Case Name: GENE & HARVEY BUILDERS, INC., Appellee, v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, Appellant
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1986-11-17
Citations: 512 Pa. 420
Docket Number: No. 13 W.D. appeal docket, 1986
Parties: GENE & HARVEY BUILDERS, INC., Appellee, v. PENNSYLVANIA MANUFACTURERS’ ASSOCIATION INSURANCE COMPANY, Appellant.
Judges: Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.
Reporter: Pennsylvania State Reports
Volume: 512
Pages: 420–439

Head Matter:
517 A.2d 910
GENE & HARVEY BUILDERS, INC., Appellee, v. PENNSYLVANIA MANUFACTURERS’ ASSOCIATION INSURANCE COMPANY, Appellant.
Supreme Court of Pennsylvania.
Argued Sept. 17, 1986.
Decided Nov. 17, 1986.
Joseph J. May, Plate, Shapira, Hutzelman, Berlin, May, Walsh & Brabender, Erie, for appellant.
William Kuhn, Sharon, for appellee.
Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.

Opinion:
OPINION OF THE COURT
FLAHERTY, Justice.
At issue in this case is whether a general liability insurance policy, written in what has become a standard form, obligates the insurance company to defend and indemnify its insured, a building contractor, against a lawsuit filed by a homeowner who claims that his house, constructed by the insured contractor, has become uninhabitable because it was negligently built on land which has subsided.
Although the present lawsuit is between Gene & Harvey Builders, Inc. (hereinafter "the contractor") and Pennsylvania Manufacturer's Association Insurance Company (hereinafter "the insurance company"), the underlying dispute is between the homeowners, Marion and Erna D'Augostine, and the contractor.
In October of 1979 the D'Augostines purchased a parcel of land in Neshannock Township, Lawrence County, Pennsylvania from Merritt Estates, Inc. At about the same time, they contracted with Gene and Harvey Builders to construct a house on this parcel of land. The house was completed and delivered on March ,1, 1980, and the D'Augostines moved in. In February of 1982, however, the homeowners filed a complaint in the Lawrence County Court of Common Pleas against Merritt Estates and the contractor. This complaint alleged that the land had subsided and fallen away from the premises, and that this, along with defects in construction, caused doors to come ajar and floors to become unstable. The complaint further stated that the house was useless because of the subsidence and that sinkholes and subsidence on the land were known or should have been known to both the seller of the land and the contractor. Further, it was alleged that the subsidence was concealed by filling in sinkholes.
Subsequently, in an amended complaint, the D'Augostines claimed that the construction was performed negligently and in an unworkmanlike manner with knowledge of the defects and subsidence of the land. They also claimed that the contractor misrepresented the true condition of the land with respect to subsidence. After the amended complaint was filed, the D'Augostines filed for bankruptcy and a demurrer to this amended complaint was granted because the D'Augostines were no longer the real parties in interest. However, on December 1, 1982, a trustee in bankruptcy for the D'Augostines instituted an action on the same subject matter against Merritt Estates, Inc. and Gene and Harvey Builders, Inc. in the Court of Common Pleas of Lawrence County. This complaint contains the following allegations, some of which are identical to those in the earlier complaint:
PARAGRAPH 11. That defects have become apparent in recent months in said construction of dwelling and in the land caused by undermining for minerals and subsidence as a result of said undermining.
PARAGRAPH 13. That sinkholes and subsidence were apparent on said land and said condition was known or should have been known to Merritt Estates, Inc., and Gene & Harvey Builders, Inc. That in addition to the condition being apparent on said land, the predecessors in ownership from whom Merritt Estates, Inc. purchased said land actually mined said land, creating the conditions which caused the subsidence. The said mining was known or should have been known by Defendants. Further, the contractor filled in sinkholes on the premises sold to the D'Augostine's [sic] under cover of darkness in order to perpetrate fraud.
PARAGRAPH 29. That said residential dwelling was constructed negligently and in an unworkmanlike manner with knowledge of the defect and subsidence of the land on which said residential dwelling was constructed; that said dwelling has been rendered unfit, unsafe, and uninhabitable as a result of the actions of Defendant second named [Gene and Harvey Builders].
PARAGRAPH 31. That Gene & Harvey Builders, Inc. Defendant second named, constructed said premises with knowledge of the defects in said land and with knowledge of said subsidence on said land and misrepresented the true condition of said premises and concealed its true condition, all of which is more specifically set forth in Paragraphs 11 and 13 of the Complaint. [Reproduced above.]
During the time the D'Augostines' action arose, Gene & Harvey Builders, Inc. (the contractor) was insured under a general liability insurance policy in standard form underwritten by Pennsylvania Manufacturers Association Insurance Company. The policy is intended to grant comprehensive general liability insurance coverage. After receiving the complaints filed by the D'Augostines as well as the complaint subsequently filed by the trustee in bankruptcy, the contractor delivered to Pennsylvania Manufacturers Association Insurance Company copies of the original and amended complaints. The insurance company at first undertook a defense of the contractor, its insured, but subsequently notified the contractor that it was denying coverage under the policy and declined to proceed further with the defense of the case. Consequently, the contractor provided his own defense and has filed the present separate action for declaratory judgment in the Court of Common Pleas of Mercer County, requesting a judicial interpretation of the coverage provided by its comprehensive general liability policy with Pennsylvania Manufacturers Insurance Company. Both parties moved for summary judgment, and the Court of Common Pleas of Mercer County granted the motion in favor of the contractor. Superior Court affirmed, relying on the trial court's opinion.
At issue in this appeal is whether the lower courts erred in holding that Pennsylvania Manufacturers Insurance Company is required by the terms of the policy to defend and indemnify the contractor.
Gene & Harvey Builders contends that the lower courts did not err and that coverage is afforded under the following policy provisions:
1. COVERAGE B — PROPERTY DAMAGE LIABILITY
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
Coverage A. bodily liability or
Coverage B. property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent____
The policy defines "occurrence" as:
an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured____
Pennsylvania Manufacturers Insurance Company, on the other hand, asserts that coverage should be denied under the following exclusions:
(n) . property damage to the named insured's products arising out of such products or any part of such products;
(o) . property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith;
(p) . damages claimed for the withdrawal, inspection, repair, replacement, or loss of use of the named insured's products or work completed by or for the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein.
As this Court stated in Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 304-305, 469 A.2d 563, 566 (1983), the principles which Pennsylvania courts apply in interpreting contracts of insurance are well established:
The task of interpreting [an insurance] contract is generally performed by a court rather than by a jury. See Gonzalez v. United States Steel Corp., 484 Pa. 277, 398 A.2d 1378 (1979); Community College of Beaver County v. Society of the Faculty, 473 Pa. 576, 375 A.2d 1267 (1977). The goal of that task is, of course, to ascertain the intent of the parties as manifested by the language of the written instrument. See Mohn v. American Casualty Co. of Reading, 458 Pa. 576, 326 A.2d 346 (1974). Where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement. See Mohn v. American Casualty Co. of Reading, supra. Where, however, the language of the contract is clear and unambiguous, a court is required to give effect to that language. See Pennsylvania Manufacturers' Ass'n. Insurance Co. v. Aetna Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967). "[I]n the absence of proof of fraud, 'failure to read [the contract] is an unavailing excuse or defense and cannot justify an avoidance, modification or nullification of the contract or any provision thereof.' " Olson Estate, 447 Pa. 483, 488, 291 A.2d 95, 98 (1972), quoting Orner v. T. W. Phillips Gas & Oil Co., 401 Pa. 195, 199, 163 A.2d 880, 883 (1960).
These principles, applicable to insurance contracts, are in actuality, not essentially dissimilar to traditional principles governing the interpretation of any contracts: the goal is to determine the intent of the parties, and in the absence of ambiguity, the plain meaning of the agreement will be enforced. Steuart v. McChesney, 498 Pa. 45, 444 A.2d 659 (1982). Because there is no ambiguity in the language of the insurance contract involved in this case, we turn to the claims made in the complaint and their relation to the language of the insurance contract.
The complaint alleges that the contractor performed negligently and in an unworkmanlike fashion, that he concealed the presence of sinkholes and filled them under cover of darkness, and that he misrepresented the condition of the premises to the buyer-homeowners. All these claims are excluded from coverage either because they are not "occurrences," i.e., accidental events, or because they fall under either exclusion (n) or exclusion (o).
The alleged intentional concealing of the condition of the land or the alleged intentional misrepresentation are not "occurrences" under the policy, for an intentional act is not an accident (and only accidents are covered).
The alleged negligence is also excluded from coverage because it clearly falls under both exclusions (n) and (o). As to exclusion (n), (damage to the contractor's product arising out of any part of the product), all the claims concern damage to the insured's product (the house) arising from a part of the product, i.e., a builder's duty to be reasonably prudent in the placement of a house. One does not contract for the building of a house in the sky; of necessity, houses must rest on the earth. Assumed is that part of the contractor's work product will be to act prudently in placing the house on the lot. Reasonable inspection of the lot and representing the condition of the lot to the owner are, in short, part of the work of building a house, which is the "product" of a contractor.
Similarly, in the case of exclusion (o) (damage to work performed by the contractor arising out of any portion of the work), all the negligence assertions in the complaint concern damage to the work (the building of the house, i.e., a building fit for habitation) arising out of any portion of the work — using reasonable care to inspect the ground to see that it is normally sound, filling in holes which were present in the ground, and representing to the homeowner-buyers that the land had or did not have certain characteristics.
Whether the contractor was negligent or whether he intentionally deceived the homeowners is not at issue in this case. He may or may not be so adjudicated at trial. What is at issue is whether the wrong alleged in the complaint is covered by the policy or whether it is excepted by an exclusion. Because intentional conduct is not covered by the policy, and because the alleged negligent conduct— whether it was actually negligent or not — arises from the product and the work, it is clearly subject to exclusions (n) and (o).
Reversed.
NIX, C.J., and HUTCHINSON, J., file a concurring opinion.
LARSEN, J., files a dissenting opinion.
. This writer joined the Concurring Opinion authored by Mr. Justice Hutchinson in Standard Venetian Blind, which places the "focus on whether an insured who is asked to replace or return the price of his own failed product could reasonably expect coverage from his liability carrier." (Emphasis supplied.) This view, however, did not com mand a majority of the Court, but its application would reach the same result in the case sub judice.
. Had the contractor wanted to protect himself against damage to his own product, such coverage is available by so-called builder's risk insurance or a performance bond. See Pittsburgh Bridge & Iron Works v. Liberty Mutual Insurance Co., 444 F.2d 1286 (3d Cir.1971).