The Third Circuit recently applied Pennsylvania law to hold that there is no duty to defend under a Commercial General Liability Policy where there is no "accident" and so there is no "occurrence." Sapa Extrusions, Inc. f/k/a Alcoa Extrusions, Inc. v. Liberty Mut. Ins. Co., 939 F.3d 243 (3d Cir. 2019).
But the ruling involves much more than that truism.
The Third Circuit held, first, that the trial court was wrong to determine the question of whether there is a duty to defend by looking to the headings or titles used in the complaint to describe different counts alleged. To the contrary, the duty to defend is determined under Pennsylvania law, as it is in most jurisdictions, by looking to the allegations of fact in the complaint and comparing those allegations to the CGL policy at bar. This is the so-called "four corners rule." Sapa Extrusions, Inc., 939 F.3d at heading III.A of the appellate court's opinlon (page numbers not available from Westlaw at the time this article is written).
Then and only then will courts applying Pennsylvania law determine whether there is a duty to defend. In this case, the question of a defense arose under a CGL policy, as has been noted. The specific claims against the insured in the complaint at issue there involved aluminum parts of windows and frames that allegedly corroded. Tired of oxidized window and door frames, homeowners sued the insured. See Sapa Extrusions, Inc., 939 F.3d at heading I.A of the appellate court's opinlon (page numbers not available from Westlaw at the time this article is written). The issue then was whether there is a duty to defend that insured in those cases under the CGL policies at issue there.
The Third Circuit held that there is no duty to defend the insured in that case because the nature of the alleged defects could not be an "accident neither expected nor intended by the insured" there. Where there was no "accident," there could be no covered "occurrence" under the CGL polices at issue. Where there was no covered "occurrence," there is no duty to defend. Sapa Extrusions, Inc., 939 F.3d at heading IV.C.1 of the appellate court's opinlon (page numbers not available from Westlaw at the time this article is written).
On all these issues, the Sapa decision is squarely in the mainstream of insurance coverage determinations.
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