Weedo v. Stone-E-Brick, Inc.

Decision Date08 December 1977
Docket NumberINC,STONE-E-BRIC
Citation155 N.J.Super. 474,382 A.2d 1152
PartiesCalvin C. WEEDO and Janice Weedo, his wife, Plaintiffs, v.and Ralph Romano, Individually, Defendants and Third-PartyPlaintiffs Appellants, v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Third-Party DefendantRespondent. Gus GELLAS and Thalma A. Gellas, his wife, Plaintiffs, v. Alfred VIVINO, Defendant and Third-Party Plaintiff, v. James FREY and Ralph Romano, Third-Party Defendants and Fourth-PartyPlaintiffs Respondents, v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Fourth-PartyDefendant Appellant.
CourtNew Jersey Superior Court — Appellate Division

George W. Parsons, Jr., Paterson, for third-party plaintiffs appellants Stone-E-Brick, Inc. and Ralph Romano (in A-559-76), and fourth-party plaintiffs respondents James Frey and Ralph Romano (in A-631-76) (Cole, Geaney & Yamner, Paterson, attorneys; H. George Avery, Paterson, on the brief).

Thomas P. McHugh, South Orange, for third-party defendant respondent Pennsylvania Nat. Mut. Cas. Ins. Co. (in A-559-76) and fourth-party defendant appellant (in A-631-76) (Gurry & Conlan, South Orange, attorneys).

Before Judges LORA, SEIDMAN and MILMED.

The opinion of the court was delivered by

SEIDMAN, J. A. D.

These consolidated appeals arise from lawsuits in two counties. They involve the issue of whether an insurance carrier is obligated, under a comprehensive general liability insurance policy, to accord its insured a defense to claims asserted against it in those lawsuits. In one of the cases the trial judge ruled that the policy did not provide coverage and granted the insurer's motion for summary judgment. In the other the trial judge held that it did, and entered summary judgment in favor of the insured.

Pennsylvania National Mutual Casualty Insurance Company (Pennsylvania National) issued to Stone-E-Brick, Inc., a masonry contractor, a general automobile liability policy for the period from October 21, 1973, to October 21, 1974. It included "Comprehensive General Liability Insurance Coverage." The hazards described under the headings "Premises-Operation" and "Completed Operations" were:

1. Concrete or cement sidewalk, driveway, yard, airport runway, or warming apron construction.

2. Concrete construction including foundations, making, setting up or taking down forms, scaffolds, falsework or concrete distributing apparatus.

The insurer undertook in the insuring agreement to pay

* * * on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage A. bodily injury or

Coverage B. property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limits of the company's liability has been exhausted by payment of judgments or settlements.

The Weedo litigation began with a complaint filed by Calvin and Janice Weedo against Stone-E-Brick for negligence and breach of contract. They alleged that they had entered into a contract with Stone-E-Brick in August 1974 for the application of Spanish stucco to their residence; that the stucco was not applied in a good and workmanlike manner, contrary to the provisions of the contract, and that they sustained damage as a result. Stone-E-Brick denied the allegations of the complaint. It also filed a third-party complaint against Pennsylvania National in which it asserted that the insurer had failed, despite demand, to defend and indemnify it under the policy against any loss from liability which might be imposed upon it by reason of the Weedo claim. It sought judgment "for all sums found due as against the third-party plaintiffs in favor of the plaintiff in the above entitled matter * * * ." Pennsylvania National denied coverage for the claim asserted, relying upon exclusionary clauses and language in the policy.

In Gellas a complaint was filed by Gus and Thalma A. Gellas against Alfred Vivino, alleging that in December 1973 they entered into a contract with Vivino for the construction of a one-family residence and that, contrary to the terms of the contract, there were numerous defects in workmanship which defendant failed to remedy. They sought damages for breach of contract. In addition to answering the complaint, Vivino filed a third-party complaint against Ralph Romano and James Frey, as agents for Stone-E-Brick, claiming that the roofing work on the Gellas dwelling had been subcontracted to Stone-E-Brick, and that any defects were the result of the latter's faulty workmanship. Indemnification was demanded. Stone-E-Brick then filed a fourth-party complaint against Pennsylvania National similar in import to the third-party complaint in Weedo. Coverage was denied by the insurer for the same reason it had asserted in the other case.

Pennsylvania National argued that the defective workmanship claims asserted against Stone-E-Brick were not within the coverage of the policy by virtue of the following exclusions:

This policy does not apply:

(n) to property damage to the named insured's products arising out of such products or any part of such products;

(o) to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts or equipment.

On the other hand, Stone-E-Brick's position was that the essence of the claims against it were for defective workmanship. It maintained that the policy provided coverage for such claims by reason of the exception to exclusion (a):

This policy does not apply:

(a) to liability assumed by the insured under any contract or agreement except an incidental contract; but this exclusion does not apply to a warranty of fitness or quality of the named insured's products or a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner. (Emphasis supplied)

The trial judge in Weedo expressed the view that "I just can't conceive in good common sense of any insurance policy insuring that somebody is going to lay a tile floor properly or do a concrete job properly. That is not what an insurance policy is about." But in Gellas the trial judge looked to exclusion (a) in the policy and held that "(a) reading of this exception to the exclusion can lead the court to no other conclusion except that coverage does exist for quality of the work performed * * * ."

It is to be noted that in both cases the trial judge granted summary judgment to one of the contending parties. Ordinarily, summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R.4:46-2; Judson v. Peoples Bank and Trust Co. of Westfield, 17 N.J. 67, 110 A.2d 24 (1954). Neither side contends here that there is any disputed factual issue. The insurer does not disagree that by looking at the four corners of the complaints, a claim is asserted for property damage which, but for the exclusions, would be covered. The only issue is the interpretation of the insurance contract. This is a question for the court to decide as a matter of law, and can be the basis for summary judgment. Blum v. Prudential Life Ins. Co., 125 N.J.Super. 195, 197-198, 309 A.2d 905 (Law Div.1973), aff'd 132 N.J.Super. 204, 333 A.2d 277 (App.Div.1975).

Pennsylvania National contends that the exception to exclusion (a) extends coverage to the insured only in the event that the alleged defective workmanship causes personal injury or property damage not excluded under some other provision of the policy. It argues that when read in conjunction with exclusions "n" and "o," the policy is clear in denying coverage, and that any other reading of the policy would effectively convert the policy into a performance bond or guarantee of contractual performance which was not the understanding of the parties at the time the policy was purchased. Stone-E-Brick's thesis is that the exclusions relied on by the insurer either do not apply to the present cases at all or there is an ambiguity in the policies which must be resolved in its favor.

There appears to be no reported case in this State interpreting the policy language here involved; none has been brought to our attention and our own research has not disclosed any. Although counsel have cited no case in point from other jurisdictions, we have uncovered three dealing with identical or comparable provisions. One, Haugan v. Home Indem. Co., 86 S.D. 406, 197 N.W.2d 18 (Sup.Ct.1972), supports the position espoused by Pennsylvania National. The other two, Federal Ins. Co. v. P.A.T. Homes, 113 Ariz. 136, 547 P.2d 1050 (Sup.Ct.1976), and Fontainebleau Hotel Corp. v. United Filigree Corp., 298 So.2d 455 (Fla.D.Ct.App.1974), cert. den. 303 So.2d 334 (Fla.Sup.Ct.1974), are helpful to Stone-E-Brick.

In Haugan plaintiff instituted a declaratory judgment action against his insurer to determine whether comprehensive general liability policies issued to him afforded coverage for a property damage claim asserted against him by an aviation company for which he had contracted to construct an aircraft hangar and office building. After the work was completed, the aviation company sued Haugan for breach of contract and negligence, alleging that the structures had not been designed in a proper and workmanlike manner in that they lacked proper foundations and footings,...

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22 cases
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