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Pennsylvania Manufacturers Indemnity Co. v. Pottstown Industrial Complex LP

Superior Court of Pennsylvania

July 22, 2019

PENNSYLVANIA MANUFACTURERS INDEMNITY COMPANY
v.
POTTSTOWN INDUSTRIAL COMPLEX LP, THE PRIDE GROUP, INC. AND LIBERTY MUTUAL INSURANCE CO. APPEAL OF POTTSTOWN INDUSTRIAL COMPLEX, LP

          Appeal from the Order Entered November 5, 2018 In the Court of Common Pleas of Montgomery County Civil Division at No(s): 2017-09855

          BEFORE: BENDER, P.J.E., GANTMAN, P.J.E., and COLINS [*] , J.

          OPINION

          COLINS, J.

         This is an appeal from an order granting a declaratory judgment in favor of an insurer, Pennsylvania Manufacturers Indemnity Company (PMA), in a declaratory judgment action that PMA brought against its insured, Pottstown Industrial Complex LP (Insured). The trial court's order granted PMA's motion for judgment on the pleadings and issued a declaratory judgment that PMA has no obligation to defend or indemnify Insured with respect to an action brought against Insured by Insured's tenant, The Pride Group, Inc. (Pride Group), for water damage to Pride Group's inventory (the Underlying Action). For the reasons set forth below, we reverse.

         The complaint in the Underlying Action alleges that the premises that Pride Group leased from Insured were flooded during rainstorms on four occasions between July 2013 and June 2016 and that these floods damaged and rendered worthless over $700,000 in inventory that Pride Group stored on the premises. Pride Group Second Amended Complaint ¶¶16-20, 39-43, 61, 65, 67, 70. The first of these floods occurred on July 22, 2013, when "extensive amounts of rainwater infiltrated from the roof area and into the [p]remises, cascading across" and destroying inventory worth over $397,000; the other three floods occurred in 2015 and 2016. Id. ¶¶16-20, 39, 61, 67.

         Pride Group alleges that the water entered the premises due to roof leaks, that Insured was responsible under the lease for keeping the roof "in serviceable condition and repair," and that the floods were caused by Insured's failure to properly maintain and repair the roof. Pride Group Second Amended Complaint ¶¶1, 7-8, 15-16, 23-34, 39, 44-48, 53-54, 57, 60-63, 66-69, 74-75 & Ex. A at 18 ¶14(a). Pride Group pleads these claims as a single cause of action for breach of contract. Id. ¶¶1, 71-77. The complaint, however, also specifically pleads that Insured was negligent in its maintenance of and repairs to the roof. Id. ¶¶1, 14-15, 74-75. The conditions of the roof that Pride Group alleges contributed to the floods include poor caulking of the roof, gaps and separations in the roofing membrane, undersized drain openings, and accumulated debris and clogged drains. Id. ¶¶30-31, 45-48 & Exs. F & I.

         PMA provided commercial general liability (CGL) insurance coverage to Insured under CGL Policy No. 301201-03-93-89-2 (the PMA Policy). PMA Declaratory Judgment Complaint ¶2 & Ex. 2; Insured's Answer ¶2. The PMA Policy provided coverage to Insured for the period November 1, 2012 to November 1, 2013, the time period in which the July 2013 flood of Pride Group's leased premises occurred. PMA Policy, Declarations at 1. PMA did not provide CGL coverage to Insured after November 1, 2013. Liberty Mutual Fire Insurance Company (Liberty Mutual) issued CGL insurance policies covering Insured for the periods November 1, 2013 to November 1, 2014, November 1, 2014 to November 1, 2015, and November 1, 2015 to November 1, 2016 (the Liberty Mutual Policies).

         The PMA Policy provides coverage of $1 million per "occurrence" to Insured for bodily injury and property damage liability during the policy period, with an aggregate limit of liability of $2 million. PMA Policy, Declarations at 2. The PMA Policy states with respect to this coverage:

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. ...
* * *
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 Coverage Form at 1 (emphasis added). The PMA Policy defines "property damage" and "occurrence" as follows:

13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general ...

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