J-A01004-18


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 J.J.D. URETHANE COMPANY              :   IN THE SUPERIOR COURT OF
                                      :        PENNSYLVANIA
                                      :
              v.                      :
                                      :
                                      :
 WESTFIELD INSURANCE COMPANY,         :
 MUNICIPAL AUTHORITY OF THE           :
 BOROUGH OF BEDFORD, FIDELITY         :   No. 1440 EDA 2017
 AND DEPOSIT COMPANY OF               :
 MARYLAND AND HOWARD ROBSON,          :
 INC.                                 :
                                      :
                                      :
 APPEAL OF: WESTFIELD                 :
 INSURANCE COMPANY                    :

                Appeal from the Order Entered April 7, 2017
   In the Court of Common Pleas of Montgomery County Civil Division at
                          No(s): No. 2016-02813

 JJD URETHANE COMPANY                 :   IN THE SUPERIOR COURT OF
                                      :        PENNSYLVANIA
                                      :
              v.                      :
                                      :
                                      :
 WESTFIELD INSURANCE COMPANY,         :
 MUNICIPAL AUTHORITY OF THE           :
 BOROUGH OF BEDFORD, FIDELITY         :   No. 1554 EDA 2017
 AND DEPOSIT COMPANY OF               :
 MARYLAND AND, HOWARD                 :
 ROBSON, INC.                         :
                                      :
                                      :
 APPEAL OF: WESTFIELD                 :
 INSURANCE COMPANY                    :

                Appeal from the Order Entered April 6, 2017
   In the Court of Common Pleas of Montgomery County Civil Division at
                          No(s): No. 2016-02813

BEFORE:   LAZARUS, J., OTT, J., and PLATT*, J.

____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-A01004-18



MEMORANDUM BY LAZARUS, J.:                             FILED FEBRUARY 09, 2018

       Westfield Insurance Company (Westfield) appeals from the trial court’s

orders,1 entered in the Court of Common Pleas of Montgomery County,

denying, without prejudice, its motion for summary judgment and granting in

part and denying in part Appellee, JJD Urethane Company’s (JJD) motion for

summary judgment obligating Westfield to defend2 and, if necessary,

indemnify JJD in an underlying action.3          After careful review, we affirm.

       JJD supplies and installs commercial urethane foam insulation.

Westfield issued JJD a commercial general liability (CGL) policy, effective

March 31, 2012 through March 31, 2013. In May 2010, Howard Robson, Inc.

(Robson), a construction company, hired JJD as a subcontractor to perform

upgrade work on sewage digester tanks at a wastewater facility (facility)




____________________________________________


1 The orders from which Westfield are appealable as of right. See 42 Pa.C.S.
§ 7532 (Declaratory Judgment Act); Pa.R.A.P. 311(b)(8) (interlocutory appeal
as of right); see also Nat’l Cas. Co. v. Kinney, 90 A.3d 747 (Pa. Super.
2014) (denial of motion for summary judgment effectively disposed of all
claims set forth in declaratory judgment complaint).

2We focus on the duty to defend, as it is broader than the duty to indemnify.
Kvaerner Metals Div. of Snaerner U.S., Inc. v. Commercial Union Ins.
Co., 908 A.2d at 888 (Pa. 2006). However, both duties “flow from a
determination that the complaint triggers coverage.” General Accident Ins.
Co. of America v. Allen, 692 A.2d 1089, 1095 (Pa. 1997).

3Municipal Auth. of the Borough of Bedford v. Fidelity and Deposit Co.
of Maryland, No. 2014-542 (Bedford County filed 10/7/14).




                                           -2-
J-A01004-18



owned by the Municipal Authority of the Borough of Bedford (the Authority).4

Specifically, JJD was hired to supply and install urethane foam insulation to

the annular space5 on the tanks to create a seal against the tank walls.6

Robson had been hired by the Authority in 2009 to upgrade the facility, which

included constructing and performing certain work on its digester tanks.7

____________________________________________


4 Robson, as principal, and Fidelity and Deposit Company of Maryland, as
surety, executed a performance bond, with the Authority as the obligee, in
the amount of $13,573,000.00 in connection with the Authority’s project.

5“Annular space” is the area between the top of the digester tanks and the
body of the digester tanks. N.T. Summary Judgment Motion Hearing,
1/30/17, at 30.

6   The subcontract agreement between Robson and JJD specifically stated:

        SCOPE OF THE WORK: The Work shall include all materials,
        equipment, parts and supplies described in the Subcontract
        Documents and all other incidental materials, equipment, parts
        and supplies that are necessary to completely enable the work and
        it to function as intended, regardless of whether they are shown,
        listed or otherwise disclosed in the Subcontract Documents. The
        Scope of Work shall consist of and include the following: FIELD
        MEASURE,        COORDINATE,         FABRICATE,        SUPERVISE,
        MOBILIZE, DELIVER, PREP, UNLOAD, RIG, HOIST, STAGE,
        INSTALL, CERTIFY AND WARRANT ALL DIGESTER COVER
        URETHANE          INSULATION        (2    DIGESTER        COVERS
        MEASURING APPROXIMATELY 50" IN DIAMETER.) in strict
        accordance with all the project plans, specifications and addenda.

Subcontract Agreement No. 09038.895, 5/3/10, at S.C. 1 (emphasis in
original).
7 Digesters are used to stabilize the solids that are removed from the
wastewater during treatment. This stabilization can be performed by using
aerobic digestion, which involves injecting oxygen into the sludge in an open
tank, or anaerobic digestion, which takes place in an airtight container like in



                                           -3-
J-A01004-18



When the Authority realized in 2012 that one of the digester tanks had been

damaged and that Robson had failed to rectify the problem,8 the Authority

____________________________________________


the instant case.     https://www2.humboldt.edu/arcatamarsh/digester.html
(last visited 1/24/18).

8 In an October 29, 2012 letter, the engineering firm for the Authority notified
Robson that there were several outstanding items requiring its attention under
the terms of the parties’ warranty agreement for the treatment facility. The
letter indicated it was putting Robson on notice that the Authority intends to
take action against the bond if the items are not fully addressed by November
15, 2012. The relevant item was described in the letter as follows:

       As a separate but related issue, this letter is to serve as a notice
       that a digester mixer on digester #3 has been damaged and may
       result in a significant warranty claim. After being removed from
       service and inspected by the equipment manufacturer, the
       manufacturer has concluded that the mixer impeller has been
       damaged due to some form of debris within the digester fluid.
       Based upon the observed damage, it is the position of the
       Authority that the size of debris impacted by the mixer could not
       have entered the digester tank through the sludge transfer
       pumps. If, upon inspection, the debris that caused the
       damage was a result of either workmanship or material
       defects emanating with your work, all costs associated
       with the inspection, repair and/or replacement of the
       damaged components and handling of sludge will be borne
       by Howard Robson, Inc. The Authority is currently making
       accommodations to empty the tank contents for inspection of the
       tank and mixer components. As this is no small task, the process
       will take several weeks and may stretch into December. If the
       date of inspection completion should extend beyond the intended
       termination of the performance bond, this correspondence shall
       serve as notice that the damage has been observed during the
       warranty period and that Howard Robson was made aware of the
       pending liability for repair prior to the expiration of the warranty
       period.

Letter of John C. Clabauth, 10/29/12, at ¶ 21 (emphasis added). A follow-up
June 2013 letter by the Authority’s attorney indicates that the Authority’s



                                           -4-
J-A01004-18



filed a complaint against Robson alleging that “Robson and its subcontractors

performed work on the anaerobic [d]igesters [n]os. 1 and 3 at the [facility] .

. . [and that] debris used to make the annular seal had fallen into tank

[number 1], damaging one of the mixers.” Authority Complaint, 10/7/14, at

¶¶ 28, 33, 36. Robson filed a joinder complaint against JJD,9 claiming that

JJD had improperly handled expanding foam insulation which was the ultimate

cause of the damage to the digester tank.10

       In response to the joinder complaint, JJD requested that Westfield both

defend and indemnify it against the Authority’s claims.          When Westfield

____________________________________________


“inspection demonstrated that damage to the digester occurred as a
result of faulty workmanship.” Therefore, the damage is a warranty issue
that your client must remedy. As detailed in our previous correspondence, the
mixers and heat exchangers must be repaired or rebuilt by the supplier,
certified by the supplier, reinstalled, and placed back into service. Additionally,
the second primary digester must likewise be inspected to insure that a similar
situation does not exist in the tank. If similar conditions are found, the second
primary digester must also be rebuilt and placed back into service. Letter of
E. Lee Stinnett, II, Esq,, 6/24/13, at ¶ 21 (emphasis added).
9 Robson also joined other additional defendants in the joinder complaint,
averring that they too were “jointly and severally liable with Robson . . . to
[the Authority] or liable over to Robson . . . for any such liability.” Joinder
Complaint, 10/8/14, at ¶¶ 3.

10 More specifically, the Authority alleged in its complaint that “the debris
contacted and damaged at least one roof-mounted mixer, thereafter breaking
into several pieces as large as forty pounds each.” Authority Complaint,
10/7/14, at ¶ 37. The manufacturer of the mixer conducted an on-site
inspection and determined that the mixer suffered bearing damage related to
the mixer’s impact with the foreign object, the suspected insulation debris.
Id. at ¶ 41.




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J-A01004-18



declined to provide coverage to JJD, claiming that the allegations were outside

the scope of coverage and/or excluded by the policy, JJD instituted the instant

declaratory judgment action/breach of contract action against Westfield in

February 2016.11 On March 15, 2016, Westfield filed preliminary objections

to JJD’s complaint, which the court denied.      Westfield filed its answer and

counterclaim on July 1, 2016. In its counterclaim Westfield sought declaratory

relief, denying that it was required to provide coverage in the underlying suit

because:      (1) the allegations do not constitute occurrences triggering

coverage under the Policy, and (2) exclusions to the Policy apply to bar

coverage to JJD.

       In September and October 2016, Westfield and JJD filed cross-motions

for summary judgment.12 Following oral argument held on January 30, 2017,

the trial court denied Westfield’s motion. See Order, 4/6/17. On the following

day, the trial court granted in part JJD’s motion, ordering that “Westfield []

shall defend JJD [] on the claims set forth in the Joinder Complaint until such

____________________________________________


11 In its declaratory judgment action, JJD alleges that the Authority “alleges
that the urethane foam applied to the exterior of the digester tanks somehow
found its way inside the digester tank and damaged the mixer equipment.”
Declaratory Judgment Complaint, 3/1/16, at ¶ 21. The Authority, however,
denies this allegation in its answer to the complaint. Authority Answer to
Complaint, 4/1/16, at ¶ 21.

12 Because the parties filed cross-motions for summary judgment, no material
facts are in dispute. See N.T. Summary Judgment Motion Hearing, 1/30/17,
at 2.




                                           -6-
J-A01004-18



time that the claim is confined to a recovery that the policy does not cover”

and that “Westfield [] is also conditionally obligated to indemnify JJD [] in the

event JJD[] is held liable for a claim covered by the policy in the underlying

action.”     Order, 4/7/17.     The order further stated that JJD’s motion “was

[d]enied without prejudice as to the claim for breach of contract.” Id.

       Westfield filed timely notices of appeal13 and a court-ordered Pa.R.A.P.

1925(b) concise statement of errors complained of on appeal.              Westfield

presents the following issues for our consideration:

       (1)    Did the trial court err and abuse its discretion in holding that
              the allegations in the underlying action against Appellee
              labelled as “negligence” describe factual content that was
              outside the scope of Appellee’s work pursuant to its
              subcontract and/or the foreseeable consequences of that
              work, such that these allegations constitute an “occurrence”
              under the relevant insurance policy?

       (2)    Did the trial court err and abuse its discretion in holding that
              Indalex Inc. v. National Fire Union Ins. Co., 83 A.3d
              418 (Pa. Super. 2013), applies to this case on the grounds
              that Indalex established a rule that an insurer is obligated
              to defend its insured whenever the underlying complaint
              asserts a tort claim based on damages to persons or
              property other than the insured’s product?

       (3)    Did the trial court err and abuse its discretion in holding that
              Exclusions “b.” and “m.” of the applicable insurance policy
              do not preclude coverage?

       (4)    Did the trial court err and abuse its discretion in holding that
              [Westfield] has a duty to indemnify [JJD] in the event [JJD]
              is held liable in the underlying action?

____________________________________________


13The parties entered into a joint stipulation to consolidate these appeals.
See Pa.R.A.P. 513; Joint Stipulation to Consolidate Appeals, 6/9/17.



                                           -7-
J-A01004-18



Appellant’s Brief, at 5-6.

        Our scope and standard of review of an order granting summary

judgment14 of an insured’s coverage is well-settled:

        An appellate court may reverse the grant of a motion for summary
        judgment if there has been an error of law or an abuse of
        discretion. Since the issue as to whether there are no genuine
        issues as to any material fact presents a question of law, our
        standard of review is de novo; thus, we need not defer to the
        determinations made by the lower tribunals. Our scope of review,
        to the extent necessary to resolve the legal question before us, is
____________________________________________


14   We note that:

        Once a motion for summary judgment is made and is properly
        supported, however, the non-moving party may not simply rest
        upon the mere allegations or denials in his or her pleadings. Pa.
        R. Civ. P. 1035(d). In such a case, Rule 1035(d) requires that by
        affidavits or as otherwise provided in this rule, the non-movant
        must set forth specific facts showing that there is a genuine issue
        for trial. The purpose of Rule 1035(d) is “‘to assure that the motion
        for summary judgment may “pierce the pleading and to require
        the opposing party to disclose the facts of his claim or defense.’”
        Thus, once the motion for summary judgment has been properly
        supported, the burden is upon the non-movant to disclose
        evidence that is the basis for his or her argument resisting
        summary judgment.

Samarin v. GAF Corp., 571 A.2d 398, 402 (Pa. Super. 1989) (emphasis in

original) (citations omitted). Moreover, a motion for summary judgment may

properly be granted only:

        if the pleadings, depositions, answers to interrogatories, and
        admissions on file, together with the affidavits, if any, show that
        there is no genuine issue as to any material fact and that the
        moving party is entitled to judgment as a matter of law.

Pa.R.C.P. 1035(b).



                                           -8-
J-A01004-18


      plenary. We must view the record in the light most favorable to
      the non-moving party, and all doubts as to the existence of a
      genuine issue of material fact must be resolved against the
      moving party.

Chanceford Aviation Properties, LLP. V. Chanceford Towp. Bd. of

Supervisors, 923 A.2d 1099, 1103 (Pa. 2007) (internal citations omitted).

             When interpreting an insurance policy, we first look to the
      terms of the policy. “When the language of the policy is clear and
      unambiguous, we must give effect to that language.” Donegal
      Mut. Ins. Co. v. Baumhammers, []938 A.2d 286, 290 (Pa.
      2007). “However, ‘when a provision in the policy is ambiguous,
      the policy is to be construed in favor of the insured[.]’” . . . Also,
      we do not treat the words in the policy as mere surplusage and, if
      at all possible, we construe the policy in a manner that gives effect
      to all of the policy’s language. Teno v. State Farm Ins. Co., 716
      A.2d 626, 631 (Pa. Super. 1998)[.]

      We then compare the terms of the policy to the allegations in the
      underlying complaint. “It is well established that an insurer’s
      duties under an insurance policy are triggered by the language
      of the complaint against the insured.”            In determining
      whether an insurer’s duties are triggered, the factual allegations
      in the underlying complaint are taken as true and liberally
      construed in favor of the insured. “It does not matter if in reality
      the facts are completely groundless, false or fraudulent. It is the
      face of the complaint and not the truth of the facts alleged
      therein[.]” D’Auria v. Zurich Ins. Co., [] 507 A.2d 857, 859
      (Pa. Super. 1986).

Indalex Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 83 A.3d 418,

420-21 (Pa. Super. 2013) (headnotes, citations and quotations omitted)

(emphasis added).

      “The obligation of the insured to defend an action is “fixed solely by the

allegations in the underlying complaint.” Erie Ins. Exchange v. Lobenthal,

114 A.3d 832, 836 (Pa. Super. 2015).        Finally, the insurer “is required to

accept all of the allegations contained in the third party’s complaint as true


                                      -9-
J-A01004-18



and provide a defense if there is a chance that the injury alleged could

potentially fall within the scope of the policy.” Selective Way Ins. Co. v.

Hosp. Grp. Services, Inc., 119 A.3d 1035, 1046 (Pa. Super. 2015). “[T]he

duty to defend is not limited to meritorious actions; it even extends to actions

that are groundless, false, or fraudulent as long as there exists the possibility

that the allegations implicate coverage.” Am. & Foreign Ins. Co., 2 A.3d

526, 541 (Pa. 2010) (citations and quotation marks omitted). “The duty to

defend persists until an insurer can limit the claims such that coverage is

impossible.” Lexington Ins. Co. v. Charter Oak Fire Ins. Co., 81 A.3d

903, 911 (Pa. Super. 2013) (emphasis omitted).

      Westfield claims that JJD did not prove that it was entitled to coverage

under the parties’ policy because the underlying claim stems from JJD’s faulty

or defective performance of its contractual work with Robson. Accordingly,

Westfield contends that the damage does not constitute an “occurrence” under

the policy, especially where the claim has been recast as one in tort.

      The parties’ CGL policy provides, in relevant part:

      SECTION I – COVERAGES

         COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
         LIABILITY

         1. Insuring Agreement

         a. We will pay those sums that the insured becomes legally
         obligated to pay as damages because of “bodily injury” or
         “property damage” to which this insurance applies. We will
         have the right and duty to defend the insured against any
         “suit” seeking those damages. However, we will have no
         duty to defend the insured against any “suit” seeking

                                     - 10 -
J-A01004-18


       damages for “bodily injury” or “property damage” to which
       this insurance does not apply. We may, at our discretion,
       investigate any “occurrence” and settle any claim or “suit”
       that may result.

       b. This insurance applies to “bodily injury” and “property
       damage” only if:

          (1) The “bodily injury” or “property damage” is caused
          by an “occurrence” that takes place in the "coverage
          territory;”

SECTION V - DEFINITIONS

     8. “Impaired property” means tangible property, other than "your
     product" or "your work," that cannot be used or is less useful
     because:

       a. It incorporates “your product” or “your work” that is
       known or thought to be defective, deficient, inadequate or
       dangerous;

       b. You have failed to fulfill the terms of a contract or
       agreement; if such property can be restored to use by the
       repair, replacement, adjustment or removal of “your
       product’" or “your work;” or your fulfilling the terms of the
       contract or agreement.

     17. “Property damage” means:

       a. Physical injury to tangible property, including all resulting
       loss of use of that property. All such loss of use shall be
       deemed to occur at the time of the physical injury that
       caused it; or

       b. Loss of use of tangible property that is not physically
       injured. All such loss of use shall be deemed to occur at the
       time of the “occurrence” that caused it.

     22. “Your work”

       a. Means:

          (1) Work or operations performed by you or on your
          behalf and

          (2) Materials, parts or equipment furnished in connection
          with such work or operations.

                                   - 11 -
J-A01004-18


        b. “Your work” includes:

           (1) Warranties or representations made at any time with
           respect to the fitness, quality, durability, performance or
           use of “your work;” and

           (2) The providing of or failure to provide warnings or
           instructions.

Finally, the policy defines occurrence as “an accident including continuous or

repeated exposure to substantially the same general harmful conditions.”

     The policy also contains the relevant exclusions:

     b. Contractual Liability

        “Bodily injury” or “property damage” for which the insured
        is obligated to pay damages by reason of the assumption of
        liability in a contract or agreement.

                                   *     *      *

     m. Damage to Impaired Property or Property Not Physically
     Injured

        (1) A defect, deficiency, inadequacy or dangerous condition
        in “your product” or “your work;” or

        (2) A delay or failure by you or anyone acting on your behalf
        to perform a contract or agreement in accordance with its
        term.

Westfield Commercial General Liability Policy No. CWP5177101, 3/20/12.

     General liability insurance policies are intended to provide coverage

where the insured’s product or work causes personal injury or damage to the

person or property of another. Ryan Homes Inc. v. Home Indem. Co., 647

A.2d 939 (Pa. Super. 1994). “Provisions of a general liability policy provide

coverage . . . if the insured work or product actively malfunctions, causing

injury to an individual or damage to another’s property.”   Id. at 942. These


                                       - 12 -
J-A01004-18



types of insurance policies involve risks that are limited in nature; they are

not the equivalent of a performance bond on the part of the insurer. Snyder

Heating Co. v Pennsylvania Mfrs.’ Ass’n Ins. Co., 715 A.2d 48

      In Kvaerner Metals Div. of Snaerner U.S., Inc. v. Commercial

Union Ins. Co., 908 A.2d at 888 (Pa. 2006), our Supreme Court stated:

      The risk intended to be insured [by commercial general liability
      policies] is the possibility that the goods, products or work of the
      insured, once relinquished and completed, will cause bodily injury
      or damage to property other than to the completed work itself and
      for which the insured by [sic] be found liable. The insured, as a
      source of goods or services, may be liable as a matter of contract
      law to make good on products or work which is defective or
      otherwise unsuitable because it is lacking in some capacity. This
      may even extend to an obligation to completely replace or rebuild
      the deficient work or product. This liability, however, is not what
      the coverages in question are designed to protect against. The
      coverage is for tort liability for physical damages to others
      and not for contractual liability of the insured for economic
      loss because the product or completed work is not that for
      which the damaged person bargained.

Id. at 899 n.10 (citation omitted) (emphasis added). Kravener held that a

third party’s complaint, alleging only faulty workmanship and damage to the

insured’s work product, does not trigger coverage under a standard CGL policy

where the underlying complaint contained claims for breach of contract and

breach of warranty.

      It is well-settled that it is the nature of the allegations themselves, not

the particular cause of action that is pled in the complaint that determines

whether coverage has been triggered. Mutual Benefit Ins. Co. v. Haver,

725 A.2d 743, (Pa. 1999).     Thus, while the Authority’s complaint included



                                     - 13 -
J-A01004-18



breach of contract, negligence, and declaratory judgment counts against

Robson, the complaint alleges that a “workmanship defect on Robson’s part”

caused the ultimate damage to the digester tank.           Authority Complaint,

10/7/14, at ¶¶ 46-47, 78-103.       Specifically, the complaint alleges that an

inspection as well as photographic evidence show the defect was in

contravention of the construction drawings that indicated “a need to confine

the sealant material to the annular space.” Id. at ¶ 46.

      With regard to the allegations in the joinder complaint filed by Robson

against JJD and the other additional defendants, Robson claims that under the

Robson-JJD subcontract, JJD “was obligated to perform its work in a good and

workmanlike manner and in full compliance with the plans and specifications

under the [Robson-Authority] contract.” Joinder Complaint, 10/8/14, at ¶ 13.

Moreover, the joinder complaint alleges that if the foam insulation JJD installed

was installed “contrary to the applicable plans and specifications or in an

otherwise defective, deficient or unworkmanlike manner, then JJD is solely

liable to [the Authority] on such claim, and/or liable to Robson on such claim

for breach of contract and/or jointly and severally liable with Robson on such

claim.” Id. at ¶ 15. Finally, the joinder complaint premises Robson’s other

counts against JJD on “carelessly or negligently handl[ing] and installing” the

foam. Id. at ¶¶ 18, 21.

      Here, the trial court concluded that Westfield did not have a duty to

defend either the breach of contract or the breach of warranty claims in the

joinder complaint since the claims were premised upon faulty workmanship,

                                     - 14 -
J-A01004-18



which does not constitute an “occurrence” under the parties’ policy.

Kvaerner, supra.      However, the court found that the language in the

Authority’s complaint and the joinder complaint regarding property damage

that “occurred as a result of conduct outside of the scope of the [Authority’s

contract with Robson] and JJD’s Subcontract[,]” could be considered an

“occurrence” under the policy, which could potentially fall within the policy’s

coverage.   Simply put, the trial court found that Westfield has a duty to

defend, and potentially indemnify, Robson where it “carelessly allowed foam

insulation to enter the digester [t]ank.” Trial Court Opinion, at 16.

      The trial court’s opinion relies heavily upon Indalex Inc. v. National

Union Fire Ins. Co., 83 A.3d 418 (Pa. Super. 2013), to conclude that

Westfield had a duty to defend and a potential duty to indemnify JJD under

the parties’ insurance policy. In Indalex, the trial court granted summary

judgment in favor of Appellee-Insurer, National Union, in a coverage dispute

involving multiple out-of-state lawsuits filed by homeowners and property

owners against Appellants-Insureds when water leakage caused physical

damage to their homes (e.g., mold and cracked walls), as well as personal

injury. The lawsuits claimed that the damage was a result of the defective

design or manufacturing of appellants’ windows and doors. Appellants alleged

that they were entitled to coverage from National Union pursuant to a

commercial umbrella policy. National Union claimed that it was not required

to provide coverage because there was no “occurrence” under the parties’

policy that triggered coverage.

                                    - 15 -
J-A01004-18



       Characterizing the claims in the case as “product-liability based tort

claims,” our Court in Indalex reversed the trial court’s order entering

summary judgment in favor of National Union. Specifically, our Court found

that the issues framed in the case involved a bad product that could be

construed as an active malfunction and not merely bad workmanship. Id. at

424.    Moreover, because the National Union policy contained language

defining “occurrence” as property damage “neither expected nor intended

from the standpoint of the Insured,” the court concluded that damages such

as mold, from an insured’s subjective viewpoint, were “arguably not

expected.” Id. at 425 (emphasis added). In finding that National Union had

a duty to defend Appellants, our Court stated “[b]ecause the underlying

complaints alleged defective products resulting in property loss, to property

other than Appellants’ products, and personal injury, we conclude there was

an “occurrence.” Id at 426.

       Instantly, we are not dealing with a bad product as in Indalex; it has

never been alleged that the damage to the digester tank resulted from

defective design or bad product manufacturing or was the result of the foam

malfunctioning.   Moreover, the parties’ policy defines “occurrence” as “an

accident, including continuous or repeated exposure to substantially the same

general harmful conditions,” very different language than the subjective

language of occurrence used in the parties’ policy in Indalex.

       In Millers Capital Ins. Co. v. Gambone Bros. Dev. Co., 941 A.2d 706

(Pa Super. 2007), two groups of homeowners individually brought lawsuits

                                    - 16 -
J-A01004-18



against the builder, Gambone, for “faulty workmanship” that resulted in

property damage to their homes. Specifically, the homeowners’ “complaints

aver[red that] Gambone and/or its subcontractors built homes with defective

stucco exteriors, windows, and other artificial seals intended to protect the

home interiors from the elements. Both complaints were based on claims of

faulty workmanship.      Both complaints alleged that when the defects

manifested themselves, water damage resulted to the interior of the larger

product – in this case, the home interiors.”      Id. at 713.    The trial court

ultimately held that Gambone’s insurance company, Miller’s, had no duty to

defend or indemnify the builder against the homeowners’ actions, finding that

Kvaerner controlled the decision.     On appeal, our Court affirmed the trial

court, concluding that the damage to the homes, a result of faulty work, was

not an occurrence because it was not a fortuitous event triggering coverage.

The court stressed that in order to give effect to the policy’s language, keeping

in mind the doctrine of in pari material, “occurrence” could be defined in no

other way.

      The trial court concludes that the instant action involves, in addition to

faulty workmanship, tort claims against Robson and JJD for property damage

that may have occurred outside of the scope of the Authority’s contract with

Robson and the Robson-JJD subcontract. In fact, Gambone discussed this

exact scenario as follows:

      Conversely, the trial court’s disposition of these cases allows for
      the term “occurrence” to be read in pari material with the
      exception to the “your work” exclusion in situations where a

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       plaintiff sues a contractor for faulty work performed by a
       subcontractor. For example, a scenario could arise where a
       subcontractor confuses job orders and works on a part of a project
       on which it was not contracted to work; such a scenario would, in
       all likelihood, be considered an “occurrence” which would not be
       defined as faulty workmanship and would fit within the exception
       to the “your work” exclusion. We can also conjure up additional
       examples. A subcontractor could use materials on a job not
       contemplated by the contractual arrangement between the
       contractor and subcontractor. An error such as this could also be
       considered an “occurrence” and could fit within the exception to
       the “your work” exclusion.

Id. at 715-16.      While neither of these specific hypothetical scenarios are

present in the instant case, the complaint against the insured, JJD (or, the

joinder complaint), alleges negligent handling of the foam insulation and

careless/negligent installation of the foam not in accordance with the plans

and specifications of the project. Therefore, while the Authority’s complaint

was grounded in allegations of defective workmanship, Robson’s joinder

complaint does allege claims of negligent and careless work and work outside

of the scope of the parties’ contract. Under such circumstances where the

“complaint ‘might or might not’ fall within the policy’s coverage as an

“occurrence”, the insured is obligated to defend.”15 Am. & Foreign Ins. Co.,

supra at 541.

       Orders affirmed.




____________________________________________


15 Again, we recognize that Westfield’s duty to defend lasts only “until such
time as the claim[s are] confined to a recovery that the policy does not cover.”
Erie Ins. Exch. v. Transamerica Ins. Co., 533 A.2d 1363, 1368 (Pa 1987)
(citation omitted).

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J-A01004-18




Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date:2/9/18




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