Pinnacle Group, Inc. v. Erie Insurance Property & Casualty Co., 231 W. Va. 470

Background

Cherrington contracted with Pinnacle for construction (cost-plus) and alleged defective workmanship and overcharges; she sued Pinnacle and later added Mamone (Pinnacle principal/agent).
Pinnacle had a commercial general liability (CGL) policy with Erie (1/1/04–1/1/05); Mamone had homeowners (1/14/04–1/14/05) and umbrella (4/19/04–4/19/05) policies with Erie.
Erie denied coverage and defense; Pinnacle and Mamone sued Erie for declaratory relief; circuit court granted summary judgment to Erie, finding no coverage under any policy.
Circuit court concluded (1) defective workmanship is not an “occurrence” under CGL, (2) alleged harms were not covered “bodily injury” or “property damage” recoverable under the policies, and (3) Mamone’s policies were barred by business-pursuits exclusions.
West Virginia Supreme Court reversed as to Pinnacle’s CGL (holding defective workmanship can be an “occurrence” when unintended/unexpected and subcontractor work is implicated) and affirmed as to Mamone’s homeowners and umbrella policies (business-pursuits exclusion applies; salesperson exception did not).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether defective workmanship is an "occurrence" under Pinnacle's CGL	CGL should cover property damage from defective work (especially where subcontractors performed the work)	Defective workmanship is not an "accident/occurrence" and therefore not covered	Overruled prior state precedent; defective workmanship that causes unintended/unexpected damage can be an "occurrence," so circuit court erred in denying coverage on that basis (reversed for CGL)
Whether CGL exclusions (L "your work", M "impaired property", N "recall") bar coverage	Exclusion L inapplicable because work largely done by subcontractors; M and N do not apply	Erie argued exclusions (esp. M) bar coverage	Exclusion L does not bar coverage for subcontractor work; Exclusion M and N do not apply on the facts (circuit court's exclusion rulings reversed)
Whether Mamone's homeowners policy covers claims (business-pursuits and salesperson exception)	Mamone acted as a salesperson; salesperson exception applies to provide coverage	Mamone acted in regular business/professional capacity; business-pursuits exclusion applies	Business-pursuits exclusion bars coverage; salesperson exception inapplicable because Mamone was principally acting as company president/agent rather than an employed salesperson (affirmed)
Whether umbrella policy provides coverage given underlying denial	Umbrella might cover if underlying homeowners policy covers or exception applies	Umbrella follows underlying; it excludes business pursuits and provides no broader coverage than underlying	Umbrella exclusion bars coverage because underlying homeowners policy provides no coverage; umbrella cannot broaden coverage (affirmed)

Key Cases Cited

Erie Ins. Prop. & Cas. Co. v. Pioneer Home Improvement, Inc., 206 W. Va. 506, 526 S.E.2d 28 (W. Va. 1999) (earlier West Virginia precedent that held faulty workmanship not covered under CGL)
Corder v. William W. Smith Excavating Co., 210 W. Va. 110, 556 S.E.2d 77 (W. Va. 2001) (reiterated that poor workmanship standing alone was not an "occurrence")
Webster Cnty. Solid Waste Auth. v. Brackenrich & Assocs., Inc., 217 W. Va. 304, 617 S.E.2d 851 (W. Va. 2005) (described CGL scope and exclusionary limits regarding defective workmanship)
Columbia Cas. Co. v. Westfield Ins. Co., 217 W. Va. 250, 617 S.E.2d 797 (W. Va. 2005) (perspective-of-the-insured guide to whether an event is an "accident")
National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (W. Va. 1987) (insurer has burden to prove exclusions; exclusions strictly construed)
Camden Fire Ins. Ass’n v. Johnson, 170 W. Va. 313, 294 S.E.2d 116 (W. Va. 1982) (defined "business pursuits" as continuous/regular profit-seeking activity)
Huggins v. Tri-County Bonding Co., 175 W. Va. 643, 337 S.E.2d 12 (W. Va. 1985) (applied business-pursuits principle)