Spears Manufacturing Company is taking Liberty Mutual Fire Insurance Company to court, alleging the insurer failed to step up when property damage claims hit.
In a complaint filed in the United States District Court for the Central District of California, Spears - a manufacturer of chlorinated polyvinyl chloride (CPVC) pipes and fittings - claims Liberty Mutual breached its obligations under two commercial general liability policies. The dispute centers on the insurer’s alleged refusal to defend, indemnify, and settle two lawsuits tied to property damage at construction projects in Louisiana and Colorado.
According to the complaint, Spears purchased general liability coverage from Liberty Mutual for the periods spanning August 2018 to August 2020. Each policy carried a $1 million per occurrence limit and a $2 million aggregate limit, with defense costs covered outside those limits. The policies, as quoted in the filing, required Liberty Mutual to “pay those sums that [Spears] becomes legally obligated to pay as damages because of … ‘property damage’” caused by an “occurrence”—defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Liberty Mutual was also obligated to “defend [Spears] against any ‘suit’ seeking those damages.”
The first underlying lawsuit cited by Spears was brought by Allied World National Assurance Company in the U.S. District Court for the Middle District of Louisiana. The suit alleged that Spears’ CPVC pipes failed, causing leaks and property damage at the Nicholson Gateway Project Development, a luxury apartment complex on the campus of Louisiana State University. Residents began moving in after construction was substantially completed in August 2018, but leaks reportedly started soon after, damaging sprinkler systems and building interiors.
Spears claims it notified Liberty Mutual of the Louisiana lawsuit on October 21, 2021, but the insurer failed to confirm coverage or provide a defense for over a year. During this period, Spears says it incurred significant legal costs, which Liberty Mutual only partially reimbursed after eventually agreeing to do so. The complaint further alleges that Liberty Mutual did not participate in or contribute to a June 2025 settlement, which Spears paid out-of-pocket.
The second case, filed in Colorado state court, involved The Grand, a mixed-use development in downtown Denver. The owner of The Grand sued the project’s general contractor and others over alleged construction defects, including CPVC leaks. Spears was later brought in as a third-party defendant, facing claims of product liability and negligence. According to the complaint, Spears tendered the claim to Liberty Mutual in December 2022, but again, the insurer allegedly failed to confirm coverage, did not defend the company, and did not reimburse defense costs or contribute to a November 2023 settlement.
Throughout both lawsuits, Spears contends, Liberty Mutual’s conduct was marked by delay, lack of communication, and refusal to honor its contractual obligations. Spears accuses the insurer of frustrating its right to coverage, exposing the company to excess liability, and acting in bad faith - specifically, violating the implied covenant of good faith and fair dealing under California law.
The complaint details Spears’ efforts to keep Liberty Mutual informed of case developments, settlement opportunities, and costs. Despite these efforts, Spears alleges, the insurer consistently failed to respond or participate, even after being notified of settlements that were within policy limits and below plaintiffs’ original demands.
Spears is seeking a judgment requiring Liberty Mutual to pay all outstanding defense fees and settlement amounts, as well as damages, attorneys’ fees, and interest. The manufacturer’s claims, if proven, could affect how insurers handle commercial liability coverage and claims management, particularly regarding defending policyholders in complex litigation.
As of now, all allegations remain unproven, and the case is at the complaint stage.
