MIssouri trigger and “legally obligated to pay”

In D.R. Sherry Construction, Ltd. v. American Family Mut. Ins. Co., No. SC90442 (Mo. June 15, 2010), following purchase of a new home constructed by insured general contractor Sherry, the owner complained of foundation and drywall cracking.  Sherry determined that the cracking was due to poor soil conditions which caused the home to settle unevenly.  Sherry then entered into an agreement to repurchase the home, and sought reimbursement from its CGL insurer American Family.  American Family denied coverage on the basis that (1) the property damage did not manifest and thus did not occur until after its policy expired shortly after the home was completed, and (2) Sherry  had not  become “legally obligated to pay.”   The trial court entered judgment for Sherry.  The Missouri Supreme Court affirmed holding that (1) there was sufficient evidence that the property damage began before the American Family policy expired, (2) the home repurchase settlement agreement entered into by Sherry satisfied the “legally obligated to pay” insuring agreement requirement.