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National Fire Insurance Company of Hartford; and Transportation Insurance v. Robinson Fans Holdings

July 18, 2011

NATIONAL FIRE INSURANCE COMPANY OF HARTFORD; AND TRANSPORTATION INSURANCE CO., PLAINTIFFS,
v.
ROBINSON FANS HOLDINGS, INC. ON ITS OWN BEHALF AND AS SUCCESSOR TO ROBINSON INDUSTRIES, INC.; AND ROBINSON FANS, INC., DEFENDANTS.



The opinion of the court was delivered by: Donetta W. Ambrose United States Senior District Judge

OPINION AND ORDER

SYNOPSIS

In this declaratory judgment action involving insurance coverage relating to underlying litigation pending in another federal district, Plaintiffs have filed a Motion for Reconsideration of this Court‟s Opinion and Order dated April 7, 2007 ("April 7 Opinion"), which found that under applicable standards, the underlying complaint "possibly pleads a triggering "occurrence‟" with respect to the duty to defend, and that I could not "rule out the possibility that something other than faulty workmanship is blamed for the equipment failure." In the alternative, Plaintiffs seek partial summary judgment, inter alia, on grounds that the "gist of the action" doctrine applies to preclude the duty to defend, and that extrinsic facts, along with the parties‟ purchase order, entitle them to judgment. In addition, Defendant has filed a Motion to Stay this action, pending the conclusion of the underlying litigation.

For the following reasons, all of the parties‟ Motions will be denied.

OPINION

I. APPLICABLE STANDARDS

Motions for reconsideration are granted sparingly, "[b]ecause federal courts have a strong interest in finality of judgments." Continental Cas. Co. v. Diversified Indus., Inc., 884 F. Supp. 937, 943 (E.D.Pa. 1995). The purpose of a motion for reconsideration is "to correct manifest errors of law or fact or to present newly discovered evidence." Max's Seafood Cafe v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999).

Summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the burden of demonstrating the absence of any genuine issues of material fact. United States v. Omnicare, Inc., 382 F.3d 432 (3d Cir. 2004).

II. MOTION FOR RECONSIDERATION

Plaintiffs first urge that this Court rely on Millers Capital Ins. Co. v. Gambone Bros. Devel. Corp., 941 A.2d 706 (Pa. Super. 2007), and ProDent, Inc. v. Zurich U.S., 33 Fed. Appx. 32 (3d Cir. 2002), which they contend are inconsistent with Schuylkill Stone Corp. v. State Auto. Mut. Ins. Co., 735 F. Supp. 2d 150 (D.N.J. 2010), and Wasau Underwriters Ins. Co. v. State Auto Mut. Ins. Co., 557 F. Supp. 2d 502 (D.N.J. 2008).*fn1 Plaintiffs further assert that the District Court for the District of New Jersey incorrectly applied Pennsylvania law in the latter two cases, and that I in turn incorrectly relied thereon.

In Gambone, the underlying action alleged that houses planned, developed, and built by defendant were defectively constructed, leading to water damage to the homes‟ interiors. Gambone, 941 A.2d at 713. One set of plaintiffs in that action alleged "construction defects and product failures," and their claims included those for breach of contract. Id. at 709. The second averred the use of defective stucco, and that the defects were "the result of poor workmanship during the initial construction of the Home, including..improper or faulty design, implementation, workmanship, and supervision of the application of the exterior finish of the Home.." Id. at 709-10. The second group also asserted breaches of implied warranty. Id. The court considered whether the allegations in the underlying action potentially constituted an "occurrence" that triggered coverage, under policy language identical to that in the case at bar. Id. at 711.

In Gambone, both complaints averred that the insured "built homes with defective.exteriors, windows, and.seals, and the court noted that both complaints were "based on claims for faulty workmanship." Id. at 713. Further, "no one dispute[d] that the.claims [were] predicated on faulty workmanship." Id. at 718. Instead, the dispute centered on the insured‟s contention that ancillary water damage to non-defective work in the homes constituted an "occurrence." Id. In that respect, the court held that "damage caused by rainfall that seeps through faulty home exterior work to damage the interior of a home is not a fortuitous event that would trigger coverage." Id. at 714. In so doing, the court explained that the word "occurrence" refers to accidental phenomena, and not "claims predicated on faulty workmanship." Id. at 718. Thus, the court concluded that foreseeable natural acts that exacerbate the effect of faulty workmanship are not "accidents." Id. at 713.

Plaintiff urges that Gambone demonstrates that Schuykill Stone Corp. v. State Automobile Mut. Ins. Co., 735 F. Supp. 2d 150 (D.N.J. 2010) and Wausau Underwriters Ins. Co. v. State Auto. Mut. Ins. Co., 557 F. Supp. 2d 502 (D.N.J. 2008), which were cited in my April 7 Opinion, misapplied Pennsylvania law. Plaintiff does not, however, explain how Gambone is inconsistent with or undermines the pertinent conclusions reached in either of those cases. In Gambone, the court did not address any argument relating to the source of the duty allegedly breached. Instead, the discussion in Gambone centered on the source or cause of the damages claimed -- i.e., those resulting from faulty workmanship, as opposed to those for ancillary damage flowing from the faulty workmanship, which were urged, but not held, to be an "occurrence." Gambone, 941 A. 2d at 711-12.

In the April 7 Opinion, I referred to Schuykill and Wausau in the context of exploring the source of the duty allegedly breached. Neither of these cases focused on the issue of ancillary damage flowing from faulty workmanship; instead, both cases looked to the allegations in the Complaint, and the distinction between duties imposed by law as a matter of social policy, versus by mutual consensus. Schuykill, 735 F. Supp. 2d at 158; see also Wausau, 557 F. Supp. 2d at 33-34. Thus, Gamboneā€Ÿs focus differed from, and was not contrary to, Schuykill and Wausau. Moreover, neither the focus nor language of Gambone in ...


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