Traub Lieberman Straus & Shrewsberry LLP | November 26, 2014
On October 14, 2014, the United States District Court for the District of Pennsylvania granted a motion for summary judgment filed by State Farm Fire and Casualty Co. (“State Farm”), seeking a declaration that it had no duty to defend or indemnify its insured, Patrick McDermott, d/b/a Patrick McDermott Plastering (“McDermott”), in connection with an underlying construction defect suit.
In State Farm Fire and Casualty Co. v. Patrick McDermott, d/b/a Patrick McDermott Plastering, Civil Action No. 11-5508S, McDermott entered into a contract with PulteGroup to install stucco, plaster, and window and door flashing on 299 homes in a development known as Traditions at Washington Crossing. PulteGroup filed a complaint against McDermott for negligence and breach of contract alleging that McDermott failed to install a drip cap under the patio doors, improperly fastened the ledger board of the deck to the homes, failed to properly install felt paper under the soffit or between the back walls and the fascia, failed to properly flash under the window flanges, failed to use felt paper behind the cladding under the header, etc. PulteGroup alleged that these defects resulted in water intrusion and accompanying damages.
In an effort to trigger coverage, McDermott pointed to the negligence claims in the underlying complaint and argued that they were “based upon the ‘inadvertent’ and “unintentional’ results of McDermott having paid inadequate attention to the installation process.” The court disagreed, and held that the claims against McDermott were for faulty workmanship and did not constitute an “occurrence” within the meaning of the commercial general liability (CGL) policy.
In reaching its decision, the Court focused on the alleged terms of the contract between McDermott and PulteGroup which, among other things, provided that McDermott would perform the work in a “workmanship like manner,” and that McDermott agreed that his stucco, would be uniform in appearance and strong; free from chipping, falling, flaking, and separating for a period of five years.
Even though cast as claims of negligence, the court found that the claims did not constitute an “accident” (they did not possess the degree of fortuity contemplated by the ordinary definition of accident or its common judicial construction in this context) and, therefore, did not constitute an “occurrence: within the meaning of the Policy.
This holding is consistent with prior Pennsylvania law where the courts have held that faulty workmanship does not constitute “accident” and therefore is not an “occurrence” within the meaning of a commercial general liability policy.