J-A07042-15


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ERIE INSURANCE EXCHANGE                        IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                        Appellee

                   v.

COSTA CONSTRUCTION, LLC; RONALD J.
SARBER AND LISA R. SARBER,
HUSBAND AND WIFE; JEFF SORICK
HEATING & COOLING,INC.;
PENNSYLVANIA SOIL & ROCK, INC.;
DANIEL F. MACKULIN T/D/B/A DANIEL F.
MACKULIN, GENERAL CONTRACTOR;
FORREST STEEL CORPORATION;
PATRICK MASONRY, INC.; CARMEN
BARONE & SONS, INC.; TIMOTHY
HANNO T/D/B/A CREATIVE CADD
CONCEPTS; ROBERT K. STAVER T/D/B/A
ROBERT STAVER ENGINEERING; AND
ELIZABETH EQUIPMENT SERVICES, INC.

APPEAL OF: COSTA CONSTRUCTION, LLC

                        Appellant                  No. 1516 WDA 2014


                  Appeal from the Order August 20, 2014
            In the Court of Common Pleas of Allegheny County
                   Civil Division at No(s): GD13-005171


BEFORE: BENDER, P.J.E., LAZARUS, J., and MUNDY, J.

MEMORANDUM BY MUNDY, J.:                               FILED MAY 8, 2015

     Appellant, Costa Construction, LLC, appeals from the August 20, 2014

order, which granted the motion for judgment on the pleadings filed by

Appellee, Erie Insurance Exchange (Erie). After careful review, we affirm.
J-A07042-15


       We recount the relevant factual and procedural history of this case as

follows. On December 30, 2002, Ronald J. Sarber and Lisa R. Sarber (the

Sarbers) contracted with Appellant for the construction of a single-family

residence. Erie’s Amended Complaint for Declaratory Judgment, 6/3/13, at

Exhibit A (Sarbers’ Amended Complaint), at ¶ 6. 1       Following Appellant’s

completion of the residence, the Sarbers moved in with their minor child.

Id. at Exhibit A, at ¶ 8. The Sarbers noticed defects in their home including,

inter alia, cracking in drywall, doors not closing properly, and uneven

flooring.   Id. at Exhibit A, at ¶¶ 9-10. The Sarbers filed a lawsuit against

Appellant at docket number GD-11-015426 on August 8, 2011.

       Erie insured Appellant under policy number Q48-0750425.2      Id. at ¶

29; Id. at Exhibit C (Commercial General Liability Form (hereinafter

Insurance Policy)). On March 21, 2013, Erie filed a complaint for declaratory

judgment against Appellant and several other entities at docket number GD-


____________________________________________


1
  For the purpose of resolving the appeal before this Court, we accept the
allegations in the underlying complaint filed by the Sarbers. However, our
review is limited to examining those allegations and Erie’s responsibility to
Appellant in light thereof. See Indalex Inc. v. Nat’l Union Fire Ins. Co.
of Pittsburgh, Pa, 83 A.3d 418, 421 (Pa. Super. 2013), appeal denied, 99
A.3d 926 (Pa. 2014). Accordingly, we make no judgment as to the merits of
the underlying lawsuit or the truth of the allegations on which the Sarbers’
lawsuit is based.
2
  The insurance policy became effective on December 7, 2004 and was
renewed annually through December 7, 2010. Erie’s Amended Complaint for
Declaratory Judgment, 6/3/13, at ¶ 29.



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13-005171.3       Thereafter, on April 11, 2013, the Sarbers filed a second

amended complaint in the underlying action against Appellant, which

incorporated the allegations set forth in their amended complaint.      As a

result, Erie filed an amended complaint, in its declaratory judgment lawsuit

subject to this appeal, on June 3, 2013, setting forth the additional

allegations the Sarbers averred against Appellant. Id. at ¶¶ 20-28. In the

amended complaint, Erie asserted that the claims set forth against Appellant

by the Sarbers are not covered by the insurance contract between Erie and

Appellant. Id. at ¶¶ 24-38. Therefore, Erie sought an order from the trial

court declaring that Erie does not have a duty to defend Appellant in the

Sarbers’ lawsuit and that Erie does not have a duty to indemnify Appellant

for any loss incurred by Appellant, resulting from said lawsuit.   Id. at 15.

On February 7, 2014, Appellant filed its answer and new matter to Erie’s

amended complaint.          Therein, Appellant requested that the trial court

dismiss Erie’s amended complaint for declaratory judgment with prejudice.



____________________________________________


3
   The Sarbers filed the underlying lawsuit naming Appellant and several
other parties related to the construction of their home as defendants. Erie
filed the subsequent lawsuit for declaratory judgment, from which this
appeal stems, naming the Sarbers and all defendants in the underlying
lawsuit as defendants. While the other defendants named in the instant
action filed responses to Erie’s pleadings and motion in the trial court,
Appellant and Erie are the only parties participating in the instant appeal.
Therefore, we discuss only the filings below germane to the instant appeal
and its participants.



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J-A07042-15


Appellant’s Answer and New Matter, 2/7/14, at 6-7 (unnumbered). Erie filed

its response to Appellant’s new matter on February 25, 2014.

       On June 16, 2014, Erie filed a motion for judgment on the pleadings.

The trial court scheduled argument on Erie’s motion for August 20, 2014.

Appellant filed a brief in opposition to the motion on August 13, 2014. On

August 20, 2014, the trial court granted Erie’s motion for judgment on the

pleadings, finding that Erie does not have a duty to defend Appellant or

indemnify Appellant in connection with the lawsuit filed by the Sarbers. Trial

Court Order, 8/20/14. On September 10, 2014, Appellant timely appealed. 4

       On appeal, Appellant raises the following issue for our review.

                    Under Pennsylvania law and jurisprudence
              construing liability insurance contracts, did the [t]rial
              [c]ourt error [sic] by granting [j]udgment on the
              [p]leadings for Erie [] declaratory judgment action
              that sought to terminate a duty to indemnify and
              defend its insured builder, [Appellant], in an
              underlying workmanship action if the underlying
              complaint lawsuit contains alternative allegations
              that the damages to the home may have been
              independently caused, in whole or in part, by the
              acts of additional defendant subcontractors acting in
              rogue or by mine subsidence?

       When considering the grant of a motion for judgment on the pleadings,

we adhere to the following standard of review.

              Entry of judgment on the pleadings is permitted
              under Pennsylvania Rule of Civil Procedure 1034,
____________________________________________


4
  Appellant and the trial court have complied with Pennsylvania Rule of
Appellate Procedure 1925.



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            which provides that “after the pleadings are closed,
            but within such time as not to unreasonably delay
            trial, any party may move for judgment on the
            pleadings.”   Pa.R.C.P. 1034(a).      A motion for
            judgment on the pleadings is similar to a demurrer.
            It may be entered when there is no disputed issues
            of fact[,] and the moving party is entitled to
            judgment as a matter of law.

            Appellate review of an order granting a motion for
            judgment on the pleadings is plenary. The appellate
            court will apply the same standard employed by the
            trial court.      A trial court must confine its
            consideration to the pleadings and relevant
            documents. The court must accept as true all well
            pleaded statements of fact, admissions, and any
            documents properly attached to the pleadings
            presented by the party against whom the motion is
            filed, considering only those facts which were
            specifically admitted.

            We will affirm the grant of such a motion only when
            the moving party’s right to succeed is certain and the
            case is so free from doubt that the trial would clearly
            be a fruitless exercise.

Sw. Energy Prod. Co. v. Forest Res., LLC., 83 A.3d 177, 185 (Pa. Super.

2013) (citation omitted), appeal denied, 96 A.3d 1029 (Pa. 2014).

      Appellant argues that the trial court erred in granting Erie’s motion for

judgment on the pleadings because facts could be developed that show that

the damage complained of was caused by “an insurable and non-excludable

‘occurrence.’”   Appellant’s Brief at 9.   In its motion for judgment on the

pleadings, Erie contended it has no duty to insure or indemnify Appellant

because the claims against Appellant, alleging faulty workmanship, faulty

repair, and damage to the residence, are not covered under the insurance


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J-A07042-15


policy. Motion for Judgment on the Pleadings, 6/16/14, at ¶¶ 1-4. The trial

court agreed with Erie and found that the allegations in the Sarbers’ lawsuit

against Appellant do not constitute an “occurrence,” thus Erie has no duty to

defend or indemnify Appellant under the insurance policy.         Trial Court

Opinion, 8/20/14, at 1-2. For the following reasons, we agree.

     We first note that “[t]he proper construction of a policy of insurance is

resolved as a matter of law in a declaratory judgment action.”      Erie Ins.

Exch. v. Lobenthal, --- A.3d ---, 2015 WL 1668183, *3 (Pa. Super. 2015).

The interpretation of an insurance policy is reviewed de novo, as it is a

question of law. Kvaerner Metals Div. of Kvaerner U.S., Inc. v.

Commercial Union Ins. Co., 908 A.2d 888, 897 (Pa. 2006).               “When

interpreting an insurance policy, we first look to the terms of the policy.”

Indalex, supra. When the policy language is clear and free of ambiguity,

“we must give effect to that language.” Id. (citation omitted). Further, “[i]t

is well established that an insurer’s duties under an insurance policy are

triggered by the language of the complaint against the insured.” Id. at 421,

quoting Kvaerner, supra at 896.        In ascertaining whether an insurer’s

duties are triggered under a policy, the allegations in the underlying

complaint are accepted as true and are construed in favor of the insured.

Id. Moreover, “[i]f an insurer does not have a duty to defend, it does not

have a duty to indemnify.”    Id. (citation omitted).   “The obligation of an

insurer to defend an action against the insured is fixed solely by the


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J-A07042-15


allegations in the underlying complaint.” Am. Nat’l Prop. and Cas. Cos. v.

Hearn, 93 A.3d 880, 884 (Pa. Super. 2014) (citation omitted). “As long as

a complaint alleges an injury which may be within the scope of the policy,

the insurer must defend its insured until the claim is confined to a recovery

the policy does not cover.” Id. (citation omitted).   Therefore, we proceed

to examine the terms of the policy to determine whether the allegations, as

asserted by the Sarbers in the underlying complaint, trigger Erie’s duty to

defend Appellant.

       The insurance policy provides that Erie will have the duty to defend

Appellant in any “suit” seeking damages because of “bodily injury” or

“property damage” to which the policy applies. Erie’s Amended Complaint

for Declaratory Judgment, 6/3/13, at Exhibit C (Insurance Policy), at 1.

Further, the insurance policy applies to cover such damages only if the

damages are the result of an “occurrence.” Id. at Exhibit C, at 1   The policy

defines “occurrence” as “an accident, including continuous or repeated

exposure to substantially the same general harmful conditions.” 5      Id. at


____________________________________________


5
 An amendment to the definition of “occurrence” applies to the December 7,
2009- December 7, 2010 policy period only. Erie’s Amended Complaint for
Declaratory Judgment, 6/3/13, at ¶ 33. It provides that work performed on
behalf of the insured may constitute an “occurrence” if other criteria are
met. Id. However, the only work relevant to this time frame are the
unsuccessful attempts at repair made by Appellant, not its subcontractors.
See generally id. at Exhibit A, at ¶¶ 1-131; id. at Exhibit B, at ¶¶ 1-9. The
amendment, therefore, has no effect on our analysis as it relates to the
(Footnote Continued Next Page)


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J-A07042-15


Exhibit C, at 11.        The insurance policy outlines several exclusions, the

incidence of which would not entitle Appellant to coverage under the policy.

Id. at Exhibit C, at 1-4.         In particular, the policy does not cover “‘bodily

injury’ or ‘property damage’ expected … from the standpoint of the insured;”

nor does the policy cover “‘property damage” to “impaired property”

resulting from “a defect, deficiency, inadequacy or dangerous condition in

‘your product’ or ‘your work.’” Id. at Exhibit C, 1, 4.

      The Sarbers’ second amended complaint alleges that the residence

that Appellant constructed “was built in a defective condition.”             Erie’s

Amended Complaint for Declaratory Judgment, 6/3/13, at Exhibit B (Sarbers’

Second Amended Complaint), at ¶ 4.                The second amended complaint

outlines specific examples of defective portions of the residence including,

inter alia, torn drywall, sloped floors, and cracks on various surfaces

throughout the residence.           Id. at Exhibit B, at ¶ 5a-5s.     The Sarbers

incorporated into their second amended complaint, paragraphs one through

131 of their amended complaint. Id. at Exhibit B, at ¶¶ 1-2. The Sarbers’

amended complaint alleges that the Sarbers noticed defects in their home,

and Appellant visited one year after its completion to address those defects.

Id. at Exhibit A, at ¶¶ 9-10. Appellant’s attempts at correcting the defects

were ineffective, and the “the cracks continued to widen[,] … the doors
                       _______________________
(Footnote Continued)

issue presented by Appellant, i.e. whether mine subsidence                      or
subcontractors caused the damage to the Sarbers’ residence.



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J-A07042-15


continued to stick[,] and the structure continued to shift.” Id. at Exhibit A,

at ¶ 15.    The Sarbers also allege in their amended complaint that after

Appellant installed a “cement footing” in the garage to remedy some of the

defects, “the walls throughout the home buckled and a number of doors

became immovable throughout the house.”           Id. at Exhibit A, at ¶ 17.

Relevant to Appellant’s issue are the following allegations.

            7. Paragraph 16, [ASSIGNMENT], of the Contract
            [between Appellant and Sarbers for the construction
            of the residence] provided that, “Contractor
            [Appellant] may subcontract portions of the work to
            subcontractors.” and JEFF SORICK HEATING &
            COOLING, INC. was retained by [Appellant] as his
            agent to install the heating and cooling system.

                                      ...

            18. Defendant, [Appellant], hired an Engineer firm
            … to assess an alternate cause of damage and …
            [the] findings were that the damage to the structure
            was a result of [m]ine [s]ubsidence with the
            exception of the buckling of the interior walls of the
            home, which was caused by Defendant [Appellant],
            jacking up the home.

                                       …

            20. Defendant, THE PHOENIX INSURANCE COMPANY,
            ONE OF THE TRAVELERS PROPERTY CASUALTY
            COMPANIES[,] dispatched their own Engineer and
            Claims Adjuster to investigate and assess the
            damages and causes thereof.

            21.   The Engineer for Defendant, THE PHOENIX
            INSURANCE COMPANY, ONE OF THE TRAVELERS
            PROPERTY CASUALTY COMPANIES[,]determined that
            the cause of damage was not that of [m]ine
            [s]ubsidence, but of deficient floor framing, and


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J-A07042-15


              inadequate compaction of the supporting soil done
              by the Defendant, [Appellant].

                                               …

              28. [The Sarbers] aver that some or all of the
              damage to their home may have been the result of
              mine subsidence.

Id. at Exhibit A, at ¶¶ 7, 18, 20-21, 28 (italics in original).

       Appellant contends that “[t]he Sarbers’ alternative claim of damage

due to unexpected mine subsidence entitles [Appellant] to the insurance

coverage[,]” as the mine subsidence can qualify as an “occurrence.”

Appellant’s Brief at 10-11.

       In Kvaerner, our Supreme Court interpreted what “occurrence”

means in the context of a commercial general liability policy, which provided

an identical definition of “occurrence” as the one used in the policy at issue

herein. Kvaerner, supra at 897-899. The Court determined that the use

of the word “accident” to define “occurrence” “implies a degree of fortuity

that is not present in a claim of faulty workmanship” and held, in order to

constitute an “occurrence,” the “accident” resulting in damage cannot be

based on allegations of faulty workmanship. Id. at 898-899.

       While paragraph 286 of the Sarbers’ amended complaint avers some of

the damage was the result of mine subsidence and paragraphs 18 and 20

____________________________________________


6
 We note paragraph 28 is an allegation included in count one of the Sarbers’
complaint alleging breach of contract against the Phoenix Insurance
(Footnote Continued Next Page)


                                          - 10 -
J-A07042-15


provide alternate allegations as to what extent, if any, mine subsidence

damaged the residence, Appellant fails to acknowledge that the Sarbers

claim it was the failure of Appellant to account for the condition of the land,

including the existence of mine subsidence, which led to the defects in their

home. Specifically, the Sarbers’ complaint alleges Appellant constructed the

home in a non-workmanlike fashion by “developing a poorly designed

construction plan and performing in a negligent manner in reference to the

requirements of the contract and the condition of the land.” Erie’s

Amended Complaint for Declaratory Judgment, 6/3/13, at Exhibit A, at ¶ 40d

(emphasis added).         They further allege faulty workmanship by Appellant’s

failure to “take proper measurements and engage in proper planning in

erecting the residence” and by Appellant “installing a wood beam with steel

support without inspection and proper analysis and claiming there was no

mine subsidence.”            Id. at Exhibit A, at ¶ 40f-40g (emphasis added).

Notably, the Sarbers allege in the underlying suit that Appellant “knew or

should have known of the intimate details of the deficient soil conditions of

the lot … but failed to disclose the same … and also failed to undertake



                       _______________________
(Footnote Continued)

Company and is not included in the allegations against Appellant. Erie’s
Amended Complaint for Declaratory Judgment, 6/3/13, at Exhibit A, at ¶ 28.
However, consistent with our plenary review, we consider all well-pleaded
statements of fact in deciding if judgment on the pleadings was proper. See
Sw. Energy Prod. Co., supra.



                                           - 11 -
J-A07042-15


adequate measures with respect to addressing aforesaid conditions of the

soil and lot.” Id. at Exhibit A, at ¶ 42.

      Applying the above principles, we conclude the language of the

complaint does not trigger a responsibility for Erie to defend Appellant under

their insurance policy. See Indalex, supra; Am. Nat’l Prop., supra. The

Sarbers’ complaint alleges several specific instances of faulty workmanship

evidenced by physical defects in the home. See generally Erie’s Amended

Complaint for Declaratory Judgment, 6/3/13, at Exhibit A, ¶¶ 1-131; id. at

Exhibit B, at ¶¶1-9.    Further, the complaint unambiguously attributes the

defects to Appellant’s non-workmanlike construction as well as the failure to

construct the home in light of and with consideration to the particular

characteristics of the lot on which the residence was constructed, i.e.,

accounting for any mine subsidence that existed.   Id. at Exhibit A, at ¶¶ 40-

44. Accordingly, we conclude the allegations in the underlying complaint do

not entitle Appellant to Erie’s coverage under the insurance policy, and the

trial court properly granted judgment on the pleadings regarding Erie’s

obligation to Appellant with respect to the allegations of mine subsidence.

       Appellant also asserts that judgment on the pleadings was premature

because “the Sarbers’ underlying lawsuit indicates that some or all of the

damage may have been caused by the actions of outside contractors and/or

subcontractors[,]” which could constitute an “excludable occurrence” under

the insurance policy. Id. at 12. We disagree.


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J-A07042-15


      As noted above, the insurance policy outlines several exclusions to

coverage including defects in “your work.”       The insurance policy defines

“your work” as follows.

              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.

                   b. 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 or failure to provide
                          warnings or instructions.

Erie’s Amended Complaint for Declaratory Judgment, 6/3/13, at Exhibit C, at

12 (emphasis added).          Moreover, the underlying contract permitted

Appellant to assign work to subcontractors to complete on Appellant’s

behalf. Id. at Exhibit A, ¶ 7. The policy language is unambiguous and has

the practical effect of equating work performed by subcontractors, on behalf

of Appellant, as Appellant’s work.      Accordingly, faulty or defective work

performed by subcontractors does not entitle Appellant to coverage under

the policy.




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J-A07042-15


     Appellant attempts to characterize the work of its subcontractors as an

occurrence, entitling it to Erie’s coverage.    Appellant’s Brief at 12.    In

support of this position, Appellant cites to this Court’s decision in Millers

Capital Ins. Co. v. Gambone Bros. Dev. Co. Inc., 941 A.2d 706 (Pa.

Super. 2007), appeal denied, 963 A.2d 471 (Pa. 2008). Appellant’s Brief at

12-14.    In Millers, this Court relied on Kvaerner and concluded,

“‘[o]ccurrence’ refers to ‘accidental’ phenomena—not claims predicated on

allegations of faulty workmanship.”   Millers, supra at 718.     Further, the

Miller Court rejected, as a contradiction, permitting claims of faulty

workmanship by subcontractors to proceed because such is not an

“‘occurrence’ as a matter of plain language and judicial construction.” Id. at

716, citing Kvaerner, supra at 899.      While Millers, in dicta, speculated

that there could be unique, factual circumstances where a subcontractor’s

work could be an “occurrence” and provided examples of such, we agree

with the trial court that there is no allegation in the underlying complaint

that “such facts are at issue in this case.”      Trial Court Opinion, at 5.

Therefore, Appellant is not entitled to coverage, as the subcontractors’ work

is not an “occurrence” under the insurance policy.

     Based on the foregoing discussion, we conclude the trial court properly

granted judgment on the pleadings in favor of Erie, as the allegations in the

underlying complaint do not give rise to a duty to defend Appellant.       See

Sw. Energy Prod. Co., supra; Indalex, supra; American Nat’l Prop.,


                                    - 14 -
J-A07042-15


supra. Likewise, because Erie does not have a duty to defend Appellant, it

does not have a duty to indemnify Appellant for costs incurred in connection

with the underlying lawsuit.   See Indalex, supra.    Accordingly, the trial

court’s August 20, 2014 order is affirmed.

     Order affirmed.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 5/8/2015




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