Lora, Seidman and Milmed. The opinion of the court was delivered by Seidman, J.A.D.
[155 NJSuper Page 476] These consolidated appeals arise from lawsuits in two counties. They involve the issue of whether an insurance carrier is obligated, under a comprehensive general liability insurance policy, to accord its insured a defense to claims asserted against it in those lawsuits. In one of the cases the trial judge ruled that the policy did not provide coverage and granted the insurer's motion for summary
judgment. In the other, the trial judge held that it did, and entered summary judgment in favor of the insured.
Pennsylvania National Mutual Casualty Insurance Company (Pennsylvania National) issued to Stone-E-Brick, Inc., a masonry contractor, a general automobile liability policy for the period from October 21, 1973, to October 21, 1974. It included "Comprehensive General Liability Insurance Coverage." The hazards described under the headings "Premises-Operation" and "Completed Operations" were:
1. Concrete or cement sidewalk, driveway, yard, airport runway, or warming apron construction.
2. Concrete construction -- including foundations, making, setting up or taking down forms, scaffolds, falsework or concrete distributing apparatus.
The insurer undertook in the insuring agreement to pay
Coverage A. bodily injury or Coverage B. property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limits of the company's liability has been exhausted by payment of judgments or settlements.
The Weedo litigation began with a complaint filed by Calvin and Janice Weedo against Stone-E-Brick for negligence and breach of contract. They alleged that they had entered into a contract with Stone-E-Brick in August 1974 for the application of Spanish stucco to their residence; that the stucco was not applied in a good and workmanlike manner, contrary to the provisions of the contract, and that they sustained damage as a result. Stone-E-Brick denied
the allegations of the complaint. It also filed a third-party complaint against Pennsylvania National in which it asserted that the insurer had failed, despite demand, to defend and indemnify it under the policy against any loss from liability which might be imposed upon it by reason of the Weedo claim. It sought judgment "for all sums found due as against the third-party plaintiffs in favor of the plaintiff in the above entitled matter * * *." Pennsylvania National denied coverage for the claim asserted, relying upon exclusionary clauses and language in the policy.
In Gellas a complaint was filed by Gus and Thalma A. Gellas against Alfred Vivino, alleging that in December 1973 they entered into a contract with Vivino for the construction of a one-family residence, and that, contrary to the terms of the contract, there were numerous defects in workmanship which defendant failed to remedy. They sought damages for breach of contract. In addition to answering the complaint, Vivino filed a third-party complaint against Ralph Romano and James Frey, as agents for Stone-E-Brick, claiming that the roofing work on the Gellas dwelling had been subcontracted to Stone-E-Brick, and that any defects were the result of the latter's faulty workmanship. Indemnification was demanded. Stone-E-Brick then filed a fourth-party complaint against Pennsylvania National similar in import to the third-party complaint in Weedo. Coverage was denied by the insurer for the same reason it had asserted in the other case.
Pennsylvania National argued that the defective workmanship claims asserted against Stone-E-Brick were not within the coverage of the policy by virtue of the following exclusions:
This policy does not apply:
(n) to property damage to the named insured's products arising out of such products or ...