Charles E. Brohawn & Bros., Inc. v. Employers Commercial Union Ins. Co.

• Decision Date: 10 December 1979
• Citation: 409 A.2d 1055
• Parties: CHARLES E. BROHAWN & BROS., INC., Plaintiff Below, Appellant, v. EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY, Defendant Below, Appellee.
• Court: United States State Supreme Court of Delaware

Page 1055

409 A.2d 1055

CHARLES E. BROHAWN & BROS., INC., Plaintiff Below, Appellant, v. EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY, Defendant

Below, Appellee.

Supreme Court of Delaware.

Submitted Oct. 9, 1979.

Decided Dec. 10, 1979.

Upon appeal from Superior Court. Affirmed.

Daniel F. Wolcott, Jr., Donald J. Wolfe, Jr. of Potter, Anderson & Corroon, Wilmington, for plaintiff below, appellant.

F. Alton Tybout of Tybout & Redfearn, Wilmington, for defendant below, appellee.

Before HERRMANN, C. J., McNEILLY and HORSEY, JJ.

McNEILLY, Justice:

Appellee, Employers Commercial Union Insurance Company (Employers), issued three insurance policies to Charles E. Brohawn & Bros., Inc. (Brohawn), a general contractor, insuring it against "property damage" caused by an "occurrence." The City of Dover contracted with Brohawn to construct a concrete pedestal designed to support a steam generator at the McKee Run Generating Station. The city allegedly suffered substantial monetary loss because of defects which were found in the pedestal constructed by Brohawn. It was alleged that, due to Brohawn's negligence and breach of contract, the pedestal was not properly erected and that it crumbled, causing delay in the completion of the generating station.

Another contractor involved in the project sued Dover for losses allegedly sustained as a result of the delay. ¹ The City, in turn, initiated a third-party action (the Dover action) against the contractors it believed liable for the delay. It alleged against Brohawn that it failed to construct the pedestal in a workmanlike manner, breached its warranty and contract and was negligent in testing the pedestal and its components. ² All the damages alleged against Brohawn flowed from the unavailability and loss of use of the pedestal pending reconstruction by Brohawn. When protection was sought under the insurance policies, Employers took the position that it had no obligation to Brohawn under the insurance contracts with respect to the claims in the Dover action. It refused to defend the suit on the ground that there was no coverage for alleged damages under the insurance policies.

The appellant sought to resolve the conflicting interpretations in an action for declaratory judgment. The Superior Court, on cross motions for summary judgment, held that the damages alleged by Dover, et al., were "property damage" resulting from an "occurrence," but also held that coverage was excluded under the terms of all three policies. Brohawn has settled the Dover action, but seeks, in this appeal from the Superior Court, reimbursement for the amounts paid in settlement and for the costs, including attorneys' fees of defending the Dover action. Brohawn does not seek coverage under a separate performance bond, as the bond, unlike the insurance policies, requires Brohawn to reimburse Employers for any payments.

Inter alia, Brohawn appeals the decision of the Superior Court that the "sistership exclusions" ³ in each of the three policies excludes coverage for these losses and the holding that Employers had no duty to defend Brohawn in the Dover action. Brohawn argues that there was coverage under the policies, that coverage was not excluded, and that, in any event, Employers had a duty to defend Brohawn in the Dover action. For the reasons below, we affirm.

At trial and on appeal there has been a considerable difference of opinion as to whether the damages alleged by Dover, et al., were "property damage" caused by an "occurrence," as defined in the policies. The position of neither party is without merit. The policy definitions of "property damage" ⁴ and "occurrence," ⁵ when applied to the present facts do not yield a single unequivocal answer about the existence or nonexistence of coverage.

The Court below decided this issue in favor of Brohawn under the public policy which construes ambiguous contract language against the insurance carrier who wrote the policy. See Steigler v. Insurance Company of North America, Del.Supr., 384 A.2d 398 (1978). While we continue to support this policy, we decline to reach this issue. Instead, for the purposes of our decision, we will assume that the damages in question were "property damage" caused by an "occurrence." This assumption leaves two questions. First, was coverage validly excluded? Second, was Employers under a duty to defend Brohawn in the Dover action?

II

Brohawn advances many arguments supporting the non-applicability of various exclusions of coverage in the three policies to this occurrence. We will consider only one. Each of the three policies expressly states that the insurance will not apply

"to damages claimed for the withdrawal, inspection, repair, replacement or loss of use of the named insured's products or work completed by or for the named insured or any property for which such products form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein." Comprehensive General Liability Policy, exclusion (p); Contractual Liability Policy, exclusion (1); Umbrella Policy, exclusion (c)(iii).

Brohawn argues that the sistership exclusions quoted...