PA Superior Court Affirms CPMY Summary Judgment Win in “Occurrence” Case

A panel of the Superior Court of Pennsylvania recently upheld summary judgment in favor of insurers Assurance Company of America and OneBeacon Insurance Company in a Bucks County case involving insurance coverage for a construction defect. In a 20-page non-precedential opinion, the three-judge panel unanimously adopted the trial court’s conclusion that Assurance and OneBeacon were justified in withdrawing from the defense of home-builder DeLuca Enterprises because the cracking and deterioration of concrete pavements and walkways in the common areas of a condominium complex were alleged to have resulted from shoddy workmanship, and not from an “occurrence” as defined by both insurers’ general liability policies. In rejecting the policyholder’s argument, the panel distinguished a prior Superior Court panel decision, Kvaerner Metals v. Commercial Union Ins. Co., 825 A2d 641 (Pa. Super. 2003), appeal granted, 577 Pa. 667, 848 A.2d 925 (2004).

The panel expressly rejected the policyholder’s contention that the fact that the policies provided “products-completed operations hazard” coverage required the insurers to defend, and also held that exclusions for damage to “your product” and “impaired property” further supported the insurers’ withdrawal. OneBeacon’s independent argument that the damage did not take place during its policy period was also upheld.

Although the opinion is classified as not precedential, it is of interest in light of the fact that the prior panel decision in Kvaerner is on appeal to the Pennsylvania Supreme Court on the issue of whether damage arising from inferior work is an “occurrence.” The DeLuca panel distinguished Kvaerner on the ground that, in that case, an unusual rainstorm triggered the damage to the coke battery for which coverage was at issue, while only bad workmanship was implicated in the damage to the concrete involved in the DeLuca case.

James W. Christie and Catherine Raymond of Christie, Pabarue, Mortensen and Young represent Assurance in the trial court and in the appeal before the Pennsylvania Superior Court.

For further information about the case (DeLuca Enterprises, Inc. et al. v. Assurance Company of America, et al., Nos. 2815 & 2816 EDA 2005), contact Jim Christie at (215) 587-1678 or Catherine Raymond at (215) 587-1606.