An Allegheny County judge has granted two insurers' bids to free themselves from defending a local builder who has been sued over faulty workmanship by a Washington County property owner and the J.C. Penney retail chain.
The case dates to 2007, when J.C. Penney relocated to The Foundry at South Strabane, leaving the nearby Washington Mall. Soon, the shopping center, built on a steep hillside along Route 19 just north of Washington, Pa., developed subsidence and ground-settling-related structural issues. A year later, in June 2008, J.C. Penney closed the store at The Foundry and reopened at Washington Mall.
Court of Common Pleas Judge R. Stanton Wettick Jr. ruled that American Home Assurance Co. and National Union Fire Insurance Co. were cleared of defense and indemnity coverage because the insured builder, North Shore-based Trumbull Corp., could not prove the property damages occurred accidentally.
Judge Wettick pointed to the state's apparent seminal case for instruction. In that case, the court held there is no legal avenue for coverage for property damage that was caused by faulty workmanship.
Other cases have since closed the gap in the jurisprudence, Judge Wettick said, establishing that a commercial general liability policy does not cover property damage to an owner's property caused by an insured builder's faulty workmanship where the work was performed under a contract between the builder insured and the owner of the property.
But what happens when the alleged shoddy workmanship damages the property of a "stranger" -- a party having no involvement with the project and no relationship with the insured?
That was the apparent issue of first impression lodged into American Home Assurance v. Trumbull. In the underlying lawsuit, a J.C. Penney store had rented a property on the lot that Trumbull built. After the retailer moved out because of foundational problems, the store sued Trumbull and the owner of the property, which has also sued Trumbull.
The Foundry at South Strabane had owned the lot, but it is currently owned by HCB Foundry.
According to Judge Wettick, a string of cases pointed toward finding the two commercial general liability insurers had no duty to provide coverage.
"In every case which I have discussed, the court has said that the definition of accident, required to establish an occurrence, cannot be satisfied by claims based on faulty workmanship," Judge Wettick said.
"Furthermore, there is no language in any of the cases [which] suggests that the courts' interpretation of [commercial general liability] policy -- that injuries caused by faulty workmanship are not an accident -- is flexible."
He granted both insurers, American and National, motions for summary judgment. The insurance companies had issued excess commercial general liability policies to Trumbull, providing $25 million in coverage. That included a duty to defend for "occurrences" resulting in property damages. Zurich American issued the underlying primary policies.
The two issues on which Judge Wettick focused his 23-page opinion were whether Trumbull could prove an accidental "occurrence" and, if it could, whether coverage for the claims would otherwise be barred by a professional liability exclusion.
Trumbull did not clear the first hurdle.