Eastern District of Pennsylvania Federal Court Judge Grants Declaratory Judgment in Favor of an Insurer and Found No Coverage Based on the Lack of an “Occurrence” Pursuant to the Terms of a Commercial General Liability Policy

Nationwide Mut. Ins. Co. v. CPB Int’l, Inc., 562 F.3d 591 (3d Cir. 2009)(citing Pennsylvania Mfrs. Assn. Ins. Co. v. LB Smith, Inc., 831 A.2d 1178 (Pa. Super. Ct. 2003)).

In this Declaratory Judgment Action, which Wright & O’Donnell filed and litigated on behalf of an Insurer, regarding an underlying Pennsylvania state court suit filed by a general contractor and a property owners’ group against multiple layers of contractors/subcontractors involved in the construction of the development at issue, Judge Patrese Tucker granted Judgment in favor of the Insurer, finding there was a lack of an “occurrence” under the terms of the Policy consistent with Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006). Initially, the Court reviewed the underlying state court Complaints and, despite headings labeling Counts as “Negligence,” found the allegations made were clearly in the nature of faulty workmanship. Citing Kvaerner and Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286 (Pa. 2007), Judge Tucker found that an “occurrence” or “accident” in a Commercial General Liability (CGL) insurance policy means, “an unexpected and undesirable event occurring unintentionally, and that the key term in the definition of ‘accident’ is ‘unexpected’ which implies a degree of fortuity.” The Court also noted that the “purpose” of CGL policies is “to protect the Insured from essentially accidental injury to the person or property of another rather than coverage for disputes between parties to a contractual undertaking.”