Court Opinion

ID: 4258212
Source: CourtListenerOpinion
Date Created: 2018-03-26 18:50:48.116307+00
Date Added: 2024-06-11T14:28:22.147801
License: Public Domain

J-A01018-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

SEAGRAVE FIRE APPARATUS, LLC         IN THE SUPERIOR COURT
                                               OF
                                          PENNSYLVANIA

                v.

CNA D/B/A CONTINENTAL CASUALTY
COMPANY AND THE CONTINENTAL
INSURANCE COMPANY,; AND
LEXINGTON INSURANCE COMPANY
D/B/A NATIONAL UNION FIRE
INSURANCE COMPANY OF
PENNSYLVANIA AND AMERICAN
INTERNATIONAL SPECIALTY LINES
INSURANCE COMPANY; AND
NATIONWIDE ON BEHALF OF LIBERTY
MUTUAL D/B/A EMPLOYERS MUTUAL
LIABILITY, OTHERWISE KNOWN AS
WAUSAU INSURANCE; AND RSUI D/B/A
LANDMARK AMERICAN INSURANCE
COMPANY; AND ACE D/B/A CENTENNIAL
INSURANCE COMPANY, CENTURY
INDEMNITY, CAL UNION, INA/AETNA,
CIGNA INSURANCE COMPANY,
INSURANCE COMPANY OF NORTH
AMERICA AND WESTCHESTER FIRE
INSURANCE COMPANY; AND CHARTIS
INSURANCE D/B/A AMERICAN HOME
ASSURANCE; AND AXIS SURPLUS
INSURANCE COMPANY; AND ROYAL
SURPLUS LINES D/B/A/ ARROWPOINT;
AND ONEBEACON D/B/A EMPLOYERS
LIABILITY ASSURANCE; AND THE
HARTFORD D/B/A NEW ENGLAND
REINSURANCE AND FIRST STATE
INSURANCE COMPANY; AND ZURICH
D/B/A NORTH INSURANCE COMPANY OF
NEW YORK AND STEADFAST
INSURANCE COMPANY; AND
LEXINGTON CASUALTY INSURANCE
D/B/A AMERICAN HOME ASSURANCE
J-A01018-18

    (CHARTIS); AND INTERSTATE FIRE AND
    CASUALTY COMPANY D/B/A FIREMAN’S
    FUND; AND ADMIRAL INSURANCE
    COMPANY; AND CRUM AND FORSTER
    D/B/A/ UNITED STATES FIRE
    INSURANCE COMPANY

                                                       No. 2497 EDA 2017

                   Appeal from the Order Entered June 29, 2017
              in the Court of Common Pleas of Philadelphia County
             Civil Division at No.: September Term, 2014 No. 02677

BEFORE: LAZARUS, J., OTT, J., and PLATT, J.*

MEMORANDUM BY PLATT, J.:                              FILED MARCH 26, 2018

        Appellant, Admiral Insurance Company, appeals from the trial court’s

order denying its motion for summary judgment, and granting the motion for

summary judgment of Nationwide Indemnity Company, Steadfast Insurance

Company, and Landmark Insurance Company (collectively, Appellees).

Specifically, the trial court found that Appellant has a duty to contribute to the

defense of Seagrave Fire Apparatus, Inc. (“Seagrave”) in claims asserted

against it, as explained more fully below. We affirm.

        We take the procedural and factual background of this matter from the

trial court’s June 29, 2017 opinion.

              Plaintiff [Seagrave] is a Wisconsin corporation which has for
        many decades manufactured fire engines.             Seagrave is a
        defendant in at least 455 occupational noise induced hearing loss
        claims brought by fire department personnel, who allege their
        deafness was caused by continued exposure to the sounds of the
____________________________________________

*   Retired Senior Judge assigned to the Superior Court.

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     sirens installed by [Appellant] on its fire engines. The exposure
     of some of the underlying plaintiffs allegedly began in the 1960’s.
     In this coverage action, Seagrave seeks payment of defense costs
     by all the insurers who issued policies to it over more than 50
     years.

            Many of those insurers have agreed to share in the costs of
     Seagrave’s defense of the underlying actions under reservations
     of rights. However, [Appellant] refuses to provide a defense and
     has moved for a summary, declaratory judgment that it has no
     duty to defend or indemnify Seagrave in the underlying actions.
     [Appellees], who asserted cross-claims for contribution and
     indemnity and equitable contribution against [Appellant], moved
     for summary judgment on those claims as well. . . .

(Trial Court Opinion, 6/29/17, at 1-2).    The trial court denied Appellant’s

motion and granted Appellees’ motion on June 29, 2017, finding Appellant had

a duty to defend Seagrave. Appellant timely appealed.

     Appellant raises three issues for the Court’s review.

     1. Did the trial court err in its determinations that policies
     provided primary coverage for continuous losses and that the
     other insurance-continuous losses endorsement does not exclude
     primary coverage for continuous losses like [noise induced hearing
     loss (NIHL)] and, rather, only provides excess coverage for NIHL
     claims that fall within the temporal limits prescribed by the
     endorsement?

     2. Did the trial court err in its determination that attorneys’ fees
     are not subject to the self-insured retention endorsement and,
     therefore, Seagrave’s self-insured retention obligations have no
     bearing on [Appellant’s] duty to contribute to Seagrave’s defense
     costs?

     3. Did the trial court abuse its discretion in limiting discovery in
     this matter to the collection of all applicable insurance policies
     issued by defendants when full and open discovery would have
     produced evidence sufficient for [Appellant] to sustain its burden
     of proof in its interpretation of the application of the other
     insurance-continuous losses endorsement by establishing the
     intent of the parties was for the endorsement to exclude primary
     coverage for NIHL claims that are at issue in this case?

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(Appellant’s Brief, at 6-7) (unnecessary capitalization omitted).

       In its first issue, Appellant argues that the trial court erred when it found

that its policies provide coverage for losses like NIHL, and that therefore it has

a duty to defend Seagrave. (See id. at 16-24).1 It maintains that, “[w]hen

correctly applied to the facts at hand, the [e]ndorsement excludes primary

coverage for continuous losses and provides excess coverage, when other

insurance is available, for those continuous losses that fall within the stated

temporal limits.” (Id. at 16). This issue does not merit relief.

       Our standard of review of a trial court’s ruling on a summary judgment

motion is well-settled:

              We view the record in the light most favorable to the
       nonmoving party, and all doubts as to the existence of a genuine
       issue of material fact must be resolved against the moving party.
       Only where there is no genuine issue as to any material fact and
       it is clear that the moving party is entitled to a judgment as a
       matter of law will summary judgment be entered. Our scope of
       review of a trial court’s order granting or denying summary
       judgment is plenary, and our standard of review is clear: the trial
       court’s order will be reversed only where it is established that the
       court committed an error of law or abused its discretion.

____________________________________________

1 We acknowledge that Appellant maintains Wisconsin law should be applied
to this dispute. (See Appellant’s Brief, at 16 n.3). The trial court observed
that the law of Pennsylvania and Wisconsin is the same on the issues before
it, and it cited to both jurisdictions. (See id.; see also Trial Ct. Op., at 2 n.1-
2). We decline to weigh in on this matter because it would have no practical
effect on our review of the trial court’s decision. See Erie Ins. Exchange v.
Claypoole, 673 A.2d 348, 352 (Pa. Super. 1996) (“It is impermissible for
courts to render purely advisory opinions.”) (citations omitted).

                                           -4-
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Good v. Frankie & Eddie’s Hanover Inn, LLP, 171 A.3d 792, 795 (Pa.

Super. 2017) (citation omitted).

     Further:

     Insurance policies are contracts, and the rules of contract
     interpretation provide that the mutual intention of the parties at
     the time they formed the contract governs its interpretation. Such
     intent is to be inferred from the written provisions of the contract.
     If doubt or ambiguity exists it should be resolved in insured’s
     favor.

            An insurer’s duty to defend is broader than its duty to
     indemnify. It is a distinct obligation, separate and apart from the
     insurer’s duty to provide coverage. An insurer is obligated to
     defend its insured if the factual allegations of the complaint on its
     face encompass an injury that is actually or potentially within the
     scope of the policy. As long as the complaint might or might not
     fall within the policy’s coverage, the insurance company is obliged
     to defend. Accordingly, it is the potential, rather than the
     certainty, of a claim falling within the insurance policy that triggers
     the insurer’s duty to defend.

           The question of whether a claim against an insured is
     potentially covered is answered by comparing the four corners of
     the insurance contract to the four corners of the complaint. An
     insurer may not justifiably refuse to defend a claim against its
     insured unless it is clear from an examination of the allegations in
     the complaint and the language of the policy that the claim does
     not potentially come within the coverage of the policy. In making
     this determination, the factual allegations of the underlying
     complaint against the insured are to be taken as true and liberally
     construed in favor of the insured. Indeed, the duty to defend is
     not limited to meritorious actions; it even extends to actions that
     are groundless, false, or fraudulent as long as there exists the
     possibility that the allegations implicate coverage.

Am. and Foreign Ins. Co. v. Jerry’s Sport Center, Inc., 2 A.3d 526, 540-

41 (Pa. 2010) (citations and quotation marks omitted).

     In interpreting the terms of an insurance contract, we examine
     the contract in its entirety, giving all of the provisions their proper

                                      -5-
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     effect. Our goal is to determine the intent of the parties as
     exhibited by the contract provisions. In furtherance of our goal,
     we must accord the contract provisions their accepted meanings,
     and we cannot distort the plain meaning of the language to find
     an ambiguity. Moreover, we will not find a particular provision
     ambiguous simply because the parties disagree on the proper
     construction; if possible, we will read the provision to avoid an
     ambiguity.

Burton v. Republic Ins. Co., 845 A.2d 889, 893 (Pa. Super. 2004) (citations

omitted).

     Instantly, the relevant sections of the policy provide:

     COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

     1. Insuring Agreement.

        a. [Appellant] will pay those sums that [Seagrave] becomes
        legally obligated to pay as damages because of “bodily injury”
        . . . to which this insurance applies. We will have the right and
        duty to defend the insured against any “suit” seeking those
        damages. . . .

                                     *     *   *

        b. This insurance applies to “bodily injury” . . . only if:

            (1)   The “bodily injury” is caused by an “occurrence” that
                  takes place in the “coverage territory”;

            (2)   The “bodily injury” . . . occurs during the policy period;
                  and

            (3) Prior to the policy period, [Seagrave did not know]
            that the “bodily injury” . . . had occurred, in whole or in part.
            ...

        c. “Bodily injury” . . . which occurs during the policy and was
        not known [by Seagrave] to have occurred . . . includes any
        continuation, change or resumption of that “bodily injury” . . .
        after the end of the policy period.

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(Commercial Lines Policy, Section I—Coverages, Coverage A Bodily Injury and
Property Damage Liability, Insuring Agreement, at 1 § 1(a)-(c)).

      SECTION V—DEFINITIONS

      3.    “Bodily injury” means bodily injury, sickness or disease
            sustained by a person, including death resulting from any of
            these at any time.

                                   *        *       *

      13.   “Occurrence” means an accident, including continuous or
            reported exposure to substantially the same general
            harmful conditions.

(Commercial Lines Policy, Section V—Definitions, at 12 § 3, 14 § 13).

      Instantly, Appellant argues that the Other Insurance—Continuous

Losses endorsement to the policy should be interpreted to mean that it is only

liable for excess insurance.       (See Appellant’s Brief, at 16-24).               The

endorsement provides, in pertinent part:

      This insurance is excess over all valid and collectible primary,
      excess and contingent insurance that is available to any insured,
      whether in the same policy period or other policy periods, for
      “bodily injury” . . . caused by an “occurrence” that involves the
      continuous or repeated exposure to substantially the same
      general harmful conditions:

      a) Beginning prior to and continuing after 9/08/2009 and ending
      by or before the end of the policy period[.]

                                       *        *       *

      When this insurance is excess, we will have no duty to defend the
      insured against any “suit” if any other insurer has a duty to defend
      the insured against that “suit”. . . .

(Commercial    Lines   Policy,   Endorsement,               Other   Insurance—Continuous

Losses).

                                           -7-
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      In interpreting the import of this language, the trial court found:

                   The endorsement does not say “this insurance will
      provide coverage for only the following limited circumstances.”
      Instead, it reads “this insurance is excess over all [other]
      insurance” with respect to the following limited occurrences, i.e.,
      those firefighters who claim their exposure to the sirens began
      prior to, and continued after September 8, 2009, but ended by or
      before June 1, 2011.”         Therefore, in some very limited
      circumstances not applicable here, [Appellant’s] policies provide
      excess coverage to Seagrave. When such limited circumstances
      do not exist, the insurance coverage afforded by the policies is not
      excess; it is primary under the general insuring provisions cited
      [above. (See Insuring Agreement, supra, at 1 § 1(a)-(c)).]

             [Appellant] argues that, as a result of [the] limited excess
      coverage set forth in the endorsement, all other primary coverage
      ceased to exist, but it cannot point to an express statement
      disclaiming all such primary coverage. Such a disclaimer of
      primary coverage for repeated noise exposure commencing before
      or after September 8, 2009, and/or continuing beyond June 1,
      2011, is not contained in the endorsement, nor anywhere else in
      the policies. Instead, the general coverage provisions of the
      policies contemplate primary coverage for any bodily injuries that
      occur during the policy period, even if they continue after the
      expiration of the policies. Furthermore, while the policies prohibit
      coverage for some bodily injuries that commenced before
      September 8, 2009, they do so only if Seagrave knew, prior to the
      policy period, that such bodily injury had occurred.

(Trial Ct. Op., at 5) (unnecessary capitalization omitted).

      We agree with the court’s reasoning. Based on independent review of

the policy, particularly when read in the light most favorable to the insured,

the clear and unambiguous language of the endorsement is that, in certain

limited circumstances, Appellant will only provide excess coverage. However,

occurrences that do not happen during that limited time-period are covered

                                     -8-
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by Appellant as a primary insurer. See Am. and Foreign Ins. Co., supra at

540-41; Burton, supra at 893.

      In addition, Appellant’s claim that it is not required to provide coverage

because Seagrave “knew” of the occurrences before signing the policy does

not merit relief. (Appellant’s Brief, at 20). As observed by the trial court:

             [Appellant] next argues, under the terms of the policies and
      the known loss doctrine, that since Seagrave apparently knew of
      one firefighter’s claims before it entered into the policies with
      [Appellant], Seagrave is barred from recovering for any
      subsequent claims for bodily injury brought by other firefighters.
      However, each underlying plaintiff’s hearing loss constitutes a
      separate “bodily injury” claim under the policies. “Bodily injury”
      is used in the singular throughout the insuring provisions of the
      policies, including the provisions regarding prior knowledge, and
      “bodily injury” is defined as something happening to “a person”,
      not multiple people. Therefore, Seagrave’s knowledge of one
      firefighter’s pre-policies injury does not bar it from claiming
      coverage for any other firefighter’s injuries, particularly those
      claims and injuries of which Seagrave did not learn until after the
      policies had terminated.

(Trial Ct. Op., at 5-6) (unnecessary capitalization omitted).

      Again, we conclude that the clear and unambiguous language of the

contracts supports the trial court’s interpretation. See Am. and Foreign Ins.

Co., supra at 540-41; Burton, supra at 893. Although Seagrave might have

been aware of one alleged occurrence at the time it signed the insurance

contract, it was not aware of the others that had not yet materialized.

Appellant’s claim in this regard fails. Therefore, for all of these reasons, its

first issue does not merit relief.

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      In its second issue, Appellant argues that “the trial court erred in its

interpretation   of   the   [self-insured      retention   (SIR)]   endorsement.”

(Appellant’s Brief, at 24) (unnecessary capitalization omitted). Specifically, it

maintains that “attorneys’ fees are included in the Retained Limit, and

Seagrave is obligated to exhaust its SIR, on a per claim basis, before

[Appellant] must contribute to Seagrave’s defense costs.” (Id.; see also id.

at 24-30). We disagree.

      In addressing Appellant’s issue, we reiterate that “[i]n interpreting the

terms of an insurance contract, we examine the contract in its entirety, giving

all of the provisions their proper effect.”        Burton, supra at 893 (citation

omitted).

      Here, the SIR endorsement provides, in pertinent part:

      1.    [Appellant’s] total liability for all damages will not exceed
            the limits of liability as stated in the Declarations and will
            apply in excess of [Seagrave’s] [SIR] (“Retained Limit”).
            “Retained Limit” is the amount shown below, which
            [Segrave is] obligated to pay, and only includes damages
            otherwise payable under this policy.

                                  *     *      *

                  $75,000    Per Occurrence—Products and Completed
                  Operations

      2. Expenses incurred under the SUPPLEMENTARY PAYMENTS
         provisions of this policy are . . . [i]ncluded in the “Retained
         Limit”[.]

(Commercial Lines Policy, SIR Endorsement, at 1 §§ 1, 2) (emphases added).

      In reviewing the above language, the trial court observed:

                                      - 10 -
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      By its clear terms, the SIR applies only to “damages” paid to
      claimants and “expenses” incurred by the insured. “Expenses” are
      defined in the supplementary payment provisions to include, inter
      alia, things like loss of earnings, as well as

         [A]ll court costs taxed against [Seagrave] in the “suit”.
         However, these payments do not include attorneys’ fees or
         attorneys’ expenses taxed against the insured.

      (Commercial Lines Policy Coverage Form, Section I—Coverages,
      Supplementary Payments—Coverages A and B, at 8 § 1(e)).

      Attorneys’ fees are instead covered under the duty to defend
      portion of the supplementary payments provision[], which states
      that “attorney’s fees . . . will not be deemed to be damages for
      ‘bodily injury’ and will not reduce the limits of insurance.” (See
      id. at 8 § 2). Since attorneys’ fees are neither damages nor
      expenses, they are not the subject of the SIR endorsement, and
      Seagrave’s SIR obligations have no bearing on [Appellant’s] duty
      to contribute to Seagrave’s defense costs.

(Trial Ct. Op., at 6-7) (unnecessary capitalization and footnotes omitted;

record citations added).

      We agree with the sound reasoning and interpretation of the trial court.

Therefore, based on the plain and unambiguous language of the insurance

contract, we conclude that the trial court properly found that attorney fees

were not part of the retained limit of the policy. See Am. and Foreign Ins.

Co., supra, at 540-41; Burton, supra at 893. Appellant’s second issue lacks

merit.

      In its third claim, Appellant maintains that the trial court erred in limiting

discovery in this matter to only the relevant insurance policies before deciding

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the motions for summary judgment.2 (See Appellant’s Brief, at 30-35). This

issue lacks merit.

       “Generally, in reviewing the propriety of a discovery order, our standard

of review is whether the trial court committed an abuse of discretion.

However, to the extent that we are faced with questions of law, our scope of

review is plenary.” Rhodes v. USAA Cas. Ins. Co., 21 A.3d 1253, 1258 (Pa.

Super. 2011) (citation omitted). Pertinent to Appellant’s issue, we observe:

       After the relevant pleadings are closed, but within such time as
       not to unreasonably delay trial, any party may move for summary
       judgment in whole or in part as a matter of law

             (1) whenever there is no genuine issue of any material fact
       as to a necessary element of the cause of action or defense which
       could be established by additional discovery or expert report, or

             (2) if, after the completion of discovery relevant to the
       motion, including the production of expert reports, an adverse
       party who will bear the burden of proof at trial has failed to
       produce evidence of facts essential to the cause of action or
       defense which in a jury trial would require the issues to be
       submitted to a jury.

Pa.R.C.P. 1035.2 (emphasis added).

       We reiterate that “[i]nsurance policies are contracts, and the rules of

contract interpretation provide that the mutual intention of the parties at the

____________________________________________

2 After a January 7, 2016 discovery hearing, the trial court issued an order
that, “in an effort to streamline and expedite this case,” the defendants were
to submit, inter alia, “all extant insurance policies under which there is some
dispute as to coverage for defense costs[,]” with all other discovery stayed.
(Order, 1/07/16, at 1). At a September 22, 2016 status conference, the trial
court denied Appellant’s request that it lift the stay. (See N.T. Conference,
9/22/16, at 30; Order, 9/27/16, at 1).

                                          - 12 -
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time they formed the contract governs its interpretation. Such intent is to

be inferred from the written provisions of the contract.”             Am. and

Foreign Ins. Co., supra at 540 (citation omitted; emphasis added). “When

. . . an ambiguity exists, parol evidence is admissible to explain or clarify or

resolve the ambiguity[.]” Ins. Adj. Bureau, Inc. v. Allstate Ins. Co., 905
A.2d 462, 481 (Pa. 2006) (citations omitted; emphasis added).

      Instantly, as discussed in Appellant’s first two issues, the contract

language is clear and unambiguous. (See supra at 8-10). Therefore, parol

evidence was inadmissible in deciding the motions for summary judgment.

See Ins Adj. Bureau, Inc., supra at 481; Burton, supra at 893. Hence,

because the court was limited to the four corners of the unambiguous contract,

it properly decided the motions for summary judgment after denying

Appellant’s request to produce further discovery.     See Rhodes, supra at

1258; see also Pappas v. UNUM Life Ins. Co. of America, 856 A.2d 183,

186 (Pa. Super. 2004) (“Summary judgment may be entered prior to the

completion of discovery in matters where additional discovery would not aid

in the establishment of any material fact.”) (citation omitted).    Appellant’s

third claim lacks merit.

      Accordingly, for all of the foregoing reasons, the trial court properly

denied Appellant’s motion for summary judgment and granted the motion for

summary judgment of Appellees. See Good, supra, at 795.

      Order affirmed.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 3/26/18

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