National Interstate Insurance is asking a Hawaii federal judge to let it walk away from a Honolulu condo waterproofing dispute it never wanted to own.
The Ohio carrier turned to the US District Court for the District of Hawaii on May 7, 2026, seeking a declaration that it owes nothing - no defense, no payout - to a Honolulu tile contractor facing a construction defect lawsuit at 1088 Bishop Street.
The insured is Jack's Tile & Stone, Inc., along with its sole director and officer, Douglas K. Uemoto. The underlying suit was brought by the Association of Apartment Owners of Executive Centre, the condominium body that runs the property - a mixed-use complex described in the filing as a 12-story townhouse and a 41-story tower with ground-floor retail.
The story behind the dispute is the kind that tends to land on a contractor's CGL desk. According to the filing, the Association alleges Jack's Tile was hired in November 2018 under what it describes as a design-build contract totaling $422,100 to tear out the old tiling on the property's "Plaza Deck," replace the underlayment, and install fresh waterproofing, tiling, and resurfacing. Sometime after the work wrapped up, the Association alleges, water began showing up where it should not have been - leaking into retail spaces on the deck and into tenant-occupied areas below.
The Association alleges improper waterproofing materials, widespread delamination of tiles, poor substrate preparation, and absence of proper drainage planes. It is pursuing claims for breach of contract, breach of express and implied warranties, negligence and gross negligence, unfair and deceptive trade practices, and punitive damages.
For insurers, the coverage angles are familiar but worth watching. National Interstate issued consecutive CGL policies to Jack's Tile from September 2018 through September 2026. Its lead argument is one the industry knows well - that faulty workmanship is not an "accident," and therefore not an "occurrence" triggering coverage in the first place. The filing also leans on the standard business-risk exclusions for damage to the contractor's own product, its own work, and so-called impaired property tied to a "defect, deficiency, inadequacy or dangerous condition" in that work.
Then there is the punitive damages question. For its earliest two policy years, National Interstate points to an endorsement excluding punitive, exemplary, and treble damages, plus any damages "intended to punish or deter misconduct, rather than to compensate for harm." It pairs that with Hawaii's statutory rule, HRS § 431:10-240, which says coverage in the state will not be read to include punitive or exemplary damages "unless specifically included."
For now, National Interstate is defending Jack's Tile and Uemoto under a reservation of rights while the court sorts out who owes what.
For claims professionals, the filing reads like a familiar template - the "occurrence" challenge, the business-risk exclusions, and a statutory punitive damages carve-out, all stacked into one package. How the Hawaii court treats the alleged water damage to other parts of the project is the part worth watching.
The allegations have not been tested in court, no response has yet been filed, and no court has ruled.
