UNDER MISSOURI LAW, SHODDY WORKMANSHIP DOES NOT CONSTITUTE AN “OCCURRENCE” FOR PURPOSES OF INSURANCE COVERAGE

In American Family Insurance Co. v. Mid-American Grain Distributors, LLC, 958 F.3d 748 (8th Cir. 2020) (interpreting Missouri law) held that shoddy workmanship was not an occurrence. Focusing on the term “accident,” the 8th Circuit noted that Missouri courts gave the term a common meaning, which involved “an event that takes place without one’s foresight or expectations, and undesigned, sudden and unexpected event. The Court also noted that under Missouri law, an intentional act could be an “accident” except for those situations where the acts resulted in “expected or foreseeable damage.” However, Missouri law left unanswered the question or “foreseeable to whom.” Was Missouri law addressing the actual insured, subjectively speaking, or a reasonable insured, objectively speaking? Turning to well established Missouri law, the Court found that it did not need to explore the nuances of any conflicting case law or pick a side in the debate. The Circuit Court ruled that the determinative test was whether the alleged damages were the foreseeable or expected consequence of the insured’s act and not the characterization of the insured’s act as being either negligent or otherwise.