2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-24-2009 

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w . vi ll anova . e du/thir dc ir c uit_2009/1702H onor abl e J os eph E. I r enas , Seni orU ni t ed St at es D i s tr i ctJ udge forthe D i s tr i ctof * N ew J er s ey , s i t t i ng bydes i gnat i on.

NO T PRECEDEN TI AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 08- 1985 T O L L B R O T H E R S , IN C ., A ppel l ant v. C E N T U R Y S U R E T Y C O ., e t al.

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th e U n ited S tate s D istric t C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . C i vi l A ct i on N o. 07- 1296) D istri ct Ju d g e: H o n o rab le P etrese B . T u ck er

A r gued February3, 2009 B e f o re : M c K E E , S T A P L E T O N , C i r cui tJudges , a nd I RE N A S , Seni orD is tr i ct Judge . * ( Fi l ed: M ar ch 24, 2009 )T he di s tr i ctcourthad s ubj ectm att erj ur i s di ct i on under28 U . S. C . § 1332. O ur 1 a p p e lla te ju ri s d ic tio n is a u th o ri z e d b y2 8 U .S .C . § 1 2 9 1 . 2 J ames A . K ozac hek ( A r gued) F l a s t e r/ Gr e e n b e r g , P . C. 200 A m er i can M etr o B oul evar d, Sui t e 126 T r ent on, N J 08619 A t t orney s forA ppel l ant G eor ge T. M cC ool , J r . ( A r gued) W r i g h t& O ’ Do n n e l l , P . C. 15 E as tR i dge Pi ke, Sui t e 570 C ons hohocken, PA 19428 A t t orney s forA ppel l ees OP I NI ON IR E N A S , Seni orU

ni t ed Stat es D is tr i ct

Judge . A p p ell an t T o ll B roth ers, I n c. (“T o ll ”) a p p ea ls th e d istri ct co u rt ’s gra n t of su m m ary j udgm enti n favorA ppel l ee Ess ex I ns ur ance C om pany( “Ess ex”) on T ol l ’ s cl ai m s that E s s ex br eac hed an i ns ur ance contr actbyfai l i ng t o defe nd ori ndemni fyT ol l fr om a s er i es o f c la im s f o r d a m a g e s . See Tol lB r os . , I nc. v. C entur

y Sur . C o. , N o . 0 7 - 1 2 9 6 , 2 0 0 8 WL 638232 ( E . D . Pa. M ar . 6, 2008) . Forthe r eas ons thatfol l ow , w e w i l l r ever s e the gr antof sum m aryj ud gm ent and rem and this m at t er for fur ther proceedings. 1 I. T o ll i s a h o m e b u ild e r w h o se o p e ra tio n s h a v e in c lu d e d n e w h o m e c o n stru c tio n in P h ilad e lp h ia- a re a c o m m u n iti e s. (T o ll B r. 5 .) In A p ril, 1 9 9 9 , T o ll su b c o n tra c ted w ith H . A . S. Pr ot ect i on, I nc. ( “H . A . S. ”) t o i ns t al l fi r e s uppr es s i on s y s t ems i n hom es underA ccor di ng t o E s s ex, T ol l w as cover ed as an addi t i onal i ns ur ed onl yforthe per i od 2 fr om O ct ober30, 2003, t o J une 26, 2004. ( E s s ex B r . 4. ) T ol l does notadmi tanys uch t i m e l i m i t at i on and gene r al l yas s ert s thati tw as an addi t i onal i ns ur ed underthe pol i ci es i s s ued byE s s ex t o H . A . S. ; as not ed above , thos e pol i ci es cover ed the per i od fr om J une 2 6 , 2 0 0 3 , to Ju n e 2 6 , 2 0 0 5 . (T o ll B r. 6 . ) In the p roc ee d ing s b elow , o n e o f E ssex ’s a rg u m e n ts in f

a v o r o f su m m a ryju d g m e n t w a s th a t th e c laim s f o r d a m a g e s a g a in st T o ll pert ai ned t o event s w hi ch di d notoccurdur i ng the per i od w hen the Ess ex i ns ur ance pol i cyw as i n for ce. ( A pp. 605- 06 ( E s s ex D i s t . C t . B r . 3- 4. ) ) T he di s tr i ctcourtdi d not re a c h th is is s u e in its o p in io n , n o r d o e s th is C o u rt . See T oll B ros. , Inc. v. C entury Sur. C o. , N o . 0 7 -1 2 9 6 , 2 0 0 8 W L 6 3 8 2 3 2 , a t * 3 n .4 (E .D . P a . M a r. 6 , 2 0 0 8 ). T r ans por t at i on I ns ur ance C om pany( “Tra ns por t at i on”) pr ovi ded the r equi r ed gener al l i abi l i tycover age t o H . A . S. forthe per i od of O ct ober29, 1998, t o O ct ober29, 1999. ( A pp. 53. ) C enturySur etyC om pany( “C entury ”) pr ovi ded the cove r age f orthe p eriod o f Ju n e 8 , 2 0 0 1 , to Ju ly2 5 , 2 0 0 3 . (A p p . 5 5 -61 . ) T ran sp o rt ati o n an d C en turyw ere n a m e d b yT o ll a s d e f

e n d a n ts in th is m a tte r b u t a re n o t p a rt ie s to th e c u rr e n t a p p e a l. 3 cons truct i on. ( I d. ) B ycontr act , H . A . S. w as obl i gat ed t o i ndemni fyand def end Tol l fr om anycl ai m s r el at i ng t o H . A . S. ’ s per form ance . ( A pp. 34. ) T o ens ur e H . A . S. had the means to sa tisf yits o b lig a tio n s, H .A .S . w a s re q u ire d to o b tain a $ 1 ,0 0 0 ,0 0 0 g e n e ra l li a b ili ty i ns ur a nc e po l i c ya nd na me Tol l a s a n a dd i t i on a l i ns ur e d o n tha tpo l i c y . ( I d. ) H . A . S. agr eed t o pr ocur e the gene r al l i abi l i tyi ns ur ance pol i cybefor e begi nni ng anyw or k under i t s contr actw i th T ol l . ( I d. ) H . A . S. obt ai ned the nec es s arygener al l i abi l i tycover age f r om E s s ex forthe per i od s panni ng fr om J une 26, 2003, t o J une 26, 2005. ( See A p p . 6 3 , 6 5 .) 2 I n J une, 2003, hom eow ner s began i nform i ng T ol l thatthei rfi r e s uppr es s i on s y s t ems w er e mal funct i oni ng and ca us i ng damage. ( T ol l B r . 6. ) T he homeow ner s s ought co v era g e u n d er the irw arran ti es a s w ell as re im b u rsem en t. (Id.) V ariou s law su it s en su ed . F ir st, h o m eo w n ers f il ed su it s in P en n sy lvan ia st ate c o u rtT o ll iden ti fies thre e c ase s as re leva n t t o the in stan t case : ( 1 ) O rt v. H arvelP last i cs, 3 I nc. , N o . 0 5 -05 6 0 4 (C o u rto f C o m m o n P leas, C h ester C o u n ty , P a.); (2) H o ffm a n v . T

o ll B r os . , I nc. , N o. 06- 05899 ( C our tof C om m on Pl eas , C hes t erC ounty , Pa. ) ; and ( 3) Schw ani nger, Jr . v. Tol lB r os . , I nc. , N o. 06- 05900 ( C our tof C om m on Pl eas , C hes t er C o u n ty, P a .). ( T o ll B r. 6 .) 4 nami ng T ol l and H . A . S. as defe ndant s . ( T ol l B r . 6. ) T hos e ac t i ons al l eged that 3 m a lf u n c tio n in g f

ire su p p re ss io n e q u ip m e n t ca u se d p ro p e rtyd a m a g e . (Id .; s ee A pp. 887- 905, 913- 24, 928- 38. ) T ol l , as an addi t i onal i ns ur ed, demanded thatE s s ex def end and ind em n ifyT o ll in the stat e c o u rtac ti o n s, b u t E ssex ref u sed to d o so . (T o ll B r. 6 -7.) Second, E s s ex i ni t i at ed a de cl ar at oryj udgm entact i on agai ns tH . A . S. befor e J udge Petr es e B . T uckeri n t he U ni t ed St at es D i s tr i ctC our tforthe East ern D i s tr i ctof P e n n s y lv a n ia . Es s ex I

ns . C o. v. H. A . S. P r ot . , I nc. , N o. 06- 5076 ( E . D . Pa. fi l ed N ov. 16, 2006) . E s s ex al l eged thatH . A . S. appl i ed fori ns ur ance cover age know i ng thati tw as fac i ng s i gni fi cantl egal expos ur e s t emm i ng fr om H . A . S. ’ s i ns t al l at i on of def ect i ve “Senj u”- br and s pr i nkl erheads , butfai l ed t o di s cl os e thatpot ent i al l i abi l i tyi n i t s i ns ur ance a p p lica tio n . (A p p . 1 5 4 , 1 5 6 -5 9 .) E ss e x so u g h t th e re sc iss io n a n d n u lli f ica tio n o f

its i ns ur ance contr actw i th H . A . S. , as w el l as a dec l ar at i on thatE s s ex had no dutyt o defe nd ori ndemni fyH . A . S. agai ns tanycl ai m i nvol vi ng defe ct i ve s pr i nkl erheads . ( A pp. 168- 6 9 . ) H. A. S . n e v e re n t e r e d a n a p p e a r a n c e i n th e d i s tr i c tc o u r tc a s e . ( Ap p . 3 3 6 - 3 7 . ) On M a y7 , 2 0 0 7 , th e d is tr ic t c o u rt g ra n te d E s s e x ’s u n o p p o s e d m o tio n f o r s u m m a ry ju d g m e n t. (A p p . 3 3 7 , 5 8 5 -8 6 .) Ju d g e T u c k e r a w a rd e d re sc iss io n o f th e in su ra n c e c o n tra c t an d a llT o ll f ile d a M o tio n to In te rv e n e in th e d is tr ic t c o u rt a c tio n b e tw e e n E s s e x a n d H .A .S . 4 (A pp . 33 7, 58 7-88.) Judg e T uck er di sm i ssed T oll ’s M oti on t o Int ervene as m oo tbecau se s um m aryj udgm enthad al r eadybeen e nt er ed i n favorof Ess ex and the mat t erhad bee n clos ed . (A p p . 3 3 7 , 5 9 8 . ) 5 d esired d ec laratoryreli ef to E ssex . (A p p . 5 8 5 -86 . )

4 T hi r d, unaw ar e of the pende ncyof the Es s ex v . H. A . S. P r ot ect i on pr ocee di ng b e f o re Ju d g e T u c k e r, T o ll i n stitu ted th is a c tio n a g a in st E ss e x a n d tw o o th e r in su re rs in s ta te c o u rt . Tol lB r os . , I nc. v. C entur

y Sur . C o. , N o. 07 -0145 8 (C ou rtof C om m on P l eas, C hes t erC ounty , Pa. fi l ed Feb. 15, 2007) . T ol l s oughtt o compel E s s ex t o defe nd and in d e m n if yit f ro m th e p e n d in g s ta te c o u rt a c tio n s b yth e p la in tif f -h o m e o w n e rs . T h e c a se w a s re m o v e d to th e E a ste rn D istric t o f P e n n sy lv a n ia a n d a ss ig n e d to J u d g e T u c k e r. E s s e x m o v e d f o r s u m m a ry ju d g m e n t, w h ic h w a s g ra n te d f o r t w o re a s o n s . Tol lB r os . , I

nc. , 2 0 0 8 W L 6 3 8 2 3 2 , at * 1 , * 3 . F irst, Ju d g e T u c k e r h e ld th a t th e d e c isio n in Es s ex v . H. A . S. P r ot ect i on h a d c la im p re c lu s iv e e f f e c t o n th e in s ta n t c a s e . Id . a t * 3 -* 4 . Second, the courtdet erm i ned thatT ol l had no r i ght s as an addi t i onal i ns ur ed underthe E s s ex i ns ur ance pol i cythats ur vi ved the t erm i nat i on of the pol i cyas t o the named in s u re d , H .A .S . I

d. a t * 4 . T h is a p p e a l f

o llo w e d . II. T hi s C our texer ci s es pl enaryr evi ew of the di s tr i ctcourt ’ s deci s i on gr ant i ng s u m m a ry ju d g m e n t, a n d a p p lie s th e s a m e te s t th a t w a s a p p lic a b le b e lo w . D oe v. C . A . R . S. P r ot . P l us , I

nc. , 5 2 7 F . 3 d 3 5 8 , 3 6 2 (3d C ir . 2 0 0 8 ). U n d er R u le 56 (c), “su m m aryT he pr ecl us i ve ef fec tof a j udgm enti n a fe der al - ques t i on cas e i s governed by 5 “ ‘u n if o rm f e d e ra l ru le[ s]’ o f

re s ju d ica ta, w h ich [ th e S u p re m e ] C o u rt h a s u lti m a te author i tyt o det erm i ne and de cl ar e. ” Tayl or , 128 S. C t . at2171 ( quot i ng Sem t ek , 53 1 U. S. a t 5 0 8 ) ( f

ir s t a lte ra tio n in o ri g in a l) . 6 j udgm enti s appr opr i at e ‘ i f the pl eadi ngs , the di s coveryand di s cl os ur e mat er i al s on fi l e, and anyaff

i davi t s s how thatther e i s no genui ne i s s ue as t o anym at er i al fac tand thatt he m ovanti s ent i t l ed t o j udgm entas a mat t erof l aw . ’ ” Star t z el lv. C i t

y of P hi la. , 533 F. 3d 1 8 3 , 1 9 2 (3 d C ir . 2 0 0 8 ) ( q u o tin g F e d . R . C iv . P . 5 6 (c )) . “The pr ecl us i ve ef

fec tof a f

eder al - courtj udgm enti s det erm i ned byfede r al comm on l aw . ” T

a y lo r v . S tu rg e ll , 128 S. C t . 2161, 2171 ( 2008) ( ci t i ng Sem t ek I nt ’ lI nc. v. Lockhee d Mar t i n C or

p. , 5 3 1 U .S . 4 9 7 , 5 0 7 -5 0 8 (2 0 0 1 )). In g e n e ra l, “[ f ]o r ju d g m e n ts in d iv e rsityc a se s, f

e d e ra l law in c o rp o ra tes th e ru les o f p re c lu sio n a p p lied b yth e S tate in w hi ch the r ender i ng courts i t s . ” Tayl or , 128 S. C t . at2171 n. 4 ( ci t i ng Sem t ek , 531 U . S. at 508) . Feder al r el i ance on s t at e l aw y i el ds i n di ver s i tycas es “i n s i tuat i ons i n w hi ch the 5 s t at e l aw i s i ncompat i bl e w i th fede r al i nt er es t s . ” Sem t ek , 5 3 1 U .S . a t 5 0 9 . H er e, the r ender i ng courtw as a fe der al courts i t t i ng i n Penns y l vani a and e xer ci s i ng di ver s i tyj ur i s di ct i on. A ppl i cat i on of Penns y l vani a pr ecl us i on l aw t o thi s cas e i s not in c o m p a tib le w ith f

e d e ra l in ter e sts . T h u s, P e n n sy lv a n ia p re c lu sio n law w ill d icta te w h e th e r T o ll’ s c la im s a re b a rr e d . III . A. T he courtbel ow det erm i ned thatthe dec i s i on i n Es s ex v . H. A . S. P r ot ect i on w as aT h e c o u rt b e lo w v iew e d th e q u e stio n o f p riv itya s u n d isp u ted b yT o ll. H o w e v e r, th is 6 concl us i on m i s appr ehends T ol l ’ s pos i t i on. I n the port i on of i t s br i ef di s cus s i ng r es ju d ica ta, T o ll arg u e d th a t th e c a u se s o f a c tio n d if

f e re d , h e n c e it w a s u n n e c e ss a ryto c o n sid e r th e o th e r e lem e n ts o f th e c laim p re c lu sio n sta n d a rd . (A p p . 6 1 1 -1 3 (T o ll D ist. C t. B r . 3- 5. ) ) H ow ever , i n t he cont extof i t s i s s ue pr ecl us i on ar gum ent , T ol l ar gued that H . A . S. w as noti t s pr i vy . ( A pp. 614- 16 ( T ol l D i s t . C t . B r . 6- 8. ) ) T ol l al s o cont ended that the cr i t er i a t o det erm i ne the pr es ence orabs ence of pr i vi tyar e the s ame w hetherthe i s s ue is on e o f c lai m p rec lusion o r i ssu e p rec lusion . (A p p . 6 1 4 (T o ll D ist . C t. B r. 6 . )) 7 f in a l ju d g m e n t, o n th e m e ri ts , in v o lv in g T o ll’ s p ri v y , H .A .S . Tol lB r os . , I nc. , 2 0 0 8 WL 638232, at*4. A ccor di ng t o J udge Tucker , T ol l and H . A . S. w er e i n pr i vi tybeca us e “a s contr act or - s ubcontr act orand named i ns ur ed- addi t i onal i ns ur ed, the tw o s har ed a c o n c u rr e n t in te re s t in c o v e ra g e u n d e r t h e E s s e x in s u ra n c e p o lic y. . . .” Id . at*3 n. 5. 6 I n addi t i on, J udge Tuckerhel d t hatthe i ns t ants ui ti nvol ved the s ame caus es of ac t i on as th e p ri o r s u it. Id . at *4 . H en ce , the d istri ct co u rtfo u n d that the g ran t of su m m ary j udgm enti n favorof Ess ex i n t he Es s ex v . H. A . S. P r ot ect i on m att erhad cl ai m pr ecl us i ve e f f e c t u p o n th e c u rr e n t p ro c e e d in g . I d. U nderPenns y l vani a l aw , “[a ] nyfi nal , val i d j udgm enton the mer i t s bya courtof compet entj ur i s di ct i on pr ecl udes anyfutur e s ui tbetw een the part i es orthei rpr i vi es on the s ame caus e of a ct i on. ” B alentv. C i t y of W i lkes- B arre , 6 6 9 A .2 d 3 0 9 , 3 1 3 (P a . 1 9 9 5 ).

“ F o rth e d o c tr i n e o f

r e s j u d i c a t a t o p r e v a i l , P e n n s y l v a n i a c o u r t s r e q u i r e th a tth e two act i on s shar e t he fo l l ow i ng fou r condit i on s: (1) the thi ng sued u po n o r for ; (2) the cau se o f a c tio n ; (3 ) th e p e rso n s a n d p a rties to th e a c tio n ; an d (4 ) th e c a p a c ityo f th e p a rties toT hi s opi ni on tr eat s the t erm “r es j udi cat a” a s s ynonym ous w i th “cl ai m pr ecl us i on. ” 7 S e e Tu r n e rv . Cr a wf

o r d Sq u a r e Ap a r tmen t

s I I I , L. P. , 4 4 9 F . 3 d 5 4 2 , 5 4 8 n . 1 0 (3d C ir . 2 0 0 6 ). 8 s u e o r b e s u e d .” Tu r n e rv . Cr a wf o r d Sq u a r e Ap a r tmen t

s I I I , L. P. , 449 F. 3d 542, 548 ( 3d 7 C i r . 2006) ( ci t i ng B ear of f v. B ear of

f B r os . , I nc. , 3 2 7 A .2 d 7 2 , 7 4 (P a . 1 9 7 4 )) . A lth o u g h P e n n sy lv a n ia r e q u ire s a n “ id e n tityo f p e rso n s a n d p a rties ” f

o r c laim p re c lu s io n to a p p ly, th a t c o n c e p t in c lu d e s a p a rt y ’s p ri v ie s . Id . at548 n. 11 ( ci t i ng St eve ns on v. Si lverm an , 2 0 8 A .2 d 7 8 6 , 7 8 8 (P a . 1 9 6 5 )). In re c e n t y e a rs, P e n n sy lv a n ia co u rt s h av e f

av o red the d ef

init ion o f p ri v ityarti cu lat ed in B lack ’s L aw D ict ion ary : “‘[i] n i t s b r o a d e s ts e n s e , “ p r i v i ty ” i s d e f i n e d a s mu tu a l o rs u c c e s s i v e r e l a t i o n s h i p s t o th e s a me rig h t o f p ro p e rty , o r su c h a n id e n tific a tio n o f in ter e st o f

o n e p e rso n w ith a n o th e r a s to r epr es entthe s ame l egal r i ght . ’ ” A m m on v. McC los key , 6 5 5 A . 2 d 5 4 9 , 5 5 4 (P a. S u p er. 1 9 9 5 ) (q u o tin g B lac k ’s L a w D ictio n a ry(5 th e d . 1 9 7 9 )); B e rg d o ll v. C o m m o n w e a lth , 858 A .2 d 1 8 5 , 1 9 7 n .4 (P a . C o m m w . 2 0 0 4 ). In a re late d c o n tex t, P e n n sy lv a n ia la w g e n e ra llyh o ld s th a t an in su re r is in p riv ity w ith its in s u re d w h e n a p p lyin g is s u e p re c lu s io n p ri n c ip le s . G r eenway C tr . , I nc. v. Es s ex I ns . C o. , 4 7 5 F .3 d 1 3 9 , 1 4 9 (3 d C ir . 2 0 0 7 ). H o w e v e r, G reenw ay C enter al s o cr eat es an exce pt i on t o t hatpr i nci pl e: ther e i s no pr i vi tybetw een a n i ns ur erand i t s i ns ur ed w hen th e irin te re s ts a re in c o n f lic t. I d. I n G r eenway C ent er , W i nco A cqui s i t i ons , I nc. ( “W i nco”) oper at ed a s ubs t ance a b u s e d e to x if

ic a tio n c e n te r ( “ C e n te r” ). I d. at142. I n J une, 1997, W i nco fi l ed for9

b a n k ru p tc y . Id . S h o rt ly th e re a f te r, M a rk W ille t d ie d w h ile b e in g tr e a te d a t th e C e n te r. Id . A tthe t i m e of W i l l et ’ s death, W i nco w as cover ed bya gene r al l i abi l i tyi ns ur ance p o lic yis s u e d b yE s s e x In s u ra n c e C o m p a n y , i d. at143, coi nci dent al l y , the appe l l ee i n the i ns t antcas e. A s a r es ul tof the bankrupt cypr oces s , an ent i tyknow n as G C I began o p e ra tin g th e C e n te r i n J a n u a ry, 2 0 0 2 . I d. In Ju n e , 1 9 9 9 , W ill e t’s e sta te in iti a ted a w ro n g f u l d e a th a c tio n a g a in st G C I in P e n n s y lv a n ia s ta te c o u rt , b e f o re J u d g e P e te r O ’B ri e n . I d. at143- 44. T he es t at e di d not n a m e W in c o a s a d e f

e n d a n t in th a t ac tio n , an d th e sta tu te o f lim itatio n s to a ss e rt a c laim a g a in s t W in c o e x p ir e d . I d. at143. T he es t at e then fi l ed a mot i on s eeki ng t o amend t he c a p tio n to in c lu d e W in c o . Id . E s s ex r et ai ned l egal r epr es ent at i on on behal f of W i nco; thatatt orneyfi l ed a M ot i on t o I nt ervene on be hal f of W i nco i n or dert o oppos e the e s ta te ’s m o tio n to a m e n d . I d. at144. J udge O ’ B r i en det erm i ned thatG C I w as the “s ucce s s ori n i nt er es t ” t o W i nco, and gr ant ed the es t at e’ s m ot i on “t o the ext entof amendi ng the capt i on i n t he s t at e courtact i on t o r ename the def endantas ‘ [G C I ] as s ucce s s ori n i nt er es tt o W i nco A cqui s i t i ons , I nc. ’ ” I d. a t 1 4 4 -4 5 . W in c o ’s M o tio n to In te rv e n e w a s d is m is s e d a s m o o t. I d. a t 1 4 8 . G C I then i ni t i at ed a s t at e courtdecl ar at oryj udgm entact i on, s eeki ng a dec l ar at i on that“bec aus e G C I i s named i n t he s t at e courtact i on as a ‘ s ucce s s ort o W i nco A cqu i si t i on [s] , Inc. , ’ Essex h as an ob l i gati on t o d efen d an d indem nifyi ti n [the est at e’s ] s t at e courtw r ongful death act i on[, ] ” s i nce Ess ex w as W i nco’ s i ns ur eratthe t i m e of10

W ille t’ s d e a th . I

d. at145. A ft erthe ca s e w as r emoved t o fede r al court , i tpr ocee ded t o a bench tr i al befor e J udge J ames M unl ey . D ur i ng the tr i al , G C I ar gued thatJ udge O ’ B r i en’ s fi ndi ng thati tw as a s ucce s s ori n i nt er es tt o W i nco had i s s ue pr ecl us i ve ef fec t u p o n th e p ro c e e d in g s b e f o re J u d g e M u n le y . I

d. at145- 46. J udge M unl eyagr eed that i s s ue pr ecl us i on appl i ed bec aus e “Ess ex, byvi r tue of i t s r et ent i on of couns el on behal f of W i nco, w as i n pr i vi tyw i th a partyt o the s t at e courtact i on[. ] ” I d. T h is C o u rt re v e rse d . T h e p a n e l n o ted th a t W in c o w a s n e v e r a p a rtyto th e sta te c o u rt litig a tio n b e c a u s e its M o tio n to In te rv e n e w a s d is m is s e d . I d. at148. T he pane l e m p h a siz e d , h o w e v e r, th a t “e v e n if W in c o h a d b e e n a p a rty , E ss e x c o u ld n o t, an d w o u ld not , be dee m ed i n pr i vi tyw i th W i nco, des pi t e thei ri ns ur er - i ns ur ed r el at i ons hi p, s i nce W i nco and Ess ex ha d co nfl i ct i ngi nter est s i n the out come of [the mot i on t o amend t he capt i on] . ” Id . (e m p h a s is a d d e d ). As th i s Co u r te x p l a i n e d , th e e s t a t e ’ s mo t i o n “ s o u g h tt o a me n d th e c a p t i o n t o n a me a s d e f e n d a n t ei ther ‘W inco A cq u isi ti o n [s], Inc. d/b /a G ree n w ayC en ter’ or‘ [G C I ] as s ucce s s ori n i nt er es tt o W i nco A cqui s i t i on[s ] , I nc. ’ ” I d. at150. W i nco onl yhad an i nt er es ti n oppos i ng the fi r s tof thos e tw o al t ernat i ves , l es ti tbe s ubj ect ed t o pot ent i al lia b ility. I

d. H o w e v e r, W in c o h a d “ a t b e s t, n o in ter e st atal l i n w hetherthe capt i on w as change d t o ‘ [G C I ] as s ucce s s ori n i nt er es tt o W i nco A cqui s i t i on, I nc’ i nas m uch as s uch an amendm entw oul d have no be ar i ng on W i nco’ s l i abi l i ty . ” I d. a t 1 5 0 -5 1 . B ycontr as t , E s s ex had a “s tr ong i nt er es ti n oppos i ng both of the pr opos edT he r ecor d does notm ake c l earw hetherH . A . S. w as a goi ng conce rn w hen Es s ex v . 8 H. A . S. P r ot ect i on w as deci ded. A ccor di ng t o T ol l , E s s ex knew thatH . A . S. w as defunc t w h en E ssex co m m en ce d the d ec laratoryjud g m en t acti o n ag ains t H . A . S . (T o ll B r. 2 1 . ) 11 amendm ent s , forE s s ex w oul d be l i abl e t o defe nd and i ndemni fyW i nco ori t s s ucce s s or r egar dl es s of w hetherW i nco i t s el f w as the named defe ndantorw hetherG C I w as d eterm ined to b e W inco ’s su cc esso r i n interest fo r th e p u rpo se o f a ssu m ing W inco ’s l i abi l i t i es . ” I

d. at 15 1 . B ec au se W inco an d E ssex h ad d iffe ri n g interests, this C o u rt decl i ned t o appl yPenns y l vani a’ s gener al rul e thatpr i vi tyexi s t ed betw een a n i ns ur erand its in s u re d . I

d. at149, 151; cf

. R adakovi ch v. R adakovi ch , 846 A . 2d 709, 715 n. 7 ( Pa. Super . 2004) ( fi ndi ng no pr i vi tybetw een a fatherand hi s s on i n l i ghtof thei rconfl i ct i ng interests as to o w n ersh ip o f a b rok era g e a cc o u n t) . T he r at i onal e of G reenw ay C enter a p p lies p e rsu a siv e lyto th e in sta n t ca se . B yits defa ul ti n Es s ex v . H. A . S. P r ot ect i on H . A . S. w as cl ear l yi ndi ffe r entt o a dec i s i on r es ci ndi ng i t s E s s ex i ns ur ance pol i cy . T ol l , how ever , had a s tr ong i nt er es ti n oppos i ng 8 the re scission o f th e E ssex insu ran ce p o li cy . T o ll is a v iable e n ti tyw h o se re so u rce s are thr eat ened byver di ct s i n favorof the pl ai nt i ff- hom eow ner s , part i cul ar l yi f i ti s noti ns ur ed agai ns ts uch l os s es byE s s ex. T ol l ant i ci pat ed the pos s i bi l i tyof l i abi l i tyar i s i ng fr om H . A . S. ’ s per form ance as a s ubcontr act or , s peci fi cal l yr equi r i ng H . A . S. t o obt ai n gener al lia b ility c o v e ra g e to p ro te c t T o ll’ s in te re s ts . W e hol d t hatther e w as no pr i vi tybetw een H . A . S. and Tol l forpurpos es of det erm i ni ng the pr ecl us i ve ef fec tvi s a vi s T ol l of Ess ex’ s defa ul ts um m aryj udgm entE s s ex dedi cat es a s i gni fi cantpor t i on of i t s r es pons e br i ef t o r efut i ng the not i on that 9 T ol l w as a nec es s aryori ndi s pens abl e partyt o the Es s ex v . H. A . S. P r ot ect i on p ro c e e d in g . E s s ex al s o ar gues thatT ol l had ampl e opportuni t i es t o j oi n thatcas e as an i nt ervenor , but fai l ed t o do s o i n a t i m el yfas hi on. T hes e poi nt s do l i t t l e t o i nform ourr es ol ut i on of the di s pos i t i ve ques t i on–namel y , w hetherT ol l w as a partyt o Es s ex v . H. A . S. P r ot ect i on , o r in pr i vi tyw i th a partyt o t hatact i on. T her e i s no di s put e thatT ol l w as nota partyt o the act i on; i t s m ot i on t o i nt ervene w as deni ed as m oot . N ori s ther e a que s t i on as t o w hat ent i t i es w er e part i es –onl yE s s ex and H . A . S. A nd fi nal l y , forthe r eas ons s t at ed above , T o ll w a s n o t in p ri v ity w ith H .A .S . 12 agai ns tH . A . S. I n t he abs ence of s uch pr i vi ty , the “pe r s ons and part i es ” t o Es s ex v . H. A . S. P r ot ect i on d iffe r fro m tho se in the in stan t case . H en ce , w e w il l r ev erse the d istri ct co u rt ’s hol di ng thatthe doctr i ne of c l ai m pr ecl us i on bar s T ol l ’ s curr entact i on agai ns tE s s ex. 9 O urdeci s i on i s i n acc or d w i th the appr oach r ecomm ended bythe R es t at ement ( Second) of J udgm ent s ( “R es t at ement ”) , an author i tythatPenns y l vani a court s have r el i ed u p o n w h e n re s o lv in g p re c lu s io n is s u e s . Turne r , 449 F. 3d at550 ( ci t i ng McArdl e v. T ro n e tti , 627 A . 2d 1219, 1223 ( Pa. Super . 1993) ) ( “[W ] e ar e ac t i ng cons i s t ent l yw i th t he appr oach of

the Penns y l vani a court s i n adher i ng t o the R es t at ement( Second) of Ju d g m e n ts in a n a ly z in g re s ju d ica ta is su e s.” ). P u rsu a n t to se c tio n 5 6 o f th e R e sta tem e n t, “[a ] j udgm entfororagai ns tthe pr om i s ee i n an ac t i on betw een hi m and the pr om i s ordoes notpr ecl ude an a ct i on bythe bene fi ci aryon the obl i gat i on t o hi m unl es s atthe t i m e the j udgm entw as r ender ed the pr om i s ee ha d pow ert o di s char ge the obl i gat i on. ” R es t at ement( Second) of J udgm ent s § 56( 1) ( 1982) . A pr om i s ee’ s pow ert o di s char ge an o b lig a tio n o th e rw ise d u e to a b e n e f icia ryter m in a tes w h e n “ th e b e n e f icia ryc h a n g e s h is pos i t i on i n r el i ance on t he pr om i s e, as s ent s t o i t , orbr i ngs an ac t i on on i t . ” R es t at ement13

( Second) of J udgm ent s § 56, cmt . a ( ci t i ng R es t at ement( Second) of C ontr act s §§ 305, 3 1 1 (3 )) . H er e, H . A . S. ent er ed i nt o an i ns ur ance agr eementw i th E s s ex forthe bene fi tof T ol l . T he contr actbetw een Tol l and H . A . S. expr es s l yr equi r ed H . A . S. t o pr ocur e s uch a pol i cy , and forbi d H . A . S. fr om begi nni ng w or k unt i l the pol i cyw as i n pl ace . T ol l r el i ed u p o n th e p ro tec tio n a f

f o rd e d b yth e E ss e x in su ra n c e p o licyw h e n it p e rm itt e d H .A .S . to i ns t al l fi r e s uppr es s i on s y s t ems i n hom es undercons truct i on. T her efor e, H . A . S. had no pow ert o t erm i nat e Ess ex’ s obl i gat i on i n favorof Tol l bythe t i m e Es s ex v . H. A . S. P r ot ect i on w a s d e c id e d . A s a re su lt, th e R e sta tem e n t w o u ld a llo w T o ll t o p ro c e e d w ith a n a c t i o n a g a i n s tE s s e x o n th e o b l i g a t i o n a l l e g e d l yd u e u n d e rth e i n s u r a n c e c o n tr a c t . We w ill d o th e s a m e . B. O urr ever s al on t he cl ai m pr ecl us i ve ef fec tof Es s ex v . H. A . S. P r ot ect i on w ill p e rm it T o ll t o c o n tes t w h e th e r H .A .S . in f a c t p e rp e tra ted a f

ra u d e n tit lin g E ss e x to v o id i t s H . A . S. pol i cy . J udge Tuckeral s o det erm i ned bel ow thats i nce i n hervi ew the Ess ex pol i cyw as voi d; “ther e exi s t s no cover age f orthe addi t i onal i ns ur ed, T ol l B r os . , pur s uant t o the t erm s of the A ddi t i onal I ns ur ed Endors ement . ” Tol lB r os . , I nc. , 2008 W L 638232, a t * 4 . T o ll, h o w e v e r, m a d e se v e ra l ar g u m e n ts b e lo w th a t th e p o licym ig h t p e rm it c o v e r a g e f

o ra n a d d i t i o n a l i n s u r e d n o twi th s t a n d i n g a r e s c i s s i o n o f H. A. S . ’ s c o v e r a g e . As thos e ar gum ent s w er e neve rcons i der ed byJ udge Tucker , w e l i kew i s e r ever s e the gr antof14

s u m m a ry ju d g m e n t o n th is is s u e . I V. F o r th e re a so n s s e t f

o rth a b o v e , the d istric t co u rt’s ju d g m e n t in f a v o r o f E ss e x w ill b e re v e rs e d a n d th e c a s e re m a n d e d f o r f u rt h e r p ro c e e d in g s c o n s is te n t w ith th is o p in io n .