AUSTIN, Texas — A federal lawsuit between a popular pool company and its insurance provider could set a precedent for whether insurers should cover damage from concrete cancer, also known as alkali-silica reaction (ASR).
The impact of concrete cancer on homeowners and business owners in Central Texas has been wide-reaching. Experts said thousands of pool owners in Central Texas could be impacted.
“It’s very frustrating,” said Chris Fulbright of Cedar Park whose pool has concrete cancer.
Early last year, Fulbright joined the masses of Central Texans impacted by concrete cancer.
As we’ve shown since the spring of last year, the defect makes concrete in pools unstable within years or even months of being built. Experts said concrete cancer happens when concrete isn’t mixed properly and lacks a material called “fly ash.” Water actually makes the concrete expand and crack and, in most cases, the only way to fix it is to demolish the pool and completely rebuild, at double, even triple, the original cost of construction.
‘I’d like a working pool’
Fulbright paid Cody Pools more than $100,000 to build his pool in 2020. A few years later, he moved his family into a different home with the intent of renting out this one, but it hasn’t been easy with an empty pool.
“No one really wants to rent a pool when it’s empty or, you know, you have to disclose that it could be under construction, it could be ripped out. You have to discount rent,” said Fulbright.
He’s been unsure of the next steps. He said Cody Pools initially told him it began the insurance claim process.
“Just month after month of no response, no engagement, no details, no follow-through,” said Fulbright.
So he sued Cody Pools last May over the warranty, which according to the lawsuit, “guarantees customers the delivery of a structurally sound pool.”
“I paid for a pool in 2020,” said Fulbright. “It’s supposed to have a lifetime warranty. I’d like a working pool.”
He said Cody Pools recently offered to make repairs but hasn’t proposed completely removing and replacing the pool.
“Anything you read anywhere and everywhere, once the concrete has these conditions, it’s bad concrete, so it feels like we’re probably just delaying yet another round of pain,” said Fulbright.
There’s a new twist. Now Cody Pools is being sued by its insurance provider, the Continental Insurance Company and National Fire Insurance Company of Hartford, or CNA, over several concrete cancer claims Cody Pools made, including Fulbright’s pool.
“Insurance companies, especially commercial general liability carriers, try to do what they can to not pay claims,” said Joshua Wilson, lawyer.
Fulbright’s attorney, Joshua Wilson, with Sprouse Shrader Smith, has numerous concrete cancer cases and thinks the insurance suit will only prolong frustrations for people like Fulbright.
“It’s going to slow down coverage obviously for the pool builder, and if the pool builder doesn’t have the funds to go in and remediate the damage and they’re waiting on an insurance payout, obviously that slows things down,” said Fulbright.
In its lawsuit against Cody Pools, the insurance company is asking the court to decide if it should cover the damage stating “it has no obligation to defend or indemnify Cody Pools” because its “polices excludes coverage for property damage arising out of the actual or alleged presence of silica.”
Cody Pool’s answer and counterclaim state: “CNA reneged on its promises and representations to Cody Pools, claiming that the insurance policies did not provide coverage for pools in which the presence of ASR had been detected.”
It went on to read: “The very information that CNA had assured Cody Pools was necessary to defend and promptly resolve customer claims would instead be used as the basis to deny coverage.”
“There’s a reason they did a core sample there because there was a crack right through it,” showed and explained Fulbright.
Cody Pool’s answer and counterclaim also state: “CNA’s betrayal has led, and will continue to lead, to the filing of lawsuits against Cody Pools.”
“According to the terms in that answer, it looks like the insurance companies used that against Cody in an effort to try to deny coverage,” said Wilson.
KVUE reached out to CNA, but a representative said they had no comment.
KVUE also reached out to Cody Pools. The company’s lawyer wrote in a statement:
“CNA’s lawsuit against Cody Pools is disappointing. CNA is attempting to abandon its longtime client by claiming that the insurance policies Cody purchased provide no coverage for damage to the most common building material used in the construction industry: concrete. We hope the Western District of Texas, if not CNA, will realize that the coverage positions asserted by CNA are both illogical and deeply unfair to its client and to the homeowners who have pools impacted by this situation.”
‘We’re all going to get the short end of the stick’
Wilson said the outcome of the case could have a broad effect.
“So, you have this coverage decision pending, and all of the other insurance companies that have this exclusion on their policies are watching this case and seeing which way it’s going to go before they pay out, more than likely,” said Wilson.
While Fulbright patiently waits, he isn’t optimistic.
“I don’t think it’ll play out well for anybody,” said Fulbright. “I think we’re all going to get the short end of the stick some way or another.”
He’s hoping their warranty isn’t an empty promise.
Wilson said he doesn’t think the federal court decision will come any time soon. KVUE found other court cases where insurance companies are trying to avoid paying for damage caused by concrete cancer or covering the cost of settling lawsuits against their clients because of it.
In the past, Cody Pool CEO Mike Church provided information about how the company has been working with clients.
Church said, “We have compiled a definitive list of original customers potentially affected by this issue and we have notified these customers.”
Church said they took the following actions to address the ASR caused by third parties:
- Set up a dedicated Response Team to support impacted customers and assess their circumstances
- Canceled contractual business agreements with the implicated shotcrete providers and have ceased using shotcrete in pools
- Provided guidance and resources to impacted customers, including but not limited to, tireless advocacy of customer insurance claims through resolution.
Church said as far as the industry can tell, the issue was limited to three separate shotcrete providers, and potentially three to four different quarries. Cody no longer uses shotcrete or the implicated shotcrete companies for the fulfillment of residential customer orders.