Appellate Court Addresses Applicability if an Absolute Auto Exclusion in a Business General Liability Policy

In the case of Chris Eldredge Containers v. Crumb & Foster Specialty Ins., 2025 Pa. Super. 92 (Pa. Super. April 24, 2025 Lazarus, P.J., King, J., Lane, J.) (Op by. Lazarus, P.J.), the court addressed a coverage issue in this declaratory judgment action involving various coverage issues, including the applicability of an automobile exclusion in a business policy in a case involving an accident that involved a service truck driven by an employee of the carriers' insured.

The appellate court noted that it was proceeding under a de novo standard of appeal, meaning that it was not limited by the trial court's rationale and could affirm or reverse the trial court decision on any basis.   

The Pennsylvania Superior Court ruled that the absolute auto exclusion, which excluded coverage for bodily injury under the policy for any incident arising out of the use of an auto, was found to be ambiguous in the context of this policy and was, therefore, found to be not enforceable.

The Superior Court additionally ruled that the ownership clause in the absolute auto exclusion was found to be ambiguous when it failed to specify whose ownership, maintenance, use, or entrustment served to trigger that exclusion.

In the end, the appellate court reversed the trial court decisions and found that the carriers did owe a duty to defend and indemnify its insured under the facts presented.

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

Source: “Court Summaries” in the Pennsylvania Bar News By Timothy L. Clawges (June 9, 2025).

Source of image:  Photo by Vlad Deep from www.unsplash.com.

Plaintiff's Bad Faith Claim Found To Be Barred by Two Year Statute of Limitations

In the case of Dana Mining Co. of PA v. Brickstreet Mut. Ins. Co., No. 2:21-CV-00700 (W.D. Pa. March 9, 2020 Colville, J.), the Western District Federal Court addressed bad faith issues and the statute of limitations related thereto.

According to the Opinion, in this matter, the carrier refused to defend or indemnify its insured against an underlying tort lawsuit. The insured then sought declaratory relief and claimed a breach of contract and bad faith.

The carrier filed a Motion to Dismiss the bad faith claim on statute of limitations grounds.

In this matter, the carrier had denied coverage in May of 2017. The insured instituted a bad faith claim in April of 2021.

The court in this matter confirmed that the statute of limitations for bad faith claims under 42 Pa. C.S.A. §8371 is two (2) years.

The court additionally confirmed that the statute of limitations for claims of §8371 bad faith begins to run when the Plaintiff’s right to institute and maintain a lawsuit for bad faith arises. The court reiterated the rule that a lack of knowledge, mistake, or misunderstanding does not serve to toll the running of the statute of limitations.

The court more specifically noted that a bad faith claim can arise when a carrier definitively denies coverage and puts the insured on notice of the same.

Judge Colville noted that an insured cannot avoid the limitations period by asserting that a continuing refusal to cover was a separate act of bad faith. He referred to the law that repeated or continuing denials of coverage do not constitute separate acts of bad faith given rise to a new statutory period of time.

While the court did observe that there was case law in support of a proposition that, if a carrier subsequently denies coverage after the insured brings to the attention of the carrier “new evidence,” this may constitute a separate and independent injury that can trigger a new limitations period.

However, in this case, the court found that there were no allegations that the insured presented the carrier with any new facts or evidence regarding the underlying claim such that the carrier should have reconsidered its denial. As such, no new limitations period was found to have been triggered. As such, the case was dismissed.

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


I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris for bringing this case to my attention. Please be sure to check out Attorney Applebaum’s excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog.

Photo by Jordan Benton on www.pexels.com.

No Duty to Defend or Indemnify Found Relative to Alleged Faulty Workmanship in a Home Construction Case

In the case of Main St. Am. Assurance Co. v. Conolly Contractors, Inc., No. 2:19-CV-04241-JHS (E.D. Pa. Feb. 28, 2022 Slomsky, J.), the court granted the carrier’s Motion for Judgment on the Pleadings in its declaratory judgment action.

The issue in this case is whether the carrier had a duty to defend and indemnify a contractor or builder who was sued by homeowners for alleged home construction defects.

The court found that the carrier had no duty to defend and indemnify because the homeowners’ claims of faulty workmanship did not allege that the property damage was caused by an “occurrence” as required by the contractor’s policy of insurance.

The court additionally found that the builder was not listed as an additional insured under the contractor’s policies.

As such, the carrier’s Motion for Judgment on the Pleadings in this declaratory judgment was granted.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's Order can be viewed LINK.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (March 24, 2022).

Coverage Found Under a Homeowner's Policy For a Drug Overdose at a House Party

In the case of Kramer v. Nationwide Prop. & Cas. Ins. Co., No. 726 EDA 2021 (Pa. Super. Dec. 2, 2021 Lazarus, J., Dubow, J., and Pellegrini, J.), the Pennsylvania Superior Court addressed an insurance coverage action arising out of an incident during which the insured’s son hosted a house party at his parents’ home while they were out of town. Early in the morning thereafter, the decedent partygoer was found dead and a coroner later determined that the cause of death was a drug overdose.

The decedent’s mother filed a wrongful death and survival action against the homeowners and their son. The Plaintiffs asserted that the son who hosted the party was negligent in supplying the decedent with the drugs that caused his overdose. The Plaintiffs also allege in both the survival and wrongful death claims that the homeowners were negligent in allowing their son to use the home in such regard.

At the time of the incident, Nationwide was the insurance company for the parents at whose house the party was held. Nationwide denied coverage under the case presented.

According to the Opinion, the insurane policy at issue provided that Nationwide must “pay damages and insured is legally obligated to pay due to an occurrence resulting from negligent personal acts or negligence arising out of the ownership, maintenance, or use of real or personal property.”

In asserting that it did not have to provide a defense, Nationwide relied upon coverage exclusions in the policy which applied when certain damages arise from criminal conduct or the use of controlled substances.

The trial court had ruled that Nationwide had a duty to defend and the Pennsylvania Superior Court affirmed this decision.

Although the Pennsylvania Superior Court addressed the policy exclusion noted above, it ruled, in part, that the carrier was required to defend its insured in this suit arising from an alleged accidental drug overdose death because the damages under the Wrongful Death Act did not implicate the term “bodily injury” under the policy definitions.

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

I send thanks to Attorney Matthew D. Vodzak of the Philadelphia office of Fowler Hirtzel McNulty & Spaulding, LLP for bringing this case to my attention.

Artful Pleading Allowed To Trigger Liability Coverage

In Erie Insurance Exchange v. Moore, No. 20 WAP 2018 (Pa. April 22, 2020)(Op. by Dougherty, J.)(Dissenting Op. by Mundy, J.), the Court allowed artful pleading of negligence by a Plaintiff in a shooting case to trigger a carrier’s duty to defend the matter.

In this case, the liability carrier sought a declaration that it did not have to defend or indemnify the estate of Harold McCutcheon Jr., who was the alleged shooter in an underlying tragic string of events involving a murder-suicide and injuries to a third person.

With regards to the previous decisions by the lower courts in this matter, a three-judge Superior Court panel had reversed a Washington County trial judge’s decision and had unanimously ruled that, because the injured third person alleged in the Complaint filed in the underlying matter that the shooting was "accidental," the events fit the definition of “occurrence” in the homeowner’s policy that the alleged shooter had with the liability carrier. 

The language in the policy at issue defined an 'occurrence' as “an accident including continuous or repeated exposure to the same general harmful conditions.”

According to the Opinion, the injured Plaintiff alleged in his Complaint that the alleged shooter had left a note outlining his intention to kill his ex-wife and then commit suicide. 

The Plaintiff further alleged that, after the alleged shooter allegedly shot his ex-wife at her house, there was a knock at the front door. The Plaintiff was that person who was knocking on the door.

The Opinion also notes that the Plaintiff had been dating the ex-wife in the time leading up to the incident.

The ex-husband, who was the alleged shooter, pulled the Plaintiff into the house where a fight ensued during which the Plaintiff was shot in the face by the ex-husband. The alleged shooter then shot himself.

In his lawsuit against the shooter, the Plaintiff alleged that the alleged shooter had "negligently, carelessly, and recklessly caused the weapon to be fired." 

Justice Kevin Dougherty, writing for the majority, compared the allegations in the Plaintiff’s Complaint against the policy language and rejected Erie’s contention that McCutcheon’s conduct was deliberate and therefore not covered by the policy. As such, the Court’s ruling resulted in a finding that the carrier had a duty to defend the claims against the alleged shooter and, therefore, possibly a duty to indemnify the Plaintiff for his injuries from this shooting event.

Justice Dougherty wrote, “Contrary to Erie’s view, this surprise encounter with [the Plaintiff] was not part of the insured’s other intentional conduct for purposes of insurance coverage, and in fact, [the Plaintiff] does not seek damages for a fistfight or shoving match,” 

Justice Dougherty also wrote that “[The Plaintiff’s] lawsuit seeks damages for being shot by the insured. Had the policy’s exclusion expressly stated coverage would not apply to incidents involving firearms, or during the commission of a crime, then perhaps there would be no duty to defend the underlying claims by [the Plaintiff]. But the policy does not say this. Instead, it excludes from coverage bodily injury ‘expected or intended’ by the insured, and to the extent this language is ambiguous in the presently alleged factual context, it must be construed in favor of coverage.”

Dougherty was joined by Justices Max Baer, Christine Donohue and David Wecht.

The three Justices on the Supreme Court that could not agree with the Majority’s decision included Chief Justice Thomas Saylor, Justice Debra Todd, and Justice Sallie Updyke Mundy.

In her Dissenting Opinion, Justice Mundy, joined by Chief Justice Saylor and Justice Todd, contended that “the discharge of a weapon during a physical altercation initiated by the insured, while the insured is holding a firearm, is the type of harm specifically excluded under the policy.”

“In my view, artful pleadings cannot form the basis of imposing a duty to defend,” Mundy said. “As the discharge of the firearm under the circumstances alleged in the [Plaintiff’s] complaint does not carry with it the degree of fortuity or unexpectedness necessary to constitute an accidental occurrence, I cannot agree Erie is obligated to afford coverage under the terms of the insurance policies.”

Anyone wishing to review the Majority Opinion in this case may click this LINK.

The Dissenting Opinion can be viewed HERE.

Source: Article - “Deeply Split High Court Says Insurer Must Cover Accidental Shooting During Murder-Suicide” by Zack Needles of the Pennsylvania Law Weekly (April 23, 2020)

Duty to Defend Supports Cross-Claim for Non-payment of Defense Legal Fees

In the case of Huffsmith v. PPL Electric Utilities Corporation, No. 11-CV-1012 (C.P. Lacka. Co. Sept. 5, 2019 Nealon, J.), the court addressed the issues surrounding a duty to defend and a duty to indemnify relative to a cross-claim asserted by one Defendant against a Co-Defendant. 

According to the Opinion, PPL Electric Utilities Corporation retained a contractor to perform tree removal services around transmission lines. 

Under the contract between the parties, the tree removal services contractor was obligated to indemnify the utility company for any personal injury or property damages claims resulting from the contractor’s work. Under the contract, the contractor also had a separate duty to defend at its own expense, with counsel acceptable to PPL, any suit or action brought against PPL based upon such claims. 

In an underlying matter, landowners filed a trespass action against the utility company and the tree removal services contractor for allegedly improperly moving seventeen (17) fully grown evergreen trees from the landowner’s property. There was a dispute in that matter as to whether or not the trees were within PPL’s lawful right-of-way. 

During the course of that litigation, PPL tendered its defense of the lawsuit to the contractor under the contract. 

However, the tree removal services contractor’s insurance company rejected PPL’s tender of its defense under an argument that the contractor’s duty to defend PPL would arise only if PPL became obligated to make a payment on the landowners’ trespass claim by virtue of a settlement or a verdict. 

As such, PPL retained its own defense counsel and, in the lawsuit, asserted a cross-claim against the contractor seeking to recover its own defense cost and counsel’s fees based upon the contractor’s breach of its contractual duty to defend. 

The case was litigated to a successful conclusion with a jury finding that the utility and the contractor had not trespassed upon the landowners’ property. 

Pursuant to a Stipulation between the two (2) Defendants, PPL’s crossclaim against the contractor was then subsequently submitted to a non-jury decision before Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas under Pa. R.C.P. 1038.

In this decision, Judge Nealon held that, although the contractor’s duty to indemnify the utility was contingent upon PPL’s liability for a payment for the landowner as a result of a settlement or verdict, the contractor’s duty to defend the utility went into effect once the landowner’s filed their lawsuit against both the PPL and the contractor for property damages allegedly caused by the contractor’s tree removal activities. 

Accordingly, the court ruled that the contractor breached its contractual duty to defend PPL in this matter.  The contractor was found to be liable for compensatory damages in the amount of the reasonable and necessary counsel fees and costs incurred and paid by PPL in defending this trespass action as well as in pursuing its cross-claim to recover those costs of defense. The court found that the defense costs and fees in the amount of $148,235.18 were reasonable and necessary to defend the lawsuit, which fees included litigation of an appeal and a remand by the appellate court.

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

Third Circuit Holds: No Coverage, No Bad Faith

In the case of 631 M. Broad St. v. Commonwealth Land Title Ins. Co., No. 18-3094 (3d Cir. July 26, 2019 Fuentes, J., McKee, J., and Schwartz, J.), the court affirmed a district court’s entry of summary judgment in favor of a carrier in a title insurance bad faith case.

Notably, after agreeing that there was no coverage obligation and, therefore, no duty to defend under the policy, the third circuit stated, “…since the [D]istrict Court correctly concluded that [the carrier] had no duty to defend, there could be no bad faith claim against [the carrier].”  

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

I send thanks to Attorney Lee Applebaum, the writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog and from the Philadelphia law firm of Fineman, Krekstein & Harris for bringing this case to my attention.  

Nonsuit in Declaratory Judgment Action on Coverage Affirmed Based On Definition of "Occurrence"

In the case of Kiely v. Phila. Contrib. Ins. Co., 2019 Pa. Super. 90 (Pa. Super. March 26, 2019 Ott, J., Dubow, J. Stevens, P.J.E.)(Op. by Dubow, J.), the Pennsylvania Superior Court affirmed a trial court’s entry of compulsory non-suit in favor of the carrier on a coverage question arising out of a homeowner’s policy and/or an umbrella policy. 

According to the Opinion, an insured who was covered a homeowner’s policy and an umbrella policy issued by the same carrier was sued in an underlying litigation by a former domestic employee, who asserted claims of assault and intentional infliction of emotional distress.   The insured had tendered the lawsuit to the carrier for a defense. The carrier denied coverage, asserting that the intentional torts alleged in the underlying Complaint were not “occurrences.” 

The insured then commenced this coverage litigation against the carrier seeking a declaration that the carrier was obligated to defend and indemnify the insured on the claims presented.  The insured also sought damages for bad faith.  

The coverage litigation proceeded to a trial.  At trial, the trial court permitted the insured to introduce evidence that evidence that he (the insured) lacked the mental capacity sufficient to intentionally assault the Plaintiff in the underlying matter.

The trial court entered a nonsuit in favor of the carrier after finding that the insured failed to introduce evidence of an “accident” which was required in order to trigger coverage under the policy for an “occurrence.”  

On appeal, the Superior Court affirmed the trial court’s entry of a compulsory nonsuit.   The court held that the insured’s alleged assault upon the underlying Plaintiff was not an “accident; rather, it was an intentional tort.”   Accordingly, given that the policy defined an “occurrence” as an “accident,” and given that the no accident or occurrence was alleged in the underlying personal injury Complaint, the Superior Court agreed that the carrier did not owe any duty to defend or indemnify under the policy.  

In addition to upholding the trial court’s entry of a compulsory nonsuit, the Superior Court additionally held that it was improper for the trial court to have permitted the insured to introduce evidence that the insured lacked the mental capacity to commit intentional torts.

The Superior Court noted that in a declaratory judgment action concerning insurance coverage issues, the allegations in the underlying personal injury Complaint control the analysis and that extrinsic evidence could not be admitted while the underlying lawsuit was still pending.  Simply put, in a coverage action, the essential analysis required involved comparing the allegations of the underlying Complaint to the insurance policy to determine if the coverage provisions were triggered.

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

I send thanks to Attorney Benjamin P. Novak, Esquire of the Lancaster, Pennsylvania office of Fowler, Hirtzel, McNulty & Spaulding, LLP, for bringing this case to my attention.

Detailed Decision by PA Superior Court in Duty to Defend Coverage Case Appealed to PA Supreme Court

In its December of 2013 decision in the case of Indalex v. National Union Fire Ins. Co. of Pittsb., 83 A.2d 413 (Pa.Super. 2013)(Donohue, Shogan, and Wecht, J.J.; Opinion by Shogan, J.), the Pennsylvania Superior Court offered one of its latest and most detailed recitations of the law of insurance contract interpretation and the duty to defend in the context of a products liability case and faulty workmanship claims.

The Superior Court ultimately ruled, after a comparison of the underlying Complaints at issue to the policy language in question, that the carrier did indeed have a duty to defend its insured.  In so ruling the court rejected an argument by the carrier the "gist of the action" doctrine (contract actions can not be recast into tort actions by artful pleading) did not serve to preclude coverage.

The Superior Court noted "that the gist of the action doctrine has not been adopted by our Supreme Court in an insurance coverage context."  The Superior Court in Indalex found persuasive the analysis of the United States District Court for the Western District Court of Pennsylvania on the relationship between the gist of the action doctrine and the duty to defend. 

In that regard, the Federal Western District Court of Pennsylvania ruled that "[i]f the underlying complaint contains more than one cause of action, and one of them would constitute a claim within the scope of the policy's coverage, the insurer must defend the complaint until it can confine the claim to a recovery excluded from the scope of the policy." Citing National Fire Ins. Co. of Hartford v. Robinson Fans Holdings, Inc., Not Reported in F.Supp.2d, 2011 WL 1327435 (W.D.Pa.2011), citing American States v. Maryland Cas., 427 Pa.Super. 170, 628 A.2d 880, 887 (Pa.Super.Ct.1993).

The Indalex court found that, since tort claims were pled in the Complaints in the underlying suits, such tort claims must be considered in the ordinary duty to defend insurance contract analysis (i.e., do the allegations of the Complaint fall within the coverage provisions of the policy?).

The court in Indalex went on to state that "[w]hether the laws under which the complaints are brought will bar those tort claims because of the application of the gist of the action or a similar doctrine will be decided by the courts presiding over those lawsuits. Ultimately, because the gist of the action doctrine has never been adopted by our Supreme Court in an insurance coverage context, we are convinced that, at this juncture of a duty to defend claim, applying the gist of the action doctrine is inappropriate. Citing with "See" signal Berg Chilling Sys., 70 Fed.Appx. [620] at 624 [(3rd Cir. 2003)](stating that a court undertaking a duty to defend analysis should not rely entirely upon whether the plaintiff characterizes its claim as one arising in tort or contract).

The Superior Court in Indalex ultimately held that "[b]ecause the underlying complaints alleged defective products resulting in property loss, to property other than Appellants' products, and personal injury, we conclude there was an “occurrence” and reverse the order granting summary judgment."


It is reiterated that, in addition to addressing the novel issue of the application of the gist of the action doctrine in the context of a duty to defend argument, the Indalex Opinion offers an excellent overview of the appropriate standard of review in a declaratory judgment action on the issue of the duty to defend under a liability insurance policy.

The Pennsylvania Superior Court's decision can be viewed HERE.


UPDATE:

Reargument in this case was denied by the PA Superior Court on February 10, 2014.

A Petition for Allowance of Appeal to the PA Supreme Court was filed on March 12, 2014.
 

 

 

I send thanks to Don Bankus, Legal Affairs Manager for Insurance Agents & Brokers of PA, MD & DE (www.IABforME.com) for bringing this to my attention.

 

Superior Court Addresses When Duty to Defend by Excess Carrier is Triggered

On an issue of apparent first impression in the case of Lexington Insurance v. Charter Oak Fire Insurance, No. 2876 EDA 2012, 2013 Pa.Super. 286 (Pa.Super. 2013 Bender, P.J., Donohue, J., Musmanno, J.)(Opinion by Bender, P.J.), the Pennsylvania Superior Court ruled that the duty of an excess insurance carrier to defend an insured is triggered when the primary carrier exhausts its policy through actual payment of a judgment or settlement.

The underlying case involved a contractor and a subcontractor, who had obtained multiple layers of insurance.  The contractor, subcontractor and others were sued after a fatal accident on a work site.

The unanimous Superior Court panel found that an excess carrier had a duty to defend an insured once a primary carrier had exhausted its policy as opposed to when the parties were still engaged in settlement negotiations that would exceed the primary policy limits.

Anyone wishing to review this decision may click this LINK.

Source: Article - "Excess Insurer's Duty Triggered by Exhausted Primary Policy" by Max Mitchell, The Legal Intelligencer (Nov. 18, 2013).

Interesting Coverage Decision on Multi-Million Dollar Case Out of Montgomery County

In the case of OneBeacon Ins. Co. v. William A. Graham Co., et al., No. 2009 - 41636 (C.P. Montg. Co. Dec. 14, 2011 Ott, J.), Montgomery County Judge Stanley R. Ott ruled that an insurance broker and its employee are not entitled to indemnity under their "advertising injury" coverage for a multi-million dollar judgment entered against them in a federal copyright infringement suit.

This decision is notable for its thorough recitation on the law of contract construction and the duty to defend and/or indemnify.  The Opinion is also interesting in that the Judge chooses to break out a Webster's Collegiate Dictionary for the determination of the ordinary meanings of pertinent words left undefined in the insurance policy at issue.

Anyone desiring a copy of the OneBeacon Ins. Co. v. William A. Graham Co., et al. case may contact me at dancummins@comcast.net.

I send thanks to Attorney Andrew L. Braunfeld of the Conshohocken law firm of Masterson Braunfeld LLP for bringing this case to my attention.

Lackawanna County Judge Terrence R. Nealon Rules in Favor of Carrier on Coverage Question

Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas recently handed down a decision granting a declaratory judgment in favor of a carrier on an automobile insurance coverage issue in the case of Safe Auto v. Zater, No. 2009-CV - 5013 (Lacka. Co. June 14, 2011, Nealon, J.).

The coverage dispute in Zater arises from an accident which occurred on October 2, 2008 when a James Manson was operating an Amy Zator’s vehicle and was involved in a multi-vehicle accident. At the time of the accident, Zator was insured by an insurance policy issued by Safe Auto.

According to Judge Nealon's Opinion, the plain language of Safe Auto’s policy excludes liability coverage for any property damage or bodily injury that occurred while Zator’s vehicle was being operated by a resident of her household who was not listed as an additional driver on the declarations page.

The term “resident” is defined in the policy as any person who physically lived in Zator’s household for longer than 14 consecutive days as of the date of the accident. In addition, Safe Auto’s policy also excludes coverage if Zator’s vehicle was being operated without her permission.

Judge Nealon noted that the summary judgment record before him, including the deemed admissions of Zator and Manson to Safe Auto’s requests for admissions, established that Zator and Manson had been residing together continuously for several years. It was also undisputed that Manson was never listed as an additional driver on Safe Auto’s policy at any time prior to the date of the accident. Furthermore, there was no dispute that Manson did not have Zator’s permission to operate her car and that Manson was aware of the fact that he was not permitted to drive Zator’s vehicles.

After providing a thorough summary of the law of contract/insurance policy interpretation, as well as the law pertaining to the duty to defend and/or indemnify, Judge Nealon entered an Order granting the carrier's request for a judicial declaration that it need not provide a defense or indemnification under the facts presented.

Anyone desiring a copy of Judge Nealon's Opinion in the case of Safe Auto v. Zater may contact me at dancummins@comcast.net

Luzerne County Judge Joseph Van Jura Addresses Duty to Defend/Indemnify

In the case of Thyssenkrupp Elevator Corporation v. Humford Equities, No. 18390-Civil-2009 (Luz. Co. August 17, 2010 Van Jura, J.), Judge Joseph Van Jura granted summary judgment in a declaratory judgment action on the issue of a duty to defend and denied summary judgment on the issue of a duty to indemnify.

By way of background, Defendant, Humford Equities, had contacted with the Plaintiff, Thyssenkrupp Elevator Corporation, for the maintenance of three elevators located in the Wilkes-Barre Center.

While the elevator maintenance agreement was in effect, two separate personal injury actions were filed by different injured parties against Thyssenkrupp, as well as Humford, and other entities, alleging that Thyssenkrupp, failed to properly maintain one of the elevators at the Wilkes-Barre Center, allegedly resulting in personal injuries to the injured parties.

Thereafter, Thyssenkrupp filed this action for declaratory judgment alleging a breach of contact on the part of Humford Equity for failure to provide a defense and indemnity to Thyssenkrupp in the underlying personal injury actions.

In his Opinion, Judge Van Jura set forth the analysis applicable to reviewing duty to defend/duty to indemnify language. Applying the law to the contract language the Court found that the duty to defend provisions contained in the elevator maintenance agreement was sufficiently specific to evidence a clear intent of the parties. Accordingly, the Court found that Humford Equity was legally bound to defend Thyssenkrupp in the underlying lawsuits.

The court also held that, under the duty to defend language contained in the agreement, that duty was triggered by the filing of the lawsuits and Thyssenkrupp did not have to await for the resolution of the underlying lawsuits. In other words, Humford Equity’s position that Thyssenkrupp was intended, under the agreement, to have a post-litigation remedy by means of a legal action to recoup Thyssenkrupp’s self-expended defense costs was rejected.

The remaining portion of the Motion for Summary Judgment dealing with the duty to indemnify was denied as premature.

Anyone desiring a copy of this opinion may contact me at dancummins@comcast.net.

Discretionary Duty to Defend Clause in Liability Policy Upheld

In the recent case of apparent first impression of Genaeya Corp. v. Harco National Insurance Company, 991 A.2d 342 (Pa.Super. March 15, 2010 Ford Elliott, J.), the Superior Court upheld a discretionary duty to defend contained in a liability insurer's policy.

In Genaeya, a declaratory judgment action was brought by a liability carrier over the duty to defend and indemnify issue in a case involving an underlying claim for damages arising when a cargo delivered by a trucking company went missing after it was dropped off overnight at a destination.

The truck motor carrier sought a judicial declaration from the court that it did not have to defend its insured trucking company or indemnify the injured party since the policy provided that the carrier "may elect to defend you" against suits arising from claims of owners of property. [Emphasis added].

The Superior Court noted that it was the settled law of Pennsylvania that there was no duty to defend in the absence of any express duty to defend clause in an insurance policy. It was also noted that no Pennsylvania caselaw could be found construing policy language similar to that at issue in this matter.

The Genaeya court reasoned that, since the duty of a liability carrier to provide a defense is contractual, and since the plain language of the policy or contract is the best evidence of the parties' intent, a carrier has no duty to defend an action unless the obligation is expressly set forth in the policy.

The Superior went on to find that the policy language at issue, i.e. that the carrier "may elect to defend" its insured, was not ambiguous and clearly conveyed that the carrier retained the discretion over the decision to defend its insured or not in any potential lawsuit.

The Genaeya court went on to also find that, under the stipulated facts presented, the carrier's duty to indemnify would not have been implicated in any event as the facts did not bring the underlying claims within the coverage terms provided in the policy.



I thank David Schweitzer, Vice President and Chief Claims Officer at Tuscarora Wayne Mutual Insurance Company, for bringing this case to my attention.

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.

Summary Judgment Secured in Declaratory Judgment Action On Proper Cancellation of Auto Policy for Non-Payment of Premium

I am hoping you won't mind me tooting my own horn a little on this blog of mine.

I recently secured a summary judgment decision in favor of my insurance company client in a declaratory judgment action on the issue of coverage in the case of Safe Auto Ins. Co. v. Soto, No. S-1361-2009 (Schuylkill Co., Jan. 26, 2010, Stine, J.).

This matter arose out of a motor vehicle accident that occurred on December 23, 2006 in Schuylkill County, Pennsylvania after which the Plaintiff filed a lawsuit against the Safe Auto insureds. The carrier denied coverage in light of the fact that, seven (7) months before the accident, the insurance company had cancelled the policy due to the insured’s failure to pay the premium.

The declaratory judgment action was filed against the insured defendants and the plaintiffs from the underlying action. This declaratory judgment action was opposed by the injured party plaintiff. However, when the tortfeasor defendants from the underlying matter, i.e. the named insured on the policy who failed to pay the premium and her permissive user of the vehicle, failed to respond to the Complaint, a default judgment was secured against those underlying defendants in this companion declaratory judgment action.

Thereafter, the motion for summary judgment was filed, which was opposed by the injured party plaintiff. Documentation required to satisfy the requirement of Pennsylvania law of showing that the proper notices had been mailed to the insured prior to the cancellation of the policy was gathered and presented as part of the motion. It was also established that there were no attempts by the insured to reinstate the policy at any time prior to the accident.

The injured party plaintiff attempted to argue that there were issues of fact and additional discovery that had to be completed before the court should address the motion for summary judgment. In granting the summary judgment the Schuylkill County Court of Common Pleas rejected the injured party’s arguments that there remained issues as to whether the carrier complied with Pennsylvania law in cancelling the policy, whether payments were made, and whether the insured had made any efforts to reinstate the policy.

The court accepted the defense argument that, under Pennsylvania law, the carrier was not required to show that the insured actually received the cancellation notices. Rather, all that was required here, as shown, was that the cancellation notices were issued to the address provided by the insured, which raised a presumption that the notices were received. The court also found the insureds’ failures to respond to the Complaint and the motion for summary judgment to constitute judicial admissions of the claims made by the carrier that proper notices had been provided. As such, it followed that no other party could dispute these claims.

Accordingly, a judicial declaration was secured for the carrier that it need not defend or indemnify the insureds in the underlying motor vehicle accident lawsuit brought by the injured party.

Anyone desiring a copy of this Opinion and Order may contact me at dancummins@comcast.net.


The facts of each case are different. No specific results are implied for future cases. Descriptions of awards in previous cases are no guarantee of future results and should not create any expectations that my firm or I can achieve similar results in another case.

Third Circuit Addresses Duty to Defend and Indemnify in Homeowners and Umbrella Policy

In the recent case of State Farm v. Estate of Mehlman, 2009 WL 4827027 (3rd Cir. Dec. 16, 2009), the Third Circuit tackled the issue of whether a carrier, which issued both a homeowner's policy and an umbrella policy, had a duty to defend and/or indemnify the estate of a man who, in a drunken rage, had unsuccessfully attempted to kill the plaintiff before killing himself. This coverage action was related to an underlying negligence suit brought by the plaintiff against the estate of the decedent.

According to the opinion, the Homeowners Policy provided coverage for damages caused by an “occurrence,” and the Umbrella Policy limited coverage to damages caused by a “loss.” The policies defined “occurrence” and “loss” as "accidents." Neither policy defined the term "accident."

Therefore, the question became whether the decedent's drunkeness rendered his otherwise purposeful and repeated acts of trying to kill the plaintiff an "accident" within the meaning of that term in the policies.

The Third Circuit, applying Pennsylvania law, noted that an "accident" has been said to be an "unanticipated event." The Court found that the decendent's intoxication did not render his intentional acts of chasing and repeatedly shooting at the plaintiff an "accident." As such, the Court found that coverage was not triggered under the policy and ruled in favor of the carrier and found no duty to defend or indemnify.

Thanks to Attorney James Beck of the Philadelphia office of Dechert LLP, and writer of the Drug and Device Law Blog (http://druganddevicelaw.blogspot.com/), for bringing this case to my attention.