Pennsylvania Court Nixes Coverage For Construction Defect
When it comes to coverage for construction defects in Pennsylvania, policyholders have been confronted with a kryptonite that can be described in two words: Kvaerner and Gambone. Kvaerner says that faulty workmanship is not an “occurrence.” While that’s not an unusual holding in the world of CD coverage, Gambone goes a step further, and says that foreseeable consequential damages are also not an “occurrence.” That second step is not often taken by courts that have confronted the issue.

In Peerless Insurance Co. v. Manown Builders, No. 15-281 (W.D. Pa. June 30, 2016), the Pennsylvania federal court issued a decision that won’t surprise anyone familiar with the plight of Pennsylvania policyholders seeking coverage for construction defect: “In this case, it is undisputed that the claims in the underlying action ‘are based upon Manown’s alleged failure to properly construct and/or erect the resident dwelling,’ including failing to properly construct, erect, and/or install pillars, floors, and ceilings. The underlying plaintiffs’ complaint further alleges that Manown failed to use appropriate materials, follow specifications, and follow uniform building codes when constructing of the home. The underlying plaintiffs’ claims against Manown are therefore unequivocally based upon faulty workmanship of the home itself. As such, Kvaerner and its progeny dictate that an ‘occurrence,’ as defined in the policy, has not been alleged in the four-corners of the underlying complaint because faulty workmanship in the construction of a home is not, as a matter of law, an ‘accident.’ See Gambone, 941 A.2d at 713.”

Court Holds That “Such Other Relief” Sought In Complaint Is “Damages” To Trigger Defense
Most courts do not treat a catch-all demand, in a Wherefore clause, for “such other relief as the court deems just and equitable,” or along those lines, as a claim for “damages.” This issue usually arises if there is no specific claim for “damages” -- and only this generic catch-all prayer for relief could trigger a defense. But Keeley v. Travelers Home and Marine Insurance Co., No. C16-0422 (W.D. Wash. June 21, 2016) said the opposite, holding that a complaint’s demand for “injunctive relief, attorney’s fees and such other and further relief as the court deems appropriate” alleged damages. It reached its decision by relying on case law holding that the catch-all allegation of “such additional relief” would permit an award of monetary damages.