Never Mind, Says Pennsylvania Court: Narrow Pleading Rule Doesn’t Limit Insurer’s Duty To Defend Product Liability Claim
Product liability law lies at the intersection of tort and contract law. In some jurisdictions (my home state of Massachusetts is one) a product liability claim is pled as a breach of warranty. This can lead to disputes concerning the duty to defend under a liability insurance policy, because the general rule is that negligence claims are covered, but claims for breach of contract are not.
In recent years, courts have frequently revisited the issue of whether allegations of breach of warranty defeat a duty to defend, in an effort to reconcile commercial general liability policy language with the many variants of pleadings in both product liability and construction defect claims.
In 2009, a Pennsylvania appeals court held, in Erie Ins. Exchange v. Abbott Furnace Co., 972 A.2d 1232 (Pa. Super. 2009), that a claim by a manufacturer against a company, which designed and installed an allegedly defective furnace in the manufacturer’s plant, was not covered under the furnace company’s general liability policy. Although the underlying complaint alleged both breach of contract and negligence, the court applied Pennsylvania’s “gist of the action” pleading rule and concluded that the negligence claim was duplicative of the breach of contract claim and was not properly pled. Therefore, there was no negligence claim and no covered “occurrence.”
Another insurer recently relied on Abbott to argue that multiple lawsuits against a window and door manufacturer for defective design or manufacturing resulting in water leakage, mold, cracked walls, and personal injury did not allege a covered “occurrence.” The insurer apparently distilled from the earlier decision the principle that product liability claims sound in contract under Pennsylvania law, even if they include allegations of negligence.
The court ruled that the underlying complaints, which alleged product liability claims under the laws of five different states, asserted tort claims based on damages to persons or property other than the insured’s windows and doors, and not merely faulty workmanship, and therefore alleged covered “occurrences.” In reaching this result the court rejected the application of the “gist of the action” doctrine to a duty to defend analysis. The court also pointed out that, unlike Abbott, where the plaintiff contracted for the purchase of a custom product that was alleged to be defective, the door and window manufacturer made off-the-shelf products that were alleged to have caused personal injury and damage to other property.
The case is Indalex, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, __ A.3d __ (Pa. Super. 2013), 2013 WL 6237312.
Photo credit: Andy Melton
Posted In: Duty to Defend