Court Opinion

ID: 3177166
Source: CourtListenerOpinion
Date Created: 2016-02-12 21:27:07.600617+00
Date Added: 2024-06-11T12:18:28.406800
License: Public Domain

J-S10020-15

                                   2016 PA Super 31

WESTFIELD INSURANCE COMPANY                              IN THE SUPERIOR COURT OF
                                                               PENNSYLVANIA

                       v.

ASTRA   FOODS   INC.,  JOSE   NOE
CASTILLO RAMOS, AND AMERICAN
GUARANTEE AND LIABILITY INSURANCE
COMPANY

APPEAL OF: ASTRA FOODS INC.
                                                              No. 1392 EDA 2014

                  Appeal from the Order dated March 19, 2014
              In the Court of Common Pleas of Philadelphia County
              Civil Division at No: February Term, 2012 No. 00902

BEFORE: GANTMAN, P.J., STABILE, and PLATT,* JJ.

OPINION BY STABILE, J.:                                  FILED FEBRUARY 12, 2016

        Appellant/defendant Astra Foods Inc. (“Astra”) appeals from the March

19, 2014 order of the Court of Common Pleas of Philadelphia County (trial

court), which granted summary judgment in favor of Appellee/plaintiff

Westfield Insurance Company (“Westfield Insurance”) and denied Astra’s

cross-motion for summary judgment. Upon review, we affirm.

        The   facts   and    procedural        history   underlying   this   appeal   are

undisputed.      As summarized by the trial court in its Pa.R.A.P. 1925(a)

opinion:

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
J-S10020-15

               This is an appeal taken from [the trial court’s] grant of a
        [m]otion for [s]ummary [j]udgment in an insurance coverage
        dispute regarding a workplace injury suffered by Jose Noe
        Castillo Ramos (Ramos) while employed by BK Packaging
        Services, Inc. (BK) (formerly known as JRI Contracting Services,
        Inc.) at a facility operated by [Astra]. In 2009, Ramos suffered
        a severe injury to his hand and arm while cleaning an exhaust
        fan, for which he filed a workers’ compensation claim.
               In January 2012, Workers’ Compensation Judge [(WCJ)]
        Denise Krass rendered a decision on Ramos’ claim. Her decision
        included a finding that Ramos was employed by BK, and that
        Ramos was not a “borrowed employee” of Astra at the time of
        the injury. [Westfield Insurance], which had issued both a
        [commercial general] liability policy [(CGL Policy)] and a
        workers’ compensation policy to Astra, was a party to that
        proceeding. As a result of [WCJ] Krass’ ruling, there was no
        coverage for Ramos’ injuries under the Westfield [Insurance]
        workers’ compensation policy.
               In June 2013, a jury verdict was rendered for Ramos
        against Astra in a personal injury action, and [Ramos] was
        awarded $763,413. Westfield [Insurance] filed a declaratory
        judgment action, arguing that the [CGL Policy] did not cover the
        incident. Westfield [Insurance] and Astra filed cross-motions for
        summary judgment,[1] and the [trial court] granted summary
        judgment for Westfield [Insurance] and denied it for Astra.

Trial Court Rule 1925(a) Opinion, 7/31/14 at 1-2.                    Astra subsequently

moved for reconsideration of the trial court’s summary judgment order. In

response, the trial court issued an order vacating its summary judgment

order    and   directing    Westfield    Insurance   to   file   a    response   to   the

reconsideration motion. On March 19, 2014, the trial court issued an order

reinstating its summary judgment order “with the exception that the

____________________________________________

1
  Westfield Insurance specifically argued that the “employer’s liability”
exclusion provision of the CGL Policy applied to this case, barring Astra from
obtaining a defense and indemnity in the underlying action because Ramos
was an employee of Astra’s by satisfying the definition of “leased worker”
under the CGL Policy.      See Westfield Insurance’s Summary Judgment
Motion, 7/19/13, at ¶¶ 43-44.

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statement that [American Guarantee and Liability Insurance Company

(AGLIC)] was in privity with Astra is stricken.”2 Trial Court Order, 3/19/14.

Astra timely appealed to this Court.3

       On appeal, Astra raises the following issues for our review:

       1. Whether the grant of motion for summary judgment in favor
       of [Westfield Insurance] constituted an error of law and/or an
       abuse of discretion when such opinion and order was based upon
       the following:

             (i) in disregarding an adjudication in a prior action
             that Ramos was not an Astra employee and failing to
             apply the doctrine of collateral estoppel to preclude
             Westfield [Insurance] from asserting otherwise in the
             action[;]
             (ii) in failing to apply the doctrine of judicial estoppel
             to preclude Westfield [Insurance] from taking
             inconsistent positions with regard to Ramos’
             employment status in the action[; and]
             (iii) in failing to declare that the [CGL Policy]
             exclusion categorizing Ramos as an employee by
             defining him as a leased worker properly excluded
             from coverage under [the CGL Policy] is
             unconscionable and void as against public policy[.]
       2. Whether the denial of [Astra’s] cross-motion for summary
       judgment constituted an error of law and/or an abuse of
       discretion when such opinion and order was based upon
       disregarding a finding in a prior adjudication that Ramos was not
       an employee or borrowed employee of Astra.

Astra’s Brief at 9 (capitalization omitted).

       We are mindful that:

       [o]ur scope of review of a trial court’s order granting or denying
       summary judgment is plenary, and our standard of review is
____________________________________________

2
  Astra’s umbrella insurer and additional defendant AGLIC is not a party to
this appeal.
3
   Our review of the docket indicates that the trial court did not order Astra to
file a Pa.R.A.P. 1925(b) statement of errors complained of on appeal.

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      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.
      Summary judgment is appropriate only when the record clearly
      shows that there is no genuine issue of material fact and that
      the moving party is entitled to judgment as a matter of law. The
      reviewing court must view the record in the light most favorable
      to the nonmoving party and resolve all doubts as to the
      existence of a genuine issue of material fact against the moving
      party. Only when the facts are so clear that reasonable minds
      could not differ can a trial court properly enter summary
      judgment.

Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting

Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)).

      Astra first argues the trial court erred in granting Westfield Insurance’s

summary judgment motion because Westfield Insurance was barred by the

doctrine of collateral estoppel from challenging Ramos’ employment status

with Astra. In this regard, Astra argues that the CGL Policy’s definition of a

leased worker—who is considered an employee—is identical to the doctrine

of   borrowed   employee,   which   was    at   issue   in   the   prior   workers’

compensation proceeding in which Westfield Insurance participated. Astra’s

Brief at 16-17.       Astra, therefore, argues that, because WCJ Krass

determined Ramos was not employed by Astra on the basis of the borrowed

employee doctrine, Westfield Insurance must be barred from re-litigating the

issue of Ramos’ employment status with Astra under the terms of the CGL

Policy. Id. We disagree.

      It is settled that:

      Collateral estoppel applies if (1) the issue decided in the prior
      case is identical to one presented in the later case; (2) there was
      a final judgment on the merits; (3) the party against whom the
      plea is asserted was a party or in privity with a party in the prior
      case; (4) the party or person privy to the party against whom

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     the doctrine is asserted had a full and fair opportunity to litigate
     the issue in the prior proceeding and (5) the determination in
     the prior proceeding was essential to the judgment. Collateral
     estoppel, sometimes referred to as issue preclusion, operates to
     prevent a question of law or an issue of fact which has once
     been litigated and adjudicated finally in a court of competent
     jurisdiction from being relitigated in a subsequent suit.

Kituskie v. Corbman, 682 A.2d 378, 382 (Pa. Super. 1996) (citations and

quotation marks omitted).
     The decision to allow or to deny a prior judicial determination to
     collaterally bar relitigation of an issue in a subsequent action
     historically has been treated as a legal issue. As such, this Court
     is not bound by the trial court’s conclusions of law and we may
     draw our own conclusions from the facts as established.

Meridian Oil & Gas Enters., Inc. v. Penn Cent. Corp., 614 A.2d 246, 250

(Pa. Super. 1992), appeal denied, 627 A.2d 180 (Pa. 1993).

     As with all questions of law, an appellate court’s review of an

insurance contract is plenary. Burton v. Republic Ins. Co., 845 A.2d 889,

893 (Pa. Super. 2004). In interpreting the terms of an insurance contract,

the appellate court examines the contract in its entirety, giving all of the

provisions their proper effect.   Id.   The court’s goal is to determine the

intent of the parties as exhibited by the contract provisions. Id.          In

furtherance of its goal, the court must accord the contract provisions their

accepted meanings, and it cannot distort the plain meaning of the language

to find an ambiguity. Id.

     Instantly, Astra does not dispute that the terms of the CGL Policy are

reasonable and unambiguous or that Ramos failed to satisfy the definition of

a leased worker under the CGL Policy.      See Astra’s Brief at 22.    Rather,

Astra argues only that the contractual definition of a leased worker is

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identical to the legal doctrine of borrowed employee, which was litigated

before WCJ Krass. As a result, Astra argues that the doctrine of collateral

estoppel    precludes   Westfield   Insurance   from   re-litigating   Ramos’

employment status with Astra.       We, however, reject Astra’s collateral

estoppel argument because the doctrine of borrowed employee at issue in

the workers’ compensation proceedings is not identical to the definition of a

leased worker under the CGL Policy. In other words, in this case, the legal

doctrine of borrowed employee is not identical to the contractual definition

of a leased worker.

     Explaining the doctrine of borrowed employee, our Supreme Court has

remarked:

     The test for determining whether a servant furnished by one
     person to another becomes the employee of the person to whom
     he is loaned is whether he passes under the latter’s right of
     control with regard not only to the work to be done but also to
     the manner of performing it. The entity possessing the right to
     control the manner of the performance of the servant’s work is
     the employer, irrespective of whether the control is actually
     exercised. Other factors which may be relevant include the right
     to select and discharge the employee and the skill or expertise
     required for the performance of the work. The payment of
     wages may be considered, but is not a determinative factor.
     Although the examination of these factors guides the
     determination, each case must be decided on its own facts.

JFC Temps, Inc. v. Workers’ Comp. Appeal Bd. (Lindsay), 680 A.2d

862, 864 (Pa. 1996) (citation omitted); accord Mullins v. Sun Co., 763

A.2d 398, 400 (Pa. Super. 2000). Under the CGL Policy, a leased worker is

defined as “a person leased to [Astra] by a labor leasing firm under an

agreement between [Astra] and the labor leasing firm, to perform duties

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related to the conduct of [Astra’s] business.”       CGL Policy, 4/1/09, at

§§ I(2)(e), V(5), (10).

      Here, a cursory look at the elements of the doctrine of a borrowed

employee and the contractual definition of a leased worker reveals glaring

differences between the two. “The definition of ‘borrowed employee,’ . . .

comes from case law and is clearly much narrower than the definition of

‘leased worker,’ as it focuses on which party controls the worker’s

performance, and the manner in which it is performed.”        Trial Court Rule

1925(a) Opinion, 7/31/14, at 3.     Thus, upon careful review of the entire

record, viewed in the light most favorable to Astra as the non-moving party,

we must agree with the trial court’s conclusion that the issue of a leased

worker under the CGL Policy was never properly before WCJ Krass because

the CGL Policy was not at issue in the workers’ compensation proceeding.

As the trial court noted:

      [T]he legal question of [Ramos’] employment status considered
      by [WCJ Krass] is not identical to the question of Ramos’
      employment status under the [CGL] Policy.         [WCJ] Krass
      considered whether Ramos was a “borrowed employee”
      according to the common law, while [the trial court] must
      determine whether Ramos meet the definition of “leased worker”
      under the [CGL] Policy.

Trial Court Opinion, 12/30/13, at 5-6. Accordingly, the trial court did not err

in granting summary judgment in favor of Westfield Insurance and against

                                     -7-
J-S10020-15

Astra by concluding that the doctrine of collateral estoppel did not apply to

whether Ramos was a leased worker under the CGL Policy.4

       Astra next argues the trial court erred in granting summary judgment

in favor of Westfield Insurance, because Westfield Insurance was judicially

estopped from challenging Ramos’ employment status with Astra.                 In

particular, Astra argues that Westfield Insurance’s position on Ramos’

employment status in the case sub judice is inconsistent with Westfield

Insurance’s position before WCJ Krass, where Westfield Insurance asserted

that Ramos was not a borrowed employee of Astra.

       Our Supreme Court has held that as a general rule, a party to an
       action is estopped from assuming a position inconsistent with his
       or her assertion in a previous action, if his or her contention was
       successfully maintained. Accordingly, judicial estoppel is properly
       applied only if the court concludes the following: (1) that the
       appellant assumed an inconsistent position in an earlier action;
       and (2) that the appellant’s contention was successfully
       maintained in that action.

Black v. Labor Ready, Inc., 995 A.2d 875, 878 (Pa. Super. 2010)

(citations and quotation marks omitted) (emphasis in original).              “The

purpose of this doctrine is to uphold the integrity of the courts by preventing

parties from abusing the judicial process by changing positions as the

moment requires.” Bugosh v. Allen Refractories Co., 932 A.2d 901, 912

(Pa. Super. 2007) (citation and quotation marks omitted). However, “[o]ur

Supreme Court has not definitively established whether the second element
____________________________________________

4
 Because we conclude Astra failed to satisfy the first prong of the collateral
estoppel doctrine, we need not analyze the other four prongs.

                                           -8-
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(successful maintenance) is strictly necessary to implicate judicial estoppel

or is merely a factor favoring the application.”    Vargo v. Schwartz, 940

A.2d 459, 470 n.8 (Pa. Super. 2007) (citing In re Adoption of S.A.J., 838

A.2d 616, 620 n.3 (Pa. 2003)); see also Ballestrino v. Ballestrino, 583

A.2d 474, 478 (Pa. Super. 1990) (holding that “it is not improper for the

court to refuse to entertain a later claim” which is inconsistent with a

previous position that appellant did not successfully maintain but from which

she obtained other relief).

      Instantly, we need not address Astra’s judicial estoppel argument

because, based upon our review of the entire record, we conclude that Astra

has waived this argument by failing to raise it before the trial court.    See

Pa.R.A.P. 302(a) (“Issues not raised in the lower court are waived and

cannot be raised for the first time on appeal.”); see Agostinelli v.

Edwards, 98 A.3d 695, 700 (Pa. Super. 2014). However, even if we were

to address the merits of Astra’s judicial estoppel argument, we would reject

the argument because Westfield Insurance never assumed any position

before WCJ Krass with respect to the definition of a leased worker under the

CGL Policy. As noted earlier, the CGL Policy or its terms were not at issue in

the workers’ compensation proceeding.

      We now turn to Astra’s third argument.       Astra argues the trial court

erred in granting summary judgment in favor of Westfield Insurance based

on the CGL Policy because the employer’s liability exclusion provision of the

CGL Policy at the core of this case “is unconscionable and against public

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policy because it results in illusory coverage, and provides [Westfield

Insurance] with a windfall from the substantial premiums collected from

Astra while providing no coverage” under either the workers’ compensation

policy or CGL Policy. Astra’s Brief at 23. We construe Astra’s argument as

challenging the inclusion of a “leased worker” in the employer’s liability

exclusion of the CGL Policy. Simply put, Astra finds it unconscionable that

the term “employee” in the CGL Policy includes a leased worker. Thus, we

must determine whether the employer’s liability exclusion of the CGL

Policy—with respect to a leased worker—is unconscionable as against public

policy. As our Supreme Court has explained:

           Generally, courts must give plain meaning to a clear and
     unambiguous contract provision unless to do so would be
     contrary to a clearly expressed public policy. Public policy is to
     be ascertained by reference to the laws and legal precedents and
     not from general considerations of supposed public interest. As
     the term public policy is vague, there must be found definite
     indications in the law of the sovereignty to justify the
     invalidation of a contract as contrary to that policy. Only
     dominant public policy would justify such action. In the
     absence of a plain indication of that policy through long
     governmental practice or statutory enactments, or of violations
     of obvious ethical or moral standards, the [c]ourt should not
     assume to declare contracts contrary to public policy. The courts
     must be content to await legislative action.

            It is only when a given policy is so obviously for or against
     the public health, safety, morals or welfare that there is a virtual
     unanimity of opinion in regard to it, that a court may constitute
     itself the voice of the community in so declaring that the
     contract is against public policy.

Heller v. Pennsylvania League of Cities & Municipalities, 32 A.3d 1213,

1220-21 (Pa. 2011) (citation and quotation marks omitted) (emphasis

added).

                                    - 10 -
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        Here, as noted above, Astra does not argue the employer’s liability

exclusion provision of the CGL Policy, which includes a leased worker, is

unclear or ambiguous.5 Rather, it argues only that the exclusion provision is

against public policy to the extent it includes a leased worker. In support of

its public policy argument, Appellant points out that “[u]nder the factual

circumstances of this case, . . . the ‘leased workers’ exclusion works to

preclude coverage under both companion policies issued by Westfield

Insurance, resulting in Westfield Insurance insulating itself from affording

coverage under either policy, making the coverage illusory.”6 Astra’s Brief at

22.

        Astra principally relies on Heller to underscore its claim that the CGL

Policy is illusory and therefore against public policy. Appellant’s reliance on

Heller, however, is misplaced, as Heller is distinguishable from the instant

case.    In Heller, our Supreme Court was asked to determine whether “it

[was] a violation of public policy to exclude from underinsured motorist

(UIM) coverage a claim by an individual eligible for workers’ compensation

benefits.”   Heller, 32 A.3d at 1215.          The appellant (Heller) was severely

injured in an automobile accident during the course of his employment as a

____________________________________________

5
  With the exception of the inclusion of a leased worker within the definition
of employees, Astra accepts the employer’s liability exclusion provision of
the CGL Policy. See Astra’s Brief at 22.
6
  As stated earlier, Westfield Insurance issued to Astra a workers’
compensation policy as well as the CGL Policy.

                                          - 11 -
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police officer for Sugarcreek Borough. Id. Subsequently, Heller sought UIM

benefits from the borough under a policy issued by the appellee, who

ultimately denied Heller’s claim under a policy exclusion providing that UIM

coverage did not apply to “[a]ny claim by anyone eligible for workers’

compensation benefits.” Id.

     The Supreme Court noted that the borough voluntarily elected to

purchase the optional UIM coverage and paid a premium to the appellee for

the coverage. Id. at 1222. The Supreme Court therefore found persuasive

Heller’s argument that the borough purchased illusory coverage.       Id. at

1223, 1228. As the Supreme Court observed:

     Instantly, we are presented with the situation where a
     mandatory offering under the [Motor Vehicle Financial
     Responsibility Law (MVFRL)] was accepted by the [b]orough,
     who paid a premium for UIM coverage to provide additional
     protection to its employees who operate or occupy its vehicles.
     The vehicles in question are used by borough employees during
     the course and scope of their employment. Thus, the vast
     majority of all UIM claims likely will be made by borough
     employees who are eligible for workers’ compensation.
     The subject exclusion, however, operates to deny UIM benefits
     to anyone who is eligible for workers’ compensation.
     Therefore, we find that [the appellee] sold the borough
     additional coverage that, in effect, will not attach by
     virtue of an exclusion. Under the facts of this case and as
     applied to borough employees, the exclusion renders the
     coverage illusory. Further, the exclusion operates to convert
     [the appellee’s] statutory obligation into a sham offering. [The
     appellee] received a windfall by charging the borough a premium
     for the coverage.

Heller, 32 A.3d at 1223 (emphasis added). The court further remarked:
     To uphold the exclusion would thwart the purpose of the MVFRL
     by allowing an insurer to deny benefits for which their insured
     paid a premium.       Thus, permitting the exclusion to stand
     provides a disincentive for insureds to pay premiums for
     coverage that is not statutorily required and relieves the insurer
     of its obligation to provide benefits for which the insured paid.
     While the borough may have received a reduced premium in

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      exchange for what [the appellee] deems “limited” coverage, an
      insured cannot contract for illusory coverage.

Id., at 1225.   The court also determined that the “workers’ compensation

exclusion violated the statutory scheme for coordination of benefits evident

in the MVFRL” because the legislature intended “to place the burden for

payment of benefits on the tortfeasor or the UM/UIM carrier where a third-

party causes a work-related injury.” Id.

      The case sub judice is distinguishable from Heller. First, Astra does

not argue that Westfield Insurance, unlike the appellee in Heller, was

required to offer coverage to Astra for personal injury claims made by

workers not directly employed by Astra. Second, unlike Heller, where the

borough specifically purchased optional UIM coverage for its employees, the

vast majority of whom were eligible for workers’ compensation, Astra does

not argue it purchased the CGL Policy to insulate itself principally against

personal injury claims made by workers not directly employed by Astra. The

record indicates Astra principally purchased the CGL Policy from Westfield

Insurance to cover itself against third-party (non-employee) liability claims.

The leased worker exclusion simply is an exception to such coverage

because leased workers are subsumed within the definition of employees

under the CGL Policy. Third, unlike the appellant in Heller, Astra does not

allege that the employer’s liability exclusion—with the exception of a leased

worker—“operates to foreclose the majority of expected claims” under

the CGL Policy.   Id. at 1228 (emphasis added); see also Meridian Mut.

Ins. Co. v. Richie, 544 N.E.2d 488, 489 (Ind. 1989) (holding that if an

                                    - 13 -
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insured could not have benefited from his insurance coverage under any set

of circumstances, the policy is illusory and in violation of public policy)

(emphasis added).       On the contrary, Astra asserts only that “[u]nder the

factual circumstances of this case,” the exclusion renders the CGL Policy

illusory because of how it defines a leased worker, i.e., as an employee.

Astra’s Brief at 21, 22 (“The exclusion of leased [workers] in the [CGL

P]olicy at issue is void against public policy under the factual circumstances

of this case[.]”) (emphasis added).

       In summary, because Westfield Insurance was not required to offer

coverage to Astra for personal injury claims by workers not directly

employed by Astra, Astra did not purchase the CGL Policy principally to

cover leased workers, and the leased worker exclusion does not operate to

foreclose the vast majority of Astra’s expected claims, we decline to hold the

CGL Policy illusory, and therefore as against public policy. 7      See Heller,

supra.

       Order affirmed.

       Platt, J. joins the majority opinion.

       Gantman, P.J. files a concurring opinion in which Platt, J. joins.

____________________________________________

7
  Based on the outcome of this case, we need not address Astra’s remaining
arguments.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/12/2016

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