Pennsylvania Appellate Court Limits Extent of Kvaerner in Coverage Matters

For the first time since the Pennsylvania Supreme Court issued its Kvaerner decision, in which it found that defective workmanship is not an "occurrence" under Pennsylvania law, a Pennsylvania appellate decision has limited the extent of that holding.  Indalex v. National Union, 2013 PA Super 311 (Dec. 3, 2013).

Indalex involved allegedly defective products—doors and windows—that were installed in homes, allegedly resulting in water infiltration, mold and bodily injury (believed to be from the mold, but the opinion is not clear).  The court concluded that this type of claim, involving bodily injury and consequential damage due to damage from a defective product, did not fall within the  Kvaerner/Gambone line of cases.  Therefore, the court found there was a potential "occurrence" alleged.  

However, the court then goes on to decide that the gist of the action doctrine, which normally would preclude coverage for allegations of negligence that are indistinct from a breach of contract claim, does not apply to an insurance carrier's duty to defend.  The decision does not discuss the multiple other Superior Court decisions that have found the doctrine does apply to the duty to defend, including Water Authority of Cambria County, Freestone, and only attempts to distinguish Abbott, because in that case the negligence claim only alleged negligence in the breach of duties under the contract, not independent torts.  Because this panel does not have the authority to overrule the decisions of other panels, it is unclear exactly how authoritative this decision is on this issue.

Special Case Law Alert, December 6, 2013