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MCCORKLE v. FIREMEN'S INS. CO.

February 9, 1988

Robert W. McCorkle, Plaintiff,
v.
Firemen's Insurance Company of Newark, New Jersey, a corporation and Underwriters Adjusting Company, a corporation, Defendants



The opinion of the court was delivered by: ZIEGLER

 ZIEGLER, United States District Judge

 Plaintiff, Robert McCorkle, originally brought this action in state court to compel defendants, Firemen's Insurance Company of Newark, New Jersey and Underwriters Adjusting Company, to provide legal representation and insurance coverage for a claim brought against plaintiff. Defendants removed the action to this court. Both parties have moved for summary judgment.

 The facts are undisputed. Plaintiff, a cement contractor, purchased a liability insurance policy from defendants. A customer, dissatisfied with the work performed by plaintiff, filed suit for breach of contract and breach of implied warranties. Claiming that the insurance policy covered the damages sought, plaintiff requested that defendants defend him in that lawsuit; defendants refused because according to them, the damages sought were excluded by the policy.

 The parties dispute the meaning of the following exclusion of the insurance policy:

 
This insurance does not apply:
 
(a) to liability assumed by the insured under any contract or agreement except an incidental contract, but this exclusion does not apply to a warranty of fitness or quality or a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner.

 Plaintiff argues that exclusion (a) is ambiguous because it contradicts other exclusions in the insurance contract. As such, the policy should be read as covering the damages alleged in the lawsuit against plaintiff. Defendants, on the other hand, argue that the language of the exclusion is clear and unambiguous. Defendants argue that the exception to the exclusion deals only with that exclusion and that the warranties listed in the exception remain subject to the other exclusions in the policy which exclude coverage.

 In Pennsylvania, a court's duty is to determine the parties' intent as manifested in the language of the insurance contract. Eastern Associated Coal v. Aetna Casualty & Surety Co., 632 F.2d 1068 (3d Cir. 1980). Generally, the policy should be read as a whole. Delaware Construction Co. v. Safeguard Ins. Co., 209 Pa. Super. 502, 228 A.2d 15 (1967). "Where the language of the policy is clear and unambiguous it cannot be construed to mean otherwise that [sic] what it says." D'Allessandro v. Durham Life Ins. Co., 503 Pa. 33, 467 A.2d 1303 (1983). However, the court should not torture the language of the policy in order to create ambiguities; ambiguities should be avoided, if possible. Eastern, 632 F.2d at 1075. If the policy language is found to be ambiguous, the provisions must be resolved in favor of the insured. St. Paul Fire & Marine Ins. Co. v. U.S. Fire Ins. Co., 655 F.2d 521, 524 (3d Cir. 1981).

 The question we face is whether exclusion (a) is ambiguous when the policy is read as a whole. The Pennsylvania courts have not resolved the issue; thus, we must predict how they would decide the issue. Although both parties have cited cases from other states which have decided the issue, we have uncovered three Pennsylvania cases which aid our analysis.

 In Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563 (1983), the Pennsylvania Supreme Court held that an insurance policy, with exclusions identical to those here, did not cover the cost of replacing a portico which the plaintiff allegedly installed improperly. The court held that the policy was unambiguous. The parties there apparently did not raise plaintiff's argument here. However, in a concurring opinion, Justice Hutchinson, joined by Justice Flaherty, stated,

 
I believe a general liability policy protects the policyholder against claims made by third parties for injuries to their person or property resulting from the policyholder's negligence. A liability policy does not provide a guarantee of the policyholder's workmanship. Such a guarantee is not within its coverage. I do not believe a businessman of ordinary intellect could reasonably expect to obtain a defense against and indemnity for the cost of properly performing his contract or replacing his failed product under a liability ...

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