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Westfield Insurance Company v. Bellevue Holding Company

February 23, 2012

WESTFIELD INSURANCE COMPANY, PLAINTIFF,
v.
BELLEVUE HOLDING COMPANY, BHC BUILDERS, INC., BHC VENTURE, INC. AND BHC DEVELOPERS LP, DEFENDANTS.



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

MEMORANDUM

Currently pending before the Court is the Motion for Summary Judgment of Plaintiff Westfield Insurance Company. For the following reasons, the Motion is granted and judgment is entered in favor of Plaintiff on the entirety of its Complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Policies

This case arises out of a series of insurance policies between Plaintiff Westfield Insurance Company ("Westfield") and Defendants Bellevue Holding Company, BHC Builders, Inc., BHC Venture, Inc., and BHC Developers LP (collectively "BHC" or "Defendants"). From February 28, 2004 through February 28, 2010, Westfield issued to Bellevue Holding Company six multi-part commercial policies, each possessing a commercial general liability ("CGL") coverage part and a commercial umbrella coverage part. These policies (the "Westfield Policies" or "Policies") include: CWP 8 263 070 (2/28/04--2/28/05) (WP 0001--35); CWP 8 263 070 (2/28/05--2/28/06) (WP 00036--70); CWP 8 263 070 (2/28/06--2/28/07) (WP 00071--105); CWP 8 263 070 (2/28/07--2/28/08) (WP 00106--140); CWP 8 263 070 (2/28/08--2/28/09) (WP 00142--275); and CWP 8 263 070 (2/28/09--2/28/10) (WP 00176--211). (Pl.'s Mot. Summ. J., Ex. B.) The following entities are Named Insureds under the Westfield Policies: Bellevue Holding Company, Bellevue Contractors, LLC, Bellevue Realty Company, BHC Developers, LP, BHC Venture, and BHC Builders, Inc. (Id.)

The Insuring Agreement Portion of the CGL coverage part in each Policy states as follows:

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. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory;"

(2) The "bodily injury" or "property damage" occurs during the policy period.

(Id. CGL Part § 1(1)(a--b).) The Westfield Policies go on to define "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Id. CGL Part § V(13).) In addition, they specifically exclude "'[b]odily injury' or 'property damage' for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement." (Id. CGL Part § I(2)(b).) This exclusion, however, does not apply to liability "[t]hat the insured would have in the absence of the contract or agreement." (Id.)

The Insuring Agreement for the commercial umbrella coverage part in each Policy provides, in pertinent part, as follows:

1. Insuring Agreement

a. We will pay "ultimate net loss' in excess of the "retained limit" that the insured becomes legally obligated to pay as damages because of "personal injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence", and settle any "claim" or "suit" that may result.

b. This insurance applies only if the "personal injury" or "property damage" occurs during the policy period and is caused by an "occurrence"

(Id. Umbrella Part § I(1)(a--b.) The definition of "occurrence" is identical to that in the CGL coverage part. (Id. Umbrella Part § V(16)(a).)

B. The Underlying Actions

The BHC Defendants, as property developers, built a residential community of new homes in Avondale, Pennsylvania. As a result of this construction, eight actions were commenced against BHC in the Pennsylvania Court of Common Pleas, Chester County, each alleging damage to the individual property (the "Property"). These actions include: Barto v. BHC Builders, Inc., No. 09-8287 (the "Barto Action"); Crowley v. BHC Builders, Inc., No. 11-11385 (the "Crowley Action"); Eberle v. BHC Venture, Inc., No. 09-13241 (the "Eberle Action"); Ench v. BHC Builders, Inc., No. 09-08288 (the "Ench Action"); Epstein v. BHC Builders, Inc., No. 09-08286 (the "Epstein Action"); Francois v. BHC Builders, Inc., No. 09-05168 (the "Francois Action"); McCullough v. BHC Builders, Inc., No. 11-12325 (the "McCullough Action"); and Travers v. BHC Builders, Inc., No. 09-05169 (the "Travers Action") (collectively the "Underlying Actions" or "Actions"). (Pl's Mot. Summ. J., Ex. A, Tabs 1--8.) Because the nature of these Underlying Actions governs the coverage decision in this case, the Court individually summarizes each of them.

1. The Barto Action

The Barto Action alleges that, in June 2008, the plaintiffs purchased their home in Avondale, Pennsylvania from the original owners of the Property. (Pl.'s Mot. Summ. J., Ex. A, Tab 1 ("Barto Compl."), ¶ 9.) Upon hearing about potential problems in their community, the plaintiffs hired an expert to perform an invasive, external forensic review of their home. (Id. ¶ 17.) At that time, they were made aware of extensive hidden construction problems with their home, including defective stucco wall system, defective windows, and resultant damage. (Id.) The plaintiffs allege that the problems with their home were related to BHC's failure to construct the home in a workmanlike manner, failure to disclose hidden defects known to BHC, false marketing of a home to the public which was not fit for habitation, refusal to honor express and/or implied warranties, refusal to take plaintiffs' concerns seriously, failure to construct a home in a non-negligent manner, and failure to construct the home in accordance with accepted industry standards. (Id. ¶ 20.) The Barto Complaint brings eight causes of action: (1) negligence; (2) breach of warranty; (3) breach of express warranty; (4) negligent misrepresentation; (5) fraud/intentional misrepresentation; (6) punitive damages; (7) violation of unfair trade practices and consumer protection law; and (8) product liability. (Id. ¶¶ 21-- 68.)

2. The Crowley Action

The Crowley Action is virtually identical to the Barto Action. The Complaint in Crowley alleges that the plaintiffs moved into their home in 2002, having purchased it directly from BHC, and, in January 2010, contacted BHC about water damage issues with the Property. (Pl.'s Mot. Summ. J., Ex. A, Tab 2 ("Crowley Compl.") ¶¶ 15--17.) BHC, however, failed to make workmanlike repairs, which resulted in further damage. (Id. ¶ 19.) On January 21, 2010, the plaintiffs hired an expert who first made them aware of the extensive hidden construction problems with their home. (Id. ¶ 19.) BHC, however, allegedly failed to respond to the plaintiffs' complaints other than to accuse them of causing the damage themselves. (Id. ¶ 21.) The plaintiffs allege that the problems with their Property were related to BHC's failure to construct the home in a workmanlike manner, failure to disclose hidden defects known to BHC, false marketing of a home not fit for habitation, refusal to honor all warranties (including express and/or implied warranties) failure to construct a home in a non-negligent manner, and failure to construct a home in accordance with accepted industry standards. (Id. ¶ 23.) The complaint contains eight causes of action: (1) negligence; (2) breach of warranty; (3) breach of express warranty; (4) negligent misrepresentation;

(5) fraud/intentional misrepresentation; (6) punitive damages; (7) violation of unfair trade practices and consumer protection law; and (8) product liability. (Id. ¶¶ 24--71.)

3. The Eberle Action

The Eberle Action also involves a suit by the purchasers of a BHC-constructed home in Avondale, Pennsylvania. (Pl.'s Mot. Summ. J., Ex. A, Tab 3 ("Eberle Compl.") ¶ 30.) In that case, the plaintiffs became aware, in November 2008, of significant building and structural defects to other stucco homes in their neighborhood. (Id. ¶ 36.) Subsequently, they had an inspection of the Property performed to determine whether their Property had any water/mold/stucco or other structural damage. (Id. ¶ 37.) That inspection revealed substantial damage, for which they received remediation quotes in the range from $71,729.50 to $127,992.41. (Id. ¶¶ 40--41.) The plaintiffs sued multiple entities involved with the construction of their home. With respect to BHC, the plaintiffs alleged negligence for failure to follow pertinent codes, failure to ensure that its subcontractors followed pertinent codes, and failure to timely notify the Township of certain phases of construction to allow it to perform regular inspections. (Id. ¶¶ 43--62.) The complaint also alleged breach of contract (unworkmanlike performance) due to its construction of the Property in a ...


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