Monday, August 15, 2016

Western Federal District Court Addresses Duty to Defend Under Commercial Liability Policy

In the Federal Western District Court of Pennsylvania case of Acuity v. Knisely & Sons, Inc., No. 3:15-CV-00076-KRG (W.D. Pa. Aug. 9, 2016 Gibbons, J.), the court addressed the carrier’s Motion for Summary Judgment in a declaratory judgment action in which the carrier sought a determination as to its rights and obligations under a commercial general liability insurance policy.  

According to the Opinion, the underlying matter arose out of a construction contract and issues related to the work performed thereunder.   The Opinion reports that a company installed a boiler in a waste water treatment plan which allegedly did not function properly.   At some point, the waste water treatment plant retained Knisely to service the boiler in an attempt to improve its function.  

When this failed, the waste water treatment plant commenced an underlying suit against the installer of the boiler.   The installer responded by filing a Joinder Complaint against Knisely and other companies who performed work on the boiler.  

Acuity sought a declaratory judgment that it has no duty to defend or indemnify Knisely with regard to the underlying action.  Acuity asserted that coverage was not triggered because the underlying Complaint did not allege an “occurrence” as defined by the policy, the underlying Complaint did not allege “property damage,” that coverage was precluded under the policy’s contractual liability exclusion, and that coverage was precluded by the policy’s impaired property/property not physically injured exclusion.  

The court granted the carrier’s Motion for Summary Judgment based upon its first contention, pertaining to an allegation that the underlying Complaint did not allege an “occurrence” as defined in the policy and, as such, deemed it unnecessary to address the carrier’s remaining arguments.  

 In its Opinion, the court outlined current status of the law pertaining to a duty to defend and/or indemnify under a liability policy.  

Anyone wishing to review the Federal Western District Court's decision in Acuity v. Knisely may click this LINK.

I send thanks to Attorney Brigid Q. Allford of the Camp Hill, Pennsylvania office of Marshall, Dennehey, Warner, Coleman & Goggin for bringing this case to my attention.

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