*1 WEEDO, WIFE, PLAIN- WEEDO AND JANICE HIS CALVIN C. ROMANO, STONE-E-BRICK, TIFFS, IN- INC. AND RALPH DIVIDUALLY, THIRD PLAIN- AND PARTY DEFENDANTS TIFFS-RESPONDENTS, MU- v. PENNSYLVANIA NATIONAL COMPANY, PARTY THIRD TUAL CASUALTY INSURANCE DEFENDANT-APPELLANT. PLAINTIFFS, GELLAS, WIFE, AND HIS GELLAS THELMA A.
GUS VIVINO, DEFENDANT, AND FREY AND v. ALFRED JAMES ROMANO, AND PARTY DEFENDANTS RALPH THIRD PLAINTIFFS-RESPONDENTS, v. PENNSYL- PARTY FOURTH COM- VANIA NATIONAL MUTUAL CASUALTY INSURANCE PANY, DEFENDANT-APPELLANT. FOURTH PARTY 11, 1978 July 1979. Argued December Decided *2 appellants McHugh argued Mr. Thomas P. the cause for Conlan, (Messrs. Gurry attorneys; McHugh, Mr. on the brief). Parsons, Jr., argued respondents
Mr. George W. the cause (Messrs. Cole, Yamner, Geaney attorneys; George & Mr. H. Avery, brief). on the Melhuish, Morgan, Monaghan Spielvogel,
Messrs. & filed a Company brief on behalf of amicus curiae Insurance North (Mr. brief). Henry Morgan, America on the G. Rosenbaum, Budd, Lamer, Kent, Gross,
Messrs. Picillo & filed a brief on behalf of amicus curiae The Travelers Insurance counsel; (Mr. Lamer, Klein, Company Mark D. Ms. Harriet F. brief). on the opinion of the court was delivered
CLIFFORD, J.
certification,
(1978), to review the
We appellant Division’s determination that Appellate brought against claims its obliged to defend two carrier wаs Inc., Stone-E-Brick, N.J.Super. 474 Weedo v. assureds. cases, together, here calls for argued both (1977). Resolution of liability provi- comprehensive general construction of the same contracting concern. masonry issued to a sions of a policy indemnifies the is whether that question Specifically, *3 of contract and in an action for breach against damages insured damages claimed workmanship project, on a where faulty Appellate itself. The Divi- correcting the work are the cost of policy, togeth- when read exclusions of the sion held that certain against er, to resolved were and hence had ambiguous be insurer. We reverse.
I (herein- Company Insurancе National Mutual Pennsylvania liabili- National) general issued a automobile Pennsylvania after Stone-E-Brick, Inc., engaged in mason- corporation a ty policy to policy there was included Com- contracting. part As of the ry CGL). (hereinafter Dur- Liability Coverage prehensive General Janice Weedo contracted policy and ing the term of Calvin and flooring on a veranda pour to a concrete with Stone-E-Brick home. The the exterior of their masonry to to stucco signs of in the stucco and other job revealed cracks completed remove the that the Weedos had to workmanship, such faulty Thereupon the material. proper it with a replace stucco and principal, its and against Stone-E-Brick Weedos instituted suit Romano, part that alleging pertinent in defendant which the in unworkmanlike manner a the defective and result of [a]s to and did cause were stucco, compelled defendants the said plaintiffs applied omissions to existing be where and the remedied, therein to possible, the defects general, work, to and did all the were furnish be in and, compelled supplied, of the said materials to labor, complete application services and necessary and were to and did expend stucco in with contract compelled accordance large that excess of the which sums of for plaintiffs money purpose price agreed was to for the of said ail of which stucco, defendants pay application damage. [Emphasis supplied.] plaintiffs’ effect, policy While the same CGL was in Stone-E-Brick performed roofing gutter being and work on house construct- Gellas, plaintiffs agreement under ed a sub-contract with contractor, general completion defendant Yivino. After brought against home the Vivino on breach Gellases suit based workmanship seeking recovery contract and of due defects repair replacement costs “in with and/or connection * * * necessary material to correct the defects in construc- sought tion.” in turn indemnification from Vivinо Stone-E- third-party contending plain- Brick that way complaint, damages “faulty tiffs’ were the work- result of Stone-E-Brick’s * * * manship, materials or construction requested Pennsylvania Thereafter Na- Stone-E-Brick indemnify tional take the defense it both regard over refused, complaints. asserting The carrier that the or, did not furnish for the claims made in the alternative, exclusionary specifically precluded clauses cov- erage. By third-party complaint in the case and way of Weedo suit, fourth-party complaint in the de- Gellas Stone-E-Brick *4 against manded all sums judgment Pennsylvania National for respective due the against found as insured and in favor the of plaintiffs. judgment for summary Cross-motions in each case results, produced contrary namely, dismissing an order Stone-E- complaint Brick’s party against third the carrier in the Weedo coverage case and an in favor of compelling order the insured Division, appeal Appellate already the Gellas as suit. On noted, coverage found both instances.
II Pennsylva question provisions the CGL Under of all sums “on behalf the insured agreed pay nia National obligated pay as legally shall become which the insured * * * * * * prop bodily injury damages because of caused an applies, this insurance damage to which erty ** This is the stan (Emphasis supplied). *.” occurrence written in great majority of CGLs language found in dard casualty rating developed by country. provisions, These this an nearly fifty years, have become period over a bureaus Tinker, “Comprehen underwriting policy. established norm and Overview” 25 Liability Insurance—Perspective sive General Henderson, “Insurance Feder.Ins.Coun.Q. (1975); 218-21 Completed Operations— Liability and Protection for Products Know,” 50 Neb.L.Rev. Every Lawyer What Should (1971).1 terms, gener forth, in fundamental agreements set
These damage to which property coverage, e. “for al outlines this insur phrase, “to which qualifying applies.” premium basic notion underscores applies” ance coverage for all buy does not by the insured paid for in the damage provided only type damage but the exclu forth in coveragе are set on policy. The limitations it to restrict function policy, whose clauses of the sion v. Allstate Ins. Capece afforded.2 otherwise shape principal undergone provisions revi four of the CGL have 1The standard promulgation 1943, 1955, in 1940. their initial 1966 and 1973—since sions—in pertinent Tinker, cit., supra, op. 221. The terms at Feder.Ins.Coun.Q. present to the issues in manner relevant have not been altered case the 1966 revision. before the Court since us, apparently argument before as 2Pennsylvania at National conceded oral Division, N.J.Super. for the Appellate that but see it did before *5 238 N.J.Super. (Law 88 Div.1965); Tinker, cit., op. Feder.Ins.Coun.Q. at 264. For example, a tavern-own
er’s
coverage under thе
CGL is limited
of
force
exclusion,
shop”
“dram
personal
where
injury or property dam
age results from service of intoxicants to an incapacitated
patron. See generally Mt. Hope Inn v. Travelers Indemnity
Company,
We that, set forth these principles simply emphasize basic aside, semantical of rules construction contracts of insurance do language (frequently here, contain relevant developed, as see n. 1, supra, years over experience after with different terms of expression) which serves to define risks underwritten. In present instance Pennsylvania policy National’s undertook to furnish certain coverage as a concern engaged Stone-E-Brick in masonry contracting. In order determine whether plaintiffs claims of the coverage provided, fall within we start with an examination of the relationships insured’s business with its customers.
In the usual course of its business
negotiates
Stone-E-Brick
with
provide masonry
homeowners to
part
work. As
bargaining process the
may
insured
an express
extend
warranty
stone,
that its
concrete and stucco products and
will
services
be
provided
reasonably
in a
See,
workmanlike fashion.
e. Hen-
ningsen
Motors, Inc.,
v.
Bloomfield
32 N.J.
(1960).
Regardless
warranties,
of the existence
express
the insured’s
provision of stucco and stone “generally carries
it
with
an
implied warranty of merchantability and often
implied
an
war-
rаnty
particular
for
purpose.”
fitness
v.
McDonald Mia-
necki,
(1979);
Chin,
79 N.J.
Hodgson
see also
coverage
exclusions in the
would obtain. Hence we need not address
policy,
grounds
non-coverage,
one of the carrier’s
validity
initially-offered
not
made
namely,
did
extend
claims
even
absent
the exclusions.
*6
opera-
by
These warranties arise
N.J.Super.
(App.Div.1979).
circumstances,
that,
recognize
under common
of law and
tion
having
capacity
as
holds himself out
the insured-contractor
manner,
further,
and
the stonework in a workmanlike
to
upon the
and antici-
representation
relies
that
homeowner
Mianecki, supra,
pates
goods
services. McDonald v.
suitable
and
Where warrаnties, both, implied or are breach- express either or faulty, the customer did not law obtain As a matter of contract ed. can, The dissatisfied customer bargained. for which he work, recover the cost faulty of the replacement or upon repair measure of insured-contractor as the standard thereof from the 1; at 282 n. 525 Main of warranties. Id. damages for breach Inc., (1961). Roofing v. 34 N.J. Corp. Eagle Co. Street ' Mianecki, supra, principal a explained As in McDonald operation law on imposing warranties of justification for position “in to parties these are often a better contractors is that in the course of major problems” the occurrence оf prevent N.J. at 288-89. homeowner. 79 constructing home than of pains quality can take to control The insured-contractor At the same time he under- goods supplied. and services thereby may he fail in this endeavor and the risk that takes express implied. or liability whether incur contractual business part every well is consequence performing of not venture; faulty and works is repair goods or replacement by the insured-contractor expense, to be borne a business Tinker, cit., supra, 25 op. customers. satisfy order to See 224; Henderson, cit., supra, Feder.Ins.Coun.Q. op. 50 Neb.L. Rev. at 441. risk the insured-contractor’s exists form of
There another is, work, injury people property and line risks of the sort workmanship. Unlike business by faulty caused above, commonly absorbs the where the tradesman described work, faulty the accidental repair of his upon cost attendant injury to persons substantially or caused his un- workmanlike performance exposes the contractor to almost lim- itless may liabilities. While it be true neglectful that the same craftsmanship can be the cause of both a expense business repair represented and a loss by damage persons proper- ty, the two consequences vastly are different in relation to sharing the cost of such risks as a matter of insurance under- writing.
In regard Dean Henderson has remarked: goods, The risk intended to be insured is the that the or work possibility products injury once insured, or will cause relinquished completed, bodily *7 damage to other than to the or work and for property product itself, completed which the insured goods be found liable. The as a source of may insured, or good be liable as a services, matter of contract law may to make on or products work which is lacking defective or otherwise unsuitable because it is in some obligation This even extend to an capacity. to may or rebuild replace completely the deficient coverages or work. This is not what the product however, liability, designed against. are to question The is for protect tort for liability damages to othеrs and not for physical contractual of the insured for liability economic loss because the or work is not that for which product completed the damaged bargained. person [Henderson, cit., Neb.L.Rev. at op. supra, 441.] An illustration of this point may fundamental serve to mark the boundaries between “business risks” and giving occurrences liability. rise to insurable When a applies craftsman stucco to an exterior wall of a in faulty discoloration, home manner and peeling result, chipping and poorly-performed work will perforce have to replaced repaired be or by the tradesman byor a surety. hand, On the other should the peel stucco and fall wall, from the and thereby injury cause to the homeowner or his neighbor standing automobile, below or to a passing an occur- rence of harm arises proper which is the subject of risk-sharing as provided by type before us in this case. The happenstance and extent of the latter is entirely unpre- neighbor dictable—the could suffer a scratched arm or a fatal blow to the skull peeling from the stonework. Whether the liability of the predicated upon businessman is warranty theory upon concepts, injury tort to or, accurately, and preferably more damage the risks persons property to other constitute to under the CGL. intended be covered provisions the CGL intended con standardized to include, alia, very inter vey concept exclusion clauses at Tinker, cit., op. Feder.Ins.Coun.Q. issue herein. at products” (exclusion “(n)”) 244-25. These exclusions—“insured (exclusion “(o)”)—are and “work as performed” follows: * * * does not This insurance damage arising (n) of such to to named insured’s out property products or of such any part products; products (o) work or behalf of the insured on named performed by arising out or materials, out the work or or thereof, any portion parts furnished connection therewith. equipment that, given precise Pennsylvania National agree with We of the claims form the basis damages which and limited form insured, is, are, applicable both either exclusion agаinst short, indemnity sought not coverage. In exclude Tinker, applies.” op. which this insurance damage to “property 233; also, see Adams Tree cit., Feder.Ins.Coun.Q. supra, 25 Ltd., Co. Guaranty & Inc. v. Hawaiian Insurance Service (Ct.App.1977). P.2d Ariz. of the “insured’s with treatment view is consistent
Our *8 majori great in the exclusions products” performed” and “work similarity and of factual Because the ty of courts elsewhere. reasoning clauses, exclusionary the the wording of the uniform Bros., Inc. Biebel thoroughly persuasive.3 is in these decisions exclusions, denomi- performed” and the “work 3The “insured’s products” “(o)” “(n)” as exclusions CGL, appeared in the standard present nated and wording “(I)” “(m)” literal the last decade. The written before рolicies constant for some denominated, has remained exclusions, of the however fifteen years. United Fidelity (8th States & Guar. 1975), F.2d 1207 Cir. Biebel, is illustrative. In roofing contractor instituted an against action its insurer to recover the costs of remov- ing roofing defective and the additional expense supplying of adequate roofing thereafter—work which by was called for the contract the with dissatisfied customer. Not unlike the instant case, faulty the insured’s work not alleged was to have caused any property damage to property other than the product work of or by materials supplied Id., the insured. at 1209. granted
The court summary judgment trial in favor of the appeal insured. insurer the On contеnded that clear mean- ing of the exclusion clauses contained its CGL was the subject insurance not to apply damage did the insured’s “(m)”, “(o)” work. Exclusion identical to exclusion in the in- case, controlling stant was by deemed the Circuit Court of Appeals. In reversing, court observed: language unambiguous The of the exclusion and all-inclusive. It broad, that the insurance does not to work clearly provides apply arising or of on behalf out of performed either work or by appellee or out of thereof, material, furnished in portion connection parts equipment therewith. of the initial and coats Beyond question, application subsequent fiberglass of insulation and the base asрhalt, placement asphalt-coated roofing and the two
sheets, placement saturated felts layers asphalt arising felts and was work or on [sic: behalf asphalt] performed by appellee just out of its contract. all Furthermore, the materials—not the asphalt project. alone—were furnished in connection with the work by appellee consisting entire defective work and was product, material, appellee’s directly (m) removed it. If exclusion does not to the facts before it is us, meaningless. F.2d at completely [522 1211.] The court also that the “insured’s product” concluded exclusion (a analogue “(n)” matter) literal to exclusion in the instant applied damages faulty inasmuch as the claimed arose out of asphalt insured. supplied Id. 1211. Numerous cases pertinent construe the exclusions in similar fashion exclude coverage in factual circumstances related to those this case.
243 Insurance Co. Co. v. General & Gravel Ross Island Sand (9th affd., 750 472 F.2d America, F.Supp. 402 (D.Or.1970), 315 Insurance Mutual Liberty v.Co. 1973); B. A. Green Constr. Cir. Tree 563, (1973); Adams 656-67 Co., 393, P.2d 213 Kan. 517 Co., Ltd., 573 Insurance & Guar. Service, Hawaiian Inc. v. Co., Service, Insurance Reliable Inc. v. Engine 79-80; P.2d Co., Equipment Timberline 474, (Wyo.1977); 475-76 487 P.2d Co., 639, Or. Marine Insurance Fire and Inc. v. Paul St. Fidelity & v. United States (1978); Overson 1244, 1247—48 P.2d 1978).4 Co., 149, (Utah 150-51 Guar. 587 P.2d very same decisions, which treat to these In addition case, in this issue in as the exclusions risk” clauses “business the “business pertaining body of case-law exists another there present development prior to the as it read risk” exclusion products” “insured’s involve claim that 4This case does not insured, improper applied performed” when to other because “work “property damage” property, use of the other in the form of loss of resulted in especial property, property during repair that other or diminution value of Co., 354, Paul-Mercury ly realty. Indem. 242 Minn. See Hauenstein v. St. 122, building (1954) (unworkmanlike application plaster on a N.W.2d damage” resulting “property it was claimed that not excluded because bricks); building containing faulty faulty presence reduced value of stucco Co., Corp. Engineering v. American Motorist Insurance Webster Stone & exists, (E.D.Va.1978) (“proрerty damage” F.Supp. notwithstand 794-95 faulty component exclusions, supplying ing a on the basis of an insured’s whole); which, damage incorporated product, to the into a causes when Insurance 22 Wash. Products American Yakima Cement Co. Great (insured’s supply (Ct.App.1979) App. defective 590 P.2d building resulting “property damage” panels wherein not excluded because value). faulty paneling placed extent that reduction in To the was suffered underlying determination rationale of our are at odds with the these decisions Coverage disapprove today, specifically is not otherwise them. which we simply by change provided in the form of be created under a CGL cannot expressed. which the claim is words *10 244 wording.5 The
standardized behind these reasoning decisions giving full to the effect “business risk” exclusion further under See, g., v. scores the we have Volf result reached in this case. e. Ocean Guar. Corp., 373, Accident & 987, 50 325 Cal.2d P.2d 989 (1958); Liberty Building Co., Co. v. Royal Indemnity 177 Cal.A pp.2d Cal.Rptr. 329, 583, 2 (Ct.App.1960); Kendall 331-32 Co., Plumbing, Inc. v. Paul Mercury 528, St. Insurance 189 Kan. Homes, 396, (1962); 370 P.2d Vobill Inc. v. Hartford Acci 398 Co., dent & Indem. 496, 179 (La.App.), So.2d 497-98 writ refus ed, 698, St. Paul Fire & Marine (1965); La. So.2d Co., Insurance Co. v. Northern Grain 361, (8th 365 F.2d Cir. 1966); Indemnity Miller, Home Co. v. 399 F.2d (8th 81-83 1968).6 Cir. 5The exclusion “business risk” contained in before 1966 policies prepared
was worded as follows:
This does not apply:
(h)
under
Coverage D,
[********]
********
injury
or destruction of:
(4)
goods,
manufactured,
sold,
or containers
thereof
han-
products,
Insured,
dled or distributed
the
or work
or for the
completed by
Insured, out of which the accident
nor to costs of
arises,
repair
“h(4)”,
in S.
thereof.
L. Rowland Const.
replacement
[Exclusion
quoted
Co., 72
Co. v. St. Paul Fire & Marine Insurance
Wash.2d
434 P.2d
1967).]
(Wash.
725, 728
given
6“Business risk” clauses have been
same
effect
exclusionary
treating
other contexts of
as that
the cited
insurance
contained in
cases
exclusions in
For
“business
exclusions
example,
CGLs.
risk”
are contained
insurance,
standard
where an
liability policy
contractual
insured ob-
coverage
among
tains
assumed under
contract
written
limited by,
things,
other
the terms
the familiar “insured’s
and “work
products”
involving
exclusions in
performed”
application
exclusions.
these
cases
again,
under
is,
the contractual
provided
liability policy
once
damagеs
unanimous where
claimed relate
to the
virtually
insured’s
only
Buildings,
See,
Ind.,
or work.
e.
Southwest
Inc. v.
products
Forest
Pole
(9th
1973);
Inc., 478
Co.,
F.2d
187-88
Cir.
Eulich v. Home Indem.
(Tex.Civ.App.1973);
S.W.2d 846, 849
Carboline
v. Home
Company
Indem.
Ill
judicial
twenty years’
review of
worth of
treatment
Our
else,
that,
nothing
if
risk” exclusion demonstrates
the “business
clauses “n”
underwriting policy sought
to be articulated
upon
widely
as
recognized
and “o” has been
a valid limitation
Indeed,
standard, readily-available liability
coverage.
ruling
of these
upon
impact
several courts have remarked in
convey
clauses that
terms used to
the “business risk” exclu-
sions are
Vobill
straightforward
ambiguity.
and without
Homes,
*11
Inc. Hartford
& Indem.
179 So.2d
Accident
497;
81;
Miller,
at
Home
at
supra,
Indem. Co. v.
399 F.2d
18,
(S.D.1972);
Haugen
Co.,
Home
22
B.
v.
Indem.
197 N.W.2d
Co., suрra,
A. Green
v.
P.2d at
Liberty
Co.
Mutual Insurance
517
565;
846,
Co.,
(Tex.Civ.
v.
Eulich Home
503 W.2d
849
Indem.
S.
Bros.,
Fidelity
v.
&
Ct.App.1973); Biebel
Inc.
United States
1211;
Service,
Co.,
Inc. v.
supra,
Guar.
F.2d
Tree
522
at
Adams
80;
Co.,
Paul
supra,
Hawaiian Insurance & Guar.
573 P.2d at
St.
888,
Coss,
Fire
145
Cal.App.3d
& Marine Insurance
v.
80
Co.
836,
Co.,
(Ct.App.1978);
Cal.Rptr.
Equipment
839
Timberline
Co.,
P.2d
supra,
Inc. v.
Paul
576
at
St.
Fire & Marine Insurance
1246;
Co., Overson
and Guar.
Fidelity
v. United States
clauses into under reading of the indulged standard CGL. The court below Co., 363, (7th 1975). 522 F.2d “business 366 Cir. A variation of current wording, part optional prepared risk” exclusion “Broad Form clause as of an Property Damage as to standard CGL Endorsement” available an alternative coverage, upheld excluding has also been its effect of See, products v. American insured’s or work. e. Rafeiro 701, Cal.Rptr. (Ct.App. Employer's Cal.App.3d 708 85 Insurance Coss, 1970); Cal.App.3d Fire St. Paul Marine Insurance Co. & 1978). Cal.Rptr. (Ct.App. accepted argument when it Stone-E-Brick’s that an ambi- guity existed in the policy when the exclusions for “business correlatively risk” were read with another exclusion clause. clause, “(a)” policy, This latter denominated exclusion in the reads: This insurance does not apply: (a) agreement assumed the insured under contract or except an incidental but this contract; exclusion does not to a of fitness warranty of the named insured’s or a that work quality products warranty performed or on bеhalf of the named insured will be done in a workmanlike manner;
On basis of three decisions proposed which consider the ambiguity “(a)” between and the “business risk” clauses dis- earlier, cussed Appellate Division found that the “co-exist- ence” of provisions “creates, least, at very ambiguity an which must be resolved in provide favor of the insured as to so coverage.” N.J.Super. import 486. The of the “business risk” exclusions is thereby rendered nugatory.
Because we are of the view “(a)” that exclusion cannot serve import exclusions, becloud the clear of the “business risk” we *12 necessarily disagree that an ambiguity policy exists in the before us. We only recently have only reaffirmed the view that genuine ambiguities engage the so-called ambigui- “doctrine of ty,” see Jersey DiOrio v. New Manufacturers Insurance N.J. (1979); and intending without in wise to “doctrine,” undercut the salutary effects of this we observe that is, been, it and always construction, indeed has one of simply an aid to proper the interpretation of terms profes- devised the sional underwriter. As Chief Justice suggested Weintraub context, another such an aid “usually serves to describe a result Ozzard, rather than to reaching Reilly assist in it.” 33 N.J. (1960). phrasing the to arise where genuine ambiguity We conceive a average policyholder the confusing is so that policy of the instance, coverage. In that make out the boundaries of cannot expectаtion objectively reasonable application of the test of coverage never in benefits of of the insured often will result grant- of view. The benefits point intended from the insurer’s risk as ed, however, landscape of pertain will to the same issue, is, that the “doctrine contemplated by policy expectation that the consumer’s ambiguity” works to effectuate particular coverage in policy purchased greater extended ambigui- construction embraces underwriting area. The rule of however, coverage artificial, reading when the ties which are of insurance indemnity in an area urged by the insured affords applies in the policy completely distinct frоm that to which no amount example, first instance. To use an extreme on a fire ingenuity brought can be to bear semantical collision. an intersection coverage so for policy as to afford based on hardly be policy an of a fire would interpretation Such DiOrio, supra, 79 any “objectively expectation. reasonable” See N.J. at 269. interpretation
In this case Stone-E-Brick’s of its own replacement coverage repair would result in supposi on the relies faulty workmanship. interpretation This exclusion “(a)”—“but this to exclusion exception tion that the by or on performed work warranty not to a does in a workmanlike will be done of the named insured behalf wаrranty on the claims based manner”—grants coverage for to the directly counter runs described. Not so. The contention subtract from exclusion clauses principle basic made point was Precisely than it. grant rather Dakota, construing very clauses Supreme Court South we have before us: * * * (a) grant coverage. Exclusion it does not extend or To the contrary (a) insuring limitation or restriction on clause. The to exclusion exception *13 removes breach of or fitness, merely implied warranty quality workmanship relating to The’
from the exclusion contractual liability. exception [to specific (a)] subject clause remains to and limited all other related exclusions (m) [(o) contained in the When considered with exclusion in the instant policy. resulting it that claims of third case] clearly appears persons from the insured’s of an are covered unless the claimed breach implied warranty [Haugan loss is confined to the insured’s work or work v. Home Indem. product. 197 N.W.2d at Co., supra, 22.] effect, To the same Marine Insurance Co. v. see St. Paul Fire & Coss, supra, Cal.Rptr. at 841. “(a)” argument grants
As a variant that exclusion of its seeks, exception, coverage it that Stone-E-Brick contends exceptions, conjunction when read in with the “business risk” confusing in former clause is coverage “granted” by that N.J.Super. taken at But this away latter two. 155 486. argument ignores principle too insuring agreement, exclusion is meant to be reаd [e]ach with the independently other every exclusion. The exclusions should be read not seriatim, cumula- If coverage, regardless one tively. exclusion there should be no applies might argued inferences that be on the basis of or exceptions qualifications contained in other exclusions. There is no instance in which an exclusion can regarded be as inconsistent properly with another since bear no exclusion, they with one another. relationship [Tinker, tit., op. supra., Feder.Ins.Couns.Q.
223.] arising ambiguity as presented When with an claim of identical risk” “(a)” and the “business comparison out of a of exclusions clauses, Bros., F. & G. States the court in Biebel Inc. v. United exception flatly language stated * * * (!) to exclusions “(a) whatsoever application has no * * agree, We (m) F.2d at 1212. [n] [o] policy. instant ambiguity in the accordingly perceive any do not
249 which has We in of the four decisions passing note each upon ambiguity found in this standard CGL based the an the same interpretation offered Stone-E-Brick suffers from “(a)” coverage exception grants which misconception that conjunction must be viewed with the exclusions in the “busi Corp. ness Hotel v. United risk” clauses. See Fountainebleau 455, Filigree Corp., (Fla.App.1974); 298 459-60 Federal So.2d Inc., 136, Homes, 547 v. A. T. 113 Ariz. P.2d Insurance Co. P. 1050, Co., (Sup.Ct.1976); Inc. v. Trans Roofing 1053 Custom 196, 1187, Co., P.2d 1189-90 america Insurance 120 Ariz. Gollan, 394 Assurance Co. v. (Ariz.App.1978); Commercial Union 839, error in (N.H.1978). A.2d below fell intо 841-42 court first two cited cases. relying entirely reasoning upon function? “(a)” mean and what is its But what does exclusion clear, question we As have endeavored make faulty workmanship but rather does not cover an accident of an Hamilton which accident. See faulty workmanship causes 417, (7th Co., Cast, F. G. 508 F.2d Die Inc. v. States & United Co., Krump Mfg. v. Phoenix Insurance 1975); Cir. Dreis Co. & structure, contrac- 681, 1977). (7th Cir. Within this 548 F.2d “(a)”. The exclusion tual under the terms of excluded however, insures, claims exception to this exclusion such as implication, quasi-contract or contract premised upon neverthe- must actions, claims warranty will be covered. Such grant of cognizable general less be otherwise under which this claim “to in the in order to constitute a first instance “(a)” import applies.” analysis This courts, of other view generally-held exclusion accords with Co., 522 F.2d e. v. see Carboline Co. Home Indem. clause 1975) given to similar
(7th (same construction Cir. Bros., v. States Inc. United liability policy); contractual Biebel 1212; Indem. Co., Haugan Home F. & at G. F.2d 22; v. Pete Insurance Co. supra, 197 Aetna N.W.2d Roofing Co., Inc., Wilson Heating & 289 Ala. 272 So.2d (1973) (contractual 234-35 liability policy construed), and at the same time import saves the clear of the exclusions for “business risks.”
IY *15 matters judgments under review are reversed and the respective entry remanded to the trial courts for there judgments Pennsylvania in favor of No costs. National.
PASHMAN, J., dissenting. respectfully majority’s analysis
I While the of the dissent. pertinent provisions policy appeal of the insurance is not without likely interpretation given and constitutes the that would be this law, my contract by legal scholar well-versed in insurance opinion the view- provisions clearly ambiguous these are from point average Consequently, of the coverage. consumer of CGL any I present would hold that in the case the carrier is liable for sums which ultimately its insured is deemed to owe to plaintiffs.
In Mazzilli v.
Co.,
Accident
(1961),
& Cas. Ins.
exception, [35 protection, interpretation applied. N.J. at 7-8] Moreover, adhesion, because contracts are contracts of forms, language based on standard couched in technical prepared by the insurer’s experts, they arе to be construed in accordance with the expectations average reasonable See, Co., 120, insured. e. Perrine v. Prudential Ins. 56 N.J. (1970); Metropolitan Co., Allen v. Life Ins. 44 N.J. (1965); Royal Co., Bauman v. (1961); Indem. 36 N.J. Kievit v. Loyal Protective Life Ins. (1961). N.J. The CGL here provides at issue coverage its does apply not
(a) to agreement assumed the insured under contract liability or except an incidental but this contract; exclusion does not to a of fitness warranty of the named insured’s quality or a that work products warranty performed * or on behalf of the named insured will be done in a workmanlike manner; * * [emphasis supplied] Thus, alone, standing this section of the policy provides that an replacement insured’s mаterials or defective repair of work substandard is not coverage. excluded from An insured therefore might reasonably construe language mean that such was in policy’s fact included within the *16 least, e., uncertainty—i. ambit. At the ambiguity—would exist as protected to whether he was against type this of loss. in order to demonstrate the non-existence majority, policy: of the insurance ambiguity, points to two other sections This insurance does not apply (n) arising damage such out of to to the named insured’s property products or of such products part products;
[********] (o) to to work or on behalf of insured the named performed by arising out of the work or or out of thereof, materials, or any portion parts furnished in connection therewith. equipment alone, provisions would to reading these seem
Standing a fair replace defective coverage for an insured’s negate faulty or work. repair materials appears be Thus, policy glance, at first negate for internally inconsistent. Two sections being against the insured. One of claim here asserted type not included in an exclu- such claims are provides section sion. notes, however, analysis closer reveals majority
As the a Merely particu- be harmonized. because provisions these can exclusion, it specific does not item is not included lar policy. is covered under the necessаrily follow that item attorney familiar with the intricacies of insur- Consequently, an interpretation likely would law and the rules contract ance coverage in policy provide the CGL does not have concluded that present. here the circumstances Rather, however, it insurance, lawyers. is not issued to CGL provides engaged construction coverage for those in the such, improvements to our central repair property. real As ambiguous must be whether this is insofar as inquiry average concerned—not, majority emphasizes, builder as jurist experi- would whether a who had scrutinized the contract any doubts as to the policy’s ence ambit. view, my jurisdic- three
In
and that of
courts of at lеast
tions, the average builder
have construed this
reasonably
could
as
contract
providing coverage
expenses
incurred
order
replace
See,
repair faulty
defective materials
work.
e.
Inc.,
Ins.
Homes,
Federal
Co. v. P. A. T.
113 Ariz.
547 P.2d
Co.,
(Sup.Ct.1976);
Roofing
Custom
Inc. v. Transamerica
Ins.
(Ct.App.1978);
Ariz.
Consequently, despite logical appeal of the majority’s interpretation of this policy, I uphold would the reasonable expectations of the insured and rule that coverage exists.
For reversal—Chief Justice HUGHES Justices MOUN- TAIN, SULLIVAN, CLIFFORD, SCHREIBER and HANDLER —6.
For affirmance—Justice PASHMAN—1.