On or about July 6, 1953, the ceiling of a fur vault in the premises leased by Germantown Fur, Inc., collapsed due to the falling of the debris upon the roof during the demolition work.
The owners of the adjoining building (claiming damage to the interior of the building) and the Germantown Fur, Inc. (claiming damage to its fur storage vault and furs stored in it) both instituted trespass actions in the fall of 1953 against the plaintiff in the state courts. The defendant refused to defend the actions, admitting responsibility only for any damage to the exterior roof surface which occurred while plaintiff was on the job, but not for the falling of the ceiling of the fur vault and other interior damage (including damage to fur coats) which occurred after plaintiff had left the job.
After waiver by defendant of paragraph 11 of the policy, making the entry of final judgment a prerequisite to liability under the policy, plaintiff settled both suits for $ 2,150 to the owners of the adjoining building and $ 22,500 to the fur company, and brings this action to recover these latter amounts, plus attorney's fees of $ 4,250 and other costs of $ 982.55, in the total amount of $ 29,882.55.
In construing the defendant's liability under the policy, the law of Pennsylvania governs.
The insuring agreement in the policy covering property damage liability contains this language:
'Liberty Mutual Insurance Company agrees with the insured * * *
'Coverage B -- Property Damage Liability
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property * * * caused by accident.'
Since the insured became 'legally obligated to pay' the above-mentioned $ 29,882.55, as those words are used in the above clause if the falling of the debris on the planks and the roof is an 'accident,' as that term is used in the above-quoted clause, and such accident caused the damage, the two principal questions for decision are:
1. Was the falling of the debris on the roof and the planks an 'accident' under the terms of the policy?
2. Assuming question 1 is answered in the affirmative, do any of the exclusions or conditions in the policy relieve the defendant of liability?
I. Falling of the Debris on the Roof
The falling of the debris on the roof and the planks in the quantity, over the area, and with the force involved in this case was an 'accident' within the meaning of that word as construed by the Pennsylvania cases. The Pennsylvania Supreme Court has stated that 'that which distinguishes an accident from other events is the element of being unforeseen; an accident is an occurrence which proceeds from an unknown cause, or which is an unusual effect of a known cause, and hence unexpected and unforeseen.' Lacey v. Washburn & Williams Co., 1933, 309 Pa. 574, 578, 164 A. 724, 725.
Although the placing of the planks on the roof of the adjoining building indicates that plaintiff anticipated that some debris would fall near the wall of the building being demolished, the fact that these planks were laid flat on the roof without any support from the front and rear walls of this building, that debris fell on the roof beyond the area covered by the planks, and that the debris had to be removed from the roof from time to time shows the unexpected and unforeseen consequences of the removal of this wall by the clam bucket.
The stipulations (paragraphs 3 of 2/15/57 and 5 of 4/1/57) make clear that the falling of this debris caused the collapse of the ceiling in the fur vault and the resulting damage to the furs.
The Pennsylvania cases also make clear that the accident need not be the sole cause of, nor need it occur contemporaneously with, the 'injury to or destruction of property.' See Trexler Lumber Co. v. Allemannia Fire Ins. Co., 1927, 289 Pa. 13, 18, 136 A. 856; Neely v. Provident Life & Accident Insurance Co., 1936, 322 Pa. 417, 185 A. 784; Dale v. Standard Accident Ins. Co., 1932, 307 Pa. 398, 161 A. 307; Marks v. Lumbermen's Ins. Co., 1946, 160 Pa.Super. 66, 68, 49 A.2d 855; cf. Denham v. La Salle-Madison Hotel Co., 7 Cir., 1948, 168 F.2d 576, 582-583; Hyer v. Inter-Insurance Exchange, 1926, 77 Cal.App. 343, 246 P. 1055.
II. Exclusions and Conditions of the Policy
contains this paragraph 2:
'2. Exclusion. This endorsement does not apply to accidents which do not occur during the course of the operations.'
Independent of the falling of the debris on the roof, it seems clear that the unexpected and unforeseen falling of the ceiling of the fur vault in July, after operations had been completed on May 15, was not covered by the terms of the policy in view of the above-quoted paragraph of Rider 21.
Where it is clear that there is no coverage under a policy, the Pennsylvania cases make clear that an insurer will not be held liable for risks that it has not assumed. See Allen v. Insurance Co. of North America, 1954, 175 Pa.Super. 281, 104 A.2d 191; Skelly v. Fidelity & Cas. Co., 1933, 313 Pa. 202, 169 A. 78; Ehrlich v. United States Fidelity & Guaranty Co., 1947, 356 Pa. 417, 51 A.2d 794. However, as explained above, the falling of the debris in quantity over the area, and with the force involved during the course of operations, was an 'accident' under the Pennsylvania cases, and it is admitted that it caused this damage. This exclusion does not say that the 'injury to or destruction of property,' quoted from the first page of the policy at page 3 above, is not covered by the policy if it also can be described as an accident.
Under these circumstances, defendant has not sustained its burden of showing the application of this exclusion clause.
It has been consistently recognized by the Pennsylvania courts that defendant has the burden of proving that an exclusionary provision in the policy is applicable. Armon v. Aetna Casualty & Surety Co., 1952, 369 Pa. 465, 469, 87 A.2d 302; Barnes v. North American Acc. Ins. Co., 1954, 176 Pa.Super. 294, 107 A.2d 196; Richman v. Home Insurance Co. of N.Y., 1953, 172 Pa.Super. 383, 94 A.2d 164. See, also, Al Berman, Inc., v. Aetna Casualty & Surety Co., 3 Cir., 1954, 216 F.2d 626.
Endorsement Serial No. 19, 'Exclusion of Property Damage Liability Arising From Certain Collapse Hazards (Superseding Endorsement No. 2),' reads as follows:
'It is agreed that such insurance as is afforded by the policy for Property Damage Liability * * * does not apply to injury to * * * property arising directly or indirectly from * * * structural injury to any building or structure due to * * * demolition of any building or structure * * *, except while such operations are being performed for the named insured by independent contractors.'
The plaintiff is not excluded from coverage by this endorsement since 'the injury to property' here involved, i.e., the damage to the roof of the abutting building and the collapse of the ceiling of the fur vault, did not arise, directly or indirectly, from 'structural injury to any building or structure.' These damages do not require extensive alterations which materially affect the basic structure of the building, its characteristic appearance, or the use that can be made of it, and were capable of repair with no structural injury.
It is clear, both from the 'X'
opposite aggregate products in Item 3 and from Endorsement Serial 11,
that no coverage was provided for 'products hazard,' as those words are defined in this policy, so that no consideration need be given to the terms of condition 3(c).
Any application of Exclusion (d)(3) to this situation would make its meaning so ambiguous that reliance upon it by defendant is precluded by the well recognized Pennsylvania rule construing against the insurer any ambiguous provisions of a contract of insurance. See Western Ins. Co. v. Cropper, 1859, 32 Pa. 351; Snader v. London & Lancashire Indemnity Co., 1949, 360 Pa. 548, 62 A.2d 835.
And now, May 7, 1957, it is ordered that judgment be entered in favor of the plaintiff, Robert Hawthorne, Inc., and against the defendant, Liberty Mutual Insurance Company, in the amount of $ 29,882.55, with costs.