Pyles v. Pennsylvania Mfrs. Ass'n Ins. Co.

• Decision Date: 01 September 1991
• Docket Number: No. 502,502
• Citation: 90 Md.App. 320,600 A.2d 1174
• Parties: Gary G. PYLES v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY. ,
• Court: Court of Special Appeals of Maryland

Page 320

90 Md.App. 320

600 A.2d 1174

Gary G. PYLES v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY.

No. 502, Sept. Term, 1991.

Court of Special Appeals of Maryland.

Feb. 4, 1992.

Certiorari denied June 9, 1992.

John S. Simcox (C. Robert Pickett and Hartman and Crain, on the brief) Annapolis, for appellant.

George C. Davis (Hardwick, Tripoda & Harris, on the brief) Baltimore, for appellee.

Argued Before MOYLAN, MOTZ, and HARRELL, JJ.

HARRELL, Judge.

Appellant, Gary G. Pyles, brought a declaratory judgment action against appellee, Pennsylvania Manufacturers' Association Insurance Company, seeking to determine the extent of coverage of liability insurance policies issued by appellee to John F. Pilli & Sons, Inc. (Pilli). The Circuit Court for Anne Arundel County (Heller, J.) granted summary judgment in favor of appellee. We affirm.

Facts

Pilli contracted with appellant to build a house on appellant's property in Anne Arundel County, Maryland. Pilli also orally agreed to maintain $750,000 worth of builder's risk insurance on the house during its construction. Due to circumstances not pertinent to this appeal, however, Pilli obtained only $250,000 worth of builder's risk insurance on the house. As anyone familiar with Murphy's Law might have predicted, a fire occurred during the construction of the house, causing extensive damage.

Appellant thereafter brought a separate action against Pilli, alleging negligence and breach of contract for Pilli's failure to obtain the agreed upon amount of builder's risk insurance, and seeking damages equal to the amount by which the house was underinsured. Pilli notified appellee that the action had been brought against it and requested that appellee defend the suit. Appellee denied coverage and refused to defend. The action resulted in the entry of a judgment in favor of appellant in excess of the builder's risk insurance coverage Pilli had obtained on the house.

Pursuant to a settlement agreement subsequently reached between them, Pilli assigned to appellant all of its rights under two general business liability insurance policies issued to it by appellee--a Comprehensive Catastrophe Liability (Commercial Umbrella) Policy and a General Liability Policy. The Comprehensive Catastrophe Liability Policy provided, in pertinent part, as follows:

[Appellee] will indemnify the insured for ultimate net loss ... which the insured may sustain by reason of liability imposed upon the insured by law ... for damages because of ... [p]roperty [d]amage ... caused by or arising out of an occurrence happening anywhere in the world during the policy period.

* * * * * *

[Appellee] shall:

(a) defend any suit against the insured alleging such ... destruction and seeking damages on account thereof, even if such suit is groundless, false, or fraudulent....

The General Liability Policy similarly provided:

[Appellee] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... property damage to which this insurance applies, caused by an occurrence, and [appellee] shall have the right and duty to defend any suit against the insured seeking damages on account of such ... property damage, even if any of the allegations of the suit are groundless, false or fraudulent....

The two policies contained identical definitions of the terms "occurrence" and "property damage":

'Occurrence' means an accident, including continuous or repeated exposure to conditions, which results in ... property damage ... neither expected nor intended from the standpoint of the insured.

* * * * * *

'Property damage' means ... physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom ...

Armed with Pilli's rights under the general business liability insurance policies, appellant filed a declaratory judgment action against appellee, seeking a determination that the coverage of the policies extended to the judgment against Pilli in the earlier action, together with the costs incurred by Pilli in defending that action. ¹ Appellant then moved for partial summary judgment. Following a hearing, the circuit court denied appellant's motion. In substance, the circuit court held that the terms of the policies required a nexus between the insured's liability and accidental property damage, and that in the instant case, there was no such nexus:

There is no way to tie Pilli's negligence and breach of contract to the actual accident, the fire. Pilli's negligence in not maintaining $750,000.00 of builder's risk coverage on [appellant's] house caused the loss when the property was damaged in excess of the $250,000 coverage which Pilli had maintained ... [T]he Court finds that as a matter of law no coverage was afforded Pilli for its mistake.

The circuit court, on its own motion, granted summary judgment in favor of appellee pursuant to Md. Rule 2-501(e). ² This appeal followed. The sole issue presented in this appeal is whether the circuit court erred in granting summary judgment in favor of appellee. We affirm.

Discussion

A.

"When ruling on a motion for summary judgment, a trial court must address two separate issues: whether there is a genuine dispute as to a material fact, and whether the moving party is entitled to judgment as a matter of law." Chesapeake v. City of Baltimore, 89 Md.App. 54, 68, 597 A.2d 503 (1991), citing Castiglione v. Johns Hopkins Hospital, 69 Md.App. 325, 332, 517 A.2d 786 (1986). The facts underlying the case sub judice are undisputed. The only question before the circuit court, therefore, was whether, under the terms of the general business liability insurance policies, appellee was entitled to judgment as a matter of law.

Appellant argues that the express terms of the policies establish a duty on the part of appellee to indemnify Pilli for its liability to appellant. Specifically, appellant contends that because property damage was a factual predicate for Pilli's liability, and because that property damage was caused by an "occurrence," or an accident, Pilli's liability to appellant is covered by the policies. We disagree.

"Maryland follows the rule that '[i]nsurance policies, being contractual, are construed as other contracts.' Words are given their customary and normal meaning." Bentz v. Mutual Fire, Marine & Inland Ins. Co., 83 Md.App. 524, 531, ...