Bound by well-established case law in Pennsylvania, the federal district court ruled that there was no coverage for alleged faulty workmanship. Peerless Ins. Co. & Ohio Sec. Ins. Co. v. Manown Builders, 2016 U.S. Dist. LEXIS 85261 (W.D. Pa. June 30, 2016). 

    Manown was sued by the homeowners after they noticed in their recently constructed home that the floors were uneven and deflected. The complaint alleged failure to properly construct the residence in several ways.

    Peerless agreed to defend subject to a reservation of rights. Peerless initiated a suit against Manown for a declaratory judgment. Cross-motions for summary judgment were filed. 

    The federal court followed the Pennsylvania Supreme Court's decision in Kvaerner Metal Div. of Kvaerner U.S., Inc. v. Comm. Union Ins. Co., 908 A.2d 888 (Pa. 2006). There, the court held that claims for breach of contract and breach of warranty were, in reality, claims for faulty workmanship. Such claims did not present the degree of fortuity contemplated by the ordinary definition of "accident" in a general liability policy.

    Similarly, the claims here were based upon Manown's alleged failure to properly construct the dwelling. The underlying claims were therefore based upon faulty workmanship of the home itself. Kvaerner dictated that an "occurrence," as defined in the policy, had not been alleged in the four-corners of the underlying complaint because  faulty workmanship in the construction of a home was not, as a matter of law, an "accident." Therefore, Peerless had no duty to defend or indemnify Manown.