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Bituminous Casualty Corp. v. Gleim

February 24, 2009

BITUMINOUS CASUALTY CORPORATION, PLAINTIFF
v.
JOHN W. GLEIM, JR., INC. AND CROSSGATES, INC., DEFENDANTS



The opinion of the court was delivered by: Christopher C. Conner United States District Judge

(Judge Conner)

MEMORANDUM

This is an insurance declaratory judgment action filed by plaintiff Bituminous Casualty Corporation ("Bituminous"). Bituminous seeks a declaration that it owes no duty to defend or indemnify defendant John W. Gleim, Jr., Incorporated ("Gleim") in an arbitration proceeding instituted by defendant Crossgates, Incorporated ("Crossgates"). Presently before the court is Bituminous' motion for summary judgment. (Doc. 17.) For the reasons that follow, the motion will be granted.

I. Statement of Facts

Gleim is a construction company that contracted with Crossgates in 1998 to perform site improvements at a manufacturing facility located in Dauphin County, Pennsylvania. (See Doc. 1 ¶ 10; Doc. 5 ¶ 10; Doc. 23, Ex. 1 ¶ 2.) The work was completed in 1999. (Doc. 1 ¶ 11; Doc. 5 ¶ 11.) Three years later, on June 30, 2002, Gleim purchased a general liability insurance policy ("the Policy") from Bituminous. (Doc. 1 ¶ 4; Doc. 5 ¶ 4.) Gleim renewed the Policy annually through June 30, 2006.

(Doc. 1 ¶ 4; Doc. 5 ¶ 4.) The Policy obligated Bituminous to "pay those sums that [Gleim] becomes liable to pay as damages because of . . . 'property damage'" caused by an "occurrence." (Doc. 1, Ex. 1 at CG 00 01 10 01.) In October 2006, Crossgates filed a demand for arbitration, alleging that Gleim "deceptively and fraudulently covered up . . . substandard earthwork [in 1998 and 1999] with an intent that it not be discovered by Crossgates." (Doc. 1, Ex. 5 ¶ 20 (emphasis added)). Bituminous claims that it is not obligated under the Policy to defend Gleim in this arbitration action. The court will provide a brief background of Crossgates' demand before analyzing Bituminous' position in the above-captioned matter.

A. The Crossgates Demand*fn1

The 1998 contract obligated Gleim to restore the earthwork surrounding the manufacturing facility owned by Crossgates. (See Doc. 23, Ex. 1 ¶ 2.) Specifically, Gleim was responsible for "Site Improvements including clearing, erosion and sediment control, earthwork, [and] utilities." (Id. ¶ 16.) The contract also included a series of plans and specifications, intended to guide the manner in which Gleim conducted its work. (See id. ¶¶ 16, 20, 25.) Crossgates claims that the plans and specifications were ignored, and that Gleim not only failed to compact properly the earthwork at the site, but also intentionally concealed its deficient performance, causing Crossgates to remain ignorant of the earthwork's defective condition for several years. (See id. ¶¶ 20-21.) In 2004, Crossgates received a report from an independent architectural firm indicating that the facility's foundation and parking lot were cracking. (Id. ¶ 21.) Repair costs are estimated to exceed $1 million. (Id. ¶ 42.)

Crossgates filed its demand for arbitration in October 2006.*fn2 The demand avers that "Gleim commenced earthwork operations, but deceptively concealed from Crossgates the fact that Gleim did not follow the plan and specifications." (Id. ¶ 20.) Gleim is accused of "conceal[ing] its shortcuts" and "cover[ing] up [its] substandard earthwork with an intent that it not be discovered." (Id. ¶¶ 37, 40.) Finally, Crossgates claims that "Gleim is responsible on account of its fraudulent behavior" for the repair costs incurred to correct its deficient performance. (Id. ¶ 40.)

B. The Above-Captioned Action

The overarching dispute in the instant matter centers upon the Policy's liability coverage for "property damage." The coverage provision reads, in pertinent part:

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. . . .

[W]e will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which ...


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