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HomeMy WebLinkAbout07-1802NATIONWIDE MUTUAL FIRE INSURANCE COMPANY 1000 Nationwide Drive Harrisburg, PA 17110 V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION 1217 Indian Peg Road Mechanicsburg, PA 17055 and CROCKETT LOG HOMES OF PA, INC. 58 Sunset Drive Mechanicsburg, PA 17050 and DONALD E. VERNET 3111 Enola Drive Carlisle, PA 17013 and BRENDA L. VERNET 3111 Enola Drive Carlisle, PA 17013 and NATURAL BUILDING SYSTEMS, INC. 35 Old Route 12N Westmoreland, New Hampshire 03467 and: ROY STOLTZFUS 801 Penns Creek Road Spring Mills, PA 16875 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION NO. 0'7 - NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS NOTICE TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET HELP. Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 800-990-9108 17 NATIONWIDE MUTUAL FIRE INSURANCE COMPANY 1000 Nationwide Drive Harrisburg, PA 17110 V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION 1217 Indian Peg Road Mechanicsburg, PA 17055 and CROCKETT LOG HOMES OF PA, INC. 58 Sunset Drive Mechanicsburg, PA 17050 and DONALD E. VERNET 3111 Enola Drive Carlisle, PA 17013 and BRENDA L. VERNET 3111 Enola Drive Carlisle, PA 17013 and NATURAL BUILDING SYSTEMS, INC. 35 Old Route 12N Westmoreland, New Hampshire 03467 and: ROY STOLTZFUS 801 Penns Creek Road Spring Mills, PA 16875 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION NO. NOTlC/A LE HAN DEMANDO A USTED EN LA CORTE. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tien viente (20) dias de plaza al partir de la fecha de la demanda y la notificacion. Usted debe presentar una apariencia excrita o en persona o por abogado y archivar en la corte en forma escrita sus defensas o sus objeciones a las demandas en contra de tomara medidas y puede entrar una Orden contra usted sin previo aviso o notificacion y por cualquier queja o alivio que es pedido en la peticion de demanda. Usted puede perder dinero o sus propiedades o otros derechos impotantes para usted. LLEVE ESTA DEMANDA A UN ABOGADO IMMEDIATEMENTE. SI NO TIENE ABOGADO O SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA O LLAME POR TELEFONE A LA OFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 800-990-9108 2 Y _ NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY OF CUMBERLAND COUNTY, PA 1000 Nationwide Drive Harrisburg, PA 17110 Plaintiff, V. CIVIL ACTION NO. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION 1217 Indian Peg Road Mechanicsburg, PA 17055 Cumberland County and CROCKETT LOG HOMES OF PA, INC. : 58 Sunset Drive Mechanicsburg, PA 17050 Cumberland County and DONALD E. VERNET 3111 Enola Drive Carlisle, PA 17013 Cumberland County and BRENDA L. VERNET 3111 Enola Drive Carlisle, PA 17013 Cumberland County and NATURAL BUILDING SYSTEMS, INC. 35 Old Route 12N Westmoreland, New Hampshire 03467 and ROY STOLTZFUS 801 Penns Creek Road Spring Mills, PA 16875 Centre County Defendants. COMPLAINT FOR DECLARATORY JUDGMENT AND NOW comes Plaintiff, Nationwide Mutual Fire Insurance Company ("Nationwide"), by and through its attorneys, W. Darren Powell, Esquire and Thomas, 3 Thomas & Hafer, LLP, and files this Complaint for Declaratory Judgment, and in support thereof, avers and states as follows: THE PARTIES 1. Nationwide is an insurance company organized and existing under the laws of the State of Ohio, with a principal place of business in Pennsylvania at 1000 Nationwide Drive, Harrisburg, PA 17110. 2. Defendant Bruce Dunlavy, d/b/a Dunlavy Construction (hereinafter "Dunlavy") is an adult individual and sole proprietor in the construction business, with an address of 1217 Indian Peg Road, Mechanicsburg, Cumberland County, Pennsylvania 17055. 3. Defendant Crockett Log Homes of PA, Inc. (hereinafter referred to "Crockett") is a corporation licensed by the Commonwealth of Pennsylvania with a principal place of business of 58 Sunset Drive, Mechanicsburg, Cumberland County, Pennsylvania 17050. 4. Defendants Donald E. Vernet and Brenda L. Vernet, husband and wife, (hereinafter collectively referred to as the "Vernets") are adult individuals residing at 3111 Enola Drive, Carlisle, Cumberland County, Pennsylvania 17013. 5. Defendant Natural Building Systems, Inc. is a corporation with a principal place of business of 35 Old Route 12N, Westmoreland, New Hampshire 03467. 6. Defendant Roy Stoltzfus (hereinafter referred to as "Stoltzfus") is an adult individual residing at 801 Penns Creek Road, Spring Mills, Centre County, Pennsylvania 16875. THE UNDERLYING CLAIM 4 7. Crockett Log Homes of PA, Inc. filed suit against the Vernets with this Honorable Court at Docket Number 2004-4108 (the "Underlying Action") 8. A copy of Crockett Log Homes of PA, Inc.'s Complaint in the Underlying Action is attached hereto as Exhibit "A." 9. In its Complaint, Crockett alleges that it entered into a contract on July 31, 2003 with the Vernets, wherein Crockett was to construct, in a workman-like manner according to the rules and regulations of any city and county department and of any public service corporation, a house located at 3111 Enola Drive, Carlisle, Cumberland County, Pennsylvania. 10. In its Complaint, Crockett alleges that the Vernets failed to pay the balance of the agreed upon contract. The Complaint contains two (2) counts against the Vernets: Count I is for Breach of Contract and Count II is for Quantum Meruit. A copy of the Complaint is attached as Exhibit "A." 11. In their Answer, the Vernets filed a Counterclaim against Crockett, alleging several deficiencies in the project, including installation of wood posts in lieu of steel posts reinforced with footers. A copy of the Answer, New Matter and Counterclaim is attached as Exhibit "B." 12. The Counterclaim contains two (2) counts against Crockett: Count I is for Breach of Contract and Count II is based upon Unfair Trade Practices. 13. On or about June 23, 2005, Crockett then filed a Joinder Complaint against National Building Systems, Inc., Bruce Dunleavy(sic), and Roy Stoltzfus. The Joinder Complaint alleges that Dunlavy was a subcontractor who performed the 5 installation of the shell of the Vernets' house. A copy of the Joinder Complaint is attached hereto and marked as Exhibit "C." 14. In its Joinder Complaint, Crockett incorporates the allegations of the Vernets' Counterclaim ( breach of contract and Unfair Trade Practices), and avers that Dunlavy is jointly and severally liable on the claim, and that Dunlavy is liable over to Crockett for indemnity or contribu-tion on the Vernets' Counterclaim. COVERAGE UNDER THE POLICY 15. During times relevant hereto, Dunlavy was the named insured under a commercial liability insurance policy issued by Nationwide, said Policy is identified and known as policy number 58AC-243996-3001 H (hereinafter "the Policy"). A copy of the Policy is attached hereto as Exhibit "D." 16. Nationwide has provided Dunlavy with defense in the Underlying Action pursuant to a reservation of rights. See, Reservation of Rights letter to Dunlavy, dated August 11, 2005, attached hereto as Exhibit "E." 17. The Policy provides, among other things, as follows: ACP-0007 Page 1 of 12 A. COVERAGES 1. Business Liability a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury," "property damage," "personal injury" or "advertising injury" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages. We may at our discretion investigate any "occurrence" 6 and settle any claim or "suit" that may result.... ACP-0007 Page 2 of 12 B. EXCLUSIONS 1. Applicable to business liability coverage This insurance does not apply to: a. "Bodily injury" or "property damage" expected or intended from the standpoint of the insured.... b. "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) Assumed in a contract or agreement that is an "insured contract," provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; (2) That the insured would have in the absence of the contract or agreement. ACP-0007 Page 4 of 12 j. "Bodily injury,,, "property damage," "personal injury" or "advertising injury" due to rendering or failure to render any professional service. This includes but is not limited to: (1) Preparing, approving, or failing to prepare or approve maps, drawings, opinions, reports, 7 surveys, change orders, designs or specifications; and (2) Supervisory, inspection or engineering services. k. "Property damage" to: (5) That particular part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the "property damage" arises out of those operations; or (6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it. "Property damage" to "your product" arising out of it or any part of it. M. "Property damage" to "your work" arising out of it or any part of it and included in the "products - completed operations hazard." n. "Property damage" to "impaired property" or property that has not been physically entered, arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or (2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. ACP-0007 Pages 4 and 5 of 12 o. Damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of: (1) "Your product"; (2) "Your work"; or (3) "Impaired property" if such product, work or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it. 18. Likewise, the Policy, at Section F (ACP-0007 Pages 9 and 10 of 12), entitled Liability and Medical Expenses Definitions, defines the following: 5. "Impaired Property" means tangible property, other than "your product" or "your work," that cannot be used or is less useful because: a. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement; If such property can be restored to use by: a. The repair, replacement, adjustment or removal of "your product" or "your work"; or b. Your fulfilling the terms of the contract or agreement. 9 ACP-0007 Page 11 of 12 9. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. 11. a. "Products-Completed Operations Hazard" includes all "bodily injury" and "property damage" arising out of "your product" or "your work" except: (1) Products that are still in your physical possession; or (2) Work that has not yet been completed or abandoned. b. "Your work" will be deemed completed at the earliest of the following times: (3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. 19. Similarly, this Section defines "property damage" as: 12. "Property damage" means a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it. ACP-0007 Page 12 of 12 14. "Your product" means: 10 a. Any goods or products, other that real property, manufactured, sold, handled, distributed or disposed of by: (1) You; (2) Others trading under your name, or (3) A person or organization whose business assets you have acquired; and "Your products" includes: a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and b. The providing of or failure to provide warnings or instructions. 15. "Your work" means: a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection with such work or operations. "Your work" includes a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work"; and b. the providing of or failure to provide warnings or instructions. 20. The Policy provides coverage, generally, subject to certain exclusions, limitations and definitions, only for liability for property damage caused by an "occurrence" which means an "accident". 11 21. The Counterclaim does not allege that the property damage was caused by an accident or occurrence, but rather asserts that the damage resulted from breach of contract and Unfair Trade Practices. 22. The Policy excludes coverage for property damage expected or intended from the standpoint of the insureds, so there is no coverage for liability for such property damage. 23. The Policy excludes coverage for property damage to that particular part of any property that must be restored, repaired or replaced because the insured's work was incorrectly performed on it. 24. The Policy excludes coverage for liability for damage to work completed by the insured. 25. The intentional harm preclusion precludes coverage for any claims based upon misrepresentation. 26. The Policy excludes coverage for property damage arising out of work that has been completed by the insured. 27. The gist of the dispute between the parties in the Underlying Action is a contract claim. 28. The Policy excludes coverage for claims based upon breach of contract. 29. There is no coverage under the Policy for the claims asserted in the Underlying Action. WHEREFORE, the Plaintiff Nationwide Mutual Fire Insurance Company requests declaratory judgment that there is no coverage under the Policy issued by Nationwide 12 Mutual Fire Insurance Company with respect to the claims asserted in the Underlying Action, and for such other relief as the Court deems appropriate. Respectfully submitted, THOMAS, THOMAS & HAFER, LLP W. Darren Powell Identification No. 68953 305 N. Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attorney for Plaintiff 13 VERIFICATION I, Peter Alfeche, on behalf of Nationwide Mutual Fire Insurance Company, hereby state and aver that I have read the foregoing COMPLAINT FOR DECLARATORY JUDGMENT, which has been drafted with the assistance of Plaintiff's counsel. Language in the foregoing pleading is that of counsel and not of the undersigned. The factual statements contained therein are true and correct to the best of my knowledge, information and belief. This statement and verification is made subject to the penalties of 18 Pa.C.S.A. § 4904 relating to unsworn falsification to authorities. Date: ? ,?- --? /6 7 Peter Alfeche ALL STATE"LEGAL BW-222-0510 ED11 RECYCLED 7249335749 Casuality, Comm, M ateri Nationwide Insurance 04:50:48 p.m. 03-09-2007 9136 LAW OFFICES OF DILS & DILS ARTHUR K. DILS, ESQUIRE Attorney I.D. No. 07056 1017 North Front Street Harrisburg, PA 17102 Telephone No. (717) 232-9724 Attorney for Plaintiff, Crockett Log Homes of Pa., Inc. CROCKETT LOG HOMES OF PA., INC. IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA VS. NO. 2004 - '?/ o 97 Civil Term DONALD E. VERNET AND BRENDA L. VERNET, Defendant CIVIL ACTION - LAW NOTICE TO DEFEND YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take prompt action within (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections t the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lost money or property or other rights important to you. EXHIBIT 7249335749 Casual ity,Comm,Maten Nationwide Insurance 04:51:13 p.m. 03-09-2007 10 /36 YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association 2 Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 7249335749 Casuality,Comm.Materi Nationwide Insurance 04:51:23 p.m. 03-09-2007 11 136 CROCKETT LOG HOMES OF PA., INC. IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. NO. 2004 - Civil Tenn DONALD E. VERNET AND BRENDA L. VERNET, Defendant CIVIL ACTION - LAW COMPLAINT AND NOW, this 4?-y of August 2004, comes the Plaintiff, Crockett Log Homes of Pa., Inc., by his attorney, Arthur K. Dils, Esquire, and respectfully avers the following: COUNTI BREACH OF CONTRACT 1. The Plaintiff is a Pennsylvania Business Corporation duly licensed by the Commonwealth of Pennsylvania with its' principal place of business at 58 Sunset Drive, Mechanicsburg, Silver Spring Township, Cumberland County, Pennsylvania 17050. G. Douglas Dodson is the President of said Corporation. 2. The Defendants, Donald E. Vernet and Brenda L. Vernet, his wife, are adult individuals residing at 3111 Enola Drive, Carlisle, Cumberland County, Pennsylvania 17013. 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:51:40 p.m. 03-09-2007 12 /36 3. The Defendants entered into a written contract with the Plaintiff Corporation on July 31, 2003. A copy of said Contract is attached hereto and marked Exhibit "A" and made apart hereof. 4. The Contract provided that the Plaintiff, Crockett Log Homes of Pa,, Inc., was to construct a high energy efficient log building for use as a residence. 5. The Plaintiff, Crockett Log Homes of Pa., Inc., and the Defendants prepared and reviewed plans and specifications for the construction of the building and the Defendants agreed to these construction specifications and plans. 6. The Plaintiff was to perform all necessary labor and to furnish the required materials as set forth in said specifications. 7. The consideration for this construction project was agreed upon, in that, the Defendants agreed to pay the sum of $150,314.00 to the Plaintiff, Crockett Log Homes of Pa., Inc. 8. Prior to the signing of the Contract, but in accordance with the formal written agreement entered into on July 31, 2003, the Defendants paid $1,500.00 toward the agreed upon construction price. 7249335749 Casuality,Comm. Materi Nationwide Insurance 04:51:58 p.m. 03-09-2007 13 /36 9. The Plaintiff also gave the Defendants credit for a $1,000.00 coupon obtained at a sales seminar. 10. As a result of the aforesaid credits, the Defendants agreed to pay the balance of the construction price amounting to $147,814.00. The parties to the Agreement agreed to a draw schedule. 11. The Plaintiff, Crockett Log Homes of Pa., Inc., began construction on or about August 23, 2003, and had performed approximately 919% of the construction work by the first or second week of April 2004. 12. The Plaintiff, Crockett Log Homes of Pa., Inc., provided all the materials as required by the Agreement. 13. The Plaintiff, Crockett Log Homes of Pa., Inc., consulted continually with the Defendants to make any changes that they desired and to completely satisfy them. 14. The Plaintiff completed all work in a proper, good, and workmanlike manner. 15. Sometime in early April 2004, the Plaintiff appeared at the building site and conferred with the Defendant, Donald E. Vernet, at which time the 7249335749 Casual ity,Comm,Materi Nationwide Insurance 04:52:16 p.m. 03-09-2007 14 !36 Defendant indicated that the construction of the job was basically completed an he was sa is ie with same. 16. The next day, G. Douglas Dodson, the President of the Plaintiff Corporation, went to the job site to check on the condition of certain foundation posts and was ordered off of the job site by the Defendant, Donald E. Vernet. Mr. Vemet said, "I don't want you to get any deeper into this because I'm seeking legal help and it will be a long drawn out court case." The Defendant, Donald E. Vernet, did not specify any reasons nor give any complaints. 17. During the construction process, the Defendant, Donald E. Vernet, approached G. Douglas Dodson, the President, of the Plaintiff Corporation and asked for various changes and modifications to the aforesaid agreed upon specification and plans. Among these requests were: (a.) change a double. window to a French door; (b.) change a single door to a French door; . (c.) tongue and groove wall covering on bottom side of second floor porch deck floor; (d.) helped with the electrical wires on the second floor, floor joists; (e.) helped wire porches; and (f.) put up a catwalk across the loft area. 18. The Defendants had constructed a foundation. The anticipated and proposed foundation was to be 14 feet wide, but the Defendant caused it to 7249335749 Casuality,Comm,Maleri Nationwide Insurance 04:52:36 p.m. 03-09-2007 15 /36 be reduced to a 12 foot wide foundation. The Plaintiff, because of this change, had to redesign the construction project. 19. The Plaintiff had hired and subcontracted with a subcontractor, Bruce Dunlavy. This subcontractor was to help in the building of the residence. The Plaintiff was under the impression that the plans and specifications and his construction responsibility was to be from the foundation up. In other words, the Defendants were responsible for all foundation work. The Defendants had the first floor system completed before the Plaintiff began its construction work. 20. The Defendant, Donald E. Vernet, without the knowledge of the Plaintiff, instructed the subcontractor, Dunlavy, to install foundation posts. 21. As a result, the subcontractor., Dunlavy, installed posts in the foundation. 22. At or about the time that the Defendants ordered the Plaintiff off of the job site, Donald E. Vernet made a statement to the Plaintiff that he was concerned about one of the foundation posts. 23. On the day that the Plaintiff was ordered off the job site, G. Douglas Dodson went to the site to check the foundation posts, even though he was not legally responsible to do so, because of the Defendant's, Donald E. Vernet's, instructions to the subcontractor, Dunlavy. 7249335749 Casual ity,Comm,Materi Nationwide Insurance 04:52:56 p.m. 03-09-2007 16 /36 24. The Defendants prevented the Plaintiff from accomplishing this inspection. 25. After being ordered off the job, the Plaintiff had his attorney write a letter to the Defendants, Vernet, in an attempt to resolve any problems between the parties. Said letter is dated April 13, 2004, marked Exhibit "B" and attached hereto and made a part hereof. 26. As a result of this letter, there was another meeting between the Plaintiff and the Defendants in mid-May 2004, at which time access was permitted to the foundation area and the Plaintiff observed a temporary post and offered to rectify that problem. Donald E. Vernet indicated that he did not want the Plaintiff to accomplish this and refused further payment. Defendant stated they would let Plaintiff know about the past due payment due the Plaintiff, but failed to communicate with Plaintiff after. that time. The Defendants have willfully refused to make any further payments. 27. In accordance with the contract, the Defendants have paid the Plaintiff the sum of one hundred thirty thousand, four hundred eighty-five and no/100 dollars ($130,485.00) in the following installments: $25,000.00, $64,060.00, $12,425.00, $12,000.00, $10,000.00, and $7,000.00. 28. The Defendants have failed to pay the balance of the agreed contract. The amount due is seventeen thousand, three hundred twenty-nine and no/100 dollars ($17,329.00). 7249335749 Casuality.CommNateri Nationwide Insurance 04:5318 p.m. 03-09-2007 17 /36 29. Repeated demands have been made upon the Defendants for this sum and the Defendants have failed to make payment. 30. Said sum is due and owing to the Plaintiff and the Defendants have indicated no just cause or reason why said sum should not be paid. WHEREFORE, Plaintiff demands judgment against the Defendants in the amount of seventeen thousand, three hundred twenty-nine and no/100 dollars ($17,329.00) and interest, all costs of suit, and attorney's fees, said amount requires referral to a Board of Arbitration. COUNT II QUANTUM MERUIT 31. The Defendants requested additional work outside of the contract which required labor and material. 32. The Defendants specifically requested that the Plaintiff change a double window to a French door. The total cost for labor and materials for this requested change is $300.00. 7249335749 Casuality,Comm, Materi Nationwide Insurance 04:53:34 p.m. 03-09-2007 18136 3 The Defendants specifically requested a the Plaintiff change a single door to a French door. The total cost for labor and materials for this requested change is $400.00. 34. The Defendants requested the Plaintiff to install railings. The total cost for labor and materials for this requested change is $1,100.00. 35. The Defendants requested the Plaintiff to install a catwalk. The total cost for labor and materials for this requested change is $800.00. 36. The Defendants requested the Plaintiff to build two additional doors. The total cost for labor and materials for this additional work is $200.00. 37. The Defendants requested the Plaintiff to assist with electrical wiring on the second floor and floor joists and assist in the wiring of the porches. The total cost for labor and materials for this additional work is $500.00. 38. The Defendants requested the Plaintiff to assist in the tongue and groove wall covering on bottom side of second floor porch and deck floor. The total cost for labor and materials for this additional work is $600.00. WHEREFORE, Plaintiff demands judgment against the Defendants in the amount of Three Thousand Nine Hundred and no/100 ($3,900.00) Dollars 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:53:53 p.m. 03-09-2007 19136 plus interest, attorney's fees, and all costs, said amount requires referral to a Board of Arbitration. Respectfully submitted, BY Arthur K. Dils, Esquire 1017 North Front Street Harrisburg, PA 17102 (717) 232-9724 I.D. No. 07056 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:54:03 p.m. 03-09-2007 20 /36 EXHIBIT "A" 7249335749 Casuality,Comrn,Maten Nationwide Insurance 04:54:10 p.m. 03-09-2007 21 136 Contract THIS CONTRACT, made the 31st day of July 2003, between Brenda and Don Homes of PA, Inc. 58 Sunset Drive, Mechanicsburg, Pennsylvania 17050, hereinafter called CONTRACTOR, agree as follows: The Owner represents that he is the real and registered Owner of the property situated at 3111 Enola Drive, Carlisle, Pennsylvania. WHEREAS, the Contractor has agreed to do the work as indicated upon the said plans and set forth in the specifications which are initialed by the parties. In consideration of the mutual promises herein contained, it is agreed that each party intending to be legally bound and the Owner desiring that the home be constructed for private use, the parties hereby agree as follows: (1) That the Contractor, for the consideration hereinafter mentioned and referred to, hereby covenants and agrees with the Owner that he will do the work set forth in the plans and specifications in a good and workmanlike manner, and in accordance therewith, as well as with the rules and regulations of any city and county department; and of any public service corporation supplying or which will in future supply services on the said premises and does further agree to do and perform all of the work, supply and furnish all of the labor and materials as set forth in the plans and specifications and necessary for the proper performance of the said work which the Contractor does hereby undertake to complete. (2) That the Owner shall pay to the Contractor the sum of $ 150,314.00 as needed with $1,500.00 Initial Deposit and $1,000.00 Coupon already paid, (3) The total agreed construction price between the parties is that the Contractor shall be paid the total remaining sum of $147,814.00 on a draw schedule. (4) The Contractor hereby agrees that all construction shall be complete as set forth within one hundred eighty (180) days from the date of initial construction provided that the Contractor is not delayed in the completion of this work by strikes, by failure of the Owner to furnish funds or other matters, or other happenings beyond his control. If such a delay is caused, the time of such delay shall not be included in the time during which this contract is to be fully performed as herein provided, but such time shall be extended for a period equal to the period of such delay. 7249335749 Casual ity,Comm, Materi Nationwide Insurance 04:54:38 p.m. 03-09-2007 22 /36 (5) In the event that the Contractor is delayed in the performance and completion of his work under this contract by any act, neglect, or default of the Owner or any damage or delay caused by fire, delays in transportation, acts of God, acts of war, strikes or any other casualty, vandalism, or calamity for which the Contractor is not responsible or any event not under his control, the time herein fixed for the completion of the work under e oun o e lost by reason of any such causes, provided nevertheless the Contractor shall give Owner notice of such delay and take reasonable steps to cure such delay. (6) No changes or alterations in the work to be done under this contract shall be, made except by written contract of the parties hereto. (7) The Owner shall pay for any additional costs in construction if there is any rock or unfavorable building conditions, provided notice is first given to Owner and Owner approves such additional costs. . (8) The Owner cannot move in until the Contractor is paid in full and Contractor has substantially completed said construction excepting reasonable items of work undone to affecting habitability. (9) If there by any disagreement between the parties hereto concerning any aspects of this contract, the Contractor shall have the option and the parties are bound by this option, .to either have the disagreement resolved through a Board of Arbitration or through the ort of Common Pleas, under the laws of the Commonwealth of Pennsylvania. (10) It is understood and agreed that the Contractor does not assume any risks or liability if the building is not erected within the time period set forth herein, finless such delay is caused directly or indirectly by Contractor or Contractor's control. (11) This Contract shall be binding upon the heirs, successors, executors, administrators, and assigns of the respective parties hereto. (12) The Owner will be responsible for but not limited to the following labor and material: Landscaping/seeding Sanding, Painting and Polyurethaning the interior Application of Exterior Weatherseal Foundation Plumbing and Fixtures Heating Air Conditioning - {? P Electric and Fixtures Kitchen, All Cabinets and Counters, Appliances f r Floor Covering --- , Co PfT f (l f o r S v Flo a n p 1 I e S f! `?? Fireplace r 7249335749 Casuality,Comm, Materi Nationwide Insurance 04:55:07 p.m- 03-09-2007 23 /36 house. Signed and sealed the day and year first abo, "iffe,SS t ess Witness C AtfaCtO Crockett Log Homes of PA, Inc. 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:55:19 p.m. 03-09-2007 24 /36 EXHIBIT "B" 7249335749 Casuality,Comm, Materi Nationwide Insurance 04:55:26 p.m. 03-09-2007 25136 ,.v ruy csG :LUA% ATTORNEYS AT LAW fiRTHUR K. DILS MANE M. DILS 1017 NORTH FRONT STREET HARRISBURG, PENNSYLVANIA 17102 PHONE: (717) 233-8743 FAX: (717) 233.2567 April 13, 2004 Brenda and Don Vernet 3111 Enola Drive Carlisle, PA 17013 Dear Brenda and Don: I represent Douglas Dodson, 58 Sunset Drive, Mechanicsburg, Pennsylvania 17050, who is the President of Crockett Log Homes of PA, Inc. A contract was entered into between the corporation and yourselves sometime in August 2003. You recently have ordered Mr. Dodson and his employees, sub-contractors from your premises. I have reviewed the blue prints, the contract, and the work performed and it is my opinion that. Mr. Dodson and the corporation are in substantial compliance with the contract and that you have breached the contract by failing to make final payments and by not permitting Mr. Dodson to finish the minor items. Brenda gave Mr. Dodson a list of things that needed to be completed. I have reviewed that list and most of the items have been taken care of. Brenda mentioned the sealer and kitchen flooring and Mr. Dodson is ready, willing, and able to supply these items. The trim around the kitchen was not completed because Don said to wait, but this work can also be accomplished. The two items were not discernable, namely; beams that need to go into the basement and more support to the stairway into the basement. We would need clarification of these items, but I assure you that Mr. Dodson would perform what is needed. Recently, Mr. Dodson asked to view the basement area to verify that Bruce Dunlavy completed the necessary posts in a proper manner. You refused Mr. Dodson to view the basement and the posts. Enclosed is a copy of a brief history of the job and its problems. Mr. Dodson is willing to consider any just complaints that you have as he believes that he wants to sustain his integrity in the building profession and wants to satisfy you as long as you have reasonable requests. The 7249335749 Casual ity, Comm. M ateri Nationwide Insurance 04:55:54 p.m. 03-09-2007 26 /36 total due Mr. Dodson at this time is $18,529.00. The final draw is $17,329.00 plus $1,100.00 for railings, $200.00 for two doors built by Mr. Dodson, $900.00 for the ceiling under the deck, $800.00 for the catwalk, $300.00 for changing a double window to a french door, and $400.00 for a single door to a french door. A credit of $2,500.00 was included in the demand figure for trusses that were not utilized. You may feel free to contact me concerning this matter; however, we do want to see that your contractual obligations are fulfilled and that this matter can be settled quickly and amicably to the satisfaction of both you and your wife and Mr. Dodson. Very truly yours, Arthur K. Dils AKDldaf 7249335749 Casual ity,Comm,Materi Nationwide Insurance 04:56:08 p.m. 03-09-2007 27/36 VERIFICATION I verify that the statements made in this Complaint are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn falsification to authorities, G. DOU AS DODS resident CROCKETT LOG HOMES OF PA., INC. Date: August 19, 2004 ?xl??b?F B 7249335749 Casual ily,Comm, Materi Nationwide Insurance 04:56:26 p.m. 03-09-2007 29136 Barbara Sumple-Sullivan, Esquire Supreme Court #32317 549 Bridge Street New Cumberland, PA 17070 !7171374-144 5 CROCKETT LOG HOMES OF PA, INC., : IN THE COURT OF COMMON PLEAS Plaintiffs : CUMBERLAND COUNTY, PENNSYLVANIA V. DONALD E. VERNET AND BRENDA L. VERNET, Defendant CIM ACTION -LAW : NO. 2004-4108 ANSWER, NEW MATTER AND COUNTERCLAIM COUNTI BREACH OF CONTRACT 1. Admitted. 2. Admitted. 3. Admitted. 4. Denied. Paragraph 4 is a conclusion of law to which no responsive pleading is required. By way of further answer, it is averred that the contract is a writing which speaks for itself and any paraphrasing by the Plaintiff is denied as a true and accurate statement of the terms of the contract. S. Admitted in part. Denied in part. It is denied that the Plaintiff and the Defendants prepared plans and specifications for the construction of the building. It is averred that Plaintiff prepared the plans and specifications in consultation with the engineer from National Building Systems, Inc. d/b/a Crockett Log Homes, which entity Defendants believed were the principal for Plaintiff. It is admitted that Plaintiff and the Defendants did in fact review an Appendix A referenced Crockett Ultra R Log home sheet and 0 EXHIBIT IE 7249335749 Casuality,Comm.Materi Nationwide Insurance 04:56:45 p.m. 03-09-2007 30136 certain residence schematics. However, Defendants never received any other specific specifications. It is further averred that an actual blueprint for the home was not provided to the Defendants until after the contract was executed and Plaintiff had already commenced building of the home. When Defendants asked for the blueprint at the time of executing the contract, Plaintiff assured them it would be forthcoming and that they would get all features exactly as discussed. This did not occur. It is further averred that Plaintiff failed to construct the building in accordance with the schematics, Appendix A, or the blueprint finally presented- 6. Admitted with the clarification that the contract specifically provided that the Plaintiff agreed "...to do and perform all of the work, supply and furnish all of the labor and materials as sei forth in the plans and specifications and necessary for the performance of the said work. which Contractor does hereby undertake to complete." 7. Admitted. 8. Admitted. 9. Admitted vdth the clarification that Defendants never actually received the coupon and had understood the credit was to be One Thousand Five Hundred Dollars ($1,500.00). 10. Admitted. 11. Admitted in part. Denied in part. It is admitted that Plaintiff began construction on or about August 23, 2003. It is denied that Plaintiff had completed approximately ninety- nine percent (99%) of the construction work by the first or second week of April, 2004. By further answer, it is averred that the entire construction should have been completed in February, 2004. It is further asserted that the work that was completed was not completed in a workmanlike fashion. 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:57:07 p.m. 03-09-2007 31 136 12. Denied, It is denied that the Defendant provided all the materials required by the Agreement. It is averred that many of the materials were provided directly from Crocket Log Homes, the principal of Defendant. It is further noted that many materials as listed on the Appendix A were never provided including, but not limited to, Therma Tru door, double windows, metal posts and plates, etc. as outlined in the Counterclaim and incorporated herein. 13. Denied. It is denied that Plaintiff consulted continually with the Defendants to make changes that they desired. It is averred that the only change which Defendants requested was an upgrade to the front door entrance. A change order was issued. Defendants are without knowledge to form a belief as to the truth of the averment that Plaintiff desired to completely satisfy them. By way of further answer, it is averred that Defendants only expected that Plaintiff comply with the terms of their agreement, the Appendix A and schematics and plans. It is noted that many changes made in the project were made due to a design error by Plaintiff and his principal, Crockett Log Homes. Plaintiff's agents proceeded with the construction despite the request that the errors be corrected. Those changes as set forth in paragraphs 44 through 103 of the Counterclaim were never desired or requested by the Defendants. 14. Denied. It is denied that Plaintiff completed the work in a proper, good and workmanlike manner. As set forth in Counterclaim, which paragraphs are incorporated by reference, it is asserted that the work was performed in an unsatisfactory and negligent manner. 15- Denied. It is denied that Defendant, Donald E. Vernet at any time in April, 2004 told Plaintiff that the construction job was completed and that he was satisfied with same. At all times relevant, Defendants advised Plaintiff of the continuing problems with the 7249335749 Casuality,Comm,Materi Nationwide Insurance 04:57:31 p.m. 03-09-2007 32 /36 construction, including, but not limited to, the failure to meet the contract specification and plans, the problems with water entering the home, and the faulty workmanship. It is fur-ther averred that at this meeting concerning the problems, Defendants declined Plaintiff's request for a draw. Plaintiff was emotionally distraught and indicated to the Defendants that he was concerned that Bruce Dunlavy, another Crockett Log Homes builder who was actually erecting the home on Plaintiff's and Crockett Log Homes behalf; was "trying to bring him down" and stated that "none of this is worth it" and that he thought he "should end it all". This was extremely upsetting to the Defendants. 16. Admitted in part. Denied in part. It is admitted that at some time in April, 2004, specifically on April 8, 2004, approximately a week after the conversation referenced in paragraph 15 above, Plaintiff did return to the Defendants' property. Al all times relevant thereto, Defendants believed that Plaintiff had come to attempt to repair the existing problem with the front door. It is denied that Defendants ordered Plaintiff' from the site. However, Defendants did tell Plaintiff not to put any more time into the project because of the extensive repairs which were necessary and the poor quality of the construction as it then existed. Defendants did not want any further work to continue until such time as the structural integrity of the home was verified. It is admitted that Dodson was advised that Defendants were seeking legal, as well as engineering assistance, to determine the appropriateness of the Plaintiff's performance to date. It is denied that Defendants did not specify any reasons or give any complaints. 17. Admitted in part. Denied in part. It is admitted that of the items listed, only one change as set forth in subsection d, was actually requested by Defendants. It is averred as follows: 7249335749 Casuality.Comm. Maten Nationwide Insurance 04:57:54 p.m. 03-09-2007 33/36 A. The French door was discussed by the parties, an agreement reached for its inclusion in the design and was intended to be included in the original blueprint. It was not included due to an administrative error by Plaintiff or design error by Crockett Log Homes. This was not additional work by Plaintiff. B. The French door was discussed by the parties, an agreement reached for its inclusion in the design and was intended to be included in the original blueprint. It was not included due to an administrative error by Plaintiff or design error by Crockett Log Homes. This was not additional work by Plaintiff. C. It is admitted that tongue and groove wall covering was required to be installed on the bottom side of the second floor porch deck by the Defendants. It is denied that said was an additional work since tongue and groove is required to be installed pursuant to the contract for everything that is framed. D. Admitted in part. Denied in part. It is admitted that Plaintiff did personally assist the Defendants with the installation of the electrical. It is averred that Plaintiffs actual time was approximately one half hour. It is averred that this work was required due to an error in installation of the logs by Mr. Dunlavy which made it almost impossible to run wire for electrical service. Defendants could not even hire an electrician who would take on the electrical construction work To remedy this, Plaintiff then illustrated to Defendant, Donald E. Vernet, how to run the router to allow the wiring to run through the logs. E. Admitted with the incorporation of subsection-(D) above. It is estimated that Plaintiff spent approximately an additional fifteen minutes (15) to punch the hole through the wall for the extension of wiring to the porch. 7249335749 Casuality,Comm, Mated Nationwide Insurance 04:58:17 p.m. 03-09-2007 34 /36 F. It is admitted that during the initial negotiations of the scope of the contract work, the catwalk across the loft was considered for deletion. However, at all times relevant to the actual design of the home, the inclusion of the catwalk was discussed by the parties, an agreement was reached for its inclusion in the design and was intended to be included in the drawing. It should have been included and was omitted only as an administrative error of the Plaintiff or a design error by Crockett Log Homes. This was not additional work. 18. Admitted in part. Denied in part. It is admitted that the foundation was a pre-existing structural item which had been constructed by the Defendants prior to Plaintiff's contract. Plaintiff and Crockett Log Homes were to design from that foundation upwards. The only area where the actual foundation was not yet erected when the design was made was in a designated foyer/entry area. It is averred that, at all times relevant to the development of plans and specifications, the foundation and the contemplated area for extension for the foyer were existing and readily available for field measure by Plaintiff and the design engineer from Crockett Log Homes. However, Plaintiffs plan and specification incorrectly incorporated the existing thirty-two feet (32) foundation wall as a thirty feet (30) wall and estimated fourteen feet (14) rather than twelve foot (12) for the foyer area It is denied that at any time, the existing foundation was proposed to be fourteen feet (14) wide. 19. Admitted in part. Denied in part. After reasonable investigation, Defendants are without personal knowledge sufficient to form a belief as to the truth of the averment related to Dunlavy and his responsibilities for construction. Proof of same is demanded at trial. It is admitted that the preparation of the design and construction of the residence was to 7249335749 Casuality,Comm. Materi Nationwide Insurance 04:58:40 p.m. 03-09-2007 35 /36 utilize the existing concrete foundation work for all construction work It is admitted that the first floor system was completed before Plaintiff began his contract work It is ri n. 20. Denied. It is denied that Defendant, Donald E. Vernet instructed any subcontractor of Plaintiff to install foundation posts. Said posts were required by the parties' contract. It is averred that even the temporary posts, as were erected by Dunlavy, were not erected in the appropriate locations and were placed in front of doorways and windows as a result of PIaintiff's design error. 21. Denied. Defendants are without knowledge as to the truth of the averment and proof thereof is demanded. By way of further answer, it is asserted that the subcontractor, Bruce Dunlavy, was the subcontractor and agent for Plaintiff or Crockett Log Homes, Inc. and acted at the direction of Plaintiff. Defendants had no control whatsoever over his actions. 22. Admitted with the clarification that Defendants told Plaintiff on that and prior occasions that he was extremely concerned about the posts and structural integrity of the building. It is also averred that said posts, as installed by Plaintiff or his agents, were wood and were required to be metal with plates pursuant to the specification Appendix. 23. Denied. After reasonable investigation, Defendants are without knowledge as to the truth of the matter and proof thereof is demanded. By way of further answer, the averments of said paragraph are denied as a conclusion of law to which no responsive pleading is due. Defendants' response to paragraphs 20 and 21 are further incorporated herein by reference. 7249335749 Casuality,Comm. Materi Nationwide Insurance 04:59:02 p.m. 03-09-2007 36136 24. Denied. After reasonable investigation, Defendants are without knowledge as to the truth of the matter and proof thereof is demanded. eru . er reasons a investigation, a en ants are Without knowledge as to the truth 25. DEd 7M of the matter and proof thereof is demanded. It is also denied that said exhibit includes the entire correspondence record by Defendants. 26. Admitted in part. Denied in part. It is admitted that an additional meeting between the parties occurred on May 11, 2004. It is further averred that an individual from Crockett Log Homes, whom Plaintiff did identify as "his boss," also attended. It is admitted that Plaintiff was able to observe the temporary posts and all other problems with the project. Defendants have no recollection of any offer to repair posts or any other construction defect. A discussion did occur as to the failure of the Plaintiff to install trusses and/or give Defendants credit for same. The representative of Crockett Log Homes indicated - that Crockett had already paid to Plaintiff a credit for the trusses. However, same was never paid to or crgdited against the balance of Defendants. All problems were made known both to Plaintiffs and Crockett Log Homes at said meeting. 27. Admitted. 28. Admitted with the clarification that since the work was not completed properly and costs of construction, repair and replacement exceeds the contract sum, no further sums are due to Plaintiff. 29. Admitted with the clarification that the work was not completed properly and costs of construction repair and replacement exceeds any amount due to Plaintiff. 30. Denied. It is denied that any further sums are due to the Plaintiff because of Plaintiff's total breach of the parties' contract and the necessary costs which will have to be incurred 7249335749 Casuatity,Comm,Materi Nationwide Insurance 04:59:44 p-m. 03-09-2007 2/41 by the Defendants to repair and replace the defective and improper work of the Plaintiff. Said work is specifically set forth in the Counterclaim, which paragraphs are specifically incorporated herein by reference. WHEREFORE, Defendants requests judgment in their favor and against the Plaintiff. COUNT II QUANTUM MERUIT 31. Admitted in part. Denied in part. It is admitted that certain changes were requested. It is denied that said work was outside the contract. It is averred that paragraph 6 of the parties' contract provided the procedure by which Plaintiff was to secure changes to the contract work It is averred that said change order procedure was implemented between the parties. 32. Admitted in part. Denied in part. It is admitted that Defendants' requested a change from a double window to French door as incorrectly depicted on the blueprint as a result of Plaintiff s design error. It is further denied that the total costs for labor and materials for the change was Three Hundred Dollars ($300.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. By way of further answer, it is averred that from the total costs for labor and materials, Plaintiff was required to offset, as credit, the monies saved for the failure of the Plaintiff to provide the window and install same in exchange for the door. 33. Admitted in part. Denied in Part. It is admitted that Defendant's requested a change from a single door to a French door as was incorrectly depicted on the plan due to a design error. It is further denied that the total costs for labor and materials for the change 7249335749 Casuafity,Comm,Materi Nationwide Insurance 050006 p.m. 03-09-2007 3141 was Four Hundred Dollars ($400.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. By way of further answer, it is averred that if the total costs from labor and materials, Plaintiff was required to offset, as credit, the monies saved for the failure of the Plaintiff to provide the single door and install same in exchange for the French door. 34. Admitted in part. Denied in part. It is admitted that the change was requested but avers that Defendants' failed to make the request. The change in the stairs resulted from the original design error in the plan which caused the house to be constructed with insufficient space to accommodate the stairs as depicted on the blueprint produced by Plaintiff or Plaintiffs agent. It is further. denied that the total costs for labor and materials for the change was One Thousand One Hundred Dollars ($1,100.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. It is further asserted that because Plaintiff deleted the landings and otherwise modified the stair wells, the costs of his actual construction was considerably less than the anticipated costs incident to construction of the stairs set forth in the blueprint. Plaintiff's are thus entitled a credit to the contract price. 35. Admitted in part. Denied in part. It is admitted that the change to the blueprint was requested to re-insert the catwalk back into the design due to its erroneous error or omission in the original design by Plaintiff or Crockett Log Homes. It is further denied that the total costs for labor and materials for the change was Eight Hundred Dollars ($800.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. 7249335749, Casuality,Comm, Maten Nationwide Insurance 05:00:28 p.m. 03-09-2007 4/41 36. Admitted. It is admitted that the change was requested by Defendants and that said sums are due as a credit in accordance with the parties' executed change order. 37. Admitted in part. Denied in part. It is admitted that Plaintiff did assist Defendants in wiring but avers that Plaintiff offered to do so without charge to mitigate the result of the construction failures of Dunlavy which made it much more time consuming and difficult for Defendants or their electrician to run the wiring. It is further denied that the total costs for labor and materials for the change was Five Hundred Dollars ($500.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. It is averred that the total labor time expended by Plaintiff did not exceed one half (1/2) hour. 38. Denied. This work was required pursuant to the parties' contract. It is further denied that the total costs for labor and materials for the change was Six Hundred Dollars ($600.00) since Defendants are without knowledge to form a belief as to the truth of the averment and said is denied. WHEREFORE, Defendants request judgment be entered on their behalf and against the Plaintiff, NEW MATTER 39. Any reimbursement for alleged additional work set forth in Count II of Plaintiff's Complaint are barred by the terms of the contract which require changes to be by written contract. 7249335749 Casual ity,Comm,Materi Nationwide Insurance 05:00:48 p.m. 03-09-2007 5/41 40. Any reimbursement for alleged additional work set forth in Count H of Plaintiff's Complaint are barred by the Statute of Frauds. 41. - Any sums our toe due to Plaintiff must be o set against monies due to Defendants as awarded pursuant to the Counterclaim set forth herein. 42. Plaintiff is responsible and liable for the actions and directions of his agents, including specifically his subcontract, Bruce Dunlavy. 43. Plaintiff supplied a faulty blueprint for construction of Defendants' home. COUNTERCLAIM 44. Counterclaim plaintiffs are Donald E. Vemet and Brenda L. Verret, adult individuals residing at 3111 Enola Road, Carlisle, Cumberland County, Pennsylvania 17013. 45. Counterclaim Defendant is Crockett Log Homes of Pa, Inc., a Pennsylvania corporation - with its principal place of business being 58 Sunset Drive, Mechanicsburg, Cumberland County, Pennsylvania 17050. COUNTI BREACH OF CONTRACT 46. Counterclaim Plaintiffs and Counterclaim Defendant entered into a written contract dated July 31, 2003 for the construction of a Crockett Log Home upon their property located at 3111 Enola Road, Carlisle, Cumberland County, Pennsylvania 17013. 47. Said contract required the work to be performed in accordance with the contract, plans and specifications. 7249335749 Casuality,Comm. Maten Nationwide Insurance 05:0106 p.m. 03-09-2007 6141 48. At all times relevant hereto and since July of 2002, Counterclaim Plaintiffs were residing in the property in the basement concrete foundation which was in existence at the time of contract with the Counterclaim Defendant. 49. Al all times relevant hereto, Counterclaim Defendant was to plan, design, secure and construct a Crockett Log Home on the existing foundation of Counterclaim Plaintiffs. 50. Crockett Log and Timber Homes is marketed nationally as a manufacturer and builder of i log homes and is a designated trademark o .National Building Systems, Inc. It is believed and therefore averred that National Building Systems, Inc., is the principal of Counterclaim Defendant. r 51, At all times relevant thereto, Counterclaim Plaintiffs believed that Counterclaim Defendant was an agent or employee of Crockett Log Homes, now legally known to them as National Building Systems, Inc. 52. At all times relevant, Counterclaim plaintiffs knew that Counterclaim Defendant, Crockett Log Homes of Pa., Inc, was working solely with Crockett Log Homes to provide the building materials, design the home for erection on Counterclaim Plaintiffs' foundation, complete specifications, drawings and building plans to construct Counterclaim Plaintiffs' new home on their existing foundation. 53. Counterclaim Defendant, with the assistance of an engineer of Crockett Log Homes named Matt Kocyba, were solely responsible for the design of the log home to be built on the existing foundation. V 54- At all times relevant thereto, Urad Dunlavy, was known to Counterclaim Plaintiffs to be an agent or employee of Crockett Log Homes and Counterclaim Defendant. 7249335749 Casual ity,Comm,Materi Nationwide Insurance 05:01:28 p.m. 03-09-2007 55. Counterclaim Defendant's original design and construction were drawn in error since it } I ` incorrectly measured the existing foundation as being two feet shorter than the thirty-two Vk y 7141 the area for an intended entry/foyer area as two (2) feet larger than the twelve feet (12) that actually existed. 56. Counterclaim Defendant and/or the engineer from Crockett 1,09 Homes improperly and erroneously field measured the foundation or failed to measure same. 57. The result of this error was to severely skew and limit the planned construction area and layout of the entire interior of Counterclaim Plaintiffs' home, causing loss of space and repositioning of structural supports and other contracted for features. 58. Counterclaim Defendant's original design provided that certain support columns at the r first level were to be metal posts with top and bottom plates under each posts and were to (It be set upon reinforcements in the existing foundation. ?l 59. In lieu of the metal support columns and support plates, Counterclaim Defendant or h' agents, subcontractors, installed eight (8) 8" x 8" wood posts and which, in many . locations, not accurately rest squarely or have bearing upon the existing footers or .: masonry walls. : 60. Also, at a main support beam integral to the first floor, an additional wood post was set in order to transfer the roof load to the basement. This additional post must be replaced with a steel post and concrete slab. 61. It is expected that approximately eight (8) posts must be replaced with steel posts and seven (8) plates and (approximately 7) need to be reinforced with footers. 7249335749 Casual ity,Comm, Mated Nationwide Insurance 05:0150 p.m. 03-09-2007 8/41 62. The cost of this repair work incident to each post replacement and repair is estimated to be One Thousand Dollars ($1,000.00) per metal post for a total of Eight Thousand 901IMs (58,606.00). ?L 63. Plaintiff constructed the support column for the roof and dining area to attach by a single u ` lag bolt although it does not abut or attached to adjoining supports. This is inappropriate construction that may cause the entire roof system to collapse with additional load, such as snow, fatigue, etc. 64. It is believed that a special support must be fabricated to reinforce this roof or after be removed and replaced with a rafter that bears on the exterior wall. The cost is currently unknown but it is estimated the support could be fabricated for One Thousand Five Hundred Dollars ($1,500.00) in fabrication of said metal support, plus labor.. 65. Other physical discrepancies from the contract, plans and specifications resulting from the design error which include, but are not limited to, the following. A) Loss of the walk-in closets depicted on the plan. Although Counterclaim Defendant did construct two (2) smaller closets, they are so inadequate in size that they cannot be used for the intended purpose due to their width and depth. B) No pantry was built. C) The powder room was built smaller than expected. i D) No island was placed in the kitchen exists. E) The stairway was shifted from the rear wall to the side wall and landings were deleted. F) Bedroom two was reduced in size from 171 square feet to 133 square feet. hk G) No laundry room was included- ,. 7249335749 Casual ity,Comm,Mated Nationwide Insurance 05:02:11 p.m. 03-09-2007 9/41 H) Limited space cause misalignment of roof lines and pitch and resulted in improper drainage to handle gutter runoff. 1) Elmlied space or installation taus improper operation o doors. J) Foyer window (which had been intended to be double window) became a single window and installed approximately three feet towards the "corner of house." Its present location has the window under the roof and this is causing major interior and exterior water damage. K) Window heights as installed prevent practical use throughout the home and must be reconstructed with different size windows to allow use. 66. These defects as set forth above have impacted the fair market value of the home and have reduced its aesthetic appearance and practical use. The errors in design and construction have prevented the Counterclaim Plaintiffs from securing the house for which they contracted to pay for. 67. The costs for repair and replacement of the losses are not currently known but will be ascertained and provided at trial. However, estimates of said costs known to date are as follows: A) Materials and labor for roof repairs, including alignment of Valley, caps - $1,800.00 13) Spouting/front of house (labor and materials) $ 350.00 C) Closest in foyer missing (materials and labor) $ 740.00 D) Pantry in kitchen (materials and labor) $ 740.00 E) Catwalk landings missing in both stairways (material and labor) $2,600.00 7249335749 Casuality,Comm, Materi Nationwide Insurance 05:02:30 p.m. 03-09-2007 10141 F) Closets in Master bedrooms were to be walk-in (material and labor $2,000.00 G) Plumbing wall needed correct by 2 x 6 (labor) $ 800.00 il) r i or bathroom $2,000.00 n Credit for losing doorway openings and repositioning of posts Space in powder room lost K) Correct foyer entrance opening into kitchen area, Gable was to Continuous to meet other ceiling L) Windows in work area Ivl) Dormer off center, window height, tongue (groove alignment and roof build to right side ' 1) Credit for changes in front exterior structural appearance. This lost of costs thereof will be determined at hearing Total $2.500.00(plus labor) $2,000.00 $4, 500.00(plus labor) $2,800.00 $2,200.00 S To be determined $25,030.00 68. - Pursuant to the contract, Counterclaim Defendant was to perform the work in a good and workmanlike manner. 69. Counterclaim Defendant failed to perform said work The following deficiencies are noted: A) Inappropriate insulation techniques which allow for water and air infiltration; B) Incorrectly installed ridge vent and shingles; C) Inappropriate windows used and error in placement; - D) Improper nailing of logs using fasteners which are too short or incorrect for the installation; 7249335749 Casuafity,Comm, Materi Nationwide Insurance 05:02:48 p.m. 03-09-2007 11 !41 E) Improper construction of master deck gable; F) Improper front door entry and damage to same. This has resulted in Counterclaim Plaintiffs loosing warranty coverage for same.- G) Deletion of Hammer trusses; H) Grids from French doors; n The floor joist on the stairwell need additional support to lessen the bounce; The deck construction is not of adequate and must be reinforced by the further installation of two (2) tap cons screws or thunderbolts per bay. IC) Due to Counterclaim Defendant's error in the construction of the kitchen step down, no chasis were drilled in plates and additional corrections required. L) The walls in the kitchen are not aligned and not frames. K The roof beams in kitchen needs repairs. N) The sink area in kitchen needs repaired. O) No handrail and steps out of line and loose. P) Loose log to siding to be attached. Q) Other problems to be revised. 70. The total costs of correction of this defective work is not yet ascertained and proof of same will be made at hearing. Estimates known to date are set forth in Exhibit "A" and incorporated herein by reference. 71. The areas of poor construction indicated in paragraph 69 above have also affected Counterclaim Plaintiffs' practical use of the residence. 72. The areas of poor construction indicated in paragraph 69 have also allowed for the introduction of water and moisture into the home. 7249335749 Casuality,Comm,Materi Nationwide Insurance 050312 p.m. 03-09-2007 12 /41 73. Further, during the actual construction, Counterclaim Defendant failed to appropriately protect the building site by erection of roofing system and reasonable care of stored 74. As a result thereof and the subsequent poor roof construction, the structure was exposed to the elements, including especially heavy rainfall, for a period of approximately six (6) months. 75. These acts resulted in the introduction of water into the property and onto the building materials, including, but not limited to, the Styrofoam, the OSB board, windows, walls and laminated floor joists. 76. This had given rise to the growth of mold and mildew in the home during construction and which continues to the present. 77. These construction problems require correction of the construction defects, as waterproofing of many of the building components. 78. Steps must also be taken to remediate the mold growth throughout the home (especially around the perimeter walls); water staining on the walls; and extensive replacement of actual wall and floor materials to eliminate the mold and deal with the high moisture content in the home. 79. The moisture problems have caused Counterclaim Plaintiffs, ceiling to warp from high humidity and moisture; insulation inside the logs is damp; and visible mold and moisture damage exists to the sub floor, foundations and inside existing cabinets, destroying same. 80. After repair and replacement of faulty construction which allowed the introduction of water and replacement of the damaged building materials in the property, an entire mold ` 7249335749 Casual ity,Comm, Mated Nationwide Insurance 05:03:39 p.m. 03-09-2007 remediation process must be undertaken in the estimated amount of Thirty-Eight Thousand Dollars ($38,000.00), per estimate performed by JEM Environmental. This water problem was further exasperated by Counterclaim Defendant's use of an interior power washer in an attempt to deter the mold growth during construction. The Counterclaim Plaintiffs have experienced health problems resulting from the mold, including wheezing, aggravated eyes, sick, mucus and muscle and joint aches as a result of exposure to the mold. 82. Items damaged by the mold and water must also be replaced and/or repaired. These include the following,- A) Interior beims and posts, as well as carrier beams, walls, floor joists, sub floors and posts.' The scope therefore costs of these repairs cannot be fully determined until tear out of the building materials occurs and determine the actual extent of loss. B) It is estimated thatthese water stains on walls must be corrected at an estimated cost of an eAdditional Six Thousand Five Hundred Dollars ($6,500.00), per proposal of Joe Taggart of Capricorner Log Homes. 13 /41 C) In addition to cleaning, all beams must be preserved and sealed for an estimated cost of Seven Thousand Four Hundred Dollars ($7,400.00), per proposes of Joe Taggart of Capricorner Log Homes. D) Counterclaim Plaintiffs will have to replace carpet, padding and other flooring damaged by the water in the amount of Five Thousand Five Hundred Forty-six Dollars and 581100 ($5,546.58), per proposal of Fluss Flooring, Inc. 7249335749 Casuality.Comm.Materi Nationwide Insurance 05:04:00 p.m. 03-09-2007 14 /41 E) Counterclaim Plaintiffs will have to replace the cherry cabinets damaged by the mold and water at a cost of Four Thousand Nine Hundred Fifteen Dollars and 01/100 ($4,915.01), per proposal ofMcCarren Supply. F) Counterclaim Plaintiffs will have to replace clothing and furniture damaged by the mold at a value to be ascertained at Twenty Thousand Dollars ($20,000.00). G) Counterclaim Plaintiffs' furnace is damaged at a repair cost of Four Hundred Fifty Dollars ($450.00). 83. In addition to the problems in design and constriction, Counterclaim Defendant has failed to provide Counterclaim Plaintiffs with items required pursuant to the contract. 84. Counterclaim Defendant has failed to provide Counterclaim Plaintiffs with kitchen flooring, the costs for replacement of which is Nine Thousand Six Hundred Fifty-seven Dollars and 50/100 ($9,657.50). 85. Counterclaim Defendant has failed to perform the actual trash removal and cleanup during the entire construction period for which Counterclaim Plaintiffs did perform. It is estimated that this act saved Counterclaim Defendant approximately One Hundred Dollars-($100.00) per month or Nine Hundred Dollars ($900.00) over the actual construction period. This cost is continuing. 86 Counterclaim Defendant did install single windows in lieu of double winds as required by the contract. The savings in labor and material costs are to be determined. 87. Counterclaim Plaintiffs expected possession and use of their home in accordance with the parties' contract to be in February, 2004. 7249335749 Casuality,Comm,Materi Nationwide Insurance 05:04:21 p.m. 03-09-2007 15 /41 88. Counterclaim Plaintiffs had secured construction financing with interest only payments at the rate of 3.9911/9 until completion of construction. This was intended to be transferred to a standard mortgage which had an expected rate of 4.35% in April, 2004. 89. Due to the failure to timely perform the contract and the poor workmanship and resulting problems with the home, Counterclaim Plaintiffs have been unable to secure a permanent mortgage financing arrangement to date. 90. As a result, Counterclaim Plaintiffs have had to pay Four Hundred Sixty-Seven Dollars and 11/100 ($467.11) for each month until the house is completed and able to be transferred to permanent financing. As of October 1, 2004 (and continuing), Counterclaim Plaintiffs have paid Four Thousand Sixty-seven Dollars ($4,067.00) in additional interest expense. 91. Further, the mortgage interest rate available to Counterclaim Plaintiffs has now risen so that in lieu of the 4.35% originally anticipated for a 15 year mortgage in April, 2004, the . rate they face cur7ently is in excess of 6%. This will result in significant additional interest expenses over the life of the mortgage and result in further financial losses for Counterclaim Plaintiffs. 92. Counterclaim Plaintiffs should be reimbursed for these additional financing costs related to the failed construction. WHEREFORE, Counterclaim Plaintiffs seek judgment in the amount of One Hundred Twenty-Nine Thousand One Hundred Eleven Dollars and 09/100 ($129,111.09), plus costs to be determined, interest, counsel fees and other costs of suit. This demand shall be mo tfied once the entire costs, losses and expenses are determined. 7249335749 Casuality.Comm. Materi Nationwide Insurance 05:04:42 p.m. 03-09-2007 16141 COUNT H UNFAIR TRADE PRACTICES 93. Paragraphs I through 92 of Counterclaim Plaintiffs' Answer, New Matter and Counterclaim are incorporated herein by reference as if fully set forth. 94. Counterclaim Defendant failed to complete the construction on Counterclaim Plaintiffs' home as contracted for. 95. Counterclaim Defendant performed the.work in a shoddy and unworkmanlike manner. 96. The goods and services provided to Counterclaim Plaintiffs by Counterclaim Defendant were primarily for Counterclaim Plaintiffs' personal, family and household uses. 97. Counterclaim Plaintiffs believed that they were purchasing a "Crockett I;o9 Home" and that Counterclaim Defendant was a "Crockett Log Homes" affiliate. 98. Counterclaim Plaintiffs later determined that no entity known as "Crockett Log Homes" exists but that it was a trade name for Natural Building Systems, inc. which was also being used by Counterclaim Defendant Crockett Log Homes of PA, Inc. to cause the consumers to believe that it was party of a larger single entity, an agency association or other cooperative affiliation existing between the parties for construction of a "Crockett Log Home". 99. Counterclaim Defendant used a marketing and sales distribution network which caused confusion and misunderstanding for Plaintiffs and the public in connection with the association and affiliation of the goods and services. 100. Marketing by Counterclaim Defendant of "Crockett Log Homes" creates the representation that the goods and services provided has a sponsorship, use or benefit that they do not have, namely the endorsement of a single entity which stands behind its 7249335749 Casuality,Comm, Materi Nationwide Insurance 05:05:04 p.m. 03-09-2007 17 /41 product, its sale and construction. 101. Counterclaim Defendant fostered this misrepresentation by referencing affiliated oca ons such as "Home Office or NHiFM ui mg Systems, c., and boss" when referencing the representative from National Building Systems, Inc. which inspected the home with Plaintiffs in April, 2004. Such a marketing scheme is calculated to cause confusion for the public. 102. The practices, failure and omissions of Counterclaim Defendant described in the Counterclaim violate to Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P. S. Section 201.1, et seg. 103. Counterclaim Plaintiffs seek treble damages and counsel fees in accordance with said Act, attorney's fees plus interest, costs of suit and all other relief the Court determines appropriate at trial of this case. WHEREFORE, Counterdaim Plaintiffs seek compensation damages in the amount of actual damages proven at trial, treble damages pursuant to Unfair Trade Practices, plus attorney's fees, interest, costs of suit, including reimbursement of expert and litigation costs, and all other relief the Court deems appropriate, Dated: September 27, 2004 C Barbarumple-Sullrvan, squi 549 Bridge Street New Cumberland, PA 17070 (717) 774-1445 Supreme Court T.D. 32317 Attorney for Defendants 7249335749 Casuality,Comm,Materi Nationwide Insurance 05:05:31 p.m. 03-09-2007 19 /41 ?VTTMTT uS Problem Current Estimate A) Inappropriate insulation techniques which allow for water and air infiltration; To be determined airs C) Inappropriate windows used and error in placement Estimate in response included in window estimated in response to paragraph 67; to paragraph 67 D) Improper nailing of logs using fasteners which are too To be determined short or incorrect for the installation; E) Improper construction of master deck gable. Included Estimate in response in roof repair estimate in response to paragraph 67 to paragraph 67; F) Improper front door entry and damage to same.. To be determined. This lm resulted in Counterclaim Plaintiff s loosing Cost of repair $350.00; warranty coverage for same; however loss of warranty is not valued G) Deletion of Hammer trusses. Estimated labor and material credit; - $5,000.00 H) Grids from French doors, $ 120.00 I) The floor joist on the stairwell need additional To be determined support to lessen the bounce; 1) The deck construction is not of adequate and must To be determined be reinforced by the further installation of two (2) tap cons screws or thunderbolts per bay, I) Due to Counterclaim Defendant's error in the To be determined construction of the kitchen step down, no chassis were drilled in plates and additional corrections required; L) The was in the kitchen are not aligned and are not framed; To be determined Ivy The roof beams in_latchen needs repairs. Included in roof Estimate in response estimate in response to paragraph 67, to paragraph 67 N) The sink area in kitchen needs repaired. To be determined 0) No handrail and steps out of line and loose. To be determined but estimate $725.00 P) Loose lop to siding to be attached $ 450.00 7249335749 Casuality,Comrn,Materi Nationwide Insurance 05:05:54 p.m. 03-09-2007 20141 Barbara Sumple-Sullivan, Esquire Supreme Court 932317 549 Bridge Street (717) 774-1445 CROCKETT LOG HOMES OF PA, INC., : IN THE COURT OF COMMON PLEAS Plaintiffs CUMBERLAND COUNTY, PENNSYLVANIA V. DONALD E. VERNET AND BRENDA L. VERNET, Defendant CIVIL ACTION - LAW :.NO. 2004-4108 VERIFICATION We, Donald E. Verret and Brenda L. Vernet, hereby certify that the facts set forth in the .. foregoing ANSWER, NEW MATTER AND COUNTERCLAIM are true and correct to the best of our knowledge, information and belief. We understand that any false statements made herein are subject to penalties of 18 Pa. C.S.A. Section 4904 relating to unworn falsification to authorities. Dated: Gl 7249335749 Casuality,Comm, Maten Nationwide Insurance 05 06:10 p.m. 03-09-2007 21 l41 Barbara Sumple-Sullivan, Esquire Supreme Court #32317 549 Bridge Street New Cumberland, PA 17070 (717) 734-1445 CROCKETT LOG HOMES OF PA-, INC. : IN THE COURT OF COMMON PLEAS Plainbff : CUMBERLAND COUNTY, PENNSYLVANIA V. NO. 20044108 CIVIL DONALD E. VERNET and BRENDA L. VERNET Defendants CERTIFICATE OF SERVICE L Barbara Sumple-Sullivan, Esquire, do hereby certify that on this date, I served a true and correct copy of the foregoing Answer, New Matter and counterclaim, in the above-captioned matter upon the following individual by first class mail, postage prepaid, addressed as follows: Arthur K Dils, Esquire Dils & Dils 1017 North Front Street Harrisburg, PA 17102 DATED: September 27, 2004 Supreme Court I.D. No. 32317 549 Bridge Street New Cumberland, PA 17070 Attorney for Defendants (717) 774-1445 [?x k., b I " ? 7249335749 Casuality.CommNateri Nationwide Insurance 04:48:40 p.m. 03-09-2007 2136 Thomas E. Brenner, Esquire Goldberg Katzman, P.C. PO Box 1268 H-rcisb r n° 1108 -26-8 - 717-234-4161 Attorneys for Plaintiff CROCKETT LOG HOMES OF PA, IN THE COURT OF COMMON PLEAS INC., : CUMBERLAND CO., PENNSYLVANIA Plaintiff NO. 2004-4108 V. DONALD E. VERNET and : CIVIL ACTION - LAW BRENDA L. VERNET, Defendants : V. NATURAL BUILIDNG SYSTEMS, : INC.,BRUCE DUNLEAVY, and ROY: STOLTZFUS, Additional Defendants NOTICE YOU HAVE BEEN SUED IN COURT. Ifyou wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the PIaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Lawyer Referral Service Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 717-249-3166 7249335749 Casual ity,Comm,Materi Nationwide Insurance 04:49:03 p.m. 03-09-2007 3/36 Le han demandado a usted en la. corte. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) digs de plazo al partir de la fecha de la demands y la notif cacion. Usted debe presentar una apariencia escrita o en persona o por abogado y archivar en la corte en forma escrita sus defensas o sus objectiones a las demandas en contra de su persona. Sea adisado que st usted no se defiende, la sin previo aviso o notificacion y por cualquier quja o puede perder dinero o sus propiedades o otros derechos. importantes para usted. LLEVE ESTA DEMANDA A UN ABOGADO IMMEDIATAMENTE. SI NO TIENE ABOGADO O ST NO TIENE EL DINERO SUFICIENTE DEPAGAR TAL SERVICIO, VAYA EN PERSONA O LLAME POR TELEFONO A LA OFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Lawyer Referral Service Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 717-249-3166 7249335749 Casual ity,Comm, Materi Nationwide Insurance 04:49.21 p.m. 03-09-2007 4136 Thomas E. Brenner, Esquire Goldberg Katzman, P.C. PO Bog 1268 Harrisburg, PA 17108-1268 717-234-4161 Attorneys or Plaintiff CROCKET-f LOG HOMES OF PA, INC., Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND CO., PENNSYLVANIA NO. 2004-4108 V. DONALD E. VERNET and BRENDA L. VERNET, CIVIL ACTION - LAW Defendants : V. NATURAL BUILIDNG SYSTEMS, INC. rBRUCE DUNLEAVY, and ROY. STOLTZFUS, Additional Defendants :•a o o r- p -n V C- T =Tc ;"gym _ -? " 7 COMPLAINT AGAINST ADDITIONAL DEFENDANTS NATURAL BUILDING SYSTEMS, INC. BRUCE DUNLEAVY AND ROY STOLTZFUS AND NOW, comes the Plaintiff, Crockett Log Homes of PA, Inc. by its attorneys, Goldberg Katzman, P.C., who state: 1. Additional Defendant Natural Building Systems, Inc. is a corporation located at 35 Old Route 12N, Westmoreland, New Hampshire, 03467. 2. Additional Defendant Bruce Dunleavy is an adult individual residing at 1217 Indian Peg Road, Mechanicsburg, Cumberland County, Pennsylvania. k?; 7249335749 Casuality,Comm,Maten Nationwide Insurance 04:49:40 p.m. 03-09-2007 5/36 3. Additional Defendant Roy Stoltzfus is an adult individual residing at 801 Penns Creek Road, Spring Mills, Centre County, Pennsylvania. 4. The present action was initiated by Complaint filed by the Plaintiff (See Exhibit A). 5. Defendants Vernet have filed an Answer, New Matter, and Counterclaim, a copy of which is attached hereto as Exhibit "B". 6. The Counterclaim avers that negligence in the design and construction of the Defendants' home resulted in damages to the Defendants. 7. The Defendant's house was manufactured by Additional Defendant Natural Budding Systems, Inc. 8. According to the Dealer Contract between Plaintiff and Additional Defendant Natural Building Systems, Inc., Paragraph H, states that Natural Building Systems, Inc. warrants its product for 10 years from the original date of purchase. The contract is attached hereto as Exhibit "C". 9. Additional Defendant Bruce Dunleavy was a subcontractor of the Plaintiff and performed the installation of the shell of the house averred in Defendants' counterclaim. 10. Additional Defendant Roy Stoltzfus was a subcontractor of Plaintiff and performed the installation of the steps and the railing of the Defendants' house averred in the Defendants' Counterclaim. 2 7249335749 Casual ity,Comm,Mated Nationwide Insurance 04:49:59 p.m. 03-09-2007 6/36 11. The averments of Breach of Contract and Unfair Trade Practices as to the design of the subject house in Paragraphs 44 to 92 of the Defendants' Counterclaim are incorporated herein by reference. 12. Should the Defendants prevail on their counterclaim, then it is averred that Additional Defendants Natural Building Systems, Inc., Bruce Dunleavy, and Roy Stoltzfus are solely liable for the Defendants' Counterclaim. In the alternative, should the Defendants prevail on their Counterclaim, it is averred that Additional Defendants Natural Building Systems, Inc., Bruce Dunleavy, and Roy Stoltzfus are jointly and severally liable on their claim. In the further alternative, should the Defendants prevail on their Counterclaim, it is averred that Additional Defendants Natural Building Systems, Inc., Bruce Dunleavy, and Roy Stolzfus are liable over to Plaintiff Crockett Log Homes of PA, Inc. for indemnity or contribution on the Defendants' counterclaim. WHEREFORE, Plaintff CrockettLog Homes of PA, Inc requests that Additional Defendants Natural Building Systems, Inc., Bruce Dunleavy, and Roy Stoltzfus be found solely liable on the Defendants' Counterclaim; or in the alternative, jointly and severally liable on the Defendants' Counterclaim; or in the alternative, liable over to Plaintiff Crockett Log Homes, Inc. for indemnity or contribution on the Defendants' Counterclaim. 3 7249335749 Casuality,Comm, M ateri Nationwide Insurance 04:50:25 p.m. 03-09-2007 7/36 GOLDBERG KATZMAN, P.C. By: Thomas E. Brenner, Esquire Attorney ID #32085 PO Boy: 1268 Harrisburg, PA 17108-1268 717-234-4161 Attorney for Counterclaim Defendant Crockett Log Homes of PA, Inc, Date: June 21, 2005 4 7249335749 Casual ity,Comm,Materi Nationwide Insurance 04:50:34 p.m. 03-09-2007 8/36 VERIFICATION I, Douglas Dodson, hereby acknowledge that I am an authorized representative of Crockett Log Homes of Pennsylvania; that I have read the foregoing document and that the facts stated therein are true and correct to the best of my knowledge, information and belief. I understand that any false statements herein are made subject to penalties of 18 Pa. C.S. Section 4904, relating to unsworn falsification to authorities. CROCKET LOG HOMES OF PENNSYLVANIA B D Dougl odson Date: 122364.1 k, ?, i ? CONTRACTORS POLICY DECLARATIONS Issued By: NATIONWIDE MUTUAL FIRE INSURANCE COMPANY Policy Number: RENEWAL 58 AC 243-996-3001 H Named Insured BRUCE M DUNLAVY Form of Business: Mailing Address ® Sole Proprietorship DBA DUNLAVY CO ? Partnership ? Corporation PO BOX 23 ? Other: BOILING SPRINGS PA 17007 Policy Period: From AUGUST 15, 2002 to AUGUST 15, 2003 at 12:01 A.M. * Standard Time at your mailing address. *Exceptions: 12:00 Noon in Michigan, New Hampshire and Puerto Rico. Description of Business CARPENTRY--RESIDENTIAL Described Premises: Premises No. Bldg. No. Location Address 001 01 1217 INDIAN PEG ROAD MECHANICSBURG PA 17055 Mortgage Holder Name and Address: Premises No. Bldg. No. Mortgage Holder Mortgage Holder IN RETURN FOR THE PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF THIS POLICY, WE AGREE TO PROVIDE YOU WITH THE INSURANCE AS STATED IN THIS POLICY. PROPERTY COVERAGES I LIMITS OF INSURANCE Buildings - Replacement Cost Actual Cash Value Option Automatic Increase Business Personal Property Deductible OPTIONAL PROPERTY COVERAGES - Applicable only if an "X" is shown in the boxes below: ? Outdoor Signs ? Exterior Grade Floor Glass ? Employee Dishonesty Accounts Receivable - Increased Limits ? Valuable Papers - Increased Limits ? ? 001 01 $ 5,000 $ 250 LIMITS OF INSURANCE $ Per Occurrence ($ Per Occurrence $ Per Occurrence $ Per Occurrence PROPERTY PREMIUM $ 73.00 ACP-0001-A (11-96) Page 1 of 2 CONTRACTORS POLICY DECLARATIONS LIABILITY AND MEDICAL EXPENSE COVERAGES LIMITS OF INSURANCE Liability and Medical Expense $ 1 , 000, 000 Any One Occurrence Personal and Advertising Injury $ Any One Person or Organization Medical Expenses $ 5 , 000 Any One Person Fire Legal Liability $ 100,000 Any One Fire or Explosion General Aggregate Limit (other than Products-Completed $ 2,000,000 Operations and Fire Legal Liability) Products-Completed Operations Aggregate Limit $ 1,000,000 TIONAL LU??Il51TY COVERAGES - Applicable only if an LIMITS OF INSURANCE IV' is shown in a ox es De low: ? $ ? $ ? $ LIABILITY AND MEDICAL EXPENSE ADVANCE PREMIUM $ 367.00 INLAND MARINE COVERAGES - Applicable only if an "X" is shown LIMITS OF INSURANCE in the boxes below: ® CONTRACTORS EQUIPMENT AND PORTABLE TOOLS ® Unscheduled Covered Property $ 2 , 000 (Coverage not to exceed $500 on any one item) © Scheduled Covered Property See Schedule DEDUCTIBLE $ 250 ? CONTRACTORS INSTALLATION $ DEDUCTIBLE $ INLAND MARINE PREMIUM $ 92.00 FORMS APPLICABLE: CAS 2527 B-0794 ACP 0007 CAS 3228 ACP 0083-1196 ACP 0005 A-0700 ACP 0086-0398 ACP 0085-0198 CAS 4814-0694 CAS 3880-0897 CAS 6117-0701 CAS 3687 A-0194 ACP 0021-0996 ACP 0074 A-1098 IL 09 10-0181 ACP 0008 ACP 0006-1199 ACP 0087-0498 TOTAL PREMIUM Total Advance Premium... ........................... ................ ................. $ 532 00 Includes the following miscellaneous charges $ ................ $ ................ $ ............ $ ................ $ In the event of cancellation by you, we will receive and retain not less than $ 100 as the minimum premium. P.O. BOX 2655 Date of Issue: 07-10-02 Issuing Office: HARRISBURG. PA 17105 Countersignature Date: 07-10-02 Agency At: MFGH NIQgR ion PA 170-5-1 Agent: ROY F COOK - 0005215-37 717-766-9173 A /.. ^Lk CONTRACTORS POLICY LIABILITY AND MEDICAL EXPENSES CLASSIFICATION SCHEDULE Policy Number: 58 AC 243-996-3001 H Classification CARPENTRY--RESIDENTIAL Code No. Premium Basis Advance Premium 91340 5,200 $ 367 ACP-0003 CONTRACTORS POLICY CONTRACTORS EQUIPMENT AND PORTABLE TOOLS SCHEDULE Policy Number: 58 AC 243-996-3001 H Item No. Described Item. Manufacturer Serial Number Limit of Insurance 001 CHAIN SAW STIHL 6341628 $ 200 002 MITER BOX CRAFTSMAN 9923710135 $ 250 003 LARGE CIRCULAR SAW MAKITA 54888E $ 500 004 LARGE CIRCULAR SAW SKIHL HD875940 $ 200 005 IMPACT WRENCH DEWALT 59437 $ 200 006 LARGE DRILL BLACKDECKR 02919420K $ 200 ACP-0004 AMENDATORY ENDORSEMENT- ADDITIONAL POLICY CONDITION It is agreed that the following condition is made a part of this policy: If this policy and any other policy issued to you by us or any affiliated Company apply to the same occurrence, the total maximum amount payable under all policies, including limits of liability, general aggregate limit and products- completed operations aggregate limit, shall not exceed the highest applicable limits of liability, general aggregate limit or products-completed operations aggregate limit under any one policy. This condition does not apply to any policy issued by us or an affiliated Company specifically to apply as excess insurance over this policy. Includes copyrighted material of Insurance Services Office, with its Cas. 2527-B (7-94) permission. Copyright, Insurance Services Office, Inc., 1977, 1979 CONTRACTORS POLICY CONTRACTORS LIABILITY COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the named insured shown in the Declarations, and any other person or organization qualifying as a named insured under this policy. The words "we," "us" and "our" refer to the company providing this insurance. The word "insured" means any person or organization qualifying as such under SECTION C. - WHO IS AN INSURED. Other words and phrases that appear in quotation marks have special meaning. Refer to SECTION F. - LIABILITY AND MEDICAL EXPENSES DEFINITIONS. A. COVERAGES (b) The "bodily injury" or "property 1. Business Liability damage" occurs during the policy period. a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury," "property damage," "personal injury" or "advertising injury" to which this insurance applies. We will have the right and duty to defend any "suit' seeking those damages. We may at our discretion investigate any "occurrence" and settle any claim or "suit" that may result. But: (1) The amount we will pay for damages is limited as described in SECTION D - LIABILITY AND MEDICAL EXPENSES LIMITS OF INSURANCE; and (2) Our right and duty to defend end when we have used up the applicable Limit of Insurance in the payment of judgments or settlements or medical expenses. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under COVERAGE EXTENSION - SUPPLE- MENTARY PAYMENTS. b. This insurance applies: (1) To "bodily injury" and "property dam- age" only it (a) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and (2) To: (a) "Personal injury" caused by an offense arising out of your business, excluding advertising, publishing, broadcasting or tele- casting done by or for you; (b) "Advertising injury' caused by an offense committed in the course of advertising your goods, products or services; but only if the offense was committed in the "coverage territory" during the policy period. c. Damages because of "bodily injury" include damages claimed by any person or organization for care, loss of services or death resulting at any time from the "bodily injury." d. "Property damage" that is loss of use of tangible property that is not physically injured will be deemed to occur at the time of the "occurrence" that caused it. e. Coverage Extension - Supplementary Payments In addition to the Limit of Insurance, we will pay, with respect to any claim or "suit" we defend: (1) All expenses we incur. Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Page 1 of 12 (2) Up to $250 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which Business Liability Coverage for "bodily injury" applies. We do not have to furnish these bonds. (3) The cost of bonds to release attach- ments, but only for bond amounts within our Limit of Insurance. We do not have to furnish these bonds. 2. (4) All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit," including actual loss of earnings up to $100 a day because of time off from work. (5) All costs taxed against the insured in the "suit." a. We will pay medical expenses as described below for "bodily injury" caused by an accident: (6) Prejudgment interest awarded against the insured on that part of the judgment we pay. If we make an offer to pay the Limit of Insurance, we will not pay any prejudgment interest based on that period of time after the offer. (7) All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within our Limit of Insurance. Medical Expenses (1) On premises you own or rent; (2) On ways next to premises you own or rent; or (3) Because of your operations; provided that: (1) The accident takes place in the "coverage territory" and during the policy period; (2) The expenses are incurred and reported to us within one year of the date of the accident; and (3) The injured person submits to exami- nation, at our expense, by physicians of our choice as often as we reasonably require. b. We will make these payments regardless of fault. These payments will not exceed the Limit of Insurance. We will pay reasonable expenses for: (1) First aid at the time of an accident; (2) Necessary medical, surgical, x-ray and dental services, including prosthetic devices; and (3) Necessary ambulance, hospital, pro- fessional nursing and funeral services. B. EXCLUSIONS 1. Applicable to Business Liability Coverage This insurance does not apply to: a. "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property. b. "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) Assumed in a contract or agreement that is an "insured contract," provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; (2) That the insured would have in the absence of the contract or agreement c. "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing or contributing to the intoxi- cation of any person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. This exclusion applies only if your are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. d. Any obligation of the insured under a workers' compensation, disability benefits or unemployment compensation law or any similar law. Includes Copyrighted Material of Insurance Services ACP-0007 Office. Inc.. 1989 Paoe 2 of 12 e. "Bodily injury" to: (1) An employee of the insured arising out of and in the course of employ- ment by the insured; or (2) The spouse, child, parent, brother or sister of that employee as a con- sequence of (1) above. This exclusion applies: (a) Whether the insured may be liable as an employer or in any other capacity; and (b) To any obligation to share dam- ages with or repay someone else who must pay damages because of the injury. This exclusion does not apply to liability assumed by the insured under an "insured contract." f. (1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seep- age, migration, release or escape of pollutants: ACP-0007 (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured; (b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste; (c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom you may be legally re- sponsible; or (d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations: (ii) If the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants. Subparagraphs (a) and (d) (i) do not apply to "bodily injury" or "property damage" arising out of heat, smoke or fumes from a hostile fire. As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be. (2) Any loss, cost or expense arising out of any: (a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or (b) Claim or "suit" by or on behalf of a governmental authority for dam- ages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way respond- ing to, or assessing the effects of pollutants. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. g. "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading." This exclusion does not apply to: (1) A watercraft while ashore on premises you own or rent; (2) A watercraft you do not own that is (i) If the pollutants are brought (a) Less than 26 feet long; and on or to the premises, site or location in connection with (b) Not being used to carry persons such operations by such or property for a charge; insured, contractor or sub- (3) Parking an "auto" on, or on the ways contractor; or next to, premises you own or rent, Includes Copyrighted Material of Insurance Services Office, Inc., 1989 Page 3 of 12 provided the "auto" is not owned by or rented or loaned to you or the insured; (4) Liability assumed under any "insured contract' for the ownership, mainten- ance or use of aircraft or watercraft; or (5) "Bodily injury" or "property damage" arising out of the operation of any of the following equipment: (a) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and (b) Air compressors, pumps and gen- erators, including spraying, weld- ing, building cleaning, geophysical exploration, lighting and well ser- vicing equipment. h. "Bodily injury" or "property damage" arising out of: (1) The transportation of "mobile equip- ment" by an "auto" owned or oper- ated by or rented or loaned to any insured; or (2) The use of "mobile equipment' in, or while in practice or preparation for, a prearranged racing, speed or demol- ition contest or in any stunting activity. "Bodily injury" or "property damage" due to war, whether or not declared, or any act or condition incident to war. War includes civil war, insurrection, rebellion or revolution. This exclusion applies only to liability assumed under a contract or agreement. j. "Bodily injury," "property damage," "personal injury" or "advertising injury" due to rendering or failure to render any professional service. This includes but is not limited to: (1) Preparing, approving, or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; and (2) Supervisory, inspection or engineering services. k. "Property damage" to: (1) Property you own, rent or occupy; (3) Property loaned to you; (4) Personal property in the care, custody or control of the insured; (5) That particular part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the "property damage" arises out of those operations; or (6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it. Paragraph (2) of this exclusion does not apply if the premises are "your work" and were never occupied, rented or held for rental by you. Paragraphs (3), (4), (5) and (6) of this exclusion do not apply to liability assumed under a sidetrack agreement. Paragraph (6) of this exclusion does not apply to "property damage" included in the "products-completed operations hazard." 1. "Property damage" to "your product" arising out of it or any part of it. m. "Property damage" to "your work" arising out of it or any part of it and included in the "products-completed operations hazard." This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor. n. "Property damage" to "impaired property" or property that has not been physically injured, arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or (2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use. (2) Premises you sell, give away or o. Damages claimed for any loss, cost or abandon, if the "property damage" expense incurred by you or others for the arises out of any part of those loss of use, withdrawal, recall, inspection, premises; Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc.. 1989 Paae 4 of 12 repair, replacement, adjustment, removal or disposal of: (1) "Your product"; (2) "Your work"; or (3) "Impaired property"; if such product, work or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it. p. "Personal injury" or "advertising injury": (1) Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity; (2) Arising out of oral or written public-ation of material whose first publication took place before the beginning of the policy period; (3) Arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured; or (4) For which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement. q. "Advertising injury" arising out of: (1) Breach of contract, other than misap- propriation of advertising ideas under an implied contract; (2) The failure of goods, products or services to conform with advertised quality or performance; or (3) The wrong description of the price of goods, products or services. Exclusions c., d., e., f., g., h., i., k., I., m., n. and o. do not apply to damage by fire or explosion to premises rented to you. A separate Limit of Insurance applies to this coverage as described in Section D., Limits of Insurance. 2. Applicable to Medical Expenses Coverage - We will not pay expenses for "bodily injury": a. To any insured. b. To a person hired to do work for or on behalf of any insured or a tenant of any insured. c. To a person injured on that part of premises you own or rent that the person - normally occupies. d. To a person, whether or not an employee of any insured, if benefits for the "bodily injury" are payable or must be provided under a workers' compensation or disability benefits law or a similar law. e. To a person injured while taking part in athletics. f. Included within the "products-completed operations hazard." g. Excluded under Business Liability Coverage. h. Due to war, whether or not declared, or any act or condition incident to war. War includes civil war, insurrection, rebellion or revolution. 3. Applicable to both Business Liability Cover- age and Medical Expenses Coverage - Nuclear Energy Liability Exclusion. This insurance does not apply: a. Under Business Liability Coverage, to "bodily injury" or "property damage": (1) With respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insur- ance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or (2) Resulting from the "hazardous prop- erties" of "nuclear material" and with respect to which: (a) Any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof; or (b) The insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization. b. Under Medical Expenses Coverage, to expenses incurred with respect to "bodily Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Page 5 of 12 injury" resulting from the "hazardous properties" of "nuclear material" and arising out of the operation of a "nuclear facility" by any person or organization. ACP-0007 c. Under Business Liability Coverage, to "bodily injury" or "property damage" resulting from the "hazardous properties" of the "nuclear material"; if: (1) The "nuclear material": (a) Is at any "nuclear facility" owned by, or operated by or on behalf of, an insured; or (b) Has been discharged or dispersed therefrom; (2) The "nuclear material" is contained in "spent fuel" or "waste" at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or (3) The "bodily injury" or "property dam- age" arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any "nuclear facility"; but if such facility is located within the United States of America, its territories or possessions or Canada, this exclusion (3) applies only to "property damage" to such "nuclear facility" and any property thereat. As used in this exclusion: "by-product material" has the meaning given it in the Atomic Energy Act of 1954 or in any law amendatory thereof; "hazardous properties" include radioactive, toxic or explosive properties; "nuclear facility" means: (1) Any "nuclear reactor"; (2) Any equipment or device designed or used for: (a) Separating the isotopes of uranium or plutonium; (b) Processing or utilizing "spent fuel"; or (c) Handling, processing or packaging "waste'; time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235; (4) Any structure, basin, excavation, premises or place prepared or used for the storage or disposal of "waste"; and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear material" means "source material," "special nuclear material" or "by-product material"-, "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material; "property damage" includes all forms of radioactive contamination of property; "source material" has the meaning given it in the Atomic Energy Act of 1954 or in any law amendatory thereof; "special nuclear material" has the meaning given it in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a "nuclear reactor"; "waste" means any waste material: (1) Containing "by-product material" other than the tailings or wastes produced by the extraction or concentration of uranium or thorium from any ore processed primarily for its "source material" content; and (2) Resulting from the operation by any person or organization of any "nuclear facility" included under paragraphs (a) and (b) of the definition of "nuclear facility." C. WHO IS AN INSURED (3) Any equipment or device used for the 1. If you are designated in the Declarations as: processing, fabricating or alloying of a. An individual, you and your spouse are special nuclear material if at any insureds, but only with respect to the Includes Copyrighted Material of Insurance Services Office, Inc., 1989 Paqe 6 of 12 conduct of a business of which you are representative will have all your rights the sole owner. and duties under this policy. b. A partnership or joint venture, you are an 3. With respect to "mobile equipment" insured. Your members, your partners registered in your name under any motor and their spouses are also insureds, but vehicle registration law, any person is an only with respect to the conduct of your insured while driving such equipment along a business. public highway with your permission. Any other person or organization responsible for c. An organization other than a partnership or the conduct of such person is also an joint venture, you are an insured. Your insured, but only with respect to liability executive officers and directors are arising out of the operation of the equipment, insureds, but only with respect to their and only if no other insurance of any kind is duties as your officers or directors. Your available to that person or organization for stockholders are also insureds, but only this liability. However, no person or with respect to their liability as stockholders. organization is an insured with respect to: 2. Each of the following is also an insured: a. Your employees, other than your executive officers, but only for acts within the scope of their employment by you. However, no employee is an insured for: (1) "Bodily injury" or "personal injury" to you or to a co-employee while in the course of his or her employment, or to the spouse, child, parent, brother or sister of that co-employee as a consequence of such "bodily injury" or "personal injury," or for any obligation to share damages with or repay someone else who must pay damages because of the injury; (2) "Bodily injury" or "personal injury" arising out of his or her providing or failing to provide professional health care services; or (3) "Property damage" to property owned or occupied by or rented or loaned to that employee, any of your other employees, or any of your partners or members (if you are a partnership or joint venture). b. Any person (other than your employee), or any organization while acting as your real estate manager. a. "Bodily injury" to a co-employee of the person driving the equipment; or b. "Property damage" to property owned by, rented to, in the charge of or occupied by you or the employer of any person who is an insured under this provision. 4. Any organization you newly acquire or form, other than a partnership or joint venture, and over which you maintain ownership or majority interest, will qualify as a named insured if there is no other similar insurance available to that organization. However: a. Coverage under this provision is afforded only until the 90th day after you acquire or form the organization or the end of the policy period, whichever is earlier; b. Coverage does not apply to "bodily injury" or "property damage" that occurred before you acquired or formed the organization; and c. Coverage does not apply to "personal injury' or "advertising injury" arising out of an offense committed before you acquired or formed the organization. No person or organization is an insured with respect to the conduct of any current or past partnership or joint venture that is not shown as a named insured in the Declarations. c. Any person or organization having proper temporary custody of your property if you die, but only: (1) With respect to liability arising out of the maintenance or use of that property; and (2) Until your legal representative has been appointed. D. LIABILITY AND MEDICAL EXPENSES LIMITS OF INSURANCE 1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or "suits" brought; or d. Your legal representative if you die, but c. Persons or organizations making claims only with respect to duties as such. That or bringing "suits"; Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Page 7 of 12 d. Premises, operations or projects insured 2. The most we will pay for the sum of all damages because of all: a. "Bodily injury," "property damage" and medical expenses arising out of any one "occurrence"; and "Personal injury" and "advertising injury" sustained by any one person or organization; is the Liability and Medical Expenses limit shown in the Declarations. But the most we will pay for all medical expenses because of "bodily injury" sustained by any one person is the Medical Expenses limit shown in the Declarations. 3. The most we will pay under Business Liability Coverage for damages because of "property damage" to premises rented to you arising out of any one fire or explosion is the Fire Legal Liability limit shown in the Declarations. 4. Aggregate Limits The most we will pay for: a. Injury or damage under the "products- completed operations hazard" arising from all "occurrences" during the policy period is the Products-Completed Operations Aggre- gate Limit shown in the Declarations; and b. All other injury or damage, including medical expenses, arising from all "occur- rences" during the policy period is the General Aggregate Limit (Other Than Products-Completed Operations and Fire Legal Liability) shown in the Declarations. This limitation does not apply to "property damage" to premises rented to you arising out of fire or explosion. The limits of this policy apply separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance. E. LIABILITY AND MEDICAL EXPENSES GENERAL CONDITIONS 2. Duties In The Event Of Occurrence, Claim Or Suit a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occur- rence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and (3) The nature and location of any injury or damage arising out of the "occur- rence" or offense. If a claim is made or "suit" is brought against any insured, you must: (1) Immediately record the specifics of the claim or "suit"and the date received; and (2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or "suit" as soon as practicable. c. You and any other involved insured must: (1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit"; (2) Authorize us to obtain records and other information; (3) Cooperate with us in the invest- igation, settlement or defense of the claim or "suit'; and (4) Assist us, upon our request, in the enforcement of any right against any person or organization that may be liable to the insured because of injury or damage to which this insurance may also apply. d. No insureds will, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent. 3. Legal Action Against Us No person or organization has a right under this policy: 1. Bankruptcy a. To join us as party or otherwise bring us into a "suit" asking for damages from an Bankruptcy or insolvency of the insured or of the insured's estate will not relieve us of our insured; or obligations under this policy. Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Paae 8 of 12 b. To sue us on this policy unless all of its terms have been fully complied with. A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured obtained after an actual trial; but we will not be liable for damages that are not payable under the terms of this policy or that are in excess of the applicable Limit of Insurance. An agreed settlement means a settlement and re- lease of liability signed by us, the insured and the claimant or the claimants legal representative. 4. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this policy to the first named insured, this insurance applies: a. As if each named insured were the only named insured; and b. Separately to each insured against whom claim is made or "suit" is brought. 5. Premium Audit a. We will compute all premiums for this Coverage Form in accordance with our rules and rates. b. Premium shown for this Coverage Form as advance premium is a deposit premium only. At the close of each audit period we will compute the earned premium for that period. Audit premiums are due and payable on notice to the first named insured. If the sum of the advance and audit premiums paid for the policy term is greater than the earned premium, we will return the excess to the first named insured. c. The first named insured must keep records of the information we need for premium computation, and send us copies at such times as we may request. 6. Representations By accepting this policy, you agree: a. The statements in the Declarations are accurate and complete; b. Those statements are based upon representations you made to us; and c. We have issued this policy in reliance upon your representations. F. LIABILITY AND MEDICAL EXPENSES DEFINITIONS 1. "Advertising Injury" means injury arising out of one or more of the following offenses: a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; b. Oral or written publication of material that violates a person's right of privacy; c. Misappropriation of advertising ideas or style of doing business; or d. Infringement of copyright, title or slogan. 2. "Auto" means a land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment. But "auto" does not include "mobile equipment." 3. "Bodily Injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. 4. "Coverage Territory" means: a. The United States of America (including its territories and possessions), Puerto Rico and Canada; b. International waters or airspace, provided the injury or damage does not occur in the course of travel or transportation to or from any place not included in a. above; or c. All parts of the world if: (1) The injury or damage arises out of: (a) Goods or products made or sold by you in the territory described in a. above; or (b) The activities of a person whose home is in the territory described in a. above, but is away for a short time on your business; and (2) The insured's responsibility to pay damages is determined in a "suit' on the merits in the territory described in a. above or in a settlement we agree to. 5. "Impaired Property" means tangible property, other than "your product" or "your work," that cannot be used or is less useful because: a. It incorporates "your product' or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Page 9 of 12 b. You have failed to fulfill the terms of a contract or agreement; if such property can be restored to use by: a. The repair, replacement, adjustment or removal of "your product" or "your work"; or b. Your fulfilling the terms of the contract or agreement. 6. "Insured Contract" means: a. A lease of premises; b. A sidetrack agreement; c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality; e. An elevator maintenance agreement; f. That part of any other contract or agreement pertaining to your business (including an indemnification of a muni- cipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. An "insured contract" does not include that part of any contract or agreement: a. That indemnifies any person or organization for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road beds, tunnel, underpass or crossing; b. That indemnifies an architect, engineer or surveyor for injury or damage arising out of. (1) Preparing, approving or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; or (2) Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; professional services, including those listed in (b) above and supervisory, inspection or engineering services; or d. That indemnifies any person or organ- ization for damage by fire or explosion to premises rented or loaned to you. 7. "Loading or Unloading," means the handling of property: a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or "auto"; b. While it is in or on an aircraft, watercraft or "auto"; or c. While it is being moved from an aircraft, watercraft or "auto" to the place where it is finally delivered; but "loading or unloading" does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the aircraft, watercraft or "auto." 8. "Mobile Equipment" means any of the following types of land vehicles, including any attached machinery or equipment: a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads; b. Vehicles maintained for use solely on or next to premises you own or rent; c. Vehicles that travel on crawler treads; d. Vehicles, whether self-propelled or not, on which are permanently mounted: (1) Power cranes, shovels, loaders, dig- gers or drills; or (2) Road construction or resurfacing equip- ment such as graders, scrapers or rollers; e. Vehicles not described in a., b., c. or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types: (1) Air compressors, pumps and gener- ators, including spraying, welding, building cleaning, geophysical explor- ation, lighting and well servicing equipment; or c. Under which the insured, if an architect, (2) Cherry pickers and similar devices engineer or surveyor, assumes liability for used to raise or lower workers; an injury or damage arising out of the insured's rendering or failure to render Includes Copyrighted Material of Insurance Services ACP-0007 Office, inc.. 1989 Paae 10 of 12 f. Vehicles not described in a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo. However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": (1) Equipment designed primarily for: (a) Snow removal; (b) Road maintenance, but not con- struction or resurfacing; (c) Street cleaning; (2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and (3) Air compressors, pumps and gener- ators, including spraying, welding, building cleaning, geophysical explor- ation, lighting and well servicing equipment. 9. "Occurrence" means an accident, including continuous or repeated exposure to sub- stantially the same general harmful conditions. 10. "Personal Injury" means injury, other than "bodily injury," arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, by or on behalf of its owner, landlord or lessor; d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or e. Oral or written publication of material that violates a person's right of privacy. 11. a. "Products-Completed Operations Haz- ard" includes all "bodily injury" and "property damage" arising out of "your product" or "your work" except: (1) Products that are still in your physical possession; or The "bodily injury" or "property damage" must occur away from premises you own or rent. b. "Your work" will be deemed completed at the earliest of the following times: (1) When all of the work called for in your contract has been completed. (2) When all of the work to be done at the site has been completed if your contract calls for work at more than one site. (3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed. c. This hazard does not include "bodily injury" or "property damage" arising out of: (1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle created by the "loading or unloading" of it; or (2) The existence of tools, uninstalled equipment or abandoned or unused materials. 12. "Property Damage" means: a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it. 13. "Suit" means a civil proceeding in which damages because of "bodily injury," "property damage," "personal injury" or "advertising injury" to which this insurance applies are alleged. "Suit' includes: a. An arbitration proceeding in which such damages are claimed and to which you must submit or do submit with our consent; or (2) Work that has not yet been b. Any other alternative dispute resolution completed or abandoned. proceeding in which such damages are Includes Copyrighted Material of Insurance Services ACP-0007 Office, Inc., 1989 Page 11 of 12 claimed and to which you submit with our consent. 14. "Your Product" means: a. Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by: (1) You; (2) Others trading under your name; or (3) A person or organization whose busi- ness or assets you have acquired; and b. Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products. "Your products" includes: a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of .your product"; and b. The providing of or failure to provide warnings or instructions. "Your product" does not include vending machines or other property rented to or located for the use of others but not sold. 15. "Your Work" means: a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection with such work or operations. "Your work" includes: a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work"; and b. The providing of or failure to provide warnings or instructions. Includes Copyrighted Material of Insurance Services ACP-0007 Office. Inc.. 1989 Paae 12 of 12 MANDATORY ENDORSEMENT POLICYHOLDER MEMBERSHIP IN THE COMPANY (Applicable Only in the Nationwide Mutual Insurance Company or the Nationwide Mutual Fire Insurance Company in All States Except Those Specifically Provided For) Because this policy is issued by a mutual insurance company, you are a member of the company while this or any other policy is in force. While a member you are entitled to a vote only - either in person or by proxy - at meetings of the company. You are entitled to any dividends which are declared by the Board of Directors and are applicable to coverages in your policy. The annual meeting of the members of the company issuing your policy (the company is indicated on the Declarations Page) will be held at the Nationwide Plaza in Columbus, Ohio, on the first Thursday of April. The time of the meeting for the Nationwide Mutual Fire Insurance Company is 9:30 A.M. and the time of the meeting for the Nationwide Mutual Insurance Company is 10:00 A.M. We will mail notice of any change in meeting dates, times or place to you at your address last known to us at least ten days prior to the rescheduled meeting date. This policy is non-assessable, meaning that you are not subject to any assessment beyond the premiums we require for each policy term. POLICYHOLDER MEMBERSHIP IN THE COMPANY (Applicable Only in the Nationwide Mutual Insurance Company or the Nationwide Mutual Fire Insurance Company When This Policy is Issued in The State of Texas) 1. MUTUALITY - MEMBERSHIP AND VOTING NOTICE. You are notified that by virtue of this policy you are a member of the Nationwide Mutual Insurance Company of Columbus, Ohio or the Nationwide Mutual Fire Insurance Company of Columbus, Ohio as shown on the Declarations Page of this Policy, and you are entitled, as is lawfully provided in the charter, constitution, or by- laws to only one vote regardless of the number of policies owned either in person or by proxy, in any or all meetings of the company. The annual meetings are held at the Home Office at Columbus, Ohio, on the first Thursday of April, in each year, at 9:30 A.M. for the Nationwide Mutual Fire Insurance Company and 10:00 A.M. of the same day for the Nationwide Mutual Insurance Company. 2. MUTUALS - PARTICIPATION CLAUSE WITHOUT CONTINGENT LIABILITY. No Contingent Liability: This policy is non-assessable. You are a member of the company and shall participate, to the extent and upon the conditions fixed and determined by the Board of Directors in the distribution of dividends so fixed and determined provided such determinations are in accordance with the provisions of the Texas Insurance Code and other applicable law, which includes the rules and regulations of the State Board of Insurance. IN WITNESS WHEREOF: Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company or Nationwide Property and Casualty Insurance Company, whichever is the issuing company, as designated on the Declarations, has caused this policy to be signed by its President and Secretary at Columbus, Ohio, and countersigned by a duly authorized representative of the company. ATTEST: ?A4'?;A pf. " -*?Z --ro Secretary Nationwide Mutual Insurance Company Nationwide Mutual Fire Insurance Company President President Nationwide Property and Casualty Insurance Company Cas. 3228 CONTRACTORS POLICY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. AMENDMENT LIABILITY AND MEDICAL EXPENSES LIMITS OF INSURANCE This endorsement modifies insurance provided under the following: CONTRACTORS LIABILITY COVERAGE FORM Section D. LIABILITY AND MEDICAL EXPENSES Coverage for damages because of "property LIMITS OF INSURANCE is replaced by the following: damage" to premises rented to you arising out of any one fire or explosion is the Fire D. LIABILITY AND MEDICAL EXPENSES LIMITS Legal Liability limit shown in the Declarations. OF INSURANCE 5. Aggregate Limits 1. The Limits of Insurance shown in the Declarations and the rules below fix the most The most we will pay for: we will pay regardless of the number of: a. Injury or damage under the "products- a. Insureds; completed operations hazard" arising from all "occurrences" during the policy period is b. Claims made or "suits" brought, or the Products-Completed Operations Aggre- gate Limit shown in the Declarations; and c. Persons or organizations making claims or bringing "suits"; b. All other injury or damage, including medi- cal expenses, arising from all "occurrences" d. Premises, operations or projects insured. during the policy period is the General Aggregate Limit (Other Than Products- 2. The most we will pay for the sum of all damages Completed Operations and Fire Legal because of all "bodily injury," "property damage" Liability) shown in the Declarations. This and medical expenses arising out of any one limitation does not apply to "property "occurrence" is the Liability and Medical damage" to premises rented to you arising Expenses limit shown in the Declarations. But out of fire or explosion. the most we will pay for all medical expenses because of "bodily injury' sustained by any one The limits of this policy apply separately to each person is the Medical Expenses limit shown in consecutive annual period and to any remaining the Declarations. period of less than 12 months, starting with the beginning of the policy period shown in the 3. The most we will pay for the sum of all damages Declarations, unless the policy period is extended because of all 'personal injury" and "advertising after issuance for an additional period of less injury" sustained by any one person or than 12 months. In that case, the additional organization is the Personal and Advertising period will be deemed part of the last preceding Injury limit shown in the Declarations. period for purposes of determining the Limits of Insurance. 4. The most we will pay under Business Liability Includes Copyrighted Material of Insurance Services ACP-0083 (11-96) Office, Inc., 1989 CONTRACTORS POLICY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CONTRACTORS COMMON POLICY CONDITIONS This endorsement modifies insurance provided under the following: CONTRACTORS POLICY A. CANCELLATION 1. The first named insured shown in the Declara- tions may cancel this policy by mailing or delivering to us advance written notice of cancellation. 2. We may cancel this policy by mailing or delivering to the first named insured written notice of cancellation at least: a. 10 days before the effective date of can- cellation if we cancel for nonpayment of premium; or b. 30 days before the effective date of can- cellation if we cancel for any other reason. or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning: 1. This policy; 2. The Covered Property; 3. Your interest in the Covered Property; or 4. A claim under this policy. D. EXAMINATION OF YOUR BOOKS AND RECORDS We may examine and audit your books and records as they relate to this policy at any time during the policy period and up to three years afterward- 3. We will mail or deliver our notice to the first named insured's last mailing address known to us. 4. Notice of cancellation will state the effective date of cancellation. The policy period will end on that date. 5. If this policy is cancelled, we will send the first named insured any premium refund due. If we cancel, the refund will be pro rata. If the first named insured cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund. 6. If notice is mailed, proof of mailing will be sufficient proof of notice. B. CHANGES This policy contains all the agreements between you and us concerning the insurance afforded. The first named insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us and made a part of this policy. C. CONCEALMENT, MISREPRESENTATION OR FRAUD This policy is void in any case of fraud by you as it relates to this policy at any time. It is also void if you E. INSPECTIONS AND SURVEYS We have the right but are not obligated to: 1. Make inspections and surveys at any time; 2. Give you reports on the conditions we find; and 3. Recommend changes. Any inspections, surveys, reports or recommen- dations relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not undertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions: 1. Are safe or healthful; or 2. Comply with laws, regulations, codes or standards. This condition applies not only to us, but also to any rating, advisory, rate service or similar organization which makes insurance inspections, surveys, reports or recommendations. F. INSURANCE UNDER TWO OR MORE COVERAGES If two or more of this policy's coverages apply to the same loss or damage, we will not pay more than the actual amount of the loss or damage. Includes Copyrighted Material of Insurance Services ACP-0005-A (7-00) Office, Inc., 1984, 1988, 2000 Page 1 of 3 G. LIBERALIZATION If we adopt any revision that would broaden the coverage under this policy without additional premium within 45 days prior to or during the policy period, the broadened coverage will immediately apply to this policy. H. OTHER INSURANCE 1. Applicable to Contractors Special Property coverage and Inland Marine coverages: If there is other insurance covering the same loss or damage, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not. But we will not pay more than the applicable Limit of Insurance. 2. Applicable to Contractors Liability coverage: If other valid and collectible insurance is avail- able to the insured for a loss we cover under Coverage A.1. Business Liability of the Con- tractors Liability Coverage Form, our obligations are limited as follows: a. Primary Insurance This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below. b. Excess Insurance This insurance is excess over: (1) Any of the other insurance, whether primary, excess, contingent or on any other basis: (a) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for "your work"; (b) That is Fire insurance for premises rented to you or temporarily oc- cupied by you with permission of the owner; (c) That is insurance purchased by you to cover your liability as a tenant for "property damage" to premises rented to you or temporarily oc- cupied by you with permission of the owner, or (d) If the loss arises out of the main- tenance or use of aircraft, "autos" or watercraft to the extent not subject to Exclusion B.1.g. of the Contractors Liability Coverage Form. (2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement. When this insurance is excess, we will have no duty under Coverage A.1. to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers. When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and (2) The total of all deductible and self- insured amounts under all that other insurance. We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declara- tions of this Policy. c. Method of Sharing If all of the other insurance permits contri- bution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid it applicable limit of insurance or none of the loss remains, whichever comes first PREMIUMS 1. The first named insured shown in the Declarations: a. Is responsible for the payment of all pre- miums; and b. Will be the payee for any return premiums we pay. 2. The premium shown in the Declarations was computed based on rates in effect at the time the policy was issued. On each renewal, continuation or anniversary of the effective date of this policy, we will compute the premium in accordance with our rates and rules then in effect. Includes Copyrighted Material of Insurance Services ACP-0005-A (7-00) Office. Inc.. 1984. 1988. 2000 Paae 2 of 3 3. With our consent, you may continue this policy in force by paying a continuation premium for each successive one-year period. The premium must be: a. Paid to us prior to the anniversary date; and b. Determined in accordance with paragraph 2. above. Our forms then in effect will apply. If you do not pay the continuation premium, this policy will expire on the first anniversary date that we have not received the premium. 4. Undeclared exposures or change in your business operation, acquisition or use of locations may occur during the policy period that are not shown in the Declarations. If so, we may require an additional premium. That premium will be determined in accordance with our rates and rules then in effect. J. TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US Applicable to Contractors Special Property coverage and Inland Marine coverages: If any person or organization to or for whom we make payment under this policy has rights to recover damages from another, those rights are transferred to us to the extent of our payment. That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them. But you may waive your rights against another party in writing: a. Prior to a loss to your Covered Property. b. After a loss to your Covered Property only if, at time of loss, that party is one of the following: (1) Someone insured by this insurance; (2) A business firm: (a) Owned or controlled by you; or (b) That owns or controls you; or (3) Your tenant. You may also accept the usual bills of lading or shipping receipts limiting the liability of carriers. This will not restrict your insurance. 2. Applicable to Contractors Liability coverage: If the insured has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring A "suit' or transfer those rights to us and help us enforce them. This condition does not apply to Medical Expenses Coverage. K. TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured. If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property. Includes Copyrighted Material of Insurance Services ACP-0005-A (7-00) Office, Inc., 1984, 1988, 2000 Page 3 of 3 CONTRACTORS THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXCLUSION - YEAR 2000 COMPUTER-RELATED AND OTHER ELECTRONIC PROBLEMS This endorsement modifies insurance provided under the following: CONTRACTORS LIABILITY COVERAGE FORM The following exclusion is added to Paragraph B., Exclusions in the Contractors Liability Coverage Form: This insurance does not apply to "bodily injury," "property damage," "personal injury" or "advertising injury" arising directly or indirectly out of: a. Any actual or alleged failure, malfunction or inadequacy of: (1) Any of the following, whether belonging to any insured or to others: (a) Computer hardware, including microprocessors or other Elec- tronic Data Processing Equipment as may be described elsewhere in the policy; (b) Computer application software or other Electronic Media and Records as may be described elsewhere in the policy; (c) Computer operating systems and related software; (d) Computer networks; (e) Microprocessors (computer chips) not part of any computer system; or (f) Any other computerized or elec- tronic equipment or components; or (2) Any other products and any services, data or functions that directly or indirectly use or rely upon, in any manner, any of the items listed in Paragraph 1.a.(1) of this endorsement due to the inability to correctly recognize, process, distinguish, interpret or accept the year 2000 and beyond. b. Any advice, consultation, design, evalua- tion, inspection, installation, maintenance, repair, replacement or supervision provided or done by you or for you to determine, rectify or test for, any potential or actual problems described in Paragraph 1.a. of this endorsement Includes Copyrighted Material of Insurance ACP-0086 (3-98) Services Office, Inc., 1998 CONTRACTORS POLICY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EMPLOYMENT-RELATED PRACTICES EXCLUSION This endorsement modifies insurance provided under the following CONTRACTORS POLICY The following exclusion is added to Section B. b. The spouse, child, parent, brother or sister of EXCLUSIONS of the Contractors Liability Coverage that person as a consequence of "bodily injury' Form: or "personal injury" to that person at whom any of the employment-related practices described This insurance does not apply to: in paragraphs (1), (2) or (3) above is directed. 1. "Bodily injury" or "personal injury" to: a. A person arising out of any: (1) Refusal to employ that person; (2) Termination of that person's employ- ment; or This exclusion applies: a. Whether the insured may be liable as an employer or in any other capacity; and b. To any obligation to share damages with or repay someone else who must pay damages because of the injury. (3) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defam-ation, harassment, humiliation or discrimi-nation directed at that person; or Includes Copyrighted Material of Insurance Services ACP-0085 (1-98) Office, Inc., 1996 _ THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXCLUSION - LEAD CONTAMINATION This endorsement modifies insurance provided under the following: BUSINESSOWNERS LIABILITY COVERAGE FORM BUSINESS PROVIDER LIABILITY COVERAGE FORM COMMERCIAL GENERAL LIABILITY COVERAGE PART COMMERCIAL UMBRELLA LIABILITY POLICY CONTRACTORS LIABILITY COVERAGE FORM The following EXCLUSION is added: This insurance does not apply to: a. "Bodily Injury" arising out of the ingestion, inhalation or absorption of lead in any form; b. "Property Damage" arising from any form of lead; c. "Personal Injury" arising from any form of lead; d. "Advertising Injury" arising from any form of lead; e. Medical Expenses arising from any form of lead; f. Any loss, cost or expense arising out of any request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of lead; or g. Any loss, cost or expense arising out of any claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of lead. Cas.4814 (6-94) ASBESTOS LIABILITY EXCLUSION The following exclusion is added: "This insurance does not apply to bodily injury, property damage, personal injury or advertising injury arising out of asbestos or goods containing asbestos or real property containing asbestos. This exclusion applies whether the bodily injury, property damage, personal injury or advertising injury is caused solely by asbestos or goods containing asbestos or real property containing asbestos, or is caused by other means in conjunction or separately with asbestos or goods containing asbestos or real property containing asbestos." Cas.3880 (8-97) THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. TOTAL FUNGI EXCLUSION This endorsement modifies insurance provided under the following: BUSINESSOWNERS LIABILITY COVERAGE FORM BUSINESS PROVIDER LIABILITY COVERAGE FORM CONTRACTORS LIABILITY COVERAGE FORM 1. Exclusion m. under the Paragraph 1., Applicable to Business Liability Coverage of Section B. Exclusions is replaced by the following: B. Exclusions This insurance does not apply to: m. Damage To Your Work "Property damage" to "your work" arising out of it or any part of it and included in the "products-completed operations hazard". This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor unless the damage would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of any "fungi'. 2. The following exclusions are added to Paragraph 1., Applicable to Business Liability Coverage of Section B. Exclusions: B. Exclusions This insurance does not apply to: a. "Bodily injury" or "property damage" which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, absorption of, exposure to, existence of, or presence of any "fungi". b. "Personal would not part, but and advertising injury" which have occurred, in whole or in for the actual, alleged or threatened inhalation of, ingestion of, contact with, absorption of, exposure to, existence of, or presence of any "fungi". c. Any loss, cost or expense arising out of the testing for, monitoring, cleaning up, re- moving, containing, treating, detoxifying, neutralizing, remediating or disposing of, or in any way responding to, or assessing the effects of, "fungi", by any insured or by anyone else. 3. The following exclusion is added to Paragraph 2., Applicable to Medical Expenses Coverage of Section B. Exclusions: B. Exclusions We will not pay expenses for "bodily injury": a. which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, absorption of, exposure to, existence of, or presence of any "fungi". 4. The following definition is added to the Definitions Section: "Fungi" includes any type or form of fungus, mold, mildew, spores, algae, smut, rusts or rot and decay organisms and any similar or related organisms and any mycotoxin, substance, compound, chemicals, mist or vapor produced by any fungi in any form or any by-products or waste produced by fungi, but does not include any fungi intended to be edible. Rot and decay organism means any living organism that causes decomposition of physical property. Cas. 6117 (7-01) AMENDATORY ENDORSEMENT - PREMIUM PAYMENT The named insured has elected to pay the premium for this policy or bond in payments in accordance with the premium payment plans approved for use by us and set forth in our approved portfolios or manuals. For each separate payment, including the initial payment, there is a payment plan service charge of five dollars ($5.00). Cas. 3687-A (1-94) CONTRACTORS POLICY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. PENNSYLVANIA CHANGES CANCELLATION AND NONRENEWAL This endorsement modifies insurance provided under the following: CONTRACTORS POLICY A. The CANCELLATION Common Policy Condition is replaced by the following: CANCELLATION factor or loss experience material to insurability has become known during the policy period. Notice of cancellation will be mailed or delivered at least 60 days before the effective date of cancellation. 1. The first named insured shown in the Declar- ations may cancel this policy by writing or giving notice of cancellation. 2. CANCELLATION OF POLICIES IN EFFECT FOR LESS THAN 60 DAYS We may cancel this policy by mailing or delivering to the first named insured written notice of cancellation at least 30 days before the effective date of cancellation. 3. CANCELLATION OF POLICIES IN EFFECT FOR 60 DAYS OR MORE If this policy has been in effect for 60 days or more or if this policy is a renewal of a policy we issued, we may cancel this policy only for one or more of the following reasons: a. You have made a material misrepre- sentation which affects the insurability of the risk. Notice of cancellation will be mailed or delivered at least 15 days before the effective date of cancellation. b. You have failed to pay a premium when due, whether the premium is payable directly to us or our agents or indirectly under a premium finance plan or extension of credit. Notice of cancellation will be mailed at least 15 days before the effective date of cancellation. c. A condition, factor or loss experience material to insurability has changed substantially or a substantial condition, Loss of reinsurance or a substantial decrease in reinsurance has occurred, which loss or decrease, at the time of cancellation, shall be certified to the Insurance Commissioner as directly affecting inforce policies. Notice of cancellation will be mailed or delivered at least 60 days before the effective date of cancellation. e. Material failure to comply with policy terms, conditions or contractual duties. Notice of cancellation will be mailed or delivered at least 60 days before the effective date of cancellation. f. Other reasons that the Insurance Com- missioner may approve. Notice of cancellation will be mailed or delivered at least 60 days before the effective date of cancellation. This policy may also be cancelled from inception upon discovery that the policy was obtained through fraudulent statements, omissions or concealment of facts material to the acceptance of the risk or to the hazard assumed by us. 4. We will mail or deliver our notice to the first named insured's last mailing address known to us. Notice of cancellation will state the specific reasons for cancellation. Includes Copyrighted Material of Insurance Services ACP-0021 (9-96) Office, Inc., 1996 Page 1 of 2 5. Notice of cancellation will state the effective date of cancellation. The policy period will end on that date. 6. If this policy is cancelled, we will send the first named insured any premium refund due. If we cancel, the refund will be pro rata and will be returned within 10 business days after the effective date of cancellation. If the first named insured cancels, the refund may be less than pro rata and will be returned within 30 days after the effective date of cancellation. The cancellation will be effective even if we have not made or offered a refund. 7. If notice is mailed, it will be by registered or first class mail. Proof of mailing will be sufficient proof of notice. B. The following are added and supersede any provisions to the contrary: 1. NONRENEWAL If we decide not to renew this policy, we will mail or deliver written notice of nonrenewal, stating the specific reasons for nonrenewal, to the first named insured at least 60 days before the expiration date of the policy. 2. INCREASE OF PREMIUM If we increase your renewal premium, we will mail or deliver to the first named insured written notice of our intent to increase the premium at least 30 days before the effective date of the premium increase. Any notice of nonrenewal or renewal premium increase will be mailed or delivered to the first named insured's last known address. If notice is mailed, it will be by registered or first class mail. Proof of mailing will be sufficient proof of notice. Includes Copyrighted Material of Insurance Services ACP-0021 (9-96) Office, Inc., 1996 Page 2 of 2 CONTRACTORS POLICY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. PENNSYLVANIA CHANGES This endorsement modifies insurance provided under the following: CONTRACTORS POLICY A. The TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY Common Policy Condition is replaced by the following: B. The following is added to the LOSS PAYMENT Property Loss Condition and supersedes any provision to the contrary: K. TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual Named Insured. If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal repre- sentative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property. If you die, this Policy will remain in effect as provided in 1. or 2. below, whichever is later: 1. For 180 days after your death regardless of the policy period shown in the Declarations, unless the insured property is sold prior to that date; or 2. Until the end of the policy period shown in the Declarations, unless the insured prop- erty is sold prior to that date. Coverage during the period of time after your death is subject to all provisions of this policy including payment of any premium due for the policy period shown in the Declarations and any extension of that period. NOTICE OF ACCEPTANCE OR DENIAL OF CLAIM 1. Except as provided in 3. below, we will give you notice, within 15 working days after we receive a properly executed proof of loss, that we: a. Accept your claim; b. Deny your claim; or c. Need more time to determine whether your claim should be accepted or denied. If we deny your claim, such notice will be in writing, and will state any policy provision, condition or exclusion used as a basis for the denial. If we need more time to determine whether your claim should be accepted or denied, the written notice will state the reason why more time is required. 2. If we have not completed our investigation, we will notify you again in writing, within 30 days after the date of the initial notice as provided in 1.c. above, and thereafter every 45 days. The written notice will state why more time is needed to investigate your claim and when you may expect us to reach a decision on your claim. 3. The notice procedures in 1. and 2. above do not apply if we have a reasonable basis, supported by specific information, to suspect that an insured has fraudulently caused or contributed to the loss by arson or other illegal activity. Under such circumstances, we will notify you of the disposition of your claim within a period of time reasonable to allow full investigation of the claim, after we receive a properly executed proof of loss. Includes Copyrighted Material of Insurance Services ACP-0074-A (10-98) Office, Inc., 1993, 1998 Page 1 of 2 C. The following is added to any provision which uses the term actual cash value: Actual cash value is calculated as the amount it would cost to repair or replace Covered Property, at the time of loss or damage, with material of like kind or quality, subject to deduction for deterioration, depreciation and obsolescence. Actual cash value applies to Covered Property regardless of whether that property has sustained partial or total loss or damage. The actual cash value of the lost or damaged property may be significantly less than its replacement cost. Includes Copyrighted Material of Insurance Services ACP-0074-A (10-98) Office. Inc.. 1993. 1998 Paae 2 of 2 PENNSYLVANIA NOTICE An Insurance Company, its agents, employees, or service contractors acting on its behalf, may provide services to reduce the likelihood of injury, death or loss. These services may include any of the following or related services incident to the application for, issuance, renewal or continuation of, a policy of insurance: 1. surreys; 2. consultation or advice; or 3. inspections. The "Insurance Consultation Services Exemption Act" of Pennsylvania provides that the Insurance Company, its agents, employees or service contractors acting on its behalf, is not liable for damages from injury, death or loss occurring as a result of any act or omission by any person in the furnishing of or the failure to furnish these services. The Act does not apply: 1. if the injury, death or loss occurred during the actual performance of the services and was caused by the negligence of the Insurance Company, its agents, employees or service contractors; 2. to consultation services required to be performed under a written service contract not related to a policy of insurance; or 3. if any acts or omissions of the Insurance Company, its agents, employees or service contractors are judicially determined to constitute a crime, actual malice, or gross negligence. IL 09 10/1-10-291 (Ed. 01 81 Copyright, Insurance Services Office, Inc., 1981 CONTRACTORS POLICY CONTRACTORS EQUIPMENT AND PORTABLE TOOLS COVERAGE FORMS Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy, the words "you" and "your" refer to the named insured shown in the Declarations. The words "we," "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to SECTION G - DEFINITIONS. A. COVERAGE We will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss. d. Building materials and supplies; e. Aircraft and watercraft, their equipment or parts; 1. Covered Property, as used in this Coverage Form, means the following: a. Scheduled Covered Property Each item of contractor's equipment and portable tool you own, or for which you are legally liable, that is specifically described in the Declarations and for which an individual Limit of Insurance is shown; and b. Unscheduled Covered Property (Cover- age not to exceed $500 on any one item). Other contractor's equipment and portable tools, including their containers, spare parts and accessories you own that are used in your business and not specifically de- scribed in the Declarations, for which a single Limit of Insurance is shown in the Declarations. 2. Property Not Covered Covered Property does not include: a. Property that is held for sale; b. Property that you rent to others; f. Automobiles, dirt bikes, house trailers, mobile homes, mopeds, motorcycles, motorized bicycles or tricycles, snow- mobiles, trucks and vehicles primarily designed and licensed for road use; g. Contraband, or property in the course of illegal transportation or trade. 3. Covered Causes of Loss RISKS OF DIRECT PHYSICAL LOSS unless the loss is: a. Excluded in Section B., Exclusions; or b. Limited in Paragraph AA., Limitations; that follow. 4. Limitations We will not pay for loss of or damage to tires and tubes mounted on vehicles unless caused by: a. Fire, windstorm, theft or vandalism; or b. A covered loss which also damages the vehicle. c. Property that is or will be a permanent 5. Additional Coverages part of a building or structure; Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 1 of 7 a. Collapse We will pay for loss or damage caused by or resulting from risks of direct physical loss involving collapse of a building or any part of a building caused only by one or more of the following: (1) The "specified causes of loss" or break-age of building glass, all only as insured against in this Coverage Form; (2) Hidden decay; (3) Hidden insect or vermin damage; (4) Weight of people or personal property; (5) Weight of rain that collects on a roof, or (6) Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. Collapse does not include settling, cracking, shrinkage, bulging or expansion. This Additional Coverage will not increase the Limits of Insurance provided in this Coverage Form. b. Debris Removal ACP-0008 (1) We will pay your expense to remove debris of Covered Property caused by or resulting from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the earlier of: (a) The date of direct physical loss or damage; or (b) The end of the policy period. (2) Except as provided in 5.b. (4) below, the most we will pay under this Additional Coverage is 25% of: (a) The amount we pay for the direct physical loss of or damage to Covered Property; plus (b) The deductible in this policy appli- (3) This Additional Coverage does not apply to costs to: (a) Extract "pollutants" from land or water; or (b) Remove, restore or replace polluted land or water. (4) Debris removal expense is included in the Limit of Insurance applying to the damaged property. But if: (a) The amount payable for the sum of direct physical loss or damage and debris removal expense exceeds the applicable Limit of Insurance; or (b) The debris removal expense ex- ceeds the amount payable under the 25% limitation in 5.b. (2) above; an additional 5% of the Limit of Insurance applying to the damaged property will be available to cover debris removal expense. c. Fire Department Service Charge When the fire department is called to save or protect Covered Property from a Covered Cause of Loss, we will pay up to $1,000 for your liability for fire department service charges: (1) Assumed by contract or agreement prior to loss; or (2) Required by local ordinance. The amount we pay under this Additional Coverage will be in addition to any Limit of Insurance that applies under this Coverage Form. No deductible applies to this Additional Coverage. d. Reasonable Repairs We will pay the reasonable cost to make necessary repairs to protect Covered Property from further damage after a loss insured against has occurred. cable to that loss or damage. Payment under this Additional Coverage will be subject to, not in addition to, the Includes Copyrighted Material of Insurance Services Office, Inc., 1988 Page 2 of 7 Limit of Insurance applying to the prop- erty being repaired. 6. Coverage Extension In addition to the Limits of Insurance, you may extend the insurance provided by this policy as provided below. Acquired Property - Newly Purchased a. If this Coverage Form covers property specifically declared and described in the Declarations and if during the policy period you acquire newly purchased contractor's equipment and portable tools, we will cover such property. b. The most we will pay under this Cover- age Extension will be the smaller of: (1) 25% of the total coverage amount for all specifically described items shown in the Declarations; or (2) $50,000; for loss of or damage to such contractor's equipment and portable tools. c. When values for Newly Purchased con- tractor's equipment and portable tools are reported under this Coverage Extension, additional premium for these values will be due and payable from the date of purchase. d. This Coverage Extension will end: (1) 30 days after the date of acquisition of the item; or (2) When this policy expires; whichever comes first. B. EXCLUSIONS 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. a. Governmental Action But we will pay for acts of destruction ordered by governmental authority taken at the time of a fire to prevent its spread if the fire would be covered under this Coverage Form. b. Intentional Loss We will not pay for loss or damage arising out of any act committed: (1) By or at your direction; and (2) With the intent to cause a loss. c. Nuclear Hazard Nuclear reaction or radiation, or radio- active contamination, however caused. But if loss or damage by fire results, we will pay for that resulting loss or damage. d. War and Military Action (1) War, including undeclared or civil war; (2) Warlike action by a military force, in- cluding action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these. 2. OTHER EXCLUSIONS We will not pay for loss or damage caused by or resulting from: a. Collapse of a building or structure, except as provided in the Additional Coverage entitled Collapse. But if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage. b. Rain, snow, ice or sleet; c. Disappearance of any property unless there is evidence that the property was stolen; d. Dishonest or criminal acts committed by Seizure or destruction of property by you, any of your partners, employees, order of a governmental authority. directors, trustees, authorized represent- Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 3 of 7 atives or anyone to whom you entrust the property for any purpose, regardless of whether: (1) That person acts alone or in collusion with others; or (2) The act is committed during the hours of employment. This exclusion does not apply to loss by: (1) Acts of destruction committed by your striking employees, but it does apply to employee theft; or (2) Dishonest acts by carriers or other bailees for hire. e. Delay, loss of market, loss of use or business interruption; f. Artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances or wires. But if loss or damage by fire or explosion results, we will pay for that resulting loss or damage. g. A process to repair, adjust, service or maintain the Covered Property. But if loss or damage by fire or explosion results, we will pay for that resulting loss or damage. h. The weight of a load when it exceeds the designed capacity of a machine to lift or support the load from any position; i. Wear and tear, j. Rust, corrosion, fungus, decay, deter- ioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself; k. Birds, vermin, rodents, insects or domestic animals; 1. Mechanical breakdown, including rupture or bursting caused by centrifugal force; m. Dampness or dryness of atmosphere; n. Changes in or extremes of temperature; With respect to exclusions B.2.i. through B.2.o., if loss or damage by the "specified causes of loss" or building glass breakage results, we will pay for that resulting loss or damage. 3. We will not pay for loss or damage caused by or resulting from any of the following. But if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage. a. Weather conditions. But this exclusion applies only if weather conditions con- tribute in any way with a cause or event excluded in paragraph B.1. above to produce the loss or damage. b. Acts or decisions, including the failure to act or decide, of any person, group, organ- ization or governmental body. c. Faulty, inadequate or defective: (1) Planning, zoning, development, sur- veying, siting; (2) Design, specifications, workmanship, repair, construction, renovation, re- modeling, grading, compaction; (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance; of part or all of any property. C. LIMITS OF INSURANCE The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations. The Limit of Insurance for any one item covered under Section A. 1.b. is $500. D. DEDUCTIBLE We will not pay for loss, damage or expense in any one occurrence until the amount of loss, damage or expense exceeds the Deductible shown in the Declarations. We will then pay the amount of loss, damage or expense in excess of the Deductible, up to the applicable Limit of Insurance. E. LOSS CONDITIONS o. Marring or scratching. Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 4 of 7 1. Abandonment There can be no abandonment of any property to us. 2. Appraisal If we and you disagree on the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will: a. Pay its chosen appraiser; and b. Bear the other expenses of the appraisal and umpire equally. If there is an appraisal, we will still retain our right to deny the claim. 3. Duties In The Event Of Loss Or Damage You must see that the following are done in the event of loss or damage to Covered Property: a. Notify the police if a law may have been broken. b. Give us prompt notice of the loss or damage. Include a description of the property involved. c. As soon as possible, give us a descrip- tion of how, when and where the loss or damage occurred. d. Take all reasonable steps to protect the Covered Property from further damage by a Covered Cause of Loss. If feasible, set the damaged property aside and in the best possible order for examination. Also keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. e. At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed. f. Permit us to inspect the property and records proving the loss or damage. Also permit us to take samples of damaged property for inspection, testing and analysis. g. If requested, permit us to question you under oath at such times as may be reasonably required about any matter relating to this insurance or your claim, including your books and records. In such event, your answers must be signed. h. Send us a signed, sworn statement of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms. i. Cooperate with us in the investigation or settlement of the claim. j. Make no statement that will assume any obligation or admit any liability, for any loss or damage for which we may be liable, without our consent. 4. Loss Payment a. In the event of loss or damage covered by this Coverage Form, at our option we will either: (1) Pay the value of lost or damaged property; (2) Pay the cost of repairing or replacing the lost or damaged property; (3) Take all or any part of the property at an agreed or appraised value; or (4) Repair, rebuild or replace the prop- erty with other property of like kind and quality. b. We will not pay you more than your financial interest in the Covered Property. c. We will give notice of our intentions within 30 days after we receive the sworn statement of loss. Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 5 of 7 d. We may adjust losses with the owners of lost or damaged property if other than you. If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the Covered Property. e. We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense. f. We will pay for covered loss or damage within 30 days after we receive the sworn statement of loss, if: (1) You have complied with all of the terms of this Coverage Form; and (2) (a) We have reached agreement with you on the amount of loss; or (b) An appraisal award has been made. 5. Pair, Sets or Parts a. Pair or Set. In case of loss or damage to any part of a pair or set we may: (1) Repair or replace any part to restore the pair or set to its value before the loss; or (2) Pay the difference between the value of the pair or set before and after the loss. b. Parts. In case of loss of or damage to any part of Covered Property consisting of several parts when complete, we will only pay for the value of the lost or damaged part. 6. Recovered Property If either you or we recover any property after loss settlement, that party must give the other prompt notice. At your option, the property will be returned to you. You must then return to us the amount we paid to you for the property. We will pay recovery expenses and the expenses to repair the recovered property, subject to the Limit of Insurance. 7. Valuation In the event of loss of or damage to Covered Property, we will settle at actual cash value as of time of loss, but we will not pay more than the amount necessary for repair or replacement. F. GENERAL CONDITIONS 1. Legal Action Against Us No one may bring a legal action against us under this Coverage Form unless: a. There has been full compliance with all the terms of this Coverage Form; and b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred. 2. Liberalization If we adopt any revision that would broaden the coverage under this Coverage Form without additional premium within 45 days prior to or during the policy period, the broadened coverage will immediately apply to this Coverage Form. 3. No Benefit To Bailee No person or organization, other than you, having custody of Covered Property, will benefit from this insurance. 4. Policy Period, Coverage Territory Under this Coverage Form: a. We cover loss or damage commencing: (1) During the policy period shown in the Declarations; and (2) Within the coverage territory. b. The coverage territory is: (1) The United States of America; (2) Puerto Rico; and (3) Canada. G. DEFINITIONS 1. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 6 of 7 2. "Specified Causes of Loss" means the following: Fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage. a. Sinkhole collapse means the sudden sinking or collapse of land into under- ground empty spaces created by the action of water on limestone or dolomite. It does not include: (1) the cost of filling sinkholes; or (2) sinking or collapse of land into man- made underground cavities. b. Falling objects does not include loss or damage to: (1) Personal property in the open; or (2) The interior of a building or structure, or property inside a building or structure, unless the roof or an outside wall of the building or structure is first damaged by a falling object. c. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam. Includes Copyrighted Material of Insurance Services ACP-0008 Office, Inc., 1988 Page 7 of 7 CONTRACTORS POLICY CONTRACTORS SPECIAL PROPERTY COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the named insured shown in the Declarations. The words "we," "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to SECTION H - PROPERTY DEFINITIONS. A. COVERAGE We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss. 1. Covered Property Covered Property, as used in this policy, means the following types of property for which a Limit of Insurance is shown in the Declarations: a. Buildings, meaning the buildings and structures at the premises described in the Declarations, including: (1) Completed additions; (2) Permanently installed: (a) Fixtures; (b) Machinery; and (c) Equipment; (3) Outdoor fixtures; (4) Personal property owned by you that is used to maintain or service the buildings or structures or the premises, including: (a) Fire extinguishing equipment; (b) Outdoor furniture; (c) Floor coverings; and (d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering; (5) if not covered by other insurance: used for making additions, alter- ations or repairs to the buildings or structures. b. Business Personal Property located in or on the buildings at the described premises or in the open (or in a vehicle) within 100 feet of the described premises, including: (1) Property you own that is used in your business; (2) Property of others that is in your care, custody or control, but this property is not covered for more than the amount for which you are legally liable, plus the cost of labor, materials or services fumished or arranged by you on personal property of others; and (3) Tenant's improvements and better- ments. Improvements and betterments are fixtures, alterations, installations or additions: (a) Made a part of the building or struc- ture you occupy but do not own; and (b) You acquired or made at your expense but cannot legally remove. 2. Property Not Covered Covered Property does not include: a. (1) Aircraft, automobiles, motortrucks and other vehicles subject to motor vehicle registration, and (2) Vehicles or self-propelled machines that are operated principally away from the described premises. (a) Additions under construction, alter- b ations and repairs to the buildings or structures; (b) Materials, equipment, supplies and c temporary structures, on or within 100 feet of the described premises, Includes Copyrighted Material of Insur ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Bullion, "money" or "securities," all except as provided in the "Money"and "Securities" Additional Coverage. Contraband, or property in the course of illegal transportation or trade; ance Page 1 of 17 d. Land (including land on which the property is located), water, growing crops or lawns; e. Outdoor fences, radio or television antennas (including satellite dishes) and their lead-in wiring, masts or towers, signs (other than signs attached to buildings), trees, shrubs or plants, all except as provided in the: (1) Outdoor Property Coverage Exten- sion; or (2) Outdoor Signs Optional Coverage; f. Watercraft (including motors, equipment and accessories) while afloat; g. Animals; h. Property that is covered under another coverage form of this or any other policy in which it is more specifically described, except for the excess of the amount due (whether you can collect on it or not) from that other insurance. described premises on the basis of unauthorized instructions. b. We will not pay more for loss of or damage to glass that is part of a building or structure than $100 for each plate, pane, multiple plate insulating unit, radiant or solar heating panel, jalousie, louver or shutter. We will not pay more than $500 for all loss of or damage to building glass that occurs at any one time. This Limitation does not apply to loss or damage by the "specified causes of loss," except vandalism. c. We will not pay for loss of or damage to fragile articles such as glassware, statuary, marbles, chinaware and porcelains, if broken, unless caused by the "specified causes of loss" or building glass breakage. This restriction does not apply to: (1) Glass that is part of a building or structure; 3. Covered Causes of Loss (2) Containers of property held for sale; or RISKS OF DIRECT PHYSICAL LOSS unless (3) Photographic or scientific instrument the loss is: lenses. a. Excluded in Section B., Exclusions; or 5. Additional Coverages b. Limited in Paragraph AA., Limitations; a. Debris Removal that follow. (1) We will pay your expense to remove 4. Limitations debris of Covered Property caused by or resulting from a Covered Cause of Loss a. We will not pay for loss of or damage to: that occurs during the policy period. The (1) Steam boilers, steam pipes steam expenses will be paid only if they are , engines or steam turbines caused by or reported to us in writing within 180 days resulting from any condition or event of the earlier of. inside such equipment. But we will pay (a) The date of direct physical loss or for loss of or damage to such equip- damage; or ment caused by or resulting from an explosion of gases or fuel within the (b) The end of the policy period. furnace of any fired vessel or within the (2) The most we will pay under this Addi- flues or passages through which the tional Coverage is 25% of: gases of combustion pass. (a) The amount we pay for the direct (2) Hot water boilers or other water physical loss of or damage to heating equipment caused by or Covered Property; plus resulting from any condition or event inside such boilers or equipment, (b) The deductible in this policy ap- other than an explosion. plicable to that loss or damage. (3) Property that is missing, but there is no But this limitation does not apply to any physical evidence to show what hap- additional debris removal limit provided pened to it, such as shortage disclosed in paragraph (4) below. on taking inventory. This limitation does (3) This Additional Coverage does not not apply to the Additional Coverage for apply to costs to: "Money" and "Securities." (a) Extract "pollutants" from land or (4) Property that has been transferred to water; or a person or to a place outside the (b) Remove, restore or replace pol- luted land or water. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office. Inc.. 1984. 1988 Pnna 9 of 17 (4) If: We will not pay for loss of or damage to the (a) The sum of direct physical loss following types of property, if otherwise or damage and debris removal covered in this policy, under items (2), (3), expense exceeds the Limit of (4), (5) and (6) unless the loss or damage is a direct result of the collapse of a building: Insurance; or awnings; gutters and downspouts; yard (b) The debris removal expense ex- fixtures; outdoor swimming pools; piers, ceeds the amount payable under wharves and docks; beach or diving the 25% Debris Removal coverage platforms or appurtenances; retaining limitation in paragraph (2) above; walls; walks, roadways and other paved we will pay up to an additional $10,000 surfaces. for each location in any one occurrence Collapse does not include settling, cracking, under the Debris Removal Additional shrinkage, bulging or expansion. Coverage. e. Water Damage, Other Liquids, Powder b. Preservation of Property or Molten Material Damage If it is necessary to move Covered Property If loss or damage caused by or resulting from the described premises to preserve it from covered water or other liquid, from loss or damage by a Covered Cause powder or molten material damage loss of Loss, we will pay for any direct physical occurs, we will also pay the cost to tear loss of or damage to that property: out and replace any part of the building or (1) While it is being moved or while tem- structure to repair damage to the system porarily stored at another location; and or appliance from which the water or other substance escapes. (2) Only if the loss or damage occurs within 30 days after the property is first moved. We will not pay the cost to repair any defect that caused the loss or damage; but c. Fire Department Service Charge we will pay the cost to repair or replace When the fire department is called to damaged parts of fire extinguishing equip- save or protect Covered Property from a ment if the damage: Covered Cause of Loss, we will pay up to (1) Results in discharge of any substance $1,000 for your liability for fire department from an automatic fire protection sys- service charges: tem; or (1) Assumed by contract or agreement (2) is directly caused by freezing. prior to loss; or f. Business Income (2) Required by local ordinance. (1) Business Income d. Collapse We will pay for the actual loss of We will pay for loss or damage caused by or Business Income you sustain due to the " resulting from risks of direct physical loss necessary suspension of your oper- " " " involving collapse of a building or any part of period of restoration. ations during the a building caused only by one or more of the The suspension must be caused by following: direct physical loss of or damage to property at the described premises, (1) The "specified causes of loss" or break- including personal property in the open age of building glass, all only as insured (or in a vehicle) within 100 feet, caused against in this policy; by or resulting from any Covered Cause (2) Hidden decay; of Loss. (3) Hidden insect or vermin damage; We will only pay for loss of Business Income that occurs within 12 con- (4) Weight of people or personal property; secutive months after the date of (5) Weight of rain that collects on a roof; direct physical loss or damage. This Additional Coverage is not subject to (6) Use of defective material or methods in the Limits of Insurance. construction, remodeling or renovation if the collapse occurs during the course Business Income means the: of the construction, remodeling or (a) Net Income (Net Profit or Loss renovation. before income taxes) that would have been earned or incurred; and Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 3 of 17 (b) Continuing normal operating ex- penses incurred, including payroll. (2) Extended Business Income If the necessary suspension of your "operations" produces a Business Income loss payable under this policy, we will pay for the actual loss of Business Income you incur during the period that: (a) Begins on the date property except finished stock is actually repaired, rebuilt or replaced and "operations" are resumed; and (b) Ends on the earlier of: (i) The date you could restore your "operations," with reason-able speed, to the level that would generate the Business Income amount that would have existed if no direct physical loss or damage had occurred; or (ii) 30 consecutive days after the date determined in (2)(a) above. However, Extended Business Income does not apply to loss of Business Income incurred as a result of un- favorable business conditions caused by the impact of the Covered Cause of Loss in the area where the described premises are located. Loss of Business Income must be caused by direct physical loss or damage at the described premises caused or resulting from any Covered Cause of Loss. This Additional Coverage is not subject to the Limits of Insurance. g. Extra Expense We will pay necessary Extra Expense you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or damage to property at the described premises, includ- ing personal property in the open (or in a vehicle) within 100 feet, caused by or resulting from a Covered Cause of Loss. Extra Expense means expense incurred: (1) To avoid or minimize the suspension of business and to continue "operations": (ii) Costs to equip and operate the replacement or temporary locations. (2) To minimize the suspension of business if you cannot continue "operations." (3) (a) To repair or replace any property; or (b) To research, replace or restore the lost information on damaged "valuable papers and records"; to the extent it reduces the amount of loss that otherwise would have been payable under this Additional Coverage or Additional Coverage f., Business Income. We will only pay for Extra Expense that occurs within 12 consecutive months after the date of direct physical loss or damage. This Additional Coverage is not subject to the Limits of Insurance. h. Pollutant Clean Up and Removal We will pay your expense to extract "pollutants" from land or water at the described premises if the release, discharge or dispersal of the "pollutants" is caused by or results from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the earlier of: (1) The date of direct physical loss or damage; or (2) The end of the policy period. The most we will pay for each location under this Additional Coverage is $10,000 for the sum of all such expenses arising out of Covered Causes of Loss occurring during each separate 12 month period of this policy. 1. Arson Reward We will pay up to $5,000 for information which leads to an arson conviction in connection with a fire covered under the policy to which this endorsement is attached. Regardless of the number of persons involved in providing information our liability under this Coverage Extension will not be increased. j. Fire Extinguisher Recharge (a) At the described premises; or We will pay up to an amount not exceeding $1,000 in any one fire for the cost of (b) At replacement premises or at recharging your Underwriters Laboratories temporary locations, including: listed or Factory Mutual approved type ABC (i) Relocation expenses; and (multipurpose) fire extinguishers or dry Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Paoe 4 of 17 chemical fixed pipe fire extinguishing systems used in fighting a fire on your premises or on an adjoining premises. k. Money and Securities Schedule $2,000 Inside the Premises $2,000 Outside the Premises (1) We will pay for loss of "money" and "securities" used in your business while at a bank or savings institution, within your living quarters or the living quarters of your partners or any employee having use and custody of the property, at the described premises, or in transit between any of these places, resulting directly from: (a) Theft, meaning any act of stealing; (b) Disappearance; or (c) Destruction. (2) In addition to the Limitations and Exclusions applicable to property coverage, we will not pay for loss: (a) Resulting from accounting or arithmetical errors or omissions; (b) Due to the giving or surrendering of property in any exchange or purchase; or (c) Of property contained in any "money"-operated device unless the amount of "money" deposited in it is recorded by a continuous recording instrument in the device. (3) The most we will pay for loss in any one occurrence is: (a) The limit shown in the Schedule for Inside the Premises for "money" and "securities" while: (i) In or on the described prem- ises; or Within a bank or savings insti- tution; and (b) The limit shown in the Schedule for Outside the Premises for "money" and "securities" while anywhere else. (4) All loss: (a) Caused by one or more persons; or (5) You must keep records of all "money" and "securities" so we can verify the amount of any loss or damage. L Civil Authority We will pay for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss. The coverage for Business Income will begin 72 hours after the time of the action and will apply for a period of up to 3 consecutive weeks after coverage begins. The coverage for necessary Extra Expense will begin immediately after the time of the action and ends: (1) 3 consecutive weeks after the time of that action; or (2) When you Business Income cover- age ends; whichever is later. The definitions of Business Income and Extra Expense contained in the Business Income and Extra Expense Additional Coverages also apply to this Civil Authority Additional Coverage. The Civil Authority Additional Coverage is not subject to the Limits of Insurance. This Additional Coverage is not subject to a deductible. m. Forgery and Alteration (1) We will pay for loss resulting directly from forgery or alteration of any check, draft, promissory note, bill of exchange or similar written promise of payment in "money," that you or your agent has issued, or that was issued by someone who impersonates you or you agent. (2) If you are sued for refusing to pay the check, draft, promissory note, bill of exchange or similar written promise of payment in "money," on the basis that it has been forged or altered, and you have our written consent to defend against the suit, we will pay for any reasonable legal expenses that you incur in that defense. (b) Involving a single act or series of (3) The most we will pay for any loss, related acts; including legal expenses, under this is considered one occurrence. Additional Coverage is $2,500. . Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 5 of 17 n. Money Orders and Counterfeit Paper Currency We will pay for loss due to the good faith acceptance of: (1) any U.S. or Canadian post office, express company, or national or state (or Canadian) chartered bank money order that is not paid upon presentation to the issuer; or (2) Counterfeit United States or Canadian paper currency; in exchange for merchandise, "money" or services or as part of a normal business transaction. The most we will pay for any loss under this Additional Coverage is $1,000. 6. Coverage Extensions In addition to the Limits of Insurance, you may extend the insurance provided by this policy as provided below. Except as otherwise provided, the following Extensions apply to property located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises. a. Newly Acquired or Constructed Property (1) You may extend the insurance that applies to Buildings to apply to: (a) Your new buildings while being built on the described premises; and (b) Buildings you acquire at locations, other than the described premises, intended for: (i) Similar use as the building described in the Declara- tions; or (ii) Use as a warehouse. The most we will pay for loss or damage under this Extension is 100% of the Limits of Insurance for Buildings shown in the Declarations, but not more than $250,000 at each building. (2) You may extend the insurance that applies to Business Personal Property to apply to that property at any location you acquire. The most we will pay for loss or damage under this Extension is 50% of the Limits of Insurance for Business Personal Property shown in the Dec- larations, but not more than $100,000 at each building. (3) Insurance under this Extension for each newly acquired or constructed property will end when any of the following first occurs: (a) This policy expires. (b) 60 days expire after you acquire or begin to construct the properly; or (c) You report values to us. We will charge you additional premium for values reported from the date construction begins or you acquire the property. b. Personal Property Off Premises You may extend the insurance that applies to Business Personal Property to apply to covered Business Personal Property, other than "money" and "securities," "valuable papers and records," or accounts receivable, while it is in course of transit or temporarily at a premises you do not own, lease or operate, including fairs and exhibits. The most we will pay for loss or damage under this Extension is $10,000, but not more than $1,000 if loss or damage is caused by theft. This Extension does not apply to: (1) Building materials and supplies not at- tached as part of a building or structure. (2) Builders' machinery, tools, and equipment you own or that are entrusted to you. c. Personal Effects You may extend the insurance that applies to Business Personal Property to apply to personal effects owned by you, your officers, your partners or your employees. This Extension does not apply to tools or equipment used in your business. The most we will pay for loss or damage under this Extension is $2,500 at each described premises. Our payment for loss or damage under this Extension will only be for the account of the owners of the personal effects. We may adjust losses with the owners of the lost or damaged personal effects if other than you. If we pay the owners, such payments will satisfy your claims against us for the owners' personal effects. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Paae 6 of 17 d. Outdoor Property (1) You may extend the insurance provided by this policy to apply to your outdoor fences, radio and television antennas (including satellite dishes) and their lead-in wiring, masts or towers, trees, shrubs and plants, including debris removal expense, caused by or resulting from any of the following causes of loss: (a) Fire; (b) Lightning; (c) Explosion; (d) Riot or Civil Commotion; or (e) Aircraft. The most we will pay for loss or damage under this Extension is: (a) $1,000 for outdoor fences, radio and television antennas; and (b) $2,500 for trees, shrubs and plants, but not more than $500 for any one tree, shrub or plant. (2) You may extend the insurance provided by this policy to apply to your outdoor signs (other than signs attached to buildings), including debris removal expense, caused by or resulting from any Covered Cause of Loss. The most we will pay for loss or dam- age under this Extension is $2,500. e. Accounts Receivable Coverage You may extend the insurance that applies to Business Personal Property to apply to accounts receivable. We will pay: (1) All amounts due from your customers that you are unable to collect; (2) Interest charges on any loan required to offset amounts you are unable to collect pending our payment of these amounts; (3) Collection expenses in excess of your normal collection expenses that are made necessary by loss or damage; and (4) Other reasonable expenses that you incur to re-establish your records of accounts receivable; that result from direct physical loss or damage by any Covered Causes of Loss to your records of accounts receivable. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 The most we will pay under this Extension for loss or damage in any one occurrence at the described premises is $5,000. For accounts receivable not at the described premises, the most we will pay is $2,500. f. Valuable Papers and Records - Cost of Research You may extend the insurance that applies to Business Personal Property to apply to your costs to research, replace or restore the lost information on lost or damaged "valuable papers and records," including those which exist on electronic or magnetic media, for which duplicates do not exist. The most we will pay under this Extension is $5,000 at each described premises. For "valuable papers and records" not at the described premises, the most we will pay is $2,500. B. EXCLUSIONS 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. a. Ordinance or Law The enforcement of any ordinance or law. (1) Regulating the construction, use or repair of any property; or (2) Requiring the tearing down of any property, including the cost of removing its debris. b. Earth Movement (1) Any earth movement (other than sink- hole collapse), such as an earthquake, landslide, mine subsidence or earth sinking, rising or shifting. But if loss or damage by fire or explosion results, we will pay for that resulting loss or damage. (2) Volcanic eruption, explosion or ef- fusion. But if loss or damage by fire, building glass breakage or volcanic action results, we will pay for that resulting loss or damage. Volcanic action means direct loss or damage resulting from the eruption of a volcano when the loss or damage is caused by: (a) Airborne volcanic blast or airborne shock waves; (b) Ash, dust, or particulate matter; or Page 7 of 17 (c) Lava flow. All volcanic eruptions that occur within any 168-hour period will constitute a single occurrence. Volcanic action does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss of or damage to Covered Property. c. Governmental Action Seizure or destruction of property by order of governmental authority. But we will pay for acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread, if the fire would be covered under this policy. d. Nuclear Hazard Nuclear reaction or radiation, or radioactive contamination, however caused. But if loss or damage by fire results, we will pay for that resulting loss or damage. e. Power Failure The failure of power or other utility service supplied to the described premises, how- ever caused, if the failure occurs away from the described premises. But if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage. f. War and Military Action (1) War, including undeclared or civil war; (2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these. g. Water (1) Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not; (2) Mudslide or mudflow; (3) Water that backs up from a sewer or drain; or (4) Water under the ground surface pressing on, or flowing or seeping through. (a) Foundations, walls, floors or paved surfaces; (b) Basements, whether paved or not; or (c) Doors, windows or other openings. But if loss or damage by fire, explosion or sprinkler leakage results, we will pay for that resulting loss or damage. 2. We will not pay for loss or damage caused by or resulting from any of the following: a. Electrical Apparatus: Artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances or wires. But if loss or damage by fire results, we will pay for that resulting loss or damage. b. Consequential Losses: Delay, loss of use or loss of market. c. Smoke, Vapor, Gas: Smoke, vapor or gas from agricultural smudging or industrial operations. d. Maintenance Types of Loss: (1) Wear and tear; (2) Rust, corrosion, fungus, decay, deterior- ation, hidden or latent defect or any quality in property that causes it to damage or destroy itself, (3) Smog; (4) Settling, cracking, shrinking or expansion; (5) Insects, birds, rodents or other animals; (6) Mechanical breakdown, including rupture or bursting caused by centrifugal force; or (7) The following causes of loss to personal property: (a) Dampness or dryness of atmosphere; (b) Changes in or extremes of temperature; or (c) Marring or scratching. But if loss or damage by the "specified causes of loss" or building glass breakage results, we will pay for that resulting loss or damage. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Paae 8 of 17 e. Steam Apparatus: Explosion of steam boilers, steam pipes, steam engines or steam turbines owned or leased by you, or operated under your control. But if loss or damage by fire or combustion explosion results, we will pay for that resulting loss or damage. We will also pay for loss or damage caused by or resulting from the explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages through which the gases of combustion pass. f. Frozen Plumbing: Water, other liquids, powder or molten material that leaks or flows from plumbing, heating, air con- ditioning or other equipment (except fire protective systems) caused by or resulting from freezing, unless: (1) You do your best to maintain heat in the building or structure; or (2) You drain the equipment and shut off the supply if the heat is not maintained. g. Dishonesty: Dishonest or criminal act by you, any of your partners, employees, directors, trustees, authorized represent- atives or anyone to whom you entrust the property for any purpose: (1) Acting alone or in collusion with others; or (2) Whether or not occurring during the hours of employment. This exclusion does not apply to acts of destruction by your employees; but theft by employees is not covered. h. False Pretense: Voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense. Exposed Property: Rain, snow, ice or sleet to personal property in the open. Collapse: Collapse, except as provided in the Additional Coverage for Collapse. But if loss or damage by a Covered Cause of Loss results at the described premises, we will pay for that resulting loss or damage. k. Pollution: We will not pay for loss or damage caused by or resulting from the release, discharge or dispersal of "pol- lutants" unless the release, discharge or dispersal is itself caused by any of the "specified causes of loss." But if loss or damage by the "specified causes of loss" results, we will pay for the resulting damage caused by the "specified cause of loss." 3. We will not pay for loss or damage caused by or resulting from any of the following. But if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage. a. Weather Conditions: Weather conditions. But this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss or damage. b. Acts or Decisions: Acts or decisions, including the failure to act or decide, of any person, group, organization or govern- mental body. c. Negligent Work: Faulty, inadequate or defective: (1) Planning, zoning, development, survey- ing, siting; (2) Design, specifications, workmanship, repair, construction, renovation, remodel- ing, grading, compaction; (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance; of part or all of any property on or off the described premises. 4. Business Income and Extra Expense Exclusions. We will not pay for: a. Any Extra Expense, or increase of Business Income loss, caused by or resulting from: (1) Delay in rebuilding, repairing or replacing the property or resuming "operations," due to interference at the location of the rebuilding, repair or replacement by strikers or other persons; or (2) Suspension, lapse or cancellation of any license, lease or contract. But if the suspension, lapse or cancellation is directly caused by the suspension of "operations," we will cover such loss that affects your Business Income during the "period of restoration." b. Any other consequential loss. C. LIMITS OF INSURANCE The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 9 of 17 2. The most we will pay for loss of or damage to outdoor signs attached to buildings is $2,500 per sign in any one occurrence. 3. The limits applicable to the Coverage Exten- sions and the following Additional Coverages are in addition to the Limits of Insurance: a. Fire Department Service Charge; b. Pollutant Clean Up and Removal; c. Arson Reward; d. Fire Extinguisher Recharge; and e. "Money" and "Securities." 4. Building Limit - Automatic Increase a. The Limit of Insurance for Buildings will automatically increase by the annual percentage shown in the Declarations. b. The amount of increase will be: (1) The Building limit that applied on the most recent of the policy inception date, the policy anniversary date, or any other policy change amending the Building limit, times (2) The percentage of annual increase shown in the Declarations, expressed as a decimal (example: 8% is.08), times (3) The number of days since the beginning of the current policy year of the effective date of the most recent policy change amending the Building limit, divided by 365. Example: If: The applicable Building limit is $100,000. The annual percentage increase is 8%. The number of days since the beginning of the policy year (or last policy change) is 146. The amount of increase is $100,000 x .08 x 146 - 365 = $3,200. 5. Business Personal Property Limit - Seasonal Increase a. The Limit of Insurance for Business Per- sonal Property will automatically increase by 25% to provide for seasonal variations. b. This increase will apply only if the Limit of Insurance shown for Business Personal Property in the Declarations is at least 100% of your average monthly values during the lesser of: (1) The 12 months immediately preceding the date the loss or damage occurs; or (2) The period of time you have been in business as of the date the loss or damage occurs. D. DEDUCTIBLES 1. We will not pay for loss or damage in any one occurrence until the amount of loss or damage exceeds the Deductible shown in the Declarations. We will then pay the amount of loss or damage in excess of the Deductible up to the applicable Limit of Insurance. 2. Regardless of the amount of the Deductible, the most we will deduct from any loss or damage under all of the following Optional and Additional Coverages in any one occurrence is $250: a. "Money" and "Securities"; b. Employee Dishonesty; c. Exterior Grade Floor Glass; and d. Outdoor Signs. But this $250 deductible will not increase the deductible shown in the Declarations. This deductible will be used to satisfy the requirements of the deductible in the Declarations. 3. No deductible applies to the following Additional Coverages: a. Fire Department Service Charge; b. Business Income; c. Extra Expense; d. Arson Reward; e. Fire Extinguisher Recharge; and f. Civil Authority. E. PROPERTY LOSS CONDITIONS 1. Abandonment There can be no abandonment of any property to us. 2. Appraisal If we and you disagree on the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will: a. Pay its chosen appraiser; and Includes Copyrighted Material of Insurance Services Office. Inc 1984 19RR b. Bear the other expenses of the appraisal and umpire equally. If there is an appraisal, we will still retain our right to deny the claim. 3. Duties In the Event Of Loss Or Damage You must see that the following are done in the event of loss or damage to Covered Property: a. Notify the police if a law may have been broken. b. Give us prompt notice of the loss or damage. Include a description of the property involved. c. As soon as possible, give us a description of how, when and where the loss or damage occurred. d. Take all reasonable steps to protect the Covered Property from further damage by a Covered Cause of Loss. If feasible, set the damaged property aside and in the best possible order for examination. Also keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim. This will not increase the limit of insurance. e. At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed. f. Permit us to inspect the property and records proving the loss or damage. Also permit us to take samples of damaged property for inspection, testing and analysis. g. If requested, permit us to question you under oath at such times as may be reasonably required about any matter relating to this insurance or your claim, including your books and records. In such event, your answers must be signed. h. Send us a signed, swom statement of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms. i. Cooperate with us in the investigation or settlement of the claim. j. Resume all or part of your "operations" as quickly as possible. b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred. 5. Limitation - Electronic Media and Records We will not pay for any loss of Business Income caused by direct physical loss of or damage to Electronic Media and Records after the longer of: a. 60 consecutive days from the date of direct physical loss or damage; or b. The period, beginning with the date of direct physical loss or damage, necessary to repair, rebuild or replace with reasonable speed and similar quality, other property at the described premises due to loss or damage caused by the same occurrence. Electronic Media and Records are: a. Electronic data processing, recording or storage media such as films, tapes, discs, drums or cells; b. Data stored on such media; or c. Programming records used for electronic data processing or electronically controlled equipment. Example No. 1: A Covered Cause of Loss damages a com- puter on June 1. It takes until September 1 to replace the computer, and until October 1 to restore the data that was lost when the damage occurred. We will only pay for the Business Income loss sustained during the period June 1 - September 1. Loss during the period September 2 - October 1 is not covered. Example No. 2: A Covered Cause of Loss results in the loss of data processing programming records on August 1. The records are replaced on October 15. We will only pay for the Business Income loss sustained during the period August 1 - September 29 (60 consecutive days). Loss during the period September 30 - October 15 is not covered. 6. Loss Payment In the event of loss or damage covered by this policy: a. At our option, we will either: 4. Legal Action Against Us (1) Pay the value of lost or damaged No one may bring a legal action against us property; under this insurance unless: (2) Pay the cost of repairing or replacing a. There has been full compliance with all of the lost or damaged property; the terms of this insurance; and Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 11 of 17 (3) Take all or any part of the property at an agreed or appraised value; or (4) Repair, rebuild or replace the property with other property of like kind and quality. b. We will give notice of our intentions within 30 days after we receive the sworn state- ment of loss. c. We will not pay you more than your financial interest in the Covered Property. d. We will determine the value of Covered Property as follows: (1) At replacement cost (without deduction for depreciation), except as provided in (2) through (7) below. (a) You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim on a replacement cost basis if you notify us of your intent to do so within 180 days after the loss or damage. (b) We will not pay on a replacement cost basis for any loss or damage: (i) Until the lost or damaged property is actually repaired or replaced; and (ii) Unless the repairs or replace- ment are made as soon as reasonably possible after the loss or damage. (c) We will not pay more for loss or damage on a replacement cost basis than the least of: (i) The cost to replace, on the same premises, the lost or damaged property with other property: i. Of comparable material and quality; and ii. Used for the same pur- pose; or apply to Buildings. Instead, we will determine the value of Buildings at actual cash value. (3) The following property at actual cash value: (a) Used or second-hand merchandise held in storage or for sale; (b) Property of others-, (c) Manuscripts; (d) Works of art, antiques or rare articles, including etchings, pictures, statuary, marbles, bronzes, por- celains and bric-a-brac. (4) Glass at the cost of replacement with safety glazing material if required by law. (5) Tenants' Improvements and Better- ments at: (a) Replacement cost if you make repairs promptly. (b) A proportion of your original cost if you do not make repairs promptly. We will determine the propor- tionate value as follows: (i) Multiply the original cost by the number of days from the loss or damage to the expiration of the lease; and (ii) Divide the amount determined in (1) above by the number of days from the installation of improvements to the expiration of the lease. If your lease contains a renewal option, the expiration of the renewal option period will replace the expiration of the lease in this procedure. (c) Nothing if others pay for repairs or replacement. (6) "Valuable Papers and Records," includ- ing those which exist on electronic or magnetic media (other than prepack- aged software programs), at the cost of (a) Blank materials for reproducing the records; and (ii) The amount you actually (b) Labor to transcribe or copy the spend that is necessary to records. repair or replace the lost or (7) Applicable only to the "Money" and damaged property. "Securities" Additional Coverage and (2) If the "Actual Cash Value - Buildings" the Employee Dishonesty Optional option applies, as shown in the Dec- Coverage: larations, paragraph (1) above does not (a) "Money" at its face value; and Includes Copyrighted Material of Insurance 44 nA\ (b) "Securities" at their value at the close of business on the day the loss is discovered. (8) Applicable only to the Accounts Receivable Extension of Coverage: (a) If you cannot accurately establish the amount of accounts receivable outstanding as of the time of loss or damage, the following method will be used: (i) Determine the total of the average monthly amounts of accounts receivable for the 12 months immediately preceding the month in which the loss or damage occurs; and (ii) Adjust that total for any normal fluctuations in the amount of accounts receivable for the month in which the loss or damage occurred or for any demonstrated variance from the average for that month. (b) The following will be deducted from the total amount of accounts receiv- able, however that amount is established: The amount of the accounts for which there is no loss or damage; (ii) The amount of the accounts that you are able to re- establish or collect; (iii) An amount to allow for prob- able bad debts that you are normally unable to collect; and (iv) All unearned interest and service charges. e. Our payment for loss of or damage to personal property of others will only be for the account of the owners of the property. We may adjust losses with the owners of lost or damaged property if other than you. If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the Covered Property. g. We will pay for -covered loss or damage within 30 days after we receive the sworn statement of loss if: (1) You have complied with all of the terms of this policy; and (2) (a) We have reached agreement with you on the amount of loss; or (b) An appraisal award has been made. 7. Recovered Property If either you or we recover any property after loss settlement, that party must give the other prompt notice. At your option, you may retain the property. But then you must return to us the amount we paid to you for the property. We will pay recovery expenses and the expenses to repair the recovered property, subject to the Limit of Insurance. 8. Resumption of Operations We will reduce the amount of your: a. Business Income loss, other than Extra Expense, to the extent you can resume your "operations," in whole or in part, by using damaged or undamaged property (including merchandise or stock) at the described premises or elsewhere. b. Extra Expense loss to the extent you can return "operations" to normal and discon- tinue such Extra Expense. 9. Vacancy If the building where loss or damage occurs has been vacant for more than 60 consecutive days before that loss or damage, we will: a. Not pay for any loss or damage caused by: (1) Vandalism; (2) Sprinkler leakage, unless you have protected the system against freezing; (3) Building glass breakage; (4) Water damage; (5) Theft; or (6) Attempted Theft. b. Reduce the amount we would otherwise pay for the loss or damage by 15%. f. We may elect to defend you against suits arising from claims of owners of property. A building is vacant when it does not We will do this at our expense. contain enough business personal property to conduct customary "operations." Buildings under construction are not considered vacant. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 13 of 17 F. PROPERTY GENERAL CONDITIONS 1. Control of Property Any act or neglect of any person other than you beyond your direction or control will not affect this insurance. The breach of any condition of this Coverage Form at any one or more locations will not affect coverage at any location where, at the time of loss or damage, the breach of condition does not exist. 2. Mortgage Holders a. The term "mortgage holder" includes trustee b. We will pay for covered loss of or damage to buildings or structures to each mortgage holder shown in the Declara- tions in their order of precedence, as interests may appear. c. The mortgage holder has the right to receive loss payment even if the mortgage holder has started foreclosure or similar action on the building or structure. d. If we deny your claim because of your acts or because you have failed to comply with the terms of this policy, the mortgage holder will still have the right to receive loss payment if the mortgage holder: (1) Pays any premium due under this policy at our request if you have failed to do so; (2) Submits a signed, sworn statement of loss within 60 days after receiving notice from us of your failure to do so; and (3) Has notified us of any change in ownership, occupancy or substantial change in risk known to the mortgage holder. All of the terms of this policy will then apply directly to the mortgage holder. e. If we pay the mortgage holder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of this policy: At our option, we may pay to the mortgage holder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us. f. If we cancel this policy, we will give written notice to the mortgage holder at least: (1) 10 days before the effective date of cancellation if we cancel for your non-payment of premium; or (2) 30 days before the effective date of cancellation if we cancel for any other reason. g. If we elect not to renew this policy, we will give written notice to the mortgage holder at least 10 days before the expiration date of this policy. 3. No Benefit to Bailee No person or organization, other than you, having custody of Covered Property will benefit from this insurance. 4. Policy Period, Coverage Territory Under this form: a. We cover loss or damage commencing: (1) During the policy period shown in the Declarations; and (2) Within the coverage territory or, with respect to property in transit, while it is between points in the coverage territory. b. The coverage territory is: (1) The United States of America (includ- ing its territories and possessions); (2) Puerto Rico; and (3) Canada. G. OPTIONAL COVERAGES If shown as applicable in the Declarations, the following Optional Coverages also apply. These coverages are subject to the terms and conditions applicable to property coverage in this policy, except as provided below. 1. Outdoor Signs a. We will pay for direct physical loss of or (1) The mortgage holder's rights under the damage to all outdoor signs at the mortgage will be transferred to us to the described premises: extent of the amount we pay; and (1) Owned by you; or (2) The mortgage holder's right to recover (2) Owned by others but in your care, the full amount of the mortgage custody or control. holders claim will not be impaired. Includes Copyrighted Material of Insurance b. Paragraph A.3., Covered Causes of Loss, (4) Rust. and Section B., Exclusions, do not apply to e. This Optional Coverage supersedes all this Optional Coverage, except for limitations in this policy that apply to (1) Paragraph B.1.c., Govemmental Action; exterior grade floor glass. (2) Paragraph B.1.d., Nuclear Hazard; and 3. Employee Dishonesty (3) Paragraph B.1.f., War and Military a. We will pay for direct loss of or damage Action. to Business Personal Property, including c. We will not pay for loss or damage "money" and "securities," resulting from caused by or resulting from: dishonest acts committed by any of your employees acting alone or in collusion (1) Wear and tear; with other persons (except you or your (2) Hidden or latent defect; partner) with the manifest intent to: (3) Rust; (1) Cause you to sustain loss or damage; and also (4) Corrosion; or (2) Obtain financial benefit (other than (5) Mechanical breakdown. salaries, commissions, fees, bonuses, d. The most we will pay for loss or damage promotions, awards, profit sharing, in any one occurrence is the Limit of pensions or other employee benefits Insurance for Outdoor Signs shown in the earned in the normal course of employ- Declarations. ment) for: e. The provisions of this Optional Coverage (a) Any employee; or supersede all other references to outdoor (b) Any other person or organization. signs in this policy. b. We will not pay for loss or damage: Exterior Grade Floor Glass 2 . (1) Resulting from any dishonest or a. We will pay for direct physical loss of or criminal act that you or any of your damage to all exterior grade floor and partners commit whether acting alone basement glass, including all lettering and or in collusion with other persons. ornamentation, located at the described (2) The only proof of which as to its premises and: existence or amount is: (1) Owned by you; or (a) An inventory computation; or (2) Owned by others but in your care, custody or control. (b) A profit and loss computation. b. We will also pay for necessary: c. The most we will pay for loss or damage in any one occurrence is the Limit of (1) Expenses incurred to put up temporary Insurance for Employee Dishonesty plates or board up openings; shown in the Declarations. (2) Repair or replacement of encasing d. All loss or damage: frames; and (1) Caused by one or more persons; or (3) Expenses incurred to remove or replace obstructions. (2) Involving a single act or series of related acts; c. Paragraph A.3., Covered Causes of Loss, and Section B., Exclusions, do not apply to is considered one occurrence. this Optional Coverage, except for: e. We will pay only for loss or damage you (1) Paragraph B.1.c., Govemmental Action; sustain through acts committed or events occurring during the Policy Period. (2) Paragraph B. 1.d., Nuclear Hazard; and Regardless of the number of years this (3) Paragraph B.1.f., War and Military policy remains in force or the number of Action. premiums paid, no Limit of Insurance cumulates from year to year or period to d. We will not pay for loss or damage period . caused by or resulting from: f. This Optional Coverage does not apply to any (1) Wear and tear; employee immediately upon discovery by. (2) Hidden or latent defect; (1) You; or (3) Corrosion; or Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 15 of 17 (2) Any of your partners, officers or directors not in collusion with the employee; of any dishonest act committed by that employee before or after being hired by you. We will pay only for covered loss or damage discovered no later than one year from the end of the Policy Period. If you (or any predecessor in interest) sustained loss or damage during the period of any prior insurance that you could have recovered under that insurance except that the time within which to discover loss or damage had expired, we will pay for it under this Optional Coverage, provided: (1) This Optional Coverage became effec- tive at the time of cancellation or termination of the prior insurance; and (2) The loss or damage would have been covered by this Optional Coverage had it been in effect when the acts or events causing the loss or damage were committed or occurred. i. The insurance under paragraph h. above is part of, not in addition to the Limit of Insurance applying to this Optional Coverage and is limited to the lesser of the amount recoverable under: (1) This Optional Coverage as of its effective date; or (2) The prior insurance had it remained in effect. 4. Accounts Receivable - Increased Limit Under the Coverage Extension for Accounts Receivable the Limit of Insurance in any one occurrence at the described premises is changed to the amount shown in the Declarations for this Option. 5. Valuable Papers and Records - Increased Limit Under the Coverage Extension for "Valuable Papers and Records" the Limit of Insurance at the described premises is changed to the amount shown in the Declarations for this Option. H. PROPERTY DEFINITIONS 1. "Money" means" a. Currency, coins and bank notes in current use and having a face value; and b. Travelers checks, register checks and money orders held for sale to the public. 2. "Operations" means your business activities occurring at the described premises. 3. "Period of Restoration" means the period of time that: a. Begins with the date of direct physical loss or damage caused by or resulting from any Covered Cause of Loss at the described premises; and b. Ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality. "Period of restoration" does not include any increased period required due to the enforcement of any ordinance or law that: a. Regulates the construction, use or repair, or requires the tearing down of any property; or b. Requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to or assess the effects of "pollutants." The expiration date of this policy will not cut short the "period of restoration." 4. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. 5. "Securities" means negotiable and non- negotiable instruments or contracts representing either "money" or other property and includes: a. Tokens, tickets, revenue and other stamps (whether represented by actual stamps or unused value in a meter) in current use; and b. Evidences of debt issued in connection with credit or charge cards, which cards are not issued to you; but does not include "money." 6. "Specified Causes of Loss" means the following: Fire; lightning; explosion, windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage. a. Sinkhole collapse means the sudden sink- ing or collapse of land into underground empty spaces created by the action of Includes Copyrighted Material of Insurance b. C. water on limestone or dolomite. This cause of loss does not include: (1) The cost of filling sinkholes; or (2) Sinking or collapse of land into man- made underground cavities. Falling objects does not include loss of or damage to: (1) Personal property in the open; or (2) The interior of a building or structure, or property inside a building or structure, unless the roof or an outside wall of the building or structure is first damaged by a falling object. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam. 7. "Valuable Papers - and Records" means inscribed, printed, or written: a. Documents; b. Manuscripts; and c. Records; including abstracts, books, deeds, drawings, films, maps or mortgages. But "valuable papers and records" does not mean: d. "Money" or Securities"; e. Converted Data; f. Programs or instructions used in your data processing operations, including the materials on which the data is recorded. Includes Copyrighted Material of Insurance ACP-0006 (11-99) Services Office, Inc., 1984, 1988 Page 17 of 17 CONTRACTORS THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXCLUSION OF CERTAIN COMPUTER-RELATED LOSSES This endorsement modifies insurance provided under the following: CONTRACTORS SPECIAL PROPERTY COVERAGE FROM including any attached endorsement that may provide specialized coverage on computers. The following exclusion is added to Paragraph B., Exclusions in the Contractors Special Property Coverage Form: We will not pay for loss or damage, caused by the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage. a. The failure, malfunction or inadequacy of: (1) Any of the following, whether belong- ing to any insured or to others: (f) Any other computerized or elec- tronic equipment or components; or (2) Any other products and any services, data or functions that directly or indirectly use or rely upon, in any manner, any of the items listed in Paragraph 1.a.(1) of this endorsement due to the inability to correctly recognize, distinguish, interpret or accept one or more dates or times. An example is the inability of computer software to recog- nize the year 2000. (a) Computer hardware, including microprocessors or other Elec- tronic Data Processing Equipment as may be described elsewhere in the policy; (b) Computer application software or other Electronic Media and Records as may be described elsewhere in the policy; (c) Computer operating systems and related software; (d) Computer networks; (e) Microprocessors (computer chips) not part of any computer system; or b. Any advice, consultation, design, evalua- tion, inspection, installation, maintenance, repair, replacement or supervision provided or done by you or for you to determine, rectify or test for, any potential or actual problems described in Paragraph 1.a. of this endorsement. 2. If excluded loss or damage, as described in Paragraph 1.a. of this endorsement results in a "Specified Cause of Loss" under the Contractors Special Property Coverage Form, we will pay only for the loss or damage caused by such "Specified Cause of Loss." 3. We will not pay for repair, replacement or modification of any items in 1.a.(1) or 1.a.(2) of this endorsement to correct any deficien- cies or change any features. Includes Copyrighted Material of Insurance ACP-0087 (4-98) Services Office, Inc., 1998 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. FUNGI AMENDATORY ENDORSEMENT This endorsement modifies insurance provided under the following: BUSINESSOWNERS SPECIAL PROPERTY COVERAGE FORM BUSINESSOWNERS STANDARD PROPERTY COVERAGE FORM BUSINESS PROVIDER SPECIAL PROPERTY COVERAGE FORM BUSINESS PROVIDER STANDARD PROPERTY COVERAGE FORM CONTRACTORS SPECIAL PROPERTY COVERAGE FORM The following Exclusion is added: We will not pay for loss or damage caused directly or indirectly by "fungi" or due to the existence of "fungi", regardless of the cause of the growth, proliferation or accretion. This includes growth, proliferation or accretion of "fungi" that is caused by or results from a Covered Cause of Loss or is a consequence of a loss covered under this policy, except as provided in the Fungi Clean Up and Removal Additional Coverage. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss from "fungi." The following Additional Coverage is added: "Fungi" Clean Up and Removal We will pay your expense to clean up and remove "fungi" from the described premises if the "fungi" is caused by or results from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date on which the Covered Cause of Loss occurs. This Additional Coverage applies to costs to test for, monitor or assess the existence, concentration or effects of "fungi" if there is physical evidence of a Covered Cause of Loss that may give rise to the growth of "fungi". The most we will pay under this Additional Coverage for each described premises is $10,000 for the sum of all covered expenses arising out of Covered Causes of Loss occurring during each separate 12 month period of this policy. The following is added to H. Definitions: "Fungi" includes any type or form of fungus, mold, mildew, spores, algae, smut, rusts or rot and decay organisms and similar or related organisms and any mycotoxin, substance, compound, chemicals, mists or vapors produced by any "fungi" in any form and any by-products and waste produced by "fungi". As used in this definition, rot and decay organism means any living organism that causes decomposition of physical property. Cas. 6118 (7-01) ?ti?e,? ? . -6?,,0 234,2903 el Claims Nationwide Insurance 09-07 05 a m 03-14-2007 10 /17 11279 Perry Highway, Suite 402 *Wexford, PA 15090** Bruce M Dunlavy Dba Dunlavy Co Po Box 23 Boiling Springs, PA 17007 OUR INSURED: Bruce M Dunlavy Dba Dunlavy Co OUR CLAIM NUMBER: 58 37 AC 538649 07312003 51 DATE OF LOSS: 07-31-2003 VIA CERTIFIED MAIL; RETURN RECEIPT REQUESTED Dear Mr. Dunlavy, August 11, 2005 This will acknowledge receipt of a lawsuit entitled Crockett Log Homes of PA, v. Donald E. Vernet and Brenda L, Vernet v. Natural Building Systems, Inc., Bruce Dunleavy, and Roy Stoltzfus and filed in the Court of Common Pleas of Cumberland County, in the Civil Action - Law Department of Pennsylvania with Case No.: 2004-4108.. Due to the specialized nature of a portion of your claim, specifically the mold, the Nationwide Insurance Environmental Claim Unit will be assisting me in the investigation of this claim. Mr. Richard A. Rodriguez of that unit has been assigned to this case. Our records indicate that Nationwide provided a Contractors Liability Coverage Form policy (ACP 0007) with policy number: 58AC-243996-3001 H. This policy is modified by additional endorsements. One which is relevant to this claim is the "Total Fungi Exclusion" endorsement (CAS 6117 07-01). This endorsement was in effect for both your prior policy (8/15/03-04) and your current policy (8/15/04-05). The facts, as we understand indicate that Crockett Log Homes of PA (Crockett) initiated a lawsuit against one of their customers, Donald and Brenda Vernet (Vernet), seeking the balance of payment on one of their contract sales relating to the sale of a residential log building. The sales contract was initiated in July 2003 and construction commenced the following month. It appears the house was completed in May, 2004. Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. ` 610 23A 2903 BI Claims Nationwide Insurance 09:07:42 a.m 03-14-2007 11 !17 In response to the lawsuit, Vemet filed a Counterclaim, alleging they are withholding payment and citing numerous deficiencies and construction defects with the building. Upon receipt of the Counterclaim, Crockett amended their complaint and added several defendants, including Bruce Dunleavy [sic], in your capacity as a subcontractor and allegedly responsible for "... the installation of the shell of the house...". The other two defendants consisted of the local general contractor (Natural Building Systems) and another subcontractor (Roy Stoltzfus) who allegedly installed the buildings steps and railings. In the amended complaint, Crockett references the construction defect allegations raised in the Counterclaim and seeks a determination that if such were found to have occurred, the additional defendants should be found to be jointly and severally liable for the Counterclaim; or in the alternative, liable to Crockett for indemnity or contribution for the Counterclaim. Our review has determined that several coverage issues exist. Please refer to Section A. Coverages, Part 1. Business Liability, subsection b. (1) (a) and (b) which states: "This insurance applies: (1) To `bodily injury' and `property damage' only if: (a) The `bodily injury' or `property damage' is caused by an `occurrence' that takes in the `coverage territory'; and (b) The `bodily injury' or `property damage' occurs during the policy period." Currently, it is difficult to determine which policy or policies may potentially apply to this claim. Our concern is whether this claim constitutes a claim for "property damage" or "bodily injury" occurring during the policy period and whether there is an "occurrence" as these terms is defined in any of the policies. Please refer to Section B. Exclusions, Part 1. Applicable to Business Liability Coverage, subsections k(5) and (6) which states: "This insurance does not apply to: k. `Property damage' to: (5) That particular part of real property on which you or any contractor or Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. ` 610 2342903 BI Claims Nationwide Insurance 09-08:17 a.m 03-14-2007 12 /17 subcontractor working directly or indirectly on your behalf is performing operations, if the `property damage' arises out of those operations; or (6) That particular part of any property that must be restored, repaired or replace because `your work' was incorrectly performed on it. Subject to the policy provisions referenced above, there would be no possibility of coverage for property damage arising out of work you performed as a contractor. The counterclaim which has been filed contains a count for Breach of Contract. Please refer to Section B. Exclusions, Part 1. Applicable to Business Liability Coverage, subsection b. "This insurance does not apply to: 'Bodily injury' or 'property damage' for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) Assumed in a contract or agreement that is an'insured contract', provided the 'bodily injury' or'property damage' occurs subsequent to the execution of the contract or agreement; or (2) That the insured would have in the absence of the contract agreement." An 'insured contract' is defined in your policy under Definitions. Section E(6) as : "a. A lease of premises; b. A sidetrack agreement; c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality. e. An elevator maintenance agreement f. That part of any other contract or agreement pertaining to your business ( including an indemnification to a municipality in connection with work performed for a municipality) under which you assume the tort liability of any other party to pay for 'bodily injury' or 'property damage' to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. 610 234,2903 BI Claims Nationwide Insurance 0908.49 a.rn 03-14-2007 13 i17 agreement. An 'insured contract' does not include that part of any contract or agreement: a. That indemnifies any person or organization for 'bodily injury' or 'property damage' arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road beds, tunnel, underpass or crossing; b. That indemnifies an architect , engineer or surveyor for injury or damage arising out of: (1) Preparing, approving or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; or (2) Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; c. Under which the insured, if an architect, engineer or surveyor assumes liability for an injury or damage arising out of the insured's rendering or failure to render professional services, including those listed in (b) above and supervisory, inspection or engineering services; or d. That indemnifies any person or organization for damage by fire to premises rented or loaned to you." Since this action includes allegations for a breach of contract under your policy, there is no applicable coverage for breach of contract. The counterclaim contains a count for Unfair Trade Practices. There would be no coverage for the count of Unfair Trade Practices as it does not meet the definition of property damage, bodily injury, personal injury, advertising injury or occurrence. The policy of insurance states in Section A. Coverages %. Business Liability a. We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury,' 'property damage,' 'personal injury,' or 'advertising injury' to whictf this insurance applies.".. . "b. This insurance applies: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. 61,0 234. 2903 BI Claims Nationwide Insurance 0909:33 a rn 03-14-2007 14 117 L .W (1) To bodily injury' and 'property damage' only if: (a) The 'bodily injury' or 'property damage' is caused by an 'occurrence' that takes place in the 'coverage territory'; and (b) The 'bodily injury' or 'property damage' occurs during the policy period. (2) To: (a) 'Personal injury' caused by an offense arising out of your business, excluding advertising, publishing, broadcasting or telecasting done by or for you; (b) 'Advertising injury' caused by an offense committed in the course of advertising your goods, products or services; but only if the offense was committed in the 'coverage territory' during the policy period. Property damages is defined in your policy in section F. Liability and medical Expenses Definitions, subsection 12 as: " a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the'occurrence' that caused it." Bodily Injury is defined in your policy in section F. Liability and Medical Expenses Definitions, subsection 3 as: "Bodily Injury means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Occurrence is defined in your policy in section F. Liability and Medical Expenses Definitions, subsection 9 as: "Occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions" Personal injury is defined in your policy in section F. Liability and Medical Expenses Definitions, subsection 10 as: Any person who knowingly and with intent to defraud any insurance company or other person tiles an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. 61,0 234.2903 BI Claims Nationwide Insurance 0910 05 a.m. 03-14-2007 15 /17 ""Personal Injury means injury, other than 'bodily injury,' arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, by or on behalf of its owner, landlord or lessor; d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or e. Oral or written publication of material that violates a person's right of privacy. Advertising injury is defined in your policy in section F. Liability and Medical Expenses Definitions, subsection 1 as: "Advertising Injury means injury arising out of one or more of the following offenses: a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; b. Oral or written publication of material that violates a person's right of privacy; c. Misappropriation of advertising ideas or style of doing business; or d. Infringement of copyright, title or slogan. Since this action includes allegations for unfair trade practices under your policy, there is no applicable coverage for unfair trade practices. As referenced earlier, there is also an endorsement which modifies insurance provided under your Contractor's Liability Coverage Form policy. The "Total Fungi Exclusion" endorsement states: "1. Exclusion in. under the Paragraph 1.; Applicable to Business Liability Coverage of Section B. Exclusions is replaced by the following: B. Exclusions This insurance does not apply to: m. Damage To Your Work Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. X10 23A 2903 BI Claims Nationwide Insurance 09 10 39 a.m. 03-14-2007 16/17 1, O%Ki. `Property damage' to `your work' arising out of it or any part of it and included in the `products-completed operations hazard'. This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor unless the damage would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, presence of any `fungi'. "2. The following exclusions are added to paragraph 1. Applicable to Business Liability Coverage of Section B. Exclusions: B. Exclusions This insurance does not apply to: a. Bodily injury' or `property damage' which would not have occurred, in whole or in part, but for the actual, alleged, or threatened inhalation of, ingestion of, contact with, absorption of, exposure to, existence of, or presence of any `fungi.' c. Any loss, cost or expense arising out of the testing for, monitoring, cleaning up, removing, containing, treating, detoxifying; neutralizing, remediating or disposing of, or any way responding to, or assessing the affects of, `fungi' by any insured or by anyone else. 4. The following definitions are added to the Definitions section: "'Fungi' includes any type or form of fungus, mold, mildew, spores, algae, smut, rusts, or rot and decay organisms, any similar or related organisms and any mycotoxins, substance, compounds, chemicals, mist, or vapor produced by a fungi in any form or any byproducts or wastes produced by fungi, but does not include any fungi intended to be edible. Rot and decay organism means any living organism that causes decomposition of physical property." Subject to the policy provisions referenced above, there would be no possibility of coverage for bodily injury or property damage related to mold or the costs associated with the testing, cleanup or remediation of same. Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. 610 gal 2903 BI Claims Nationwide Insurance 09:1114 a m. 03-14-2007 17117 ILI Not withstanding these concerns, Nationwide is willing to participate in the defense of Bruce M. Dunlavy. We have retained the services of Jacobs and Associates to protect your interests. We will continue in our investigation of this matter. This investigation will continue to be subject to a reservation of rights. However, the above-cited reasons for our reservation of rights/denial of coverage are not meant to be exhaustive. Nationwide specifically reserves its right to cite and invoke other coverage defenses should their applicability become apparent. Any action taken by Nationwide, its agents, employees, or other representatives shall not be deemed to be a waiver of or estoppel to these rights. Should you become aware of or possess additional information which you believe bears upon the issue of coverage, please forward that information for our review. Should you have any questions concerning the above, please do not hesitate to contact the undersigned. Thank you for bringing this claim to our attention, and we look forward to your continued cooperation and assistance. Very truly yours, NATIONWIDE MUTUAL FIRE INSURANCE COMPANY Keith Bader Claims Department 1-(800)985-1057 Ext. 5665 cc: Jacobs and Associates Agent Cook Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such a person to criminal and civil penalties. \ \ ? C'y !tea 4` ry -? t Michael F. Socha, Esquire I.D.#200988 GOLDBERG KATZMAN, P.C. 320 Market Street P. O. Box 1268 Harrisburg, PA 17108-1268 (717) 234-4161; (717) 2344161 (facsimile) Counsel for Plaintiff NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, V. BRUCE DUNLAVY, d/b/a DUNLAVY NO. 07-1802 Civil CONSTRUCTION, CROCKETT LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC. and ROY STOLTZFUS ENTRY OF APPEARANCE Please enter the appearance of Thomas E. Brenner, Esquire and Michael F. Socha, Esquire, of Goldberg Katzman, P.C., on behalf of Defendant, Crockett Log Homes of PA, Inc. GOLDBERG KATZMAN, P.C. Thomas E. Brenner, Esquire Attorney ID #32085 Michael F. Socha, Esquire Attorney ID # 200988 Y.O. Box 1268 Harrisburg, PA 17108-1268 717-234-4161 Attorney for Defendant, Crockett Log Homes of PA, Inc. Date: 4/24/07 CERTIFICATE OF SERVICE I hereby certify that on the 24`h day of April, 2007, I served a copy of the foregoing document upon the person(s) indicated below by depositing a copy of the same in the United States mail, postage prepaid at Harrisburg, Pennsylvania and addressed as follows: W. Darren Powell, Esquire 305 N. Front Street Harrisburg, PA 17108-0999 JoAnne E. Kinzel, Esquire Jacobs & Associates 214 Senate Avenue, Suite 503 Camp Hill, PA 17011 Barbara Sumple-Sullivan, Esquire 549 Bridge Street New Cumberland, PA 17070 Jennifer Rood, Esquire Bernstein Shur 670 N. Commercial Street, Suite 108 P.O. Box 1120 Manchester, NH 03105-1120 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 Michael F. Socha, Esquire Attorney ID # 200988 Attorney for Defendant, Crockett Log Homes of PA, Inc. W. Darren Powell, Esquire THOMAS, THOMAS & HAFER, LLP 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attomeys for Nationwide Mutual Fire Insurance Company NATIONWIDE MUTUAL FIRE INSURANCE COMPANY V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION - LAW C N O. O'7- fPO ;. UI. C PRAECIPE TO REINSTATE' COMPLAINT TO THE PROTHONOTARY: Please reinstate the Complaint, a copy of which is attached hereto. Respectfully submitted, & HAF By: Date: ./ 497778.1 Attorney I.D. No. 68953 305 North Front Street, 6th Floor P.O. Box 999 Harrisburg, PA 17108-0999 (717) 441-7057 CERTIFICATE OF SERVICE AND NOW, thi&,fLZPday of April 2007, I, Tammie L. Berkheimer, of the law firm of Thomas, Thomas & Hafer, LLP, hereby certify that I sent a true and correct copy of the foregoing document by placing a copy of the same in the United States Mail, postage prepaid, to the following: Bruce Dunlavy d/b/a Dunlavy Construction 1217 Indian Peg Road Mechanicsburg, PA 17055 Crocket Log Homes of PA, Inc. 58 Sunset Drive Mechanicsburg, PA 17050 Donald E. Vernet 3111 Enola Drive Carlisle, PA 17013 Brenda L. Vernet 3111 Enola Drive Carlisle, PA 17013 Natural Building Systems, Inc. 35 Old Route 12N Westmoreland, New Hampshire 03467 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 ammie L. 497786.1 7 V C7 °UtxS r-I J C?? }? sin =d .-G rc.. Barbara Sumple-Sullivan, Esquire Supreme Court #32317 549 Bridge Street New Cumberland, PA 17070 (717) 774-1445 NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. CIVIL ACTION - LAW BRUCE DUNLAVY, d/b/a DUNLAVY NO. 2007 - 1802 CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET and BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, : INC., and ROY STOLTZFUS, Defendants DEFENDANTS', DONALD E. VERNET AND BRENDA L. VERNET, ANSWER TO COMPLAINT FOR DECLARATORY JUDGMENT 1. Admitted.. 2. Admitted. 3. Admitted. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. 8. Admitted. 9. Denied as stated. The Complaint and the contract are written documents which speak for themselves and Defendant Vernets deny the accuracy and 1 completeness of Plaintiff's attempt to characterize, describe, paraphrase or quote selectively therefrom. 10. Denied as stated. The Complaint is a written document which speaks for itself and Defendant Vernets deny the accuracy and completeness of Plaintiff's attempt to characterize, describe, paraphrase or quote selectively therefrom. 11. Admitted with the clarification that the Defendant Vernets alleged many more deficiencies than just the installation of wood posts in lieu of steel posts reinforced with footers. Defendant Vernets have averred elements of water damage including property loss and mold infestation of the home. It is further averred that prior to trial, amendment to include additional damages will be made. 12. Admitted. 13. Admitted. 14. Admitted. 15. Denied. After reasonable investigation, Defendant Vernets are without the knowledge as to the truth of the averment and proof thereof is demanded. 16. Denied. After reasonable investigation, Defendant Vernets are without the knowledge as to the truth of the averment and proof thereof is demanded. 17. Denied as stated. The policy is a written document which speaks for itself and Defendant Vernets deny the accuracy and completeness of Plaintiff's attempt to characterize, describe, paraphrase or quote selectively therefrom. 2 I 18. Denied as stated. The policy is a written document which speaks for itself and Defendant Vernets deny the accuracy and completeness of Plaintiffs attempt to characterize, describe, paraphrase or quote selectively therefrom. 19. Denied as stated. The policy is a written document which speaks for itself and Defendant Vernets deny the accuracy and completeness of Plaintiffs attempt to characterize, describe, paraphrase or quote selectively therefrom. 20. Denied. Paragraph 20 is denied as a conclusion of law to which no responsive pleading is due. 21. Denied. The Counterclaim does allege property damage. It alleges damage from water infestation and moisture, as well as improper construction processes and procedures. 22. Denied. Paragraph 22 is denied as a conclusion of law to which no responsive pleading is due. 23. Denied. Paragraph 23 is denied as a conclusion of law to which no responsive pleading is due. 24. Denied. Paragraph 24 is denied as a conclusion of law to which no responsive pleading is due. 25. Denied. Paragraph 25 is denied as a conclusion of law to which no responsive pleading is due. 26. Denied. Paragraph 26 is denied as a conclusion of law to which no responsive pleading is due. 3 27. Admitted in part. Denied in part. It is admitted that Defendant Vernets plead a contract claim. It is denied that said claim does not include damages resulting from Defendant Dunlavy's negligent work. 28. Denied. Paragraph 28 is denied as a conclusion of law to which no responsive pleading is due. 29. Denied. Paragraph 29 is denied as a conclusion of law to which no responsive pleading is due. WHEREFORE, Defendant Vernets request this Honorable Court deny Plaintiff's request for Declaratory Judgment. Dated: Vlald t 1, Barbara Sumple-Sullivan, Esquire 549 Bridge Street New Cumberland, PA 17070 (717) 774-1445 Supreme Court I.D. 32317 Attorney for Defendant Vemets 4 Barbara Sumple-Sullivan, Esquire Supreme Court #32317 549 Bridge Street New Cumberland, PA 17070 (717) 774-1445 NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. CIVIL ACTION - LAW BRUCE DUNLAVY, d/b/a DUNLAVY NO. 2007 - 1802 CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET and BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS, Defendants VERIFICATION We, Donald E. Vernet and Brenda L. Vernet, hereby certify that the facts set forth in the foregoing ANSWER are true and correct to the best of our knowledge, information and belief. We understand that any false statements made herein are subject to penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities. Dated: 0 , 2007 BRENDA L. VERNET Barbara Sumple-Sullivan, Esquire Supreme Court #32317 549 Bridge Street New Cumberland, PA 17070 (717) 774-1445 NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. CIVIL ACTION - LAW BRUCE DUNLAVY, d/b/a DUNLAVY NO. 2007 - 1802 CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET and BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS, Defendants CERTIFICATE OF SERVICE I, BARBARA SUMPLE-SULLIVAN, ESQUIRE, do hereby certify that on this date, I served a copy of the foregoing Defendant's, Donald E. Vernet and Brenda L. Vernet, Answer to Complaint for Declaratory Judgment in the above-captioned matter upon the following individual by first class mail, postage prepaid, addressed as follows: Thomas E. Brenner, Esquire Goldberg Katzman P.O. Box 1268 320 Market Street Harrisburg, PA 17108 JoAnne E. Kinzel, Esquire Law Office of Snyder and Dorer 214 Senate Avenue, Suite 503 Camp Hill, PA 17011 Mr. Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 DATED: () W. ". Front .O. Box 99? , Esquire & Hafer, LLP 17 Barbara Sumple-Sullivan, Esquire 549 Bridge Street New Cumberland, PA 17070-1931 (717) 774-1445 Supreme Court I.D. No. 32317 Attorney for Defendant Vernets 5 rv Ti l..; rn } Thomas E. Brenner, Esquire ID #32085 Michael F. Socha, Esquire ID #200988 GOLDBERG KATZMAN, P.C. 320 Market Street, P. O. Box 1268 Harrisburg, PA 17108-1268 (717) 234-4161; (717) 234-4161 (facsimile) Counsel for Defendant Crockett Log Homes of PA NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY CUMBERLAND CO., PENNSYLVANIA Plaintiff, NO. 07-1802 Civil V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, et al. NOTICE TO PLEAD TO: Nationwide Mutual Fire Insurance Company c/o W. Darren Powell, Esquire Thomas, Thomas & Hafer PO Box 999 Harrisburg, PA 17108-0999 YOU ARE REQUIRED to plead to the within New Matter of Defendant Ephrata Rehab Services, Inc. within twenty (20) davs of service hereof or a default judgment may be entered against you. Date: April 30, 2007 GOLDBF.RG KATZMAN, P.C. L B, y. Thomas E. Brenner, Esquire Attorney ID #32085 PO Box 1268 Harrisburg, Ply 17108-1268 717-234-4161 Attornev for Defendant Crockett Log Homes of P-1 Thomas E. Brenner, Esquire ID #32085 Michael F. Socha, Esquire ID #200988 GOLDBERG KATZMAN, P.C. 320 Market Street, P. O. Box 1268 Harrisburg, PA 17108-1268 (717) 234-4161; (717) 234-4161 (facsimile) Counsel for Defendant Crockett Log Homes of PA NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY CUMBERLAND CO., PENNSYLVANIA Plaintiff, NO. 07-1802 Civil V. BRUCE DUNLAVY, d/h/a DUNLAVY CONSTRUCTION, et at. ANCWFR Defendant, Crockett Log Homes of PA, Inc., by and through its counsel, Goldberg Katzman, P.C., files this Answer to Plaintiff's Complaint and in support thereof avers the following: THE PARTIES 1. Admitted, upon information and belief. 2. Admitted, upon information and belief. 3. Admitted. 4. Admitted, upon information and belief. 5. Admitted, upon information and belief. 6. Admitted, upon information and belief. THE UNDERLYING CLAIM 7. Admitted. 8. Admitted. 9. The Complaint is a legal document which speaks for itself and no response is necessary. 10. The Complaint is a legal document which speaks for itself and no response is necessary. 11. The Answer is a legal document which speaks for itself and no response is necessary. 12. The Answer is a legal document which speaks for itself and no response is necessary. 13. It is admitted that Crockett filed a joinder Complaint on or about June 23, 2005. No response to the remaining allegations set forth in this paragraph are necessary as the joinder Complaint is a legal document and speaks for itself. 14. The Joinder Complaint is a legal document which speaks for itself and no response is necessary. COVERAGE UNDER THE POLICY 15. Denied pursuant to Pa.R.C.P. 1029(c). 16. Denied pursuant to Pa.R.C.P. 1029(c). 17. The Policy speaks for itself and no response is required. 18. The Policy speaks for itself and no response is required. 19. The Policy speaks for itself and no response is required. 20. The Policy speaks for itself and no response is required. 21. The Counterclaim is a legal document and speaks for itself and no response is necessary. Moreover, the terms "Breach of Contract" and "Unfair Trade Practices" are labels appended to Counts within the Complaint. The averments of the Complaint and the evidence produced in discovery and the Plaintiffs demand letter of April 19, 2007 outline the damages and legal theories of this dispute. 22. Denied. The Policy speaks for itself and no response is required. Moreover, the paragraph states a conclusion of law to which no response is necessary. 23. Denied as a conclusion of law to which no response is necessary. Moreover, the paragraph states a conclusion of law to which no response is necessary. 24. Denied as a conclusion of law to which no response is necessary. Moreover, the paragraph states a conclusion of law to which no response is necessary. 3 25. Denied as a conclusion of law to which no response is necessary. Moreover, the paragraph states a conclusion of law to which no response is necessary. 26. Denied as a conclusion of law to which no response is necessary. Moreover, the paragraph states a conclusion of law to which no response is necessary. 27. Denied as a conclusion of law to which no response is necessary. Moreover, the discovery and the Vernets' demand letter of April 19, 2007 reflect a claim of negligence. 28. Denied as a conclusion of law to which no response is necessary. 29. Denied as a conclusion of law to which no response is necessary. Moreover, the discovery and the Vernets' demand letter of April 19, 2007 reflect claims of negligence. WHEREFORE, Defendant Crockett Log Homes of PA, Inc. respectfully requests that this Honorable Court dismiss Plaintiffs Complaint with prejudice. NEW MATTER .30. The commercial liability insurance policy issued by Plaintiff Nationwide Mutual Fire Insurance Company to the Plaintiff provides coverage for damages suffered by the Vernets in the underlying claim. 4 31. The damage claimed by the Vernets as set forth in the demand letter of April 19, 2007 which claim losses covered under the Nationwide policy. (Exhibit WHEREFORE, Defendant Crockett Log Homes of PA, Inc. respectfully requests that this Honorable Court dismiss Plaintiffs Complaint with prejudice. GOLDBERG KATZMAN, P.C. By: Thomas E. Brenner, Esquire Attorney ID #32085 Michael F. Socha, Esquire Attorney ID # 200988 PO Box 1268 Harrisburg, PA 17108-1268 717-234-4161 Attorneys for Defendant Crockett Log Homes of PA, Inc. Date: April 30, 2007 5 VERIFICATION I, Thomas E. Brenner, Esquire, hereby acknowledge that I am the attorney for Crockett Log Homes of PA, that I have read the foregoing document; that there are no new facts of record contained in the document; and that the facts stated therein are true and correct to the best of my knowledge, information and belief. I understand that any false statements herein are made subject to penalties of 18 Pa.C.S. §4904, relating to unsworn falsification to authorities. Thomas E. Brenner, Esquire Date: April 30, 2007 Apr•19, 2007 9:45AM LAW OFFIC96 BARBARA SUMPLE-SULLIVAN 549 BRIDQ$ STREET NEW OUMBBRLAND, PZXNSYLVANIA 17070-1981 PHONE (717) 774-1445 No•8165 P- 1 FAX (717) 774-7059 April 19, 2007 Thomas E. Brenner, Esquire JoAnne E. Kinzel, Esquire Goldberg Katzman Law Office of Snyder and Dorer P.O. Box 1268 214 Senate Avenue, Suite 503 320 Market Street, Strawberry Square Camp Hill, PA 17011 Harrisburg, PA 17108 Re: Crockett Log Homes of Pa, Inc. V. Donald E. Vernet and Brenda L. Vernet V. Natural Building Systems, Inc., Bruce Dunlavy and Roy Stoltzfus Docket No. 2004 - 4108 Dear Counsel: I wanted to present curtain offers for settlement of the above captioned matter. In assessing same, I feel compelled to note the following: This contract was originally signed in July, 2003. Construction began on August 23, 2003 and was to be completed by February, 2004. It was a simple task - to erect a shell designed by and materials provided by Crockett Log Homes on a pre-existing, structurally sound foundation provided by the owner. The foundation was physically available for field verification. No one can contest that the weather conditions were rainy, the house delayed in going under roof, materials were inappropriately stored and extensive damage resulted to the basement living area and to existing household items when the contractor opened the new construction to the living area in the basement. The water damage to the interior continued because of defective roofing construction. Mold is present. Materials provided by Crockett, especially logs, have twisted and cracked effecting their functionality and aesthetics. Today, more than three years later, my clients still are not in their dream home. They continue to reside only in the basement because they lacked the funds to make the necessary repairs. The delay in concluding this case has been extraordinary given the bankruptcy and certain other proceedings. However, through all of this, my clients have been forced to be paying the mortgage for their dream home while living in the basement. ' EXlill? APr.19. 2007 9:45AM Thomas E. Brenner, Esquire JoAnne E. Ki.nzel, Esquire April 19, 2007 Page 2 No.8165 P. 2 Obviously, I do not want to give you an outline of my opening argument but I need to also remind you that in addition to the breach of contract claims, my clients have the pending Unfair Trade Practices Claim. Under those legal theories, my clients have claims for counsel fees and can. be awarded treble damages. At all times relevant, the Vernets were not aware that there was no Crockett Log Homes. They decided to contract with a company which advertised and represented a solid and established tradition in home construction. When problems arose, the Vernets, for the first time, learned there was no solid company to stand beside them to address their problems. Rather, fingers were pointed between a myriad of separate dealers, waster dealers, builders, and manufacturer. Counsel fees at this time for the Vermts presently exceed $25,000.00. Some recovery needs to be made to effectuate justice. I do not believe that anyone, in good faith, cannot raise issue on the timely completion of the job. The failure to prosecute the work, especially getting the property under roof and the construction techniques of opening the basement upon erection of the upper construction resulted in the excessive water coming into the house. The undisputed wet conditions made the construction process difficult and there was an extended time when the property was not under roof. Water damage too many items of personal property was caused by this water. I want to clearly state the costs of replacement for these items as they now exist. At the time of filing the complaint, the estimate for replacement of the cherry cabinets damaged by the mold and water were $4,915.01. ,A. recent cost estimate from Lowe's for in kind replacement was $9,463.93. Similarly, the flooring estimate three years ago was $5,546.58 and it now is $8,704.62. With the above said and much more unsaid but known to all the participants of this litigation, I have been authorized to make the following offer. This offer is for settlement purposes only and are not admissible in any future proceedings: I know that we been considering and working toward a sale of the Vernets' Home to Mr. Dodson in an "as-is" condition. I am providing a copy of the appraisal received since I will be using it as an exhibit at trial. However, after much heart breaking conversation and gut wrenching decision making, my clients cannot agree to sale of the land. The property is close to relatives of the Vernets for whom they care. The home was intended to bring in for a rental value a relative to live in the basement apartment for ease in care giving. The property is the base for Don's business. Extensive real estate searching has not turned up any available other lots or parcels. Therefore, the Vernets Apr•19. 2007 9:45AM No-8165 P. 3 Thomas E. Brenner, Esquire JoAnne E. Kinzel, Esquire April 19, 2007 Page 3 cannot sell the land. They desire to keep their land and the foundation after it is cleaned up from the mold. As an alternative they would accept the following: 1) PAYMIENT OF REPLACEMENT VALUE OF LOST PERSONAL PROPERTY DUE TO WATER AND MOLD: $ 329000.00 Your clients pay the replacement value of the personal property items which have been lost. These total approximately $32,000.00 and are itemized as follows for the damages: a) Flooring: $8,704.62; b) Cabinets: $9,463.93; c) Two Lemoyne sleeper craft mantic beds $3,500.00 d) One (1) Lemoyne sleeper dark Cherry headboard $450.00 e) Ethan Allen bedroom set consisting of 1 chest of drawers, 1 bureau, 1 nightstand - $1,800.00; f) One (1) queen size mattress purchased at Boscovs - $850.00; g) One (1) older bed replacement - $50.00; h) One (1) older dresser replacement - $75.00; i) Ethan Allen Kitchen Hutch Replacement - $125.00; J) Living room set, including coach, love seat and recliner - leather replacement - $2,800.00; k) One (1) Fabric Massaging Recliner replacement - $450.00; Avr,19. 2007 9:46AM Thomas E. Brenner, Esquire JoAnne E. Kinzel, Esquire April 19, 2007 Page 4 1) Cement Board stored in the basement - $200.00; and No-8165 P• 4 m) Clothing, Iinen, blankets, leather shoes, refrigerator contents, 2 leather coats, Australian coat - $3,497.00. 2) COMPLETE DEMOLITION OF THE CROCKETT PACKAGE: $ 71500.00 My clients will contract with a demolition company and have the entire constructed shell package demolished. All labor and disposal of materials would be included. This is estimated to be about $7,500.00. 3) REFUND OF ENTIRE PACKAGE COST: $170,314.00 Your clients will refund in its entirety the monies expended to buy the Crockett package and to provide the labor or $150,314.00. They will also be reimbursed the a lump sum of $20,000.00 which generally represents the inflation value for present completion of the construction, the loss of use of the home for the last few years despite having to make the payments. 4) RELMBURSEMENT OF ACTUAL OUT OF POCKET COSTS EXPENDED BY MY CLIENTS FOR CONSTRUCTION IN THE CURRENT PROPERTY: $ 16,800.00 Your clients would reimburse my clients their labor costs for wiring and plumbing in the home of $16,800.00 which is being demolished. 5) MOLD CLEAN UP COSTS IN THE BASEMENT: $ 1$5,000.00 Your clients will pay for mold and construction clean up of the basement which is estimated to be $15,000.00 and includes removal, storage and then return of all furnishings to basement after work completed, removal of damaged cabinets, their disposal and costs of reinstallation of new cabinets, APr•19- 2 0 0 7 9 : 4 6 A M No•8165 P- 5 Thomas E. Brenner, Esquire JoAnne E. Kinzel, Esquire April 19, 2007 Page 5 6) 7) cleaning and painting supplies for mold and staining on the basement walls, painting supplies, cleansing of air ducts, fiunace, and exhaust pipes, replacement of ceiling in the basement storage room, reinstallation of electrical work in ceiling. COUNSEL FEES AND COSTS: $ 42,500.00 Your clients will pay $35,000.00 in counsel fees incurred by my clients and waiver of treble damages will be made. Your client will also pay $7,500.00 in out of pocket costs for my clients for the engineering report, the mold specialist and the appraiser. NO CONTRACT OFFSET: Judgment for the Vernets on the original complaint with no monies due. Basically, the goal of this settlement is to restore my clients to their status prior to this unfortunate event. The total cash payment would be $285,000.00. Please consider and advise. l BSS/lh Enclosure: (Appraisal) Barbara Sumple-Sullivan cc: Mr. and Mrs. Donald E. Vernet CERTIFICATE OF SERVICE I hereby certify that on the 24" day of April, 2007, I served a copy of the foregoing document upon the person(s) indicated below by depositing a copy of the same in the United States mail, postage prepaid at Harrisburg, Pennsylvania and addressed as follows: W. Darren Powell, Esquire Thomas, Thomas & Hafer PO Box 999 Harrisburg, PA 1.7108-0999 Barbara Sumple-Sullivan, Esquire 549 Bridge Street New Cumberland, PA 17070 JoAnne E. Kinzel, Esquire Jacobs & Associates 214 Senate Avenue, Suite 503 Camp Hill, PA 17011 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 GOLDBERG KATZMAN, P.C. Z ? By: Angel. Kelly, Legal ??c Mary Date: April 30, 2007 1-3 ' W J rrt .? W. Darren Powell, Esquire THOMAS, THOMAS & HAFER, LLP 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attomeys for Nationwide Mutual Fire Insurance Company NATIONWIDE MUTUAL FIRE INSURANCE COMPANY V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION - LAW NO. C)7 - /4P6,.Z L"- PRAECIPE TO REINSTATE COMPLAINT TO THE PROTHONOTARY: Please reinstate the Complaint, a copy of which is attached hereto. Respectfully submitted, THOMAS, TROMAS & fiAFER, LLP Date: 497778.1 By: W. , Attorney I.D. No. 68953 305 North Front Street, 6t" Floor P.O. Box 999 Harrisburg, PA 17108-0999 (717) 441-7057 CERTIFICATE OF SERVICE -0/IC> AND NOW, this= day of May 2007, I, Tammie L. Berkheimer, of the law firm of Thomas, Thomas & Hafer, LLP, hereby certify that I sent a true and correct copy of the foregoing document by placing a copy of the same in the United States Mail, postage prepaid, to the following: Michael F. Socha, Esquire GOLDBERG KATZMAN 320 Market Street Strawberry Square P.O. Box 1268 Harrisburg, PA 17108-1268 Barbara Sumple-Sullivan, Esquire LAW OFFICES OF BARBARA SUMPLE-SULLIVAN 549 Bridge Street New Cumberland, PA 17070-1931 Bruce Dunlavy d/b/a Dunlavy Construction 1217 Indian Peg Road Mechanicsburg, PA 17055 Natural Building Systems, Inc. 35 Old Route 12N Westmoreland, New Hampshire 03467 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 497786.2 W b a a d c N rO kD C) r? W. Darren Powell, Esquire THOMAS, THOMAS & HAFER, LLP 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attorneys for Nationwide Mutual Fire Insurance Company NATIONWIDE MUTUAL FIRE INSURANCE COMPANY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS PLAINTIFF'S REPLY TO NEW MATTER OF DEFENDANT CROCKETT LOG HOMES OF PA, INC. CIVIL ACTION - LAW NO. 07-1802 Civil Term AND NOW comes Plaintiff, Nationwide Mutual Fire Insurance Company, by and through its attorneys, W. Darren Powell, Esquire, and Thomas, Thomas & Hafer, LLP, and files this Reply to the New Matter of Defendant Crockett Log Homes of PA, Inc., averring and stating as follows: 30. Denied. The averments contained in this Paragraph constitute conclusions of law to which no response is required. 31. Denied. The averments contained in this Paragraph constitute conclusions of law to which no response is required. To the extent that it is judicially determined that a response thereto is necessary, the same is denied. 32. Denied. The averments contained in this Paragraph constitute conclusions of law to which no response is required. To the extent that it is judicially determined that a response thereto is necessary, the same is denied. WHEREFORE, Plaintiff, Nationwide Mutual Fire Insurance Company, respectfully requests that this Honorable Court demand judgment in its favor and find that there is no coverage under the policy as alleged in its Complaint. Respectfully submitted, Date: "P" ? L?7 508605.1 THOMAS LLP BY: W. owell Identification No. 68953 305 N. Front Street, P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 CERTIFICATE OF SERVICE AND NOW, this :;?fday of June 2007, I, Tammie L. Berkheimer, of the law firm of Thomas, Thomas & Hafer, LLP, hereby certify that I sent a true and correct copy of the foregoing document in the manner indicated below: Thomas E. Brenner, Esquire GOLDBERG KATZMAN 320 Market Street, Strawberry Square P.O. Box 1268 Harrisburg, PA 17108-1268 Barbara Sumple-Sullivan, Esquire LAW OFFICES OF BARBARA SUMPLE-SULLIVAN 549 Bridge Street New Cumberland, PA 17070-1931 Natural Building Systems, Inc. C/O DOUGLAS F. GREEN, ESQUIRE 50 Washington Street P.O. Box 666 Keene, NH 03431 Bruce Dunlavy d/b/a Dunlavy Construction 1217 Indian Peg Road Mechanicsburg, PA 17055 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 Tammie L. B i r 497786.2 o--3 c?,.. sty ?- M CQ 'j NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Plaintiff V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET and BRENDA L. Verret, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS, Defendants IN THE COURT OF COMMON CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 2007 -1802 DEFENDANT BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION ANSWER TO COMPLAINT FOR DECLARATORY JUDGMENT 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. 8. Admitted. 9. Denied as stated. The Complaint and the contract are written documents which speak for themselves. To the extent that Plaintiff seeks to interpret either document such interpretation is denied. 10. Denied as stated. The Complaint and the contract are written documents which speak for themselves. To the extent that Plaintiff seeks to interpret either document such interpretation is denied. 11. Denied as stated. The Complaint and the contract are written documents which speak for themselves. To the extent that Plaintiff seeks to interpret either document such interpretation is denied. 12. Admitted. 13. Admitted. 14. Admitted. 15. Admitted. 16. Admitted. 17. Admitted. 18. Admitted. 19. Admitted. 20. Denied as stated. The coverage provided by the Policy is set forth within the policy, a written document, which speaks for itself. To the extent that Plaintiffs allegation interprets the policy the interpretation is denied. 21. Denied. The Counterclaim alleges improper performance by the Defendant which resulted in property damage in the form of water damage and mold infestation over time. The policy defines "occurrence" to "include [sic] continuous or repeated exposure to substantially the same general harmful conditions" which is a portion of the damages set forth in the Counterclaim to which this Defendant was joined. 22. Denied as stated. The exclusions are part of the Policy, a written document which speaks for itself. To the extent that Plaintiffs allegation interprets that document the interpretation is denied. 23. Denied as stated. The exclusions are part of the Policy, a written document which speaks for itself. To the extent that Plaintiffs allegation interprets that document the interpretation is denied. 24. Denied as stated. The exclusions are part of the Policy, a written document which speaks for itself. To the extent that Plaintiffs allegation interprets that document the interpretation is denied. 25. Denied as stated. The exclusions are part of the Policy, a written document which speaks for itself. To the extent that Plaintiffs allegation interprets that document the interpretation is denied. 26. Denied as stated. The exclusions are part of the Policy, a written document which speaks for itself. To the extent that Plaintiff's allegation interprets that document the interpretation is denied. 27. Admitted in part. Denied in part. It is admitted that Defendants Vernet have pled a breach of contract claim, but the claim includes damages to property allegedly caused by Defendant's negligent performance. 28. Denied. This allegation is a conclusion of law to which no responsive pleading is required. 29. Denied. This allegation is a conclusion of law to which no responsive pleading is required. WHEREFORE, Defendant Dunlavy prays this Honorable Court deny Plaintiff's request for Declaratory Judgment. Respectfully submitted, Dated: k / i) r _ Bruce Dun avy r? d/b/a Dunlavy Construction VERIFICATION 1 verify that the statements made in the foregoing document are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of' 18 Pa. C.S. §4904, relating to unsworn falsification to authorities. Date: G C _ CERTIFICATE OF SERVICE I, Bruce Dunlavy, d/b/a Dunlavy Construction, hereby certify that on June /y, 2007, I served a copy of this Answer on the following persons by depositing same in the U.S. Post Office, postage prepaid and addressed as follows: W. Darren Powell, Esq. 305 N. Front St. P.O. Box 999 Harrisburg, PA 17108-0999 Barbara Sumple-Sullivan, Esq. 549 Bridge St. New Cumberland, PA 17070 Thomas E. Brenner, Esq. Goldberg Katzman, P.C. P.O. Box 1268 Harrisburg, PA 17108-1268 Respectfully submitted, Date: Bruce avy d/b/a Dunla onstruction f c- rj CJI('1 N -i n. yrW SHERIFF'S RETURN - REGULAR CP+SE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS DUNLAVY BRUCE ET AL MARK CONKLIN , Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon CROCKET LOG HOMES OF PA INC the DEFENDANT , at 2020:00 HOURS, on the 4th day of April 2007 at 58 SUNSET DRIVE MECHANICSBURG, PA 17050 by handing to DOUG DODSON, PRESIDENT, ADULT IN CHARGE a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing His attention to the contents thereof. Sheriff's Costs: Docketing 6.00 Service 9.60 Affidavit .00 Surcharge 10.00 .00 5'I a .z107 1T-2 5 . 6 0 Sworn and Subscibed to before me this day of , So Answers: R. Thomas Kline 05/01/2007 THOMAS THOMAS HAFER By. Deputy Sheriff A. D. SHERIFF'S RETURN - REGULAR CASE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS DUNLAVY BRUCE ET AL RICHARD SMITH , Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon V7PN7T -nnNAT,n E the DEFENDANT , at 0843:00 HOURS, on the 5th day of April 2007 at 3111 ENOLA ROAD CARLISLE, PA 17013 by handing to BRENDA VERNET, WIFE a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing Her attention to the contents thereof. Sheriff's Costs: Docketing 6.00 Service 6.72 Affidavit .00 Surcharge 10.00 .00 ? 22.72 Sworn and Subscibed to before me this of So Answers: ?e 27 R. Thomas Kline 05/01/2007 THOMAS THOMAS HAF By: _ day eputy Sheriff A. D. SHERIFF'S RETURN - REGULAR CASE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS DUNLAVY BRUCE ET AL RICHARD SMITH , Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon VERNET BRENDA L the DEFENDANT , at 0843:00 HOURS, on the 5th day of April 2007 at 3111 ENOLA ROAD CARLISLE, PA 17013 by handing to BRENDA VERNET a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing Her attention to the contents thereof. Sheriff's Costs: Docketing 6.00 Service .00 Affidavit .00 Surcharge 10.00 .00 S/a2`e1 16.00 Sworn and Subscibed to before me this day of , Deputy Sheriff A. D. So Answers: R. Thomas Kline 05/01/2007 THOMAS THOMAS H F R By: %% SHERIFF'S RETURN - REGULAR CASE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS DUNLAVY BRUCE ET AL STEPHEN BENDER , Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon DUNLAVY BRUCE D/B/A DUNLAVY CONSTRUCTION the DEFENDANT , at 1805:00 HOURS, on the 10th day of April 2007 at 1217 INDIAN PEG ROAD MECHANICSBURG, PA 17055 by handing to BRUCE DUNLAVY a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing His attention to the contents thereof. Sheriff's Costs: Docketing 18.00 Service 8.64 Affidavit .00 Surcharge 10.00 .00 b f 36.64 Sworn and Subscibed to before me this day of , So Answers: R. Thomas Kline 05/01/2007 THOMAS THOMAS HAFER By. <?;?- -1`1 'r--Deputy A. D. SHERIFF'S RETURN - U.S. CERTIFIED MAIL CASE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS. DUNLAVY BRUCE ET AL R. Thomas Kline , Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law served the within named DEFENDANT NATURAL BUILDING SYSTEMS INC , by United States Certified Mail postage prepaid, on the ist day of May 2007 at 1000:00 HOURS, at 35 OLD ROUTE 12 N WESTMORELAND, NH 03467 and attested copy of the attached COMPLAINT & NOTICE with a true Together . The returned receipt card was signed by RETURNED TO OFFICE - UNCLAIMED on 04/02/2007 . Additional Comments: Sheriff's Costs: So answe Docketing 6.00 Service 9.05 R. Thomas Kline Affidavit .00 Sheriff of Cumberland County Surcharge 10.00 .00 2 5 . 0 5 ? sJa ?/a ? Paid by THOMAS THOMAS HAFER on 05/01/2007 . Sworn and Subscribed to before me this day of A.D. SHERIFF'S RETURN - OUT OF COUNTY C.,SE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS DUNLAVY BRUCE ET AL R. Thomas Kline , Sheriff or Deputy Sheriff who being duly sworn according to law, says, that he made a diligent search and and inquiry for the within named DEFENDANT , to wit: STOLTZFUS ROY but was unable to locate Them deputized the sheriff of CENTRE serve the within COMPLAINT & NOTICE County, Pennsylvania, to On May 1st , 2007 , this office was in receipt of the attached return from CENTRE Sheriff's Costs: So answer -- --?''^ - ° w-- ?? Docketing 6.00 Out of County 9.00 Surcharge 10.00 Thomas K1.!'ne Dep Centre County 48.48 Sheriff of Cumberland County Postage 5.28 78.76 ?? vr`da fo7 C?,.? 05/01/2007 THOMAS THOMAS HAFER Sworn and subscribe to before me this day of in his bailiwick. He therefore A. D. 'In The Court of Common Pleas of Cumberland County, Pennsylvania Nationwide Mutual Fire Insurance Company VS. Bruce Dunlavy d/b/a Dunlavy Construction et a No. 07-1802 civil SERVE: Roy Stoltzfus Now, April 2, 2007 , I, SHERIFF OF CUMBERLAND COUNTY, PA, do hereby deputize the Sheriff of ntre County to execute this Writ, this deputation being made at the request and risk of the Plaintiff. Sheriff of Cumberland County, PA Affidavit of Service Now, within 20 , at o'clock M. served the upon at by handing to a and made known to copy of the original So answers, the contents thereof. Sheriff of County, PA Sworn and subscribed before me this day of , 20 COSTS SERVICE $ MILEAGE AFFIDAVIT SHERIFF'S OFFICE CUMBERLAND COUNTY SHE CENTRE COUNTY Rm 101 Court House, Bellefonte, Pennsylvania, 16823 (814) 355-6803 SHERIFF SERVICE INSTRUCTIONS FOR SERVICE OF PROCESS: You must file one eet for PROCESS RECEIPT AND AFFIDAVIT OF RETURN Not de detach a copies.ch defendant. please type or print legibly. Do 1. Plaintiff(s) 2. Case Number Nationwide Mutual Fire Insurance Company 07-1802 Civil 3. Detendant(s) 4. Type of Writ or Complaint: Roy Stoltzfus Compliant 102149 SERVE 5. Name of Individual, Company, Corporation, Etc., to Serve or Description of Property to be Levied, Attached or Sold. Roy Stoltzfus AT? 6. Address (Street or RFD, Apartment No., City, Boro, Twp., State and Zip Code) 801 Penns Creek Road, Spring Mills, PA 16875 7. Indicate unusual service: F-',,' Reg Mail Certified Mail Deputize 1.. Post Other Now, 20_ . 1 SHERIFF OF CENTRE COUNTY, PA., do hereby deputize the Sheriff of County to execute this Writ and make return thereof according to law. This deputation being made at the request and risk of the plaintiff. 91heriff of en re unN 8. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE NOTE ONLY APPLICABLE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN -- Any deputy sheriff levying upon or attaching any property under within writ may leave same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part of such deputy or the sheriff to any plaintiff herein for any loss, destruction or removal of any such property before sheriff's sale thereof. 9. Print/Type Name and Address of Attorney/Originator 10. Telephone Number 11. Date CUMBERLAND COUNTY SHERIFF (717) 240-6390 ONE COURTHOUSE SQUARE 12. Signature CARLISLE, PA. 17013 tot hhe l SIGNATURE of Authorized CCSD Deputy of Clerk and Title =14, te Filed ge eceeip 13. 1 a kna ed 15. Expiration/Hearing Date pt i t TO BE COMPLETED BY S RIFF 16. Served and made known to Martha Stoltzfus _ on the 5.._.._ ,._ __ day of April 2007 3:16 PM 801 Penns Creek Road, Spring Mills, PA 16875 20 , at o'clock, m., at County of Centre Commonwealth of Pennsylvania, in the manner described below: Defendant(s) personally served. wife r7 Adult family member with whom said Defendant(s) resides(s). Relationship is r Adult in charge of Defendant's residence. 17Manager/Clerk of place of lodging in which Defendant(s) resides(s). 1-7 Agent or person in charge of Defendant's office or usual place of business. and officer of said Defendant company. Other ?....?- On the . day of 20 _ , at o'clock , ?.___.. M. Defendant not found because: 1 Moved 171, Unknown 177, No Answer 7 Vacant 7, Other Remarks: Advance Costs Docket Service Sur Charcle Affidavit Mileage Postage Misc. Total Costs Costs Due or Refund 75.00 9.00 9.00 10.00 2.50 16.98 1.00 48.48 (26.52) 17 AFFIRMED and subscribed to before me this So answer. . 18 ature o D e ' 19. Date `0 20. day of 1. Sig ature of Sheri 22. Date 23. _ Notary uNic SHERIFF OF CENTRE COUNTY Amount Pd. Page My Commission Expires 24. 1 ACKNOWLEDGE RECEIPT OF THE SHERIFF'S RETURN SIGNATURE 25. Date Received OF AUTHORIZED AUTHORITY AND TITLE. W. Darren Powell, Esquire THOMAS, THOMAS & HAFER, LLP 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attorneys for Nationwide Mutual Fire Insurance Company NATIONWIDE MUTUAL FIRE INSURANCE COMPANY V. Plaintiff BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION - LAW NO. 07-1802 Civil Term PLAINTIFF NATIONWIDE MUTUAL FIRE INSURANCE COMPANY'S MOTION FOR JUDGMENT ON THE PLEADINGS AND NOW comes Plaintiff, Nationwide Mutual Fire Insurance Company ("Nationwide"), by and through its attorneys, W. Darren Powell, Esquire, and Thomas, Thomas & Hafer, LLP, files this Motion for Judgment on the Pleadings and, in support thereof, avers and states as follows: 1. Nationwide filed this declaratory judgment action on or about March 30, 2007, seeking a declaration of its rights and responsibilities under a commercial liability policy issued to Bruce Dunlavy, d/b/a Dunlavy Construction, relative to a suit filed against the Vernets by Crockett Log Homes of PA, Inc. to Docket No. 2004-4108 (the "Underlying Action") 2. Through its Complaint in the Underlying Action, Crockett Log Homes of PA, Inc. alleges it entered into a contract on July 31, 2007, with the Vernets, wherein Crockett was to construct, in a workmanlike manner and according to the rules and regulations of any city and county department and of any public service corporation, a house located at 3111 Enola Drive, 1 Carlisle, Cumberland County, Pennsylvania. A copy of said Complaint ("Complaint") is attached to the Declaratory Judgment Complaint as Exhibit "A." 3. In its Complaint, Crockett alleges that the Vernets failed to pay the balance of the agreed upon contract price. The Complaint contains two (2) counts against the Vernets: Count I is for Breach of Contract and Count II is for Quantum Meruit. 4. In their Answer, the Vernets filed a Counterclaim against Crockett, alleging several deficiencies in the project, including installation of wood posts in lieu of steel posts reinforced with footers. A copy of the Answer, New Matter and Counterclaim is attached to the Complaint for Declaratory Judgment as Exhibit "B." 5. The Counterclaim contains two (2) counts against Crockett: Count I is for Breach of Contract and Count II is based upon Unfair Trade Practices. 6. On or about June 23, 2005, Crockett filed a Joinder Complaint against National Building Systems, Inc., Bruce Dunlavy, and Roy Stoltzfus. The Joinder Complaint alleges that Dunlavy was a subcontractor who performed the installation of the shell of the Vernet's house. A copy of the Joinder Complaint is attached to the Complaint for Declaratory Judgment as Exhibit "C." 7. In its Joinder Complaint, Crockett incorporates the allegations of the Vernets Counterclaim (breach of contract and Unfair Trade Practices), and avers that Dunlavy is jointly and severally liable on the claim, and that Dunlavy is liable over to Crockett for indemnity or contribution on the Vemets' Counterclaim. 8. During the times relevant hereto, Dunlavy was insured under a commercial liability policy issued by Nationwide, said policy identified as policy number 58 AC 243996- 3001 H (the "Policy"). A copy of said Policy is attached to the Complaint for Declaratory Judgment as Exhibit D. 9. The deficiencies in the home alleged by the Vernets all arise out of the work contracted to Crockett Log Homes of PA, Inc. 2 10. The Counterclaim contains two (2) counts against Crockett: Count I is for Breach of Contract and Count II is based upon Unfair Trade Practices. 11. The Vernet's claims against Crockett Log Homes of PA, Inc. arise out of the contract between the Vernets and Crockett Log Homes of PA, Inc. The Counterclaims also arise out of contract. 12. The gist of the action of all these claims is in contract. 13. The policy issued by Nationwide is not a performance bond. 14. The Underlying Action does not constitute an "occurrence" under the Policy. 15. Claims for breach of contract are not covered under the policy issued by Nationwide. Phico Ins. Co. v. Presbyterian Medical Services, 663 A.2d 753 (Pa. Super. 1995). 16. Where the gist of the action is based upon contract, Nationwide owes no duty to defend or indemnify under the policy. 17. It is believed that the Underlying Action has been assigned for a non jury trial before The Honorable Edgar Bayley. WHEREFORE, it is respectfully requested that this Honorable Court grant Plaintiff's Motion and enter an Order declaring that Nationwide has no duty to defend or indemnify Dunlavy in the Underlying Action. Respectfully submitted, & HAFER, LLP Dated: I.D. No. 68953 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attorneys for Plaintiff 513712.1 3 CERTIFICATE OF SERVICE AND NOW, this o day of July 2007, I, Tammie L. Berkheimer, of the law firm of Thomas, Thomas & Hafer, LLP, hereby certify that I sent a true and correct copy of the foregoing document in the manner indicated below: Thomas E. Brenner, Esquire GOLDBERG KATZMAN 320 Market Street, Strawberry Square P.O. Box 1268 Harrisburg, PA 17108-1268 Barbara Sumple-Sullivan, Esquire LAW OFFICES OF BARBARA SUMPLE-SULLIVAN 549 Bridge Street New Cumberland, PA 17070-1931 Natural Building Systems, Inc. C/O DOUGLAS F. GREEN, ESQUIRE 50 Washington Street P.O. Box 666 Keene, NH 03431 Bruce Dunlavy d/b/a Dunlavy Construction 1217 Indian Peg Road Mechanicsburg, PA 17055 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 497786.2 CJ ? p 17- ; t_ T! SHERIFF'S RETURN - U.S. CERTIFIED MAIL CASE NO: 2007-01802 P COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND NATIONWIDE MUTUAL FIRE INS CO VS. DUNLAVY BRUCE ET AL R. Thomas Kline Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law served the within named DEFENDANT NATURAL BUILDING SYSTEMS INC by United States Certified Mail postage prepaid, on the 7th day of June ,2007 at 1000:00 HOURS, at C/0 DOUGLAS F GREEN, ESQUIRE 50 WASHINGTON STREET KEENE, NH 03431 a true and attested copy of the attached COMPLAINT & NOTICE Together with The returned receipt card was signed by CYNTHEA HERREID 06/12/2007 . Additional Comments: on Sheriff's Costs: Docketing Cert Mail Postage Surcharge 18.00 10.10 .41 10.00 .00 38.51 ? 411 So R. omas Kline ?jSFif iff of Cumberland County i n Paid by THOMAS THOMAS & HAFER Sworn and Subscribed to before me this day of , on 06/15/2007 . A. D. ¦ Complete items 1, 2, and 3. Also complete A. ure item 4 if Restricted Delivery Is desired. Agent ¦ Print your name and address on the reverse Addressee so that we can return the card to you. B. R i ad by (P ' ad Name) C. Della of Ivery ¦ Attach this card to the back of the mailpiece, ?? or on the front if space permits. D s D. delivery address different from item e t. Article Addressed to: If YES, enter delivery address below: ? No -Natural Building Systems Inc c/o Douglas F. Green esquire 50 Washington Street Keene, NH 03431 3. Service Type 9 Certified Mail ? Express Mail 0 Registered 0 Retum Receipt for Merchandise ? Insured Mail 00.0.0. 4. Restricted Delivery? (Eft Fee) 0 Yes 7005 1822 0002 4619 0463 07-180"civil; rTn 3811, February 2004 Domestic Return Receipt 102595-02 M 1540 UNITED STATES POSTAL SERVICE 12 -JUN 2007 PM I • Sender: Please print your name, address, and ZIP44ln'this box • R. Thomas Kline, Sheriff County of Cumberland Court House Carlisle, P4, 17013 -js r Thomas E. Brenner, Esquire ID #32085 Michael F. Socha, Esquire ID #200988 GOLDBERG KATZMAN, P.C. 320 Market Street, P. O. Boa 1268 Harrisburg, PA 17108-1268 (717) 234-4161; (717) 234-4161 (facsimile) Counsel for Deferdant Crockett Log Homes of PA NATIONWIDE MUTUAL FIRE IN THE COURT OF COMMON PLEAS INSURANCE COMPANY CUMBERLAND CO., PENNSYLVANIA Plaintiff, NO. 07-1802 Civil V. BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, et al. Defendants DEFENDANT CROCKETT LOG HOMES OF PA, INC 'S RESPONSE TO PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS Defendant, Crockett Log Homes of PA, Inc., by and through its counsel, Goldberg Katzman, P.C., files this Response to Plaintiff's Motion for judgment on the Pleadings, and in support thereof avers the following: 1. Denied. The Complaint filed in this matter is a written document which speaks for itself and no response is required. 2. Denied. The Complaint in the Underlying Action is a written document which speaks for itself and no response is necessary. 3. Denied. The Complaint in the Underlying Action is a written doeunnent which speaks for itself and no response is necessary. F 4. Denied. The Answer in the Underlying Action is a written document which speaks for itself and no response is necessary. To the extent Plaintiff seeks to interpret the Answer, such interpretation is denied. 5. Denied. The Counterclaim in the Underlying Action is a written document which speaks for itself and no response is required. 6. Admitted in part, denied in part. It is admitted that the Joinder Complaint was filed by Crockett on or about June 23, 2005. The Joinder Complaint is a written document which speaks for itself, and no response to the remaining allegations is necessary. 7. Denied. The Joinder Complaint in the Underlying Action is a written document which speaks for itself and no response is required. 8. Admitted, upon information and belief. 9. Denied. The pleadings in the underlying matter speak for themselves and no response is necessary. To the extent that a response is necessary, it is denied that the deficiencies in the home alleged by the Vernets arise solely from the work contracted to Crockett Log Homes of PA, Inc. 10. Denied. The Counterclaim in the Underlying Action is a written document which speaks for itself and no response is necessary. 11. Denied as a legal conclusion to which no response is necessary. 12. Denied as a legal conclusion to which no response is necessary. 13. Denied as a legal conclusion to which no response is necessary. 14. Denied as a legal conclusion to which no response is necessary. 15. Denied as a legal conclusion to which no response is necessary. 16. Denied as a legal conclusion to which no response is necessary. 17. Admitted. WHEREFORE, Defendant Crockett Log Homes of Central PA, Inc. respectfully requests that this Honorable Court deny Plaintiff's Motion for judgment on the Pleadings and order Plaintiff to provide a defense and indemnification for Defendant Bruce Dunlavy d/b/a Dunlavy Construction. GOLDBERG KATZMAN, P:C. K y: zomas E. Brenner, Esquire Attorney ID #32085 Michael F. Socha, Esquire Attorney ID # 200988 PO Boa 1268 Harrisburg, PA 17108-1268 717-234-4161 Attorneys for Defendant Crockett Lou Homes of PA, Inc. Date: July 20, 2007 CERTIFICATE OF SERVICE I hereby certify that I served a copy of the foregoing document upon the person(s) indicated below by depositing a copy of the same in the United States mail, postage prepaid at Harrisburg, Pennsylvania and addressed as follows: W. Darren Powell, Esquire Thomas, Thomas & Hafer PO Box 999 Harrisburg, PA 17108-0999 Barbara Sumple-Sullivan, Esquire 549 Bridge Street New Cumberland, PA 17070 JoAnne E. Kinzel, Esquire Jacobs & Associates 214 Senate Avenue, Suite 503 Camp Hill, PA 17011 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 GOL G KATZMAN, P.C. Fornas E. Brenner, Esquire Date: July 20, 2007 r-j (71 71 a -Ti r,? W. Darren Powell, Esquire THOMAS, THOMAS & HAFER, LLP 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attomeys for Nationwide Mutual Fire Insurance Company NATIONWIDE MUTUAL FIRE INSURANCE COMPANY V. Plaintiff BRUCE DUNLAVY, d/b/a DUNLAVY CONSTRUCTION, CROCKET LOG HOMES OF PA, INC., DONALD E. VERNET, BRENDA L. VERNET, NATURAL BUILDING SYSTEMS, INC., and ROY STOLTZFUS Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA CIVIL ACTION - LAW NO. 07-1802 Civil Term PRAECIPE TO DISCONTINUE TO THE PROTHONOTARY: Please mark the above case discontinued. b ? Respectfully submitted Dated: / 0 THOMAS, TI-1004$ & HAFER, W. Darren Powell, Esquire I.D. No. 68953 305 North Front Street P.O. Box 999 Harrisburg, PA 17108-0999 (717) 237-7154 Attorneys for Plaintiff 537122-1 CERTIFICATE OF SERVICE C f? AND NOW, this day of October 2007, I, Tammie L. Berkheimer, of the law firm of Thomas, Thomas & Hafer, LLP, hereby certify that I sent a true and correct copy of the foregoing document in the manner indicated below: Thomas E. Brenner, Esquire GOLDBERG KATZMAN 320 Market Street, Strawberry Square P.O. Box 1268 Harrisburg, PA 17108-1268 Barbara Sumple-Sullivan, Esquire LAW OFFICES OF BARBARA SUMPLE-SULLIVAN 549 Bridge Street New Cumberland, PA 17070-1931 Natural Building Systems, Inc. C/O DOUGLAS F. GREEN, ESQUIRE 50 Washington Street P.O. Box 666 Keene, NH 03431 Bruce Dunlavy d/b/a Dunlavy Construction 1217 Indian Peg Road Mechanicsburg, PA 17055 Roy Stoltzfus 801 Penns Creek Road Spring Mills, PA 16875 Tammie L. B er 497786.2 C7 ? 0 ? w -?-{ r . ? rj ?? O t7? 't, ='' i?;? iu L]? N