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Toll Bros. Inc v. Century Surety Company

June 24, 2011

TOLL BROS. INC., PLAINTIFF,
v.
CENTURY SURETY COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Tucker J.,

MEMORANDUM OPINION

June, ___2011

The parties have fully briefed cross-motions for summary judgment. Presently before the Court is Plaintiff, Toll Bros. Inc.'s Motion For Partial Summary Judgment (Doc. 41); Defendant Essex Insurance Company's Response in Opposition thereto (Doc. 45); Defendant Essex Insurance Company's Motion For Summary Judgment (Doc. 40) and Plaintiff, Toll Bros. Inc's Response in Opposition thereto (Doc. 44). Upon careful consideration of the parties' submissions and exhibits thereto and for the reasons set forth below the Court will deny the motions without prejudice.

I. FACTUAL BACKGROUND

The above-captioned action is procedurally complex and in fact stems from, and is related to, several other actions filed in both state and federal court, including the instant Court.

The facts as alleged in Plaintiff's Complaint are as follows:

Plaintiff, Toll Bros. Inc. ("Toll Bros.") is a Delaware Corporation in the business of residential construction, including building townhomes, condominiums, single-family homes and rental units in the greater Philadelphia area and elsewhere. (Compl. ¶¶ 2, 9.) Defendant Essex Insurance Company ("Essex") is a commercial insurer, organized and existing under the laws of the State of Delaware, with a principal place of business in Glen Allen, Virginia. (Compl. ¶ 5.) In April, 1999, Toll Bros. alleges that it subcontracted H.A.S. Protection Inc. ("H.A.S."), a Pennsylvania corporation, to design, provide and install fire suppression systems in various homes under construction by Plaintiff in the greater Philadelphia area.*fn1 (Compl. ¶¶ 7, 11.) One such construction included Plaintiff's Swedesford Chase Community, located in Chester County, Pennsylvania. (Compl. ¶ 12.) Prior to commencing work on the Swedesford Chase development, the parties entered into a Subcontract Agreement ("Agreement"). (Compl. ¶ 12.)

The Agreement between Toll Bros. and H.A.S. required that H.A.S. indemnify and defend Toll Bros. from any suits related to damages caused by the H.A.S. fire control systems. (Pl.s Br. Ex. A, Article 3.) Accordingly, pursuant to Article 4 of the Agreement, H.A.S. was required to obtain a $1,000,000 general liability insurance policy in which Toll Bros. would be named as an additional insured in order to ensure that H.A.S. had the means to satisfy its obligations. (Compl. ¶ 13.)(Pl.s Br. Ex. A, Article 4)

In or around 2003, in accordance with the Agreement, H.A.S. procured an insurance policy from Essex and supplied certificates of said policy to Toll Bros. (Compl. ¶ 14.) Essex underwrote a general liability insurance policy to H.A.S. for the period spanning from June 26, 2003, to June 26, 2004 under Policy Number 3CK6280. (Compl. ¶ 18.) The policy was renewed under Policy Number 3CK6533 for the period spanning from June 26, 2004 to June 26, 2005.

(Compl. ¶ 19.) The parties dispute whether Toll Bros. was named as an additional insured for the entire duration of the policy and subsequent renewal. Essex avers that Toll Bros. was named as an additional insured under Policy No. 3CK6280, with an endorsement effective date of October 30, 2003. Thus, according to Essex's averment Toll Bros. was covered as an additional insured only for the period spanning from October 30, 2003, to June 26, 2004. Toll Bros disputes this limitation and contends that it was covered as an additional insured for the entire duration of the insurance contract, namely, June 26, 2003 to June 26, 2005.

The Additional Insured Endorsement issued to H.A.S. by Essex provides:

SECTION II - WHO IS AN INSURED of the Commercial General Liability Form is amended to include: Person or Entity: TOLL BROTHERS, INC. AND IT'S SUBSIDIARIES AND AFFILIATES ...

Interest of the Above: FIRE SUPPRESSION INSTALLATION as an additional insured under this policy, but only as respects negligent acts or omissions of the named Insured and only for occurrences, claims or coverage not otherwise excluded in the policy.

It is further agreed that where no coverage shall apply herein for the Named Insured, no coverage nor defense shall be afforded to the above-identified additional insured.

Thus, as an additional insured, Toll Bros.'s coverage under the Essex insurance policy was coextensive with the coverage for H.A.S., the named insured.

In June, 2003, homeowners in the Swedesford Chase Community began informing Toll Bros. that the fire suppression systems installed in their respective homes were malfunctioning and causing damage. Consequently, said homeowners sought reimbursement and coverage under their warranties. In 2005 and 2006, Toll Bros. was named as a defendant, alongside H.A.S., in three state court actions filed by said homeowners in Chester County, Pennsylvania.*fn2 (Compl. ¶ 20.) The Ort plaintiffs avered that their home was damaged on January 23, 2004 and on August 8, 2004. (Compl. ¶ 21.) The Hoffman plaintiffs alleged that their home was damaged on September 21, 2005. (Compl. ¶ 22.) Last, the Schwaninger plaintiff alleged that his home was damaged on July 18, 2005. ...


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