Opinions of the United 2003 Decisions States Court of Appeals for the Third Circuit

1-21-2003

Brosnahan Bldrs Inc v. Harleysville Mutl Precedential or Non-Precedential: Non-Precedential

Docket 02-1402

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Recommended Citation "Brosnahan Bldrs Inc v. Harleysville Mutl" (2003). 2003 Decisions. Paper 874. http://digitalcommons.law.villanova.edu/thirdcircuit_2003/874

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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No: 02-1402

BROSNAHAN BUILDERS, INC.; KEVIN BROSNAHAN; LINDA BROSNAHAN,

Appellants

v.

HARLEYSVILLE MUTUAL INSURANCE COMPANY

Appeal from the United States District Court for the District of Delaware (Civ. No. 00-cv-00339) District Court: Hon. Sue L. Robinson

Submitted Pursuant to Third Circuit LAR 34.1(a) December 17, 2002

Before: NYGAARD, ALITO and McKEE, Circuit Judges.

(Filed: January 21, 2003)

OPINION

McKEE, Circuit Judge.

Brosnahan Builders, Inc., Kevin Brosnahan and Linda Brosnahan (collectively

“Brosnahans”) appeal the district court’s grant of summary judgment to Harleysville Mutual

Insurance Company. We will affirm.

I.

The Brosnahans, who are in the business of building single-family homes, filed this action in the district court on March 24, 2000, seeking a declaratory judgment that

Harleysville, their commercial general liability insurer, must defend them in an underlying

lawsuit, Pinkert v. John H. Olivieri, P.A., Civ. No. 99-380 (the “Pinkert complaint”),

which was filed in the district court on June 16, 1999. The Pinkert complaint alleged

breach of contract and several counts of fraud arising out of a claim of defective

workmanship by the Brosnahans under a contract to build a home for the Pinkerts in

Bethany Beach, Delaware, and it requested recovery of damages for the cost of repairing

and replacing the allegedly shoddy workmanship the Brosnahans performed.

In the Brosnahan declaratory judgment action, the parties eventually filed cross-

motions for summary judgment. On March 30, 2001, the district court denied the

Brosnahans’ motion and granted Harleysville’s motion. The court held that the Pinkert

complaint did not contain allegations of “property damage” caused by an “occurrence”

because it alleged breach of contract and claims of defective workmanship. Accordingly,

the court concluded that the allegations did not trigger any duty to defend under plaintiffs’

commercial general liability policy. The district court also found that Exclusions k(5) and

(n) applied to bar coverage to the Brosnahans, thus precluding any duty to defend the

Brosnahans at the outset of the Pinkert litigation. Brosnahan Builders, Inc. v.

Harleysville Mutual Ins. Co.,

(D. Del. 2001).

The Brosnahans later moved to amend the judgment, but the district court denied the

motion. Prior to the court’s denial of that motion Harleysville entered into a settlement

agreement with the Pinkerts to dismiss all claims against the Brosnahans in exchange for a

2 payment of $170,000 pursuant to its previously issued reservation of rights. The

Brosnahans then argued that Harleysville had waived its right to contest its initial duty to

defend them in the underlying action because of its participation in the settlement. The

district court disagreed, holding that Harleysville’s “indemnification of [the Brosnahans] . .

. does not constitute a clear waiver of [Harleysville’s] challenge to the duty to defend.”

Dist. Ct. Order of Jan. 18, 2002 (App. at 27). This appeal followed.

Our review of the district court’s grant of summary judgment is plenary. Huang v.

BP Amoco Corp.,

(3d Cir. 2001). In its Memorandum Opinion, the

district court carefully and completely explained its reasons for finding that Harleysville

had no duty to defend the Brosnahans in the underlying Pinkert action, and we can add little

to the district court’s thoughtful analysis. Accordingly, we will affirm the district court’s

grant of summary judgment to Harleysville substantially for the reasons set forth in the

district court’s Memorandum Opinion without further elaboration.

We will also affirm the district court’s finding that Harleysville’s participation in

the settlement pursuant to its reservation of rights does not constitute a waiver of its right

to contest its initial duty to defend the Brosnahans in the underlying Pinkert action. When

first made aware of the Pinkert complaint, Harleysville disclaimed coverage based upon its

belief that the allegations of the complaint did not trigger a duty to defend. Nonetheless,

the Brosnahans and Harleysville executed a non-waiver agreement which permitted

Harleysville to investigate the Pinkerts’ claim and reserved all of Harleysville’s rights

under the commercial general liability policy. When the Brosnahans filed a third-party

3 complaint against subcontractors in October of 2000, Harleysville was presented for the

first time, through the averments in the third-party complaint, with the possibility that

subcontractors negligently and accidentally caused damage to the building. At that point,

Harleysville, although not bound to do so by the reservation of rights and non-waiver

agreement, undertook the defense of the Brosnahans. Based on information Harleysville

developed in the course of the representation, viz., that a previously unidentified

subcontractor negligently attached drainpipes to the building roof scuppers in a manner

which caused water damage to the interior of the building, Harleysville settled the Pinkert

action on behalf of the Brosnahans pursuant to its reservation of rights and non-waiver

agreement. However, Harleysville did not waive its right to contest any duty to defend

from the time of the filing of the Pinkert complaint to the date of the assumption of the

defense.

II.

For the above reasons, we will affirm the district court.

4 TO THE CLERK OF THE COURT:

Please file the foregoing Opinion.

/s/Theodore A. McKee

Circuit Judge

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