Friday, July 31, 2020

Issues of Fact Preclude Summary Judgment on Excess Coverage Issue

In the case of Farber v. Erie Insurance Exchange, No. 19-CV-2302 (C.P. Lacka. Co. July 8, 2020 Nealon, J.), the court addressed coverage issues pertaining to whether an excess/umbrella policy was precluded by an exclusion. In the end, after finding that the insurance company had not established its position in a fashion that was free and clear from any doubt, the carrier’s Motion for Summary Judgment on the issues presented was denied. 

By way of background, a boat owner, who had been sued in a wrongful death lawsuit involving the use of his motorboat, instituted a coverage action against his excess/umbrella carrier asserting claim for breach of contract, declaratory judgment, bad faith, and violations of the Unfair Trade Practices and Consumer Protection law. 

According to the Opinion, the excess/umbrella policy contained a watercraft exclusion that provided temporary insurance coverage for watercraft “acquired during the policy period,” but that liability coverage “ceases” to exist, if notice is not given [by the insured] within thirty (30) days” of “the date of acquisition” of the watercraft.

According to the record before the court, the insured gained possession of the motorboat on August 5, 2017 and paid the seller for its purchase on August 18, 2017. 

The Commonwealth of Pennsylvania issued title to the boat in the insured’s name on September 6, 2017. 

The fatal motorboat accident occurred on September 26, 2017. 

The carrier filed a Motion for Summary Judgment arguing that the insured has “acquired” the motorboat when he took custody of it on August 5, 2017 and asserted that, as such, the excess/umbrella coverage was allegedly precluded by the watercraft exclusion since the thirty (30) day temporary coverage purportedly lapsed on September 4, 2017, which would have been several weeks before the subject incident. 

Judge Nealon noted that the carrier had drafted the policy in utilized words such as “acquired” and “acquisition,” rather than words like “possessed” or even “purchased,” in establishing the dates for commencement and cessation of temporary liability coverage for watercrafts. 

The court also noted that the terms utilized by the carrier in the policy were not defined within the policy. 

Turning to ordinary dictionary definitions of the undefined words led the court to conclude that the words used by the carrier mean gaining “ownership” or the “power of disposal” of the watercraft. 

The court also noted that the state regulations indicate that a purchaser of a boat becomes the lawful owner upon obtaining title to the boat. 

Since the court found that different interpretations of the terms at issue gave rise to an ambiguity, and since Pennsylvania law requires that all ambiguities be construed in favor of the insured, Judge Nealon found that the carrier had not established, in a fashion that was free and clear from doubt, that the carrier was entitled to judgement on the question of coverage. As such, the Motion for Summary Judgment filed by the carrier was denied. 

Anyone wishing to review a copy of this decision may click this LINK.

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