Pennsylvania General Insurance v. American Safety Indemnity Co.

D. A. Whitacre Construction, Inc. (Whitacre), a framing subcontractor on a construction project, was insured under a commercial general liability (CGL) insurance policy issued by plaintiff Pennsylvania General Insurance Company (Pennsylvania General) for the period October 1998 through December 2001. While insured by Pennsylvania General, Whitacre entered into a subcontract to perform work on a project and completed that work. At the conclusion of Pennsylvania General’s coverage period, and after Whitacre’s work on the project was completed, Whitacre was insured by a CGL policy issued by defendant American Safety Indemnity Company (ASIC), for the period December 2001 through December 2002.

In an ensuing construction defect lawsuit involving Whitacre (the construction defect litigation), various parties alleged that Whitacre’s work on the project was improperly done and had created various problems with the project. Whitacre tendered its defense to both Pennsylvania General and ASIC. Pennsylvania General accepted Whitacre’s tender of the defense under a reservation of rights and ultimately paid the defense and settlement costs for Whitacre. ASIC declined Whitacre’s…