Freestone v. New England Log Homes, Inc.
| Decision Date | 17 January 2003 |
| Citation | 2003 Pa. Super. 24,819 A.2d 550 |
| Parties | William FREESTONE and Sandra Freestone, His Wife v. NEW ENGLAND LOG HOMES, INC., a Connecticut Corporation, Perform Sealants, Inc., an Ohio Corporation, and Sika Corporation, a New Jersey Corporation, and Crum & Forster Commercial Insurance Appeal of: NORTH RIVER INSURANCE COMPANY, Incorrectly Named Herein as Crum & Forster Commercial Insurance |
| Court | Pennsylvania Superior Court |
Alan S. Miller, Pittsburgh, for appellant.
Meghan F. Wise, Pittsburgh, for appellees.
Before: MUSMANNO, LALLY-GREEN and KLEIN, JJ.
¶ 1 North River Insurance Company (North River), incorrectly named as Crum & Forster, appeals the order entered on December 6, 2001 granting judgment on the pleadings to William and Sandra Freestone (Freestone) and denying its own motion for judgment on the pleadings. We reverse and direct that judgment be entered in favor of North River.
¶ 2 Upon review of the record, relevant case law, and the submissions by the parties, we must conclude that the general liability insurance policy issued by North River does not provide coverage for the breach of contract and breach of warranty alleged by the Freestones in their underlying complaint. Further, the allegation of negligence arises from the contractual duty imposed on NELHI to provide suitable building materials. Thus, under the gist of the action doctrine, this case is properly viewed in entirety as a contract action, for which no coverage is due. Finally, even if the negligence count was taken at face value, giving improper advice cannot be construed as an accident for which coverage is required. Therefore, the trial court improperly granted judgment in their favor.
¶ 3 Because the facts of this garnishment action are complex, we will begin with a condensed history of the case.
¶ 4 In April 1984, the Freestones purchased a log home kit from New England Log Homes, Incorporated (NELHI). NELHI held a general liability insurance policy issued by North River. The Freestones originally contracted for the delivery of red pine logs, but due to a flood in Berrington, Massachusetts, the red pine logs were washed away. The Freestones had sought the red pine for both aesthetic reasons and because the red pine is less dense than other woods and so is easier to work with. NELHI offered to ship yellow pine logs instead and the Freestones accepted the replacement. The house kit was delivered in August 1984.
¶ 5 Unfortunately, the denser yellow pine logs shipped to the Freestones were not properly seasoned. This lack of seasoning meant that the logs were still internally wet. As a result, they were subject to the vicissitudes of weather, causing the logs to contract and expand. This then created gaps between the logs that allowed wind and rain to enter the Freestones, home relatively unimpeded. Understandably, this rendered the home something less than habitable as well as causing considerable damage to the Freestones' furnishings and other personal property.
¶ 6 When the Freestones complained, NELHI suggested a certain type of caulk be used to seal the home. This was attempted but proved useless. In fact, at trial, expert testimony indicated that caulking actually made the problem worse, allowing new moisture to invade the logs, leading to rot.
¶ 7 The Freestones filed suit against a number of entities, including NELHI, on October 31, 1989. NELHI notified North River of the claim, but North River declined both coverage and defense of NELHI under the terms of the policy it had issued to NELHI. The Freestones complaint contained three counts against NELHI. Count I was for breach of contract. Count II was for breach of warranty. Count III was for negligently recommending the use of caulk to repair the home. During the pendency of the litigation, NELHI went out of business. Counsel for NELHI was allowed to withdraw from representation, having not been paid.
¶ 8 The case eventually went to trial on September 28, 1995. By the time of trial in 1995, only NELHI remained as a defendant. NEHLI made no appearance at the trial and so offered no testimony. Having declined coverage and defense, no one from North River was present either. The judge took the testimony of the Freestones and their experts and found NELHI liable to the Freestones for $338,994.32 in damages. The judgment was entered upon praecipe on December 22, 1995.
¶ 9 On February 3, 2000 the Freestones filed a writ of execution seeking to garnish the insurance policy provided by North River. Interrogatories and new matter were served upon the Freestones. Eventually, both parties filed motions for judgment on the pleadings and briefs in support. Argument was heard on the motions, and on December 6, 2001, judgment was granted in favor of the Freestones and against North River. The amount of the judgment was later amended to reflect a $52,775.62 offset in favor of North River (representing the cost of the kit) and an additional $105,996.30 in interest (from October 5, 1995—the date of the original verdict) was added. Costs and attorneys fees were also awarded.
¶ 10 We note first that our scope of review in determining whether judgment on the pleadings was appropriate is plenary. Vetter v. Fun Footwear Co., 447 Pa.Super. 84, 668 A.2d 529 (1995). Our standard of review is to determine whether the trial court committed a clear error of law or whether there were facts disclosed by the pleadings that should properly go to the jury. Kelly v. Nationwide Ins. Co., 414 Pa.Super. 6, 606 A.2d 470 (Pa.Super. 1992).
¶ 11 In determining what, if anything, a garnishee such as North River owes to a judgment creditor, such as the Freestones, we must determine the existence of a valid judgment and the insurer's obligation to the judgment debtor. Bianco v. Concepts "100", Inc., 291 Pa.Super. 458, 436 A.2d 206 (1981). There is no contention here regarding the existence of a valid judgment. The salient question is one of the insurer's obligations.
¶ 12 That an insurer is only obliged to provide indemnification for those damages which are covered by the policy of insurance is obvious. For example, a home owners' insurance policy cannot be garnished to provide coverage for an automobile accident. Therefore, much like a declaratory judgment action, we must determine under what theory the plaintiff seeks to collect.
¶ 13 Here, the Freestones made three allegations against NELHI: breach of contract, breach of warranty and negligent advice. Without stating its rationale, the trial court found that under one, some, or all of those theories, NELHI owed the Freestones damages. The right to garnish the North River insurance policy, therefore, can only be derived from the right of the Freestones to collect damages. That right, in turn, is due to a breach of contract, a breach of warranty or upon negligently given advice, as alleged by the Freestones themselves.
¶ 14 As to the breach of contract and breach of warranty claims, it is clear that Pennsylvania law does not recognize the applicability of a general liability policy to such causes of action.
The purpose and intent of [a general liability] insurance policy is to protect the insured from liability for essentially accidental injury to the person or property of another rather than...
To continue reading
Request your trial
-
Peerless Ins. Co. v. Brooks Systems Corp.
...policy. Plaintiff relies for this proposition on the decision of the Superior Court of Pennsylvania in Freestone v. New England Log Homes, Inc., 819 A.2d 550 (Pa.Super.2003). Plaintiff asserts that the reason for a finding of no coverage in this circumstance is that an occurrence-based poli......
-
Kvaerner Metals v. Commercial Union Ins.
...667, 848 A.2d 925 (2003); Freestone v. New England Log Homes, Inc., 577 Pa. 735, 848 A.2d 929 (2004); Freestone v. New England Log Homes, Inc., 819 A.2d 550, 553-54 (Pa.Super.Ct.2003). The Freestone case, however, was dismissed prior to oral argument. Given these circumstances, we see no ne......
-
Nationwide Mut. Ins. Co. v. Cpb Intern., Inc.
...Pennsylvania Mfrs.' Ass'n Ins. Co. v. L.B. Smith, Inc., 831 A.2d 1178, 1181 (Pa.Super. Ct.2003); see Freestone v. New England Log Homes, Inc., 819 A.2d 550, 553 (Pa.Super.Ct.2003); Snyder Heating Co. v. Pennsylvania Mfrs.' Assoc. Ins. Co., 715 A.2d 483, 487 (Pa.Super.Ct.1998). "The purpose ......
-
Nat'l Fire Ins. Co. of Hartford v. Robinson Fans Holdings, Inc., Civ. No. 10-1054
...Indeed, the Pennsylvania Superior Court applied the gist of the action doctrine to a coverage question in Freestone v. New England Log Homes, Inc., 819 A. 2d 550 (Pa. Super. 2003). That case predated the Court of Appeals' decision in Berg Chilling, but did not alter the Court of Appeals' co......