Court Opinion

ID: 9945319
Source: CourtListenerOpinion
Date Created: 2024-02-27 18:10:42.335439+00
Date Added: 2024-06-11T14:25:26.628887
License: Public Domain

J-A03034-24

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

 COUNTRY POOLS & SPAS, INC.             :   IN THE SUPERIOR COURT OF
                                        :        PENNSYLVANIA
                                        :
              v.                        :
                                        :
                                        :
 ERIE INSURANCE EXCHANGE; TY            :
 SCHOTT; AND CARISSA SCHOTT             :
                                        :   No. 375 WDA 2023
                                        :
 APPEAL OF: ERIE INSURANCE              :
 EXCHANGE                               :

             Appeal from the Order Entered February 24, 2023
     In the Court of Common Pleas of Allegheny County Civil Division at
                          No(s): GD-18-005134

BEFORE: BOWES, J., KUNSELMAN, J., and MURRAY, J.

MEMORANDUM BY MURRAY, J.:                   FILED: February 27, 2024

     Erie Insurance Exchange (Erie) appeals from the trial court’s order

denying its motion for summary judgment and compelling it to defend and

indemnify its insured, Country Pools & Spas, Inc. (Country Pools), in an

underlying lawsuit. After careful review, we reverse and remand for the entry

of summary judgment in Erie’s favor.

     On April 5, 2017, Ty and Carissa Schott (the Schotts) filed a civil

complaint (Schott complaint) against Country Pools in the Court of Common

Pleas of Allegheny County at No. GD-17-004843 (Schott action). The Schott

complaint set forth claims for unjust enrichment, violation of the Home

Improvement Consumer Protection Act (HICPA), 73 P.S. § 517.1 et seq., and
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violation of the Unfair Trade Practices and Consumer Protection Law (UTPCPL),

73 P.S. § 201-1 et seq.

      The Schott complaint alleged that, in July 2016, the Schotts sought a

quote from Country Pools for the installation of a swimming pool in their back

yard. Schott Complaint, 4/5/17, ¶ 5. Country Pools represented that it “could,

and would, install an in-ground pool of the model and size” the Schotts

selected. Id. ¶ 9. Country Pools quoted a price of $53,160, after which the

Schotts signed a written agreement and paid a $26,580 deposit. Id. ¶¶ 13-

17. Relying on Country Pools’ instructions, the Schotts engaged a separate

contractor to build a retaining wall for $18,916.67, engaged another

contractor to install a fence for approximately $1,500, and disposed of their

children’s playground equipment in anticipation of the pool’s installation. Id.

¶¶ 22-25, 31.

      Before commencing the retaining wall project, the Schotts asked

Country Pools whether permits were required from their municipality, Franklin

Park Borough. Id. ¶ 26. Country Pools responded “that no permits would be

necessary until installation of the swimming pool.” Id. After completion of

the retaining wall, the Schotts sought permits for the pool. Id. ¶ 27. At that

time, they learned that Franklin Park’s zoning regulations “would not permit

construction of the swimming pool.”     Id. ¶ 28.   The Schotts applied for a

zoning variance, but were denied. Id. ¶ 29. The Schott complaint alleged

Country Pools “never advised [the Schotts] to investigate local zoning laws

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prior to advising [the Schotts] that a swimming pool could be installed, and

[Country Pools] never investigated such laws itself prior to advising [the

Schotts] that a swimming pool could be installed.” Id. ¶ 33.

       The Schott complaint alleged Country Pools refunded $20,429 of the

Schotts’ deposit but wrongfully refused to refund the remaining $6,151. Id.

¶ 30. It also alleged the Schotts suffered “an additional ascertainable loss” of

$26,000 for costs incurred for excavation, the retaining wall, topsoil and grass

seed, fencing, the variance application, and replacement of playground

equipment. Id. ¶ 31.

       The Schott complaint set forth three causes of action.       Count one

claimed unjust enrichment for the $6,151 portion of the deposit Country Pools

refused to refund. Id. ¶¶ 34-38. Count two claimed Country Pools violated

HICPA by not including its mandated provisions in the home improvement

contract. Id. ¶¶ 39-49; see also 73 P.S. § 517.7(a).1 Count three claimed

Country Pools violated the UTPCPL “by knowingly misrepresenting that

particular services are needed if they are not needed and by engaging in

____________________________________________

1 While statutory and treble damages are available for HICPA violations, the

Schott complaint did not explain how the alleged HICPA violations caused the
Schotts to suffer the approximately $32,000 in actual damages they alleged.
Id. ¶¶ 39-49; see 73 P.S. §§ 517.10, 201-9.2.

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fraudulent or deceptive conduct which causes a likelihood of misunderstanding

or confusion.” Schott Complaint, 4/5/17, ¶ 54.2

       Country Pools sought defense and indemnification for the Schott action

under a commercial general liability insurance policy issued by Erie (the

policy).    Erie denied coverage, asserting that the Schott complaint did not

allege an “occurrence” as defined in the policy, nor did the Schotts’ alleged

damages constitute “property damage” as defined in the policy.              See

Complaint, 4/19/18, Exhibit B.

       The policy provides, in relevant part:

       1.     Insuring Agreement

              a.     We will pay those sums that the insured becomes
              legally obligated to pay as damages because of “bodily
              injury” or “property damage” to which this insurance
              applies. We will have the right and duty to defend the
              insured against any “suit” seeking those damages.
              However, we will have no duty to defend the insured against
              any “suit” seeking damages for “bodily injury” or “property
              damage” to which this insurance does not apply. We may,
              at our discretion, investigate any “occurrence” and settle
              any claim or “suit” that may result….

              b.   This insurance applies to “bodily injury” and
              “property damage” only if:

                     1)    The “bodily injury” or “property damage”
                     is caused by an “occurrence” that takes place in
                     the “coverage territory”….

____________________________________________

2 Count three further alleged that, by definition, the alleged HICPA violations

also constituted UTPCPL violations. Id. ¶ 51 (citing 73 P.S. § 517.10).

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Erie’s Answer, New Matter, and Counterclaim, 6/10/19, Exhibit C (Policy) §

I.A.1 (emphasis added).

        The policy includes the following relevant definitions:

        “Occurrence” means an accident, including continuous or
        repeated exposure to substantially the same general
        harmful conditions….

Erie’s Answer, New Matter, and Counterclaim, 6/10/19, Exhibit D (Policy

Amendment) (emphasis added).

        “Property damage” means:

        a.    Physical injury to tangible property, including all resulting
        loss of use of that property. All such loss of use shall be deemed
        to occur at the time of the physical injury that caused it; or

        b.    Loss of use of tangible property that is not physically
        injured. All such loss of use shall be deemed to occur at the time
        of the “occurrence” that caused it.

        ….

        c.     “Property damage” does not include any loss, cost or
        expense to correct any defective, faulty or incorrect work
        performed by you or by any contractors or subcontractors working
        directly or indirectly on your behalf.

Policy § V.17; Policy Amendment (adding part c to definition).

        The policy also defines “your product” and “your work” to include, inter

alia:

        1)    Warranties or representations made at any time with
        respect to the fitness, quality, durability, performance or use of
        “your product” [or “your work”]; and

        2)    The providing    of   or   failure   to   provide   warnings   or
        instructions.

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Policy §§ V.21-22. The policy identifies several exclusions, stating that the

insurance does not apply to damage to “your product” and “your work.” See

Policy §§ I.A.2.k-n.       It does not contain language specifically providing

coverage for damage caused by “your product” or “your work.”

       After Erie denied coverage, Country Pools filed the instant action for a

declaratory judgment requiring Erie to defend and indemnify it in the Schott

action. Erie filed preliminary objections, which the trial court granted in part

by ordering Country Pools to join the Schotts as defendants.3 Erie thereafter

filed an answer, new matter, and counterclaim requesting a declaration that

it owed no coverage. Erie moved for judgment on the pleadings, which the

trial court denied. After the parties engaged in discovery, Erie filed a motion

for summary judgment.

       On February 24, 2023, the trial court entered an order denying Erie’s

motion and compelling it to “defend and/or indemnify” Country Pools in the

Schott action. The trial court determined that, under the policy, “[p]roperty

damage includes injury to property and/or loss of use of that property that

result from representations made by Country Pools.”        Trial Court Opinion,

5/17/23, at 2. It further determined that “the representation by Country Pools

that led the Schotts to alter their realty, discard personal property[,] and

spend money” constituted an “occurrence” under the policy. Id. at 2-3.

____________________________________________

3 The Schotts do not appear to have participated in the substantive dispute

before the trial court, nor do they participate in the instant appeal.

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      Erie filed a timely notice of appeal from the February 24, 2023, order.

The trial court did not direct Erie to file a concise statement of matters

complained of on appeal, but filed an opinion under Pa.R.A.P. 1925(a).

      Erie presents two questions for our review:

             1.   Did the trial court err as a matter of law when it denied
      Erie’s motion for summary judgment and entered an order
      compelling Erie to defend and indemnify Country Pools & Spas,
      Inc., in the Schott action where the allegations set forth in the
      Schott[s’] complaint do not trigger the insuring agreement?

             2.   Did the trial court err as a matter of law in entering
      an order compelling Erie to defend and indemnify Country Pools &
      Spas, Inc., where no cross-motion for summary judgment was
      filed?

Erie’s Brief at 5.

      We begin with Erie’s first issue. Erie argues the policy provides coverage

only for “property damage” caused by an “occurrence.” Erie’s Brief at 20-21.

It maintains the Schott complaint failed to allege an “occurrence” or “property

damage” as the policy defines those terms. Id. at 21-32. Erie argues the

trial court erroneously relied on the policy’s definitions of “your product” and

“your work” (which include the insured’s “representations”), maintaining those

definitions apply only to exclusions and not to extensions of coverage. Id.

at 32-35.

      Country Pools counters that the policy provides coverage for the

insured’s representations, and argues its alleged representations to the

Schotts, and the Schotts’ reliance thereon, constitute a covered “occurrence.”

Country Pools’ Brief at 6-7.

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       Our standard of review of an order granting or denying a motion for

summary judgment is well settled:

       We view the record in the light most favorable to the nonmoving
       party, and all doubts as to the existence of a genuine issue of
       material fact must be resolved against the moving party. Only
       where there is no genuine issue as to any material fact and it is
       clear that the moving party is entitled to a judgment as a matter
       of law will summary judgment be entered. Our scope of review of
       a trial court’s order granting or denying summary judgment is
       plenary, and our standard of review is clear: the trial court’s order
       will be reversed only where it is established that the court
       committed an error of law or abused its discretion.

Kozel v. Kozel, 97 A.3d 767, 772 (Pa. Super. 2014) (quoting Daley v. A.W.

Chesterton, Inc., 37 A.3d 1175, 1179 (Pa. 2012)).

       “Generally, the trial court will resolve a declaratory judgment action

involving an insurance coverage dispute on summary judgment.” Kline v.

Travelers Personal Sec. Ins. Com., 223 A.3d 677, 685 (Pa. Super. 2019)

(quotation omitted).    “The interpretation of the contractual language in an

insurance policy is a pure issue of law which we review under a de novo

standard.” Kramer v. Nationwide Property & Casualty Ins. Co., 271 A.3d

431, 435 n.1 (Pa. Super. 2021). “[W]e are not bound by the trial court’s

conclusions of law, but may reach our own conclusions.” Kline, 223 A.3d at

686.

       “[T]he well-reasoned and long-standing rule” provides “that an insurer’s

duty to defend is triggered, if at all, by the factual averments contained in the

[underlying] complaint itself.” Kvaerner Metals Div. of Kvaerner U.S., Inc.

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v. Commercial Union Ins. Co., 908 A.2d 888, 896 (Pa. 2006). Courts “look

to the language of” insurance policies “to determine in which instances they

will provide coverage, and then examine [the underlying] complaint to

determine whether the allegations set forth therein constitute the type of

instances that will trigger coverage.” Id. at 896-97. “When the language of

the policy is clear and unambiguous, we must give effect to that language.”

Id. at 897 (quotation and brackets omitted). “Alternatively, when a provision

in the policy is ambiguous, the policy is to be construed in favor of the insured

to further the contract’s prime purpose of indemnification and against the

insurer, as the insurer drafts the policy, and controls coverage.”           Id.

(quotation omitted).

       Our examination of the relevant policy language discloses that it

provides coverage only for “property damage” caused by an “occurrence.”

Policy § I.A.1.4 “Occurrence” is defined as “an accident, including continuous

or repeated exposure to substantially the same general harmful conditions….”

Policy Amendment. This is standard language in commercial general liability

policies, and our Courts have interpreted substantially identical language on

many occasions. See, e.g., Kvaerner, 908 A.2d at 897; Donegal Mut. Ins.

Co. v. Baumhammers, 938 A.2d 286, 289 (Pa. 2007); Millers Capital Ins.

Co. v. Gambone Bros. Dev. Co., 941 A.2d 706, 711 (Pa. Super. 2007);

____________________________________________

4 It is undisputed that the Schott action does not implicate the policy’s “bodily

injury” coverage.

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Kiely v. Philadelphia Contributionship Ins. Co., 206 A.3d 1140, 1143 (Pa.

Super. 2019).

      In Kvaerner, where an “occurrence” was identically defined as “an

accident,” our Supreme Court noted the relevant inquiry was to “examine what

constitutes an accident under the policy.” Kvaerner, 908 A.2d at 897. With

“accident” undefined in the policy, the Kvaerner Court observed:

      Words of common usage in an insurance policy are construed
      according to their natural, plain, and ordinary sense. Madison
      Const. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 108
      (Pa. 1999). We may consult the dictionary definition of a word to
      determine its ordinary usage. Id. Webster’s II New College
      Dictionary 6 (2001) defines “accident” as “[a]n unexpected and
      undesirable event,” or “something that occurs unexpectedly or
      unintentionally.” The key term in the ordinary definition of
      “accident” is “unexpected.” This implies a degree of fortuity that
      is not present in a claim for faulty workmanship.

Id. at 897-98 (internal citation modified).

      Interpreting the same policy language, this Court has held that

“[i]ntentional acts are not ‘occurrences.’”      Sclabassi v. Nationwide Mut.

Fire Ins. Co., 789 A.2d 699, 703 (Pa. Super. 2001). We have also held that

“a breach of contract… is not an accident or occurrence contemplated or

covered   by    the   provisions   of   a   general   liability   insurance   policy.”

Redevelopment Auth. of Cambria County v. Int’l Ins. Co., 685 A.2d 581,

589 (Pa. Super. 1996). “The purpose and intent of such an insurance policy

is to protect the insured from liability for essentially accidental injury to the

person or property of another rather than coverage for disputes between

parties to a contractual undertaking.” Id.

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       We now turn to the Schott complaint and consider whether it alleged an

“occurrence.” Erie argues the Schotts’ claim for unjust enrichment, relating

to Country Pools’ alleged refusal to refund part of their deposit, cannot

constitute an occurrence, because it is not accidental and is contractual in

nature.    Erie’s Brief at 21-22.       Erie further argues the Schotts’ claim for

violations of HICPA involves intentional rather than accidental conduct. Id. at

26-27. We agree.5

       Initially, we agree with Erie’s argument that both Country Pools and the

trial court improperly relied on the policy’s definitions of “your work” and “your

product” to bolster the conclusion that Country Pools’ representations

constitute a covered “occurrence.” See Erie’s Brief at 34-35; Erie’s Reply Brief

at 1. Without citing to the policy, Country Pools asserts that the “policy

specifically provides coverage for ‘representations’ or ‘instructions’ that

[Country Pools] may make that turn out to be erroneous, resulting in” the

Schotts’ losses “as a result of their reliance” on those representations or

instructions. Country Pools’ Brief at 7. Our review discloses nothing in the

policy to support this assertion. The terms “your product” and “your work,”

which the policy defines to include the insured’s “representations” and

____________________________________________

5 Country Pools does not argue, and the trial court did not conclude, that
coverage was triggered by the unjust enrichment or HICPA claims. The
dispute centers on the Schotts’ UTPCPL claim and Country Pools’ alleged
misrepresentation that a pool could be installed when local zoning regulations
barred such installation.

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“instructions,” are used only in provisions excluding coverage. See Policy

§§ V.21-22, I.A.2.k-n. They are not used in the provisions extending coverage

and have no bearing on the meaning of “occurrence.”

      Nevertheless, the trial court cited the definitions of “your product” and

“your work” in concluding that “the representation by Country Pools that led

the Schotts to alter their realty, discard personal property[,] and spend

money” constituted an “occurrence.”     Trial Court Opinion, 5/17/23, at 2-3

(citing Policy §§ V.21-22). The court improperly relied on those definitions to

support its determination that “[p]roperty damage includes injury to property

and/or loss of use of that property that result from representations made by

Country Pools.” Id. at 2. Our review discloses no connection between the

policy’s definitions of “your product” or “your work” and its provisions

extending coverage. Those definitions are simply not relevant to the inquiry

of whether Country Pools’ representations constitute an “occurrence.”

      Our review further discloses inconsistencies in the Schott complaint

regarding the representations made by Country Pools. In its initial factual

statement, the Schott complaint alleged that Country Pools “never advised

[the Schotts] to investigate local zoning laws prior to advising [the Schotts]

that a swimming pool could be installed, and [Country Pools] never

investigated such laws itself prior to advising [the Schotts] that a swimming

pool could be installed.” Schott Complaint, 4/5/17, ¶ 33. Thus, the Schotts

appear to claim Country Pools’ representation that a pool could be installed

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constituted a negligent misrepresentation, i.e., “made under circumstances in

which the misrepresenter ought to have known its falsity….”                   Bilt–Rite

Contractors, Inc. v. The Architectural Studio, 866 A.2d 270, 277 (Pa.

2005) (detailing the elements of negligent misrepresentation). However, the

Schott complaint did not set forth a cause of action for negligent

misrepresentation.

       Rather, it presented the alleged misrepresentation in its UTPCPL claim.

The   Schotts     alleged    Country     Pools     violated   UTPCPL   “by    knowingly

misrepresenting that particular services are needed if they are not needed and

by engaging in fraudulent or deceptive conduct which causes a likelihood of

misunderstanding or confusion.” Schott Complaint, 4/5/17, ¶ 54 (citing 73

P.S. § 201-2).      In this averment, the Schotts characterize Country Pools’

representation as an intentional, indeed fraudulent, misrepresentation.              In

light of the policy’s definition of “occurrence” as “an accident,” and our

precedent holding that “[i]ntentional acts are not ‘occurrences,’” Sclabassi,

789 A.2d at 703, the alleged intentional misrepresentation by Country Pools

cannot constitute an occurrence.6

       Alternatively,     even     if   the      Schotts      had   alleged   negligent

misrepresentation, our precedent points to the same conclusion.

____________________________________________

6 Additionally, the policy contains a specific exclusion for intentional injury,
stating, “This insurance does not apply to … ‘property damage’ expected or
intended from the standpoint of the insured.” Policy § I.A.2.a.

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        Negligent      misrepresentation     requires  proof    of:    1)   a
        misrepresentation of a material fact; 2) made under
        circumstances in which the misrepresenter ought to have known
        its falsity; 3) with an intent to induce another to act on it; and 4)
        which results in injury to a party acting in justifiable reliance on
        the misrepresentation.

Erie Ins. Exch. v. Maier, 963 A.2d 907, 910 (Pa. Super. 2008) (citation

omitted).     In Maier, we held that negligent misrepresentation is not an

“occurrence”:

        The elements of the claim [of negligent misrepresentation] …
        demonstrate that while a specific knowledge of the falsity of the
        claim is not a requirement there is an intent for another person to
        rely on the misrepresentation. Here, in the underlying claim, the
        complaint alleges that there was specific knowledge of the falsity
        of the statement. This makes the claim as found in the complaint
        more akin to intentional misrepresentation. Even so, the claim of
        negligent misrepresentation still contains an element of specific
        intent which takes the claim outside the realm of the
        unintentional.

Id. at 910 (footnote omitted). Relying on the Supreme Court’s observation

in Kvaerner that an accident “is something that occurs unexpectedly or

unintentionally,” this Court noted “an occurrence is generally an unintended

event.”    Id. at 909 (quoting Kvaerner at 898).        Consequently, under the

terms of the policy, we concluded the insured’s negligent misrepresentation

“was not an ‘occurrence’ or accident.” Id. We reach the same conclusion

here.

        Our review of the Schott complaint, in light of our precedent, discloses

no allegations of an “occurrence” as defined in the policy.        Country Pools’

argument is largely based on the language of the policy’s exclusions. See

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Country Pools’ Brief at 6-9. Further, Country Pools does not distinguish the

instant case from our           prior holdings that intentional and negligent

misrepresentations are not occurrences or accidents. Id.; see Maier at 909-

10.    Applying our holding in Maier, we conclude that Country Pools’

representations are not an “occurrence” under the policy.

       Accordingly, because the policy provides no coverage for the Schott

action, Erie is entitled to summary judgment.7

       Based on the foregoing, we vacate the trial court’s February 24, 2023,

order and remand the case for the entry of summary judgment in Erie’s favor.

       Order reversed.         Case remanded with instructions.      Jurisdiction

relinquished.

2/27/2024

____________________________________________

7 Based on this disposition, we need not address whether the Schott complaint

also alleged “property damage” as defined in the policy, nor whether the trial
court erred in granting relief to Country Pools without its filing a cross-motion
for summary judgment. We note, however, that Country Pools fails to
advance any argument that the Schotts’ alleged damages meet the policy’s
definition of “property damage.”        See generally Country Pools’ Brief.
Similarly, the trial court’s opinion contains no analysis of this issue. See
generally Trial Court Opinion, 5/17/23.

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