NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

_____________ N o. 09- 3821

_____________ P E NNS YL VANI A NAT I ONAL M UT UAL CA S UAL T Y I NS UR ANC E CO M P ANY v. P AR KS HOR E DE VE L OP M E NT CO RP OR AT I ON; CA T AL I NA C OVE CO NDOMI NI UM AS S OC I AT I ON, I NC . ; KE E N' S CA UL KI NG AND W ATE RP ROOFI NG; ABC CORP ORATI ON I THROUGH A BC

C O R PO R A T I O N X fi ct i t i ous names Par ks hor e D evel opm entC orpor at i on, A ppel l ant

___ ___ ___ ___ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt

forthe D i s tr i ctof N ew J er s ey ( N o. 07- cv- 01331) D i s tr i ctJ udge: H on. R obertB . K ugl er Subm i t t ed N ovember19, 2010 B efore: B A R R Y , C H A G A R E S , and V A N A S K IE, C i rcui tJudg es.

( Fi l ed D ece m ber10, 2010)

____________ OPI NI ON O F THE COURT

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C H A G A R E S, C i r cui tJ udge. P ark sh o re D ev elop m en t C o rpo rati o n (“P ark sh o re” ) ap p ea ls th e D istri ct C o u rt ’s gr antof s um m aryj udgm entw hi ch r el i eved i t s i ns ur er , Penns y l vani a N at i onal M utual C as ual tyI ns ur ance C om pany , fr om pr ovi di ng cover age f orcl ai m s of w at erdamage s t emm i ng fr om faul tyw or km ans hi p bys ubcontr act or s ata Parks hor e condomi ni um devel opm entpr oj ect . T he D i s tr i ctC our tdet erm i ned ther e w as no cover age unde rthe pol i cybeca us e ther e w as no “occ urr ence ” due t o the fa ctthatthe onl ydamage w as t o t he pr opertyi t s el f. Forthe r eas ons thatfol l ow , w e w i l l aff i r m the j udgm entof the D i s tr i ct C o u rt. I. W e w r i t e forthe part i es ’ benef i tand r eci t e onl ythe fa ct s es s ent i al t o our di s pos i t i on. Par ks hor e w as the deve l operand gene r al contr act orof the C at al i na C ove C o n d o m in iu m s in L in w o o d , N e w Je rse y . P a rk sh o re h ire d su b c o n tra c to rs to p e rf o rm a ll o f th e wo r k a n d c o n s tru c t i o n a tth e s i t e i n c l u d i n g r o o f i n g , f r a mi n g , i n s t a l l i n g wi n d o ws a n d d o o r s , c a u l k i n g a n d s e a l i n g , i n s t a l l i n g v e n th o o d s , i mp l e me n t i n g a n i rr i g a t i o n s y s t e m, gr adi ng, s ett i ng the founda t i on, and i ns t al l i ng gut t er s and l eade r s . Par ks hor e compl et ed the fi r s tuni tatC at al i na C ove i n 1989 and the pr oj ectw as fi ni s hed i n 1998. I n J ul y1999, the C at al i na C ove C ondom i ni um A s s oci at i on ( “C C C A ”) not i fi ed Parks hor e thats tucco a ro u n d s o m e o f

th e w in d o w s h a d n o t b e e n c a u lk e d p ro p e rl y , c a u s in g w a te r l e a k a g e . P a rk s h o re h ir e d K e e n ’s C a u lk in g & W a te rp ro o f in g to re -c a u lk th e w in d o w s . I n O ct ober2006, the C C C A fi l ed a c om pl ai nti n the Super i orC our tof N ew J er s ey al l egi ng cl ai m s agai ns tPar ks hor e forbr eac h of contr act , negl i gence , br eac h of i m pl i edB e f

o re th is a p p e a l, th e p a rties a g re e d to d ism iss th e in su ra n c e c o v e ra g e c laim s re late d to 1 the cons um erfr aud i s s ues i n t he under l y i ng cas e. 3 w a rra n ties in th e d e sig n a n d c o n stru c tio n o f th e c o n d o m in iu m s, n e g lig e n c e in f a ili n g to r emedi at e pr oper l ythe w at erdamage, and forvi ol at i ons of the N ew J er s eyC ons um er Fr aud A ct . T o s uppor tthes e al l egat i ons , the C C C A ’ s expert , M i chae l H y l and, r eport ed thatther e w er e mul t i pl e def i ci enci es i n the s i t e gr adi ng and dr ai nage w hi ch al l ow ed w at er t o ent erthe cr aw l s pace and ca us e damage. A ddi t i onal l y , H y l and conc l uded thatthe fi nal pr oj ectfai l ed t o conform t o bui l di ng code r equi r ement s and devi at ed fr om the appr oved engi neer i ng s i t e pl an. I n a s uppl ement al r eport , H y l and det ai l ed more defi ci enci es i n t he ro o f in g , sid in g , w in d o w in sta llatio n , fr a m in g , w o o d trim a n d irrig a tio n w h ich re su lted in w at erpenetr at i on and ca us ed damage t o the fr ami ng, s heathi ng, w i ndow s , cas i ngs and s tu c c o f in is h . P a rk sh o re ten d e re d th e d e f e n se a n d in d e m n if

ica tio n o f

th is a c tio n to P e n n sy lv a n ia N at i onal M utual C as ual tyI ns ur ance C om pany( “Penn N at i onal ”) . Penn N at i onal i s s ued a C om m er ci al G ener al L i abi l i ty( “C G L ”) pol i cyt o Par ks hor e foreveryy earbegi nni ng M ar ch 7, 1989 thr ough M ar ch 7, 2006. O n M ar ch 22, 2007, Penn N at i onal fi l ed a decl ar at oryj udgm entact i on i n t he D i s tr i ctC our ts eeki ng a dec l ar at i on thati thad no obl i gat i on t o pr ovi de i ns ur ance cover age t o Par ks hor e i n the C C C A l aw s ui t . T he D i s tr i ct C our tgr ant ed Penn N at i onal ’ s s um m aryj udgm entm ot i on on al l cl ai m s exce ptthos e for cons um erfr aud, fi ndi ng thatthe al l egat i ons i n the l aw s ui tfi l ed bythe C C C A di d not 1 gi ve r i s e t o an “oc curr ence ” underthe pol i cy . O n Sept ember23, 2009, Par ks hor e fi l ed th is a p p e a l.4 II. T h e Di s tr i c tCo u r th a d d i v e r s i tyj u r i s d i c t i o n p u r s u a n tt o 2 8 U. S . C. § 1 3 3 2 a n d we have appel l at e j ur i s di ct i on pur s uantt o 28 U . S. C . § 1291. O urr evi ew of the D i s tr i ct C o u rt = s g ra n t o f

su m m a ryju d g m e n t is p len a ry , an d w e a p p lyth e sa m e leg a l sta n d a rd a s it s houl d have. V i t al o v. C abotC orp. , 399 F. 3d 536, 542 ( 3d C i r . 2005) . A partyi s ent i t l ed t o s um m aryj udgm ent“i f the pl eadi ngs , the di s coveryand di s cl os ur e mat er i al s on fi l e, and anyaff

i davi t s s how thatther e i s no genui ne i s s ue as t o anym at er i al fac tand thatt he m ovanti s ent i t l ed t o j udgm entas a mat t erof l aw . ” Fed. R . C i v. P. 56( c) . I n conduct i ng ou r anal y si s, w e m ustview the record i n the l i gh tm ostfavo rabl e t o P arkshore, and m ust dr a w a l l r e a s on a bl e i nf

e r e nc e s i n i t s fa vo r . Se e V i t a l o, 39 9 F. 3d a t54 2; Fe d. R. Ci v. P. 5 6 (c ). T o d e f

e a t su m m a ryju d g m e n t, ho w e v e r, P a rk sh o re m u st “ p ro d u c e a d m iss ib le evi dence cont ai ni ng ‘ s peci fi c fa ct s s how i ng thatther e i s a genui ne i s s ue fortr i al . ’ ” V it alo, 39 9 F . 3 d at 54 2 (qu o ti n g F ed . R . C iv. P. 56 (e)). III . P ark sh o re m aintains that d ef ec ti v e w o rkm an sh ip p erf o rm ed b yit s su b co n tr ac tors w hi ch ca us ed damage t o i t s non- defe ct i ve w or k qual i fi es as “pr opertydamage” ca us ed by an “oc curr ence , ” and thus i s cover ed underi t s C G L pol i cy . Par ks hor e cont ends thatt he w at erdamage atthe C C C A condomi ni um s w as an ac ci dentthatw as nei therexpec t ed nor in ten d e d b yP a rk sh o re a n d , as su c h c o n stitu tes a n “ o c c u rre n c e .” In su p p o rt o f th is i nterpret at i on , P arkshore rel i es on W eedo v. S t on e-E-B ri ck, Inc. , 40 5 A . 2d 78 8 (N . J.Par ks hor e al s o s uppor t s i t s pos i t i on byr el y i ng on the comm ent aryof the I ns ur ance 2 S e r v i c e s Of

f i c e ’ s 1 9 8 6 e d i t i o n o f

th e CG L c o v e r a g e f

o r m a n d b ye v a l u a t i n g th e CG L e x c lu sio n s to d e ter m in e th e in ten t o f th e c o v e ra g e . W e h a v e c o n sid e re d th e se a rg u m e n ts a n d f i n d th a tth e ya r e n o tp e r s u a s i v e i n e s t a b l i s h i n g a n “ o c c u rr e n c e ” u n d e rth e CG L p o lic y . 5 1979) , and i t s pr ogenyt o s how thatcons truct i on defe ct s r es ul t i ng i n cons equent i al d a m a g e to th e p ro p e rt yits e lf c o u ld q u a lif

ya s a n “ o c c u rr e n c e .” 2 W e c o n c lu d e th a t P a rk sh o re ’s in terp re tatio n o f W e e d o is m isg u id e d . W h ile W eedo doe s di s t i ngui s h betw een the bus i nes s r i s k of r epai r i ng a def ectand the r i s k of faul tyw or km ans hi p t hatcaus es cons equent i al damage, the dec i s i on does notdet erm i ne the exi s t ence of an “ occurr ence ” w her e fa ul tyw or km ans hi p caus es damage t o the c o m p lete d p rojec t it se lf. S e e W e e d o , 4 0 5 A .2 d a t 7 9 1 (“ T h e risk in ten d e d to b e in su re d is the pos s i bi l i tythatthe goods , pr oduct s orw or k of the i ns ur ed, once r el i nqui s hed or compl et ed, w i l l caus e bodi l yi nj uryordamage t o pr opertyotherthan t o the pr oductor compl et ed w or k i t s el f, and forw hi ch the i ns ur ed maybe found l i abl e. ” ( i nt ernal quot at i on m a rk s o m itt e d )). T h is c o n c lu sio n is f u rth e r e n f

o rc e d b yth e su b se q u e n t h o ld in g s in F ire m e n ’s I n s. C o . o f

N e w a rk v . N a t’l U n io n F ire In s. C o ., 9 0 4 A .2 d 7 5 4 (N .J. S u p e r. C t. A pp. D i v. 2006) , and S. N . G ol den Est at es , I nc. v. C ont i nent al C as . C o. , 680 A . 2d 1114 ( N . J . Super . C t . A pp. D i v. 1996) . See Fi r emen’ s , 904 A . 2d at761- 63 ( appl y i ng W eedo, the courtfound thatfaul tyw or km ans hi p w hetherper form ed bya contr act oror s ubcontr act orw hi ch ca us es damage t o the gene r al contr act or ’ s w or k i s notan “occu rr ence” ); S . N . G olden, 68 0 A . 2d at11 17 , 11 19 (fi nd i ng an “o ccurr ence” becau se the i ns ur ed’ s faul tycons truct i on of s ept i c s y s t ems ca us ed damage t o nei ghbor i ngSubcontr act or s di d al l of the w or k atthe condomi ni um pr oj ect , butthe w hol e pr oj ect 3 n o n ethe less w as P ark sh o re’s “o w n w o rk” b ec au se P ark sh o re w as th e g en era l con tr ac tor. S e e F ir e m e n ’s , 9 0 4 A .2 d a t 7 6 1 . 6 re sid e n ts’ h o m e s). W h ile o th e r c o u rts h a v e p e rm itt e d a n “ o c c u rre n c e ” w h e re f a u lty cons truct i on damages onl ythe i ns ur ed’ s ow n w ork, N ew J er s eycourt s for ecl os e s uch a 3 p o ss ib ili ty . T h e re f

o re , w e c o n c lu d e th a t P a rk sh o re ’s a rg u m e n ts a re n o t p e rsu a siv e in e s ta b lis h in g a n “ o c c u rr e n c e ” u n d e r t h e C G L p o lic y . I V. A cc o rdin g ly , w e w il l aff irm the D istri ct C o u rt ’s ord er g ran ti n g su m m ary ju d g m e n t to P e n n N a tio n a l.