Brosnahan Bldrs Inc v. Harleysville Mutl ( 2003 )

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Precedential or Non-Precedential: Non-Precedential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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"Brosnahan Bldrs Inc v. Harleysville Mutl" (2003). 2003 Decisions. Paper 874.
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NOT PRECEDENTIAL
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., 137 F.Supp.2d 517, 527-28 (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
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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., 271 F.3d 560, 564 (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
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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.
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TO THE CLERK OF THE COURT:
Please file the foregoing Opinion.
/s/Theodore A. McKee
Circuit Judge
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