PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
               _______________

                    No. 22-1498
                  _______________

   AMERICAN HOME ASSURANCE COMPANY,
                             Appellant

                          v.

        SUPERIOR WELL SERVICES, INC.
               _______________

    On Appeal from the United States District Court
       For the Western District of Pennsylvania
               (D.C. No. 2-16-cv-01065)
     District Judge: Honorable David S. Cercone
                  _______________

                       Argued
                    April 26, 2023

Before: JORDAN, KRAUSE and BIBAS, Circuit Judges

                 (Filed: July 25, 203)
                  _______________
Devin Adams
Arnold & Porter Kaye Scholer
700 Louisiana Street – Ste. 1600
Houston, TX 77002

Robert R. Anderson [ARGUED]
Arnold & Porter Kaye Scholer
1144 Fifteenth Street – Ste. 3100
Denver, CO 80202

      Counsel for Appellant

Michael G. Connelly
Troutman Pepper
501 Grant Street
One Oxford Centre – Ste. 300
Pittsburgh, PA 15219

Ralph C. Surman, Jr.
Morgan Lewis & Bockius
301 Grant Street
One Oxford Centre – Ste. 3200
Pittsburgh, PA 15219




                               2
Misha Tseytlin [ARGUED]
Troutman Pepper
227 W. Monroe Street – Ste. 3900
Chicago, IL 60606

       Counsel for Appellee Superior Well Services Inc.

William A. Ciszewski [ARGUED]
Hodgson Russ
140 Pearl Street
The Guranty Building – Ste. 100
Buffalo, NY 14202

      Counsel for Intervenor-Appellee US Energy
      Development Corp
                     _______________

                OPINION OF THE COURT
                    _______________

JORDAN, Circuit Judge.

       American Home Assurance Co. (“American Home”)
appeals the District Court’s order granting summary judgment
for policy holder Superior Well Services, Inc. (“Superior”).
Specifically, American Home contends that the insurance
policy it issued to Superior does not indemnify the latter for
property damage caused by Superior’s own faulty
workmanship. We agree and we will reverse the District
Court’s order, remanding with directions to enter judgment for
American Home.




                              3
I.     BACKGROUND

       A.     The Underlying State Law Claim

        This dispute stems from an underlying New York state-
law claim brought by U.S. Energy Development Corporation 1
(“U.S. Energy”) against Superior. From June 2005 to October
2007, U.S. Energy contracted with Superior for hydraulic
fracking services to extract natural gas from wells owned by
U.S. Energy. In October 2007, U.S. Energy advised Superior
that it believed Superior had damaged some of these wells
during the fracking process. 2 Accordingly, in November 2007,
Superior notified its insurance provider, American Home,
about the potential claim. In February 2008, American Home
agreed to provide Superior with defense counsel, but it also


       1
          U.S. Energy is an Intervenor-Defendant-Appellee in
this action. Superior is a Chapter 11 Debtor in a bankruptcy
reorganization, In re CJ Holding Co., No. 16-33590 (Bankr.
S.D. Tex., Houston Div.), and U.S. Energy has filed a proof of
claim in that matter.
       2
         According to U.S. Energy, Superior improperly used
certain chemical mixtures during the fracking process,
mixtures that were “defectively designed, were [unfit for]
stimulating the production of natural gas wells[], were used in
improper concentration or ratios, were used in geologic
formations for which they were not fit, were improperly
manufactured, stored, handled or applied, or were improperly
used with incompatible materials, incompatible water, or
incompatible geology.” (App. at 74.) As a result, the damaged
wells produced diminished amounts of natural gas.




                              4
sent Superior a letter reserving its right to contest insurance
coverage.

         In September 2010, U.S. Energy filed the underlying
lawsuit against Superior in New York state court, alleging that
Superior had damaged 97 of its wells. The case proceeded to
trial in April 2018, with American Home providing Superior’s
defense. The jury considered only whether Superior had
breached its agreement with U.S. Energy “to render services in
a reasonably careful and professional manner[.]” (App. at 75.)
The trial court instructed the jury that, if it found “that Superior
breached the contract by failing to perform services with
reasonable care, skill and diligence” and “that U.S. Energy
suffered damages as a result, [it should] find for U.S. Energy
on its breach of contract claim[.]” (App. at 326-27.)

       In May 2018, the jury found against Superior on the
breach of contract claim and determined that Superior had
damaged 53 of the 97 wells. The jury’s verdict form specified
that Superior “fail[ed] to perform its contract with U.S. Energy
in a workman like manner” and that this “failure” was “a
substantial factor in causing damage to the U.S. Energy
wells[.]” (App. at 336.) Accordingly, it awarded U.S. Energy
$6.16 million, a figure that was increased to approximately
$13.18 million after the state court tabulated interest.

       B.      The Dispute Between Superior and American
               Home

        Before the unfortunate misperformance of its duties to
U.S. Energy, Superior purchased four commercial general
liability (“CGL”) policies from American Home, one for each
of the years 2004–2005, 2005–2006, 2006–2007, and 2007–




                                 5
2008. Superior’s policy provided coverage for “property
damage” arising out of an “occurrence.” 3 (App. at 352.) The
policy defined “property damage” as both “[p]hysical injury to
tangible property, including all resulting loss of use of that
property” and “[l]oss of use of tangible property that is not
physically injured.” (App. at 366.) It defined “occurrence” as
“an accident, including continuous or repeated exposure to
substantially the same general harmful conditions[,]” but it did
not define the term “accident.” (App. at 365.) The policy
further contained exclusions, one of which excluded coverage
for all damage to “[p]ersonal property in the care, custody or
control of the insured[.]” (App. at 355.)

        Superior also purchased an “underground resources and
equipment coverage” (“UREC”) endorsement that amended
the CGL policy to provide additional coverage “against risks
associated with well-servicing operations[.]” (Answering Br.
at 7.) Specifically, the endorsement “added” coverage “with
respect to ‘property damage’ included within the ‘underground
resources and equipment hazard’ arising out of the operations
performed by [Superior] or on [Superior’s] behalf[.]” (App. at
374.) The UREC endorsement defined “[u]nderground
resources and equipment hazard” as “property damage” to any
of the following:




       3
          The policies Superior bought each year were
materially identical except that the limit for “each occurrence”
under the policy was increased from $1 million to $2 million
in the 2007-08 policy. (App. at 587.) This opinion cites to the
2004–05 policy.




                               6
       a. Oil, gas, water or other mineral substances
       which have not been reduced to physical
       possession above the surface of the earth or
       above the surface of any body of water;

       b. Any well, hole, formation, strata or area in or
       through which exploration for or production of
       any substance is carried on;

       c. Any casing, pipe, bit, tool, pump or other
       drilling or well servicing machinery or
       equipment located beneath the surface of the
       earth in any such well or hole or beneath the
       surface of any body of water.

(App. at 375.)

       In July 2016, American Home filed this diversity action
seeking a declaratory judgment that Superior’s policy does not
indemnify Superior for any damages that might be awarded to
U.S. Energy and which were caused by Superior’s breach of
contract. American Home argued below – and now argues on
appeal – that property damage caused by a failure to perform a
contract “in a workman like manner” is not an “occurrence”
under the policy. (Opening Br. at 20.) It further argued that,
even if the policy covered Superior’s insurance claim, the
claim would involve a single “occurrence” under Pennsylvania
law, as opposed to 53 separate occurrences, and is thus subject
to the policy’s $2 million per-occurrence limit. U.S. Energy
intervened as a defendant and counter-claimed for a
declaration that American Home has a duty to indemnify
Superior. It argued that the plain text of the endorsement,
which modified the standard CGL policy, expressly covers the
judgment awarded to U.S. Energy and that the 53 instances of




                               7
well damage were separate “occurrences.” Each of the parties
then moved for summary judgment.

       C.     The District Court’s Opinion

       The District Court granted summary judgment for
Superior and, by extension, for U.S. Energy, and it ordered
American Home to indemnify Superior for the state court
judgment. It first determined that the policy’s “occurrence”
provision was “irrelevant” because, in its view, the UREC
endorsement covered Superior’s fracking operations
regardless of whether Superior’s liability was caused by its
own failure to perform the contract “in a workman like
manner.” (App. at 16-20.) Additionally, and alternatively,
while recognizing that the Pennsylvania Supreme Court has
held that the term “occurrence” does not cover “faulty
workmanship,” the District Court distinguished that language
from the phrasing of the jury’s verdict sheet, which stated that
Superior “fail[ed] to perform its contract with U.S. Energy in
a workman like manner[.]” (App. at 336 (emphasis added).)
Finally, the Court concluded that each of the 53 damaged wells
gave rise to a separate occurrence, triggering an independent
coverage limit for each respective well.

II.    DISCUSSION 4

     Setting aside for the moment the question of whether
the UREC endorsement displaces the insurance policy’s

       4
        The District Court had jurisdiction under 

. We have jurisdiction under 

. We
review summary judgment decisions de novo, applying the
same standard as the district court was obligated to apply. Sapa




                               8
“occurrence” requirement, it is readily apparent that the
damage to U.S. Energy’s wells was not caused by an
“occurrence.” In Kvaerner Metals Div. of Kvaerner U.S., Inc.
v. Commercial Union Ins. Co., a steel company hired Kvaerner
to construct a coke oven battery. 

 (Pa. 2006).
The steel company alleged that the battery did not meet the
contract’s specifications and sued Kvaerner for breach of
contract. 

 Kvaerner notified its insurer, which disclaimed
coverage, leading Kvaerner to file a declaratory judgment
action. 

. Like the insurance policy in this case,
the policy in Kvaerner defined “occurrence” as an “accident”
but did not define the word “accident.” 

. The court
relied on the ordinary dictionary meaning of “accident”: “‘[a]n
unexpected and undesirable event,’ or ‘something that occurs
unexpectedly or unintentionally.’” 

 at 897-98 (quoting
Webster’s Second New College Dictionary 6 (2001)). “The
key term” in that definition, the court explained, is
“unexpected,” which “implies a degree of fortuity that is not
present in a claim for faulty workmanship.” 

.




Extrusions, Inc. v. Liberty Mut. Ins. Co., 

 (3d
Cir. 2019). Under Pennsylvania law, which the parties agree
governs our interpretation of the insurance policy at issue, the
interpretative task “is generally performed by a court rather
than by a jury.” 401 Fourth Street, Inc. v. Inv’rs Ins. Grp., 

 (Pa. 2005) (internal quotation marks and citation
omitted). “When the language of an insurance policy is plain
and unambiguous, a court is bound by that language.” Pa.
Nat’l Mut. Cas. Ins. Co. v. St. John, 

 (Pa. 2014).




                               9
        In affirming a grant of summary judgment that denied
coverage to Kvaerner, the Supreme Court of Pennsylvania
stated:

       We hold that the definition of “accident”
       required to establish an “occurrence” under the
       policies cannot be satisfied by claims based upon
       faulty workmanship. Such claims simply do not
       present the degree of fortuity contemplated by
       the ordinary definition of “accident” or its
       common judicial construction in this context. To
       hold otherwise would be to convert a policy for
       insurance into a performance bond. We are
       unwilling to do so, especially since such
       protections are already readily available for the
       protection of contractors.

Id. at 899 (internal footnote omitted).

        Similarly, in Sapa Extrusions, Inc. v. Liberty Mutual
Insurance Co., we concluded that faulty workmanship did not
amount to an “occurrence” defined as an “accident” under the
CGL policy at issue in that case. 

 (3d Cir.
2019). There, Sapa supplied “organically coated extruded
aluminum profiles” to a company that manufactured windows
and doors using those profiles. 

. The manufacturer
contended that Sapa’s aluminum profiles “did not perform as
intended, represented, and agreed.”         

. The
manufacturer sued Sapa, whose insurers disclaimed coverage.

. Observing that “Kvaerner directly informs our
analysis,” we held that the breach of contract that “flow[ed]
from faulty workmanship” did not amount to an “‘occurrence’
– that is, an unforeseeable, ‘fortuitous event.’” 

. In




                               10
other words, it was “largely within Sapa’s control whether it
supplied the agreed-upon product, so any liability flowing from
Sapa’s failure to deliver a product that met the agreed
specifications was too foreseeable to be considered an
accident.” 

 (cleaned up).

       Although the District Court in this case indicated that
“faulty workmanship” might be different from a failure to
perform a contract “in a workman like manner,” 5 the Supreme
Court of Pennsylvania’s holding in Kvaerner – and our
application of Kvaerner in Sapa – were premised on the logic
that poor workmanship is too “foreseeable to be considered an
accident,” rather than on labels or special words. 

 The
phrases “faulty workmanship” and “failure to perform in a
workman like manner” are equivalent in this respect. And,
under Pennsylvania law, faulty workmanship, such as
rendering a substandard service or causing damage by use of
an unsuitable product, as was the case here, does not constitute
an “occurrence” when an insurance policy defines an
“occurrence” as an “accident.” Kvaerner, 

.

       Returning to the question of whether the UREC
endorsement eliminates the policy’s             “occurrence”
requirement, we conclude that the policy and endorsement are
best read together as retaining the requirement. The District
Court held that the endorsement “either expands or supersedes
the [underlying policy’s] definition of occurrence” and

       5
         The Court expressly declined “to decide whether
‘faulty workmanship’ and ‘workman like manner’ are
equivalent phrases[,]” but the analysis it undertook
distinguished Kvaerner and Sapa and their focus on faulty
workmanship. (App. at 19 & n.3.)




                              11
provides coverage for any damage that both falls within the
definition of “underground resources and equipment hazard”
and “aris[es] out of the operations performed by” Superior.
(App. at 22–23.) Although it is true that the language of an
endorsement would supersede that of an underlying policy if
the two were in conflict, that is not the case here.

       First, the underlying policy excluded coverage for
damage to all “[p]ersonal property in the care, custody or
control of the insured.” (App. at 354-55.) Therefore, absent
the UREC endorsement, damage to personal property used in
connection with servicing the wells and within Superior’s care,
custody or control would have been excluded from the policy.
(App. at 374-75.) The endorsement, however, reinstates that
coverage by providing that the “exclusion does not apply to
any ‘property damage’ included within the ‘underground
resources and equipment hazard[.]’” (App. at 375.) The
endorsement defines “[u]nderground resources and equipment
hazard” to “include[] ‘property damage’” to oil and gas wells
and “[a]ny casing, pipe, bit, tool, pump or other drilling or well
servicing machinery or equipment located beneath the surface
of the earth in any such well[.]” 6 (App. at 375.) Notably, to

       6
         Indeed, this equipment likely would have constituted
personal property under Pennsylvania law as trade fixtures, so
the endorsement restored coverage for damage (caused by an
occurrence) to certain items that otherwise would have fallen
outside of the underlying policy. See Haut v. Carlson, 

 (Pa. Ct. Com. Pl. 1975) (“[T]he casing in
an oil or gas well as well as the derrick and other appliances
used in drilling are trade fixtures and may be removed by the
owner or lessee either during the term of the lease or within a
reasonable time after its expiration.”); accord 

                               12
trigger coverage, the endorsement expressly requires “property
damage,” which, under the underlying policy, is covered only
if it “is caused by an ‘occurrence.’” (App. at 352.) The
endorsement then, instead of conflicting with the terms of the
underlying policy, incorporates the “occurrence” requirement
by way of the “property damage” requirement.

        Second, there are other places in the endorsement that
either cross-reference the underlying policy or expressly use
the term “occurrence.” The endorsement’s Provision A creates
a new aggregate limit for coverage and states that the new limit
“is the most we will pay under Coverage A [of the underlying
agreement] for the sum of damages because of all ‘property
damage’ included within the ‘underground resources and
equipment hazard’ and arising out of operations in connection
with any one well.” (App. at 374.) Next, Provision A provides
that it is “subject to [Paragraph] 5” of Section III of the
underlying policy, and Paragraph 5 of the underlying policy
establishes policy limits that are “the most [American Home]
will pay … because of all ‘bodily injury’ and ‘property
damage’ arising out of any one ‘occurrence.’” (App. at 361.)


(originally published in 1925) (“There is considerable
authority for the view that the lessee of an oil or gas well has
the absolute right to remove casing which he has installed in
the well …. based upon the ground that the casing is a trade
fixture or personal property, rather than a permanent fixture or
part of the realty, and that it can be removed without injury to
the land.”); see also Fixture, Black’s Law Dictionary (11th ed.
2019) (defining “trade fixture” as “[r]emovable personal
property that a tenant attaches to leased land for business
purposes”).




                              13
And Provision D of the endorsement imposes certain duties on
the insured “[u]pon the ‘occurrence’” of certain types of
damages. (App. at 375.) The endorsement’s cross-reference
to the underlying policy and use of the term “occurrence”
therefore suggest that the endorsement incorporates, rather
than eliminates, the “occurrence” requirement.

        Third and finally, no provision in the endorsement
implicitly, let alone expressly, repudiates the “occurrence”
requirement. As a matter of structure, it makes sense that the
UREC endorsement would amend but not eliminate key terms
in the underlying policy, because only the latter functions as an
independent insurance agreement that promises to “pay those
sums that the insured becomes legally obligated to pay as
damages[.]” 7 (App. at 352.)


       7
         Superior also asserts that American Home is barred
under Pennsylvania’s estoppel doctrine from asserting its
“occurrence” requirement argument because, Superior alleges,
American Home did not provide Superior notice of that
argument until eight years after November 2007, when
Superior first informed American Home about U.S. Energy’s
potential claim against it. On the contrary, however, American
Home informed Superior in February 2008 – in its first
reservation of rights letter – that American Home “reserves its
rights” as to “whether the claimed damage arose out of an
‘occurrence’ as defined by the policy and applicable law.”
(App. at 265.) Moreover, Superior did not articulate in its
briefing any detrimental reliance due to the purported lack of
notice. American Home was therefore not estopped from
asserting its “occurrence” requirement argument because it
“timely” and “fairly inform[ed] the insured of the insurer’s




                               14
        We therefore hold that the endorsement does not
displace the underlying policy’s occurrence requirement.
Because we also hold that the damage caused by Superior’s
failure to perform its contract “in a workman like manner” is
not an “occurrence” under Pennsylvania law, we do not reach
the question of whether the insurance claim here involves 53
separate occurrences or a single occurrence.

III.   CONCLUSION

       For the foregoing reasons, we will reverse the District
Court’s summary judgment order and remand with instructions
to enter judgment for American Home.




position[.]” Erie Ins. Exch. v. Lobenthal, 

, 837
(Pa. Super. Ct. 2015).




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