June 14, 2006 : Michael S. Savett Wins Summary Judgment for Insurer in Coverage Dispute
Michael S. Savett, a partner in Weber Gallagher's Philadelphia office, recently prevailed in an insurance coverage dispute on behalf of his client, Pennsylvania National Insurance Company.
The insured, a masonry contractor, was subcontracted to perform work at a truck repair facility in York, Pennsylvania. In May 2001, a portion of a wall at the facility collapsed. As a result, the owner was required to hire a second company to replace the wall and expended nearly $400,000 to have the wall partially dismantled and have a new wall built.
The owner sued the general contractor on breach of contract and negligence theories. In turn, the general contractor sued its subcontractors, including Penn National's insured, on the same theories. The general contractor alleged that the masonry subcontractor failed to take into account certain measurements regarding the location of the wall and, as a result, constructed the wall in the wrong location, which could not support the wall and led to the collapse.
Penn National issued a general liability insurance policy to the insured, with a $1 million policy limit, and pursued a declaratory judgment action against the insured in York County. In a motion for summary judgment, Mr. Savett argued that the damages claimed in the construction action were not insurable because they resulted from the alleged breach of contract, for which there is no coverage under general liability policies, rather than from negligence.
The trial court accepted Mr. Savett's argument that the purpose of such policies is to protect insureds from accidental injury to another's property, not to cover disputes between parties to a contractual undertaking. The court recognized that the "gist of the action" was the alleged breach of contract in failing to perform obligations specifically required by the contract, not negligence, and granted the motion on June 8, 2006. As a result, Penn National was relieved of any obligation to pay either for the insured's defense counsel in the construction case or indemnity for any settlement or judgment in that action.
File Under: Results, Insurance, Michael S. Savett