pay under Missouri law in the United States District Court for the Eastern District of Missouri. The District Court granted Travelers summary judgment on both claims, finding that as a matter of law, BCC had no entitlement to the demanded payments under the policy. BCC then appealed to the Eighth Circuit Court of Appeals, titled BCC Partners, LLC v. Travelers Property Casualty Company of America, No. 24-1909 (8th Cir. June 9, 2025).
This case rested particularly on the terms of the contract. Under the plain language, the insurance contract provided that only a “Named Insured” is covered for losses of rental income and soft costs. The provision further reiterated this point, defining “you” and “your” to refer only to the “Named Insured.” The contract only identifies Blanton as a “Named Insured.” By contrast, an “Additional Named Insured,” such as BCC, is only covered “to the extent of their financial interest in the Covered Property.” Based on the plain language of the contract, the Eighth Circuit found that rental income and soft costs fell outside the coverage for “Additional Named Insureds.”
BCC attempted to argue that “you” and “your” within the contract is ambiguous, and thus, the contract should be construed in its favor. However, the Eighth Circuit rejected this argument, finding that, when reading the contract as a whole, the language was neither ambiguous nor conformed to BCC’s preferred reading. Particularly, because “Additional Named Insured” was separately defined, the Eighth Circuit found that the scope must, as a matter of law, differentiate between “Named Insured” and “Additional Named Insured”, lest the separate definition be made useless or redundant.
Finding that the language of the contract was plain and unambiguous, the Eighth Circuit therefore affirmed the judgment of the District Court, finding that BCC’s breach of contract claim failed as a matter of law. Travelers had no duty to cover BCC’s alleged losses, and as a result, BCC’s claim for vexatious refusal to pay failed as well.
Retaining walls can fail; such failures can result in major headache and losses. That’s why it is of vital importance to ensure that insurance contracts and provisions remain clear and unambiguous in the terms of its coverage. While a retaining wall’s failure can result in significant costs to repair it, the failure of an insurance contract can result in catastrophic costs.
You can read the full opinion here: https://ecf.ca8.uscourts.gov/opndir/25/06/241909P.pdf