Wednesday, April 7, 2010

Lackawanna County Judge Terrence Nealon Addresses Declaratory Judgment Issues

In his recent March 29, 2010 Opinion and Order issued in the case of C.S. Individually, and as parent and Natural Guardian of M.S., a minor, et al. v. Colony Insurance Company, et al, No. 05 CV 569 (Consolidated) (Lacka. Co. 2010 Nealon, J.), Lackawanna County Court of Common Pleas Judge Terrence Nealon succinctly set forth the law pertaining to declaratory judgment actions and the rationale supporting the refusal of courts to give advisory opinions in such cases.

In M.L. v. Colony Insurance Company, four juveniles filed tort actions naming the Juvenile Rehabilitation Services, Inc. ("JRS") as a defendant. It was alleged in the underlying action that the juveniles sustained various personal injuries as result of being placed into the foster care of a man who was a transvestite who impersonated himself as a female who was purportedly married to another man at the time of the foster care placements. While the juveniles were in the individual defendant's foster care, they were sexually abused in a graphic manner. The foster parent eventually pleaded guilty to a number of sexual offenses and was sent to prison.

The juveniles sued JRS under the primary allegations that the defendant failed to conduct proper background checks and, after placement, failed to conduct periodic reviews and inspections to ensure the safety of the minors.

JRS was covered by a primary liability policy as well as an excess liability policy. Under the primary liability policy issued by Colony Insurance Company, there was medical incident coverage with $1 million per claim/$3 million per incident limits and a separate sexual abuse coverage with a $100,000 per claim/$100,000 per incident limit.

The juvenile Plaintiffs filed a declaratory judgment action seeking an adjudication that the facts of the case fell under the higher liability coverage. In this case before Judge Nealon, the juvenile Plaintiffs had filed a certificate of trial readiness in the declaratory judgment action while the underlying third party litigation was still pending and had not yet been tried.

The Defendant primary liability carrier motioned to Judge Nealon to strike the certificate of readiness, arguing that the scope of the duty to indemnify under the policy could not be properly determined until the underlying tort actions had been decided by a jury. More particularly, the carrier argued that the declaratory judgment action on the issue of the applicable coverage could not be decided until a jury in the underlying third party matter issued a verdict on whether the juveniles' injuries were caused solely by the sexual abuse or by the other alleged actions of JRS.

After thoroughly reviewing the law of declaratory judgments and the prohibition against advisory opinions in such cases, Judge Nealon ruled that any declaration by the court on the carrier's duty to indemnify would be premature and merely advisory prior to the resolution of the tort lawsuit against JRS. As such, Judge Nealon granted the carrier's motion to strike the juvenile Plaintiffs trial certification of the declaratory judgment actions without prejudice to the Plaintiffs' right to re-certify the case after the disposition of the underlying lawsuit.

Anyone desiring a copy of Judge Nealon's Opinion and Order may contact me at dancummins@comcast.net.

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