Court: Insurers Don’t Have to Pay to Settle Windows Lawsuit

May 3rd, 2018 by Trey Barrineau

On Tuesday, a Pennsylvania federal court ruled that nine insurance companies won’t have to pay settlements for  faulty aluminum fenestration products on behalf of Sapa Extrusions following a 2013 lawsuit involving Marvin Windows and Doors.

Judge Malachy E. Mannion of the U.S. District Court of the Middle District of Pennsylvania ruled that the allegations covered do not amount to an “occurrence,” a standard that the court said has been defined in legal precedent as “an accident, including continuous or repeated exposure to . . . conditions.” Because of that, the insurance companies Sapa used aren’t obligated to pay out settlement funds.

Case Background

According to court documents, between 2000 and 2010, Sapa sold Marvin approximately 28 million aluminum extrusions, which constituted about 87 percent of all extrusions the window maker purchased in those years. Marvin produced about 8.5 million aluminum-clad doors and windows during that time.

Within a few years, some customers starting complaining that paint on the aluminum was bubbling and cracking, particularly on products installed in coastal areas. Marvin tried to repair the windows, then was forced to replace many of them. That led to the company suing Sapa in 2010 to recover repair/replacement costs for approximately 25,000 aluminum-clad units.

In August 2013, the U.S. District Court for the District of Minnesota ruled in Marvin’s favor. Following that, Sapa and Marvin entered into a confidential settlement agreement.

Is it an “Occurrence”?

Sapa’s lawsuits against its insurance companies over paying out the settlement began in November 2013 before wrapping up in Mannion’s court this week. In his ruling, the judge wrote that “the question for analysis thus becomes whether any of Marvin’s claims … qualified as covered ‘occurrences’ such that they triggered the Defendant Insurers’ duty to defend Sapa.”

Among other items, Sapa argued that it wasn’t liable for replacements Marvin attempted that damaged homeowners’ surrounding drywall and wall fixtures. Mannion rejected that argument, noting that “the allegedly faulty extrusions originated from Sapa’s contractual breach and not by virtue of some accident or surprise defect.”

“It was plainly natural and foreseeable to expect that cracking and peeling window extrusions may need replacing and, as a result, may damage the surrounding drywall and wall fixtures during the replacement process,” he wrote. “Since the failed window extrusions were initially caused by Sapa’s faulty workmanship, the mere fact that additional damages subsequently flowed from the costly and disruptive repair process does not suddenly transform this non-occurrence into an occurrence.”

Because of that and other reasons, the court ruled that Sapa’s insurers aren’t obligated to pay.

“As the Defendant Insurers had no duty to defend Sapa in the Underlying Action, they consequently have no duty to indemnify Sapa,” Mannion wrote in his ruling.

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