Category Archives: Pennsylvania

Can a Resident of a Homeowners’ Association Be Deemed an Invitee in the Common Areas of Their Own Community? (PA)

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In Hackett v. Indian King Residents Association, the plaintiff, a resident of the defendant homeowners’ association, brought suit to recover for injuries she sustained after she fell on a common area leading to her town home in a residential community managed by the defendant.  The residential community in which she lived is a mixed town home/single family residence community in West Chester, Pennsylvania.  The plaintiff claimed that she could not see branches in the dark as she climbed the steps that evening.  After two days of trial, the jury found that the defendant homeowners’ association was not negligent.

On appeal, the plaintiff argued that the trial court erred by charging the jury that the plaintiff was a licensee rather than an invitee.  Particularly, she argued that by paying maintenance fees, she became an invitee, and that the defendant’s business is that of property manager and thus it is responsible for keeping common areas safely maintained.  Pursuant to the declaration of the homeowners’ association, the plaintiff used the common areas with the defendant’s permission.

The duty of the defendant to a licensee versus that of an invitee is different; the duty to an invitee is more stringent.  The Court reviewed the definition of licensee, and also looked to the facts, determining that the plaintiff was a resident of the community, she used the common area with the defendant’s permission, not by invitation, and the declaration granted residents an easement of enjoyment regarding common areas.   The Court found that this essentially conferred permission to each resident to use the common areas.  The Superior Court found that the trial court properly instructed the jury that the plaintiff was a licensee, as there was no evidence offered that the plaintiff entered the property upon invitation or for a purpose for which land is held open to the public.  The court noted that the distinction between invitation and permission forms the basis for distinguishing an invitee from a licensee.  Thus, the trial court’s conclusion that the plaintiff was a licensee was affirmed on appeal.

Thanks to Alexandra M. Perry for her contribution to this post.

Pennsylvania Court Rescinds Policy Based On Insured’s Fraudulent Acts

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The U.S. Eastern District Court for Pennsylvania recently rescinded an insurance policy based on the insured’s fraudulent misrepresentations.

In Pallante v. Those Certain Underwriters At Lloyd’s, a fire occurred at an insured’s property while the insured was away.  After the fire, during an inspection of the property with the insurer’s adjuster, the insured represented that there were also several personal items missing from the property and advised that a theft had also occurred.  Subsequently, the insured sent photographs of the items that were allegedly stolen from the property.  The insurer had the photographs analyzed and it was revealed that the photographs were all taken after the fire and theft were alleged to have occurred.  Consequently, the insurer denied the claim based on concealment and misrepresentation.

The insured subsequently commenced a declaratory judgment action asserting breach of contract and bad faith claims against the insurer.  The insurer moved for summary judgment.  In determining whether to grant the motion, the court reasoned that there was no dispute that the insured made material false misrepresentations regarding her claim.  Thus, looking to the policy language, the court concluded that since the policy did not provide coverage if the insured concealed or misrepresented facts, the insurer was entitled to rescind the policy on that basis.

Accordingly, this case shows that, under certain factual circumstances, Pennsylvania Courts will support a policy’s rescission, and it appears to be viable basis for insurers to contest coverage in Pennsylvania.

Thanks to Colleen Hayes for her contribution to this post.

Lack of Causation Finding Results in Defense Verdict (PA)

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The defendant in a rear-end collision case was recently found not liable for injuries suffered by the plaintiff.  In Firoud v. Carr, C.P. Philadelphia No. 160803547, the jury found that plaintiff was unable to prove that the defendant’s actions were causative of her injuries.

In September of 2014, plaintiff Hassania Firoud was driving in Northeast Philadelphia when her vehicle was rear-ended by an SUV while stopped in traffic.  The SUV had been rear-ended by a vehicle being driven by defendant Jean Carr.  Firoud sued Carr alleging that Carr was negligent and caused the SUV to be pushed into Firoud’s vehicle, which caused Firoud to suffer permanent neck and back injuries.  Carr stipulated to negligence and the matter was tried solely on the issues of causation and damages.

Firourd originally treated with her family doctor and underwent five sessions of physical therapy to address her neck and back pain.  Later, Firoud sought treatment with an orthopedic surgeon, who conducted an MRI and diagnosed Firoud with cervical and lumbar disc herniations as well as bilateral radiculopathy. She underwent physical therapy for ten months and completed the treatment in November 2015. Firoud also complained of headaches, anxiety, depression, and panic attacks.  Firoud sought treatment with a psychologist and was diagnosed with post-traumatic stress disorder for which she underwent psychological counseling.

At trial, Firoud’s expert report from her orthopedic surgeon opined that her back and neck injuries were causally related to the accident.  The orthopedic surgeon also determined that Firoud had suffered a serious impairment of functionality.  Firoud’s psychological expert opined that the trauma from the accident caused her to experience stress and anxiety, which ultimately resulted in post-traumatic stress disorder.  Firoud herself testified that she continued to experience back and neck pain, which caused difficulty lifting heavy objects at work as well as performing household chores.  She also testified that she suffered from anxiety, which was worse when driving, and also experienced moodiness and lethargy.  She sought compensation for her medical costs as well as past and future pain and suffering.

The defense countered with an expert report from a radiologist who opined that Firoud’s imaging studies showed no evidence of traumatic injury, but rather that only pre-existing degenerative changes were present.  The defense counsel also relied on Firoud’s medical records which indicated that Firoud’s cervical and lumbar herniations, radiculopathy, depression, and anxiety had all pre-existed the accident.  Furthermore, Firoud had been in several motor vehicle accidents in the 9 years prior to the accident at issue in the lawsuit, and had been previously diagnosed with permanent injuries from those prior accidents.  Ultimately, the jury determined that Carr was not liable for Firoud’s injuries.

The salient point here, from the defense perspective, is that despite the hole in plaintiff’s claim, the facts were nevertheless put to a jury.  Kudos to defense counsel for holding plaintiff to his burden.  But the risk was certainly present.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons any questions.

Unless Explicitly Stated Otherwise, Reinsurer’s Policy Limit Does Not Cap Defense Cost (PA)

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In October of 2017, the Superior Court of Pennsylvania upheld a Philadelphia trial judge’s ruling that OneBeacon Insurance, the reinsurer, was on the hook for defense expenses incurred by its reinsured above and beyond the limit established in the “Reinsurance Accepted” section of its facultative certificates.

The case was in regards to an asbestos-related claim against Century Indemnity and Pacific Employers Insurance Co(“PEIC”). OneBeacon was the reinsurer and paid $11 million pursuant to the reinsurance policy limit stated in the certificates.

OneBeacon argued that it should not be liable for defense expenses beyond that amount, but the trial court disagreed and, after a nonjury trial, awarded Century about $4.8 million plus prejudgment interest, and PEIC $2.4 million plus prejudgment interest.

The Court stated that OneBeacon’s policy did not make clear that the “Reinsurance Accepted” amount in the certificates included defense costs.

OneBeacon argued on appeal that the terms and conditions of the certificate follow that of the underlying policy “except as otherwise specifically provided herein” and that because the language does not explicitly state otherwise, the “Reinsurance Accepted” cap must include both losses and defense expenses. The company also argued that because the “Reinsurance Accepted” is set at a specific amount, the reinsurance certificate follows the terms and conditions of the underlying policy only up to that amount.

But the Court ruled that, “viewing the certificate as a whole, we do not find the language unambiguously limits OneBeacon’s entire liability for losses and expenses to the ‘Reinsurance Accepted’ amount.”

“A reasonable interpretation of the certificate’s reference to OneBeacon’s ‘liability … specified in Section IV’ is that it refers only to liability for losses,” Francisco said. “This is particularly true in light of General Condition (3), which requires the reinsurer to pay its proportion of losses, ‘and in addition thereto’ its proportion of expenses. Similarly, the ‘except as otherwise provided herein’ language is also ambiguous because the certificate does not explicitly state that expenses are included in (or ‘subject to’) the ‘Reinsurance Accepted’ limit. Pursuant to this reasoning, if the certificate follows the underlying policy, expenses must be reimbursed in addition to the policy limits.”

The Superior Court rejected OneBeacon’s attempt to analogize its case with Bellefonte Reinsurance v. Aetna Casualty & Surety, a 1990 case in which the U.S. Court of Appeals for the Second Circuit rejected Aetna’s argument that the “follow the fortunes” doctrine required reinsurers to pay for all of a reinsured’s expenses and costs even if they exceed the “Reinsurance Accepted” amount listed on the certificate.

The Bellefonte court focused on the language in the certificates that stated Bellefonte’s obligation to reinsure Aetna “subject to the terms, conditions and amount of liability set forth herein.”

But the Court rules that OneBeacon’s reinsurance certificates stated only that the reinsurance was “subject to the general conditions set forth on the reverse side.” It does not expressly provide that all of the coverage is subject to the ‘Reinsurance Accepted’ limit.

The Court also noted that Century/PEIC’s underlying policies provide for the payment of expenses beyond the limits.

“Therefore, because the reinsurance certificate ‘follows’ that of the underlying policy, it would cover expenses above the liability limit,” “This is factually different from the situation in Bellefonte, where the defense costs were paid as part of the reinsured’s settlement agreement with the underlying insured—an agreement to which the reinsurer was not a party.”  Thanks to Jonathan Avolio for his contribution to this post.  Please email Brian Gibbons with any questions.

Theft of Human Hair Weaves Legal Analysis

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Recently, in an unpublished opinion, a New Jersey appellate court in the case of Beauty Plus Trading Co. Inc. v. National Union Fire Insurance Co. of Pittsburgh, considered whether an insurance policy’s “loading and unloading” provision precluded coverage to an insured for damages arising out of a theft of a shipment of human hair weaves.

The insured received its goods on a Friday evening, but decided not to unload the container of goods until the following Monday.  Instead of unloading, the insured’s staff Beauty Plus Trading Co. Inc. v. National Union Fire Insurance Co. of Pittsburgh cut the container’s seal and left it on the loading bay outside of the warehouse.  The following night, an individual stole the container housing over $283,000 worth of human hair weaves.

The policy contained a “loading and unloading” section which provided coverage for the insured’s goods for 24-hours after the company received a shipment.  In this case, the insured received a shipment at 5:00 p.m. on a Friday evening and the theft took place at 9:00 p.m. the following Saturday night.  According to the policy, the goods were insured until 5:00 p.m. on Saturday.

The insured tried to argue that coverage under the loading and unloading provision should have been extended through the following Monday under the so-called “business day” rule. This rule states that where a party’s time to perform its obligations under an insurance policy expires on a weekend or holiday, it is entitled to push the deadline to fulfill those obligations to the next business day.  Here, the policyholder argued that the rule should have applied because it did not receive the goods for unloading until the end of the day on Friday.  The judge, however, found that the rule was inapplicable. The loading and unloading provision did not require the insured to unload the goods or perform any obligation during the 24-hours of coverage and the insured could leave the goods in the container as it chose to do. The court found that the plain terms of the policy precluded coverage for this loss.

Thanks to Chelsea Rendelman for her contribution to this post

Be Careful Who You Join

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In construction projects, accidents often occur and there are  many individuals potentially at fault for those accidents.  As a result, many defendants seek to join those additional defendants that may not have been sued to transfer the risk.

In Element Constr., LLC v. Dougherty, Element Construction, LLC was the manager of a renovation project owned by 5th Street, LLC.  Element and 5th Street retained Lunar Agency, Inc., an insurance brokerage company, to obtain the necessary insurance policies and manage any claims.  While working on the  project, a subcontractor allegedly crashed a forklift into a wall resulting in damages of almost $3 million.  Element and 5th Street filed an action against Lunar and its principals for failing to timely notify their insurer of the accident, which resulted in the insurer denying coverage.  Lunar subsequently joined the subcontractor responsible for the accident to the lawsuit seeking contribution, to which the subcontractor filed objections because it claimed it was not a joint tortfeasor.

Addressing that issue, the Court recognized that the joint tortfeasor statute required  “the parties must either act together in committing the wrong, or their acts, in independent of each other, must unite in causing a single injury…A joint tort is defined as where two or more persons owe to another the same duty and by their common neglect such other is injured.”  Neal v. Bavarian Motors, Inc., 882 A.2d 1022, 1028 (Pa.Super. 2005).  The Court found that there was no evidence that the Subcontractor acted together in committing a wrong, or that their independent actions united to cause a single injury.  The Court found that the two negligent acts-Lunar’s purported failure to timely handle an insurance claim, and the Subcontractor’s negligence in crashing the forklift- had nothing in common.  Thus, the Court denied the joinder motion.

Joinder is a great strategy for limiting liability, but care must be taken that those sought to be joined actually share some part in causing the single (specific) injury.  There was no correlation between the subcontractor’s purported negligence and that of the insurance broker.  Although negligence was claimed against both the subcontractor and broker, they were based on two separate actions that caused to separate injuries.

Thanks to Malik Pickett for his contribution to this post.

 

Lessor Can’t Pass the Buck to the Lessee

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In Bonnie Sanders v. Angela Dukes, Sanders was staying with her friend on the second story of a rooming house in Philadelphia.  As Sanders left the room her shoe got caught in a loose metal strip on top of the staircase.  Dukes’ husband was the property manager for the rooming house, and went there monthly.  He never made any repairs to the stairs or the metal strip.  At the close of plaintiff’s case at trial, Dukes moved to dismiss arguing that the tenant (plaintiff’s friend) was aware of the dangerous condition, therefore, alleviated Dukes’ own liability for the condition. The court rejected the argument, and found that the Dukes, as the lessor was liable for a dangerous condition in the common area that could have been discovered by exercising reasonable care.  Since Sanders was a lawful guest, Dukes owed her a duty of care.

This case reminds us that a lessor often owes a duty of care to those that enter the premises, regardless of any duty owed by the lessee.

Thanks to Robert Turchik for his contribution to this post.

What is “Lawful Possession” of a Vehicle?

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The Pennsylvania Superior Court recently analyzed the circumstances under which an insured is in “possession” of a vehicle for coverage purposes.

In State Farm Automobile Ins. Co. v. Dooner, Dooner, the passenger, grabbed the steering wheel of the vehicle, while Fonte, the driver, was driving, causing the vehicle to strike a police car. Fonte and the police officer commenced lawsuits against Dooner.  Dooner sought coverage for the lawsuits under his State Farm Policy. State Farm commenced a declaratory judgment action seeking a declaration that its policy did not provide coverage to Dooner for the lawsuits.  The trial court granted State Farm summary judgment.

On appeal, Fonte argued the State Farm Policy provided coverage for a “non-owned” vehicle if that vehicle was in the “lawful possession” of the insured.  Fonte argued Dooner was in possession of Fonte’s vehicle, at the time of the accident, because Dooner had grabbed the wheel of the vehicle that caused the accident.

In analyzing this argument, the court noted the State Farm Policy did not define the term “possession”.  As such, the court looked to the surrounding facts.  The court reasoned that the driver, Fonte, at all times relevant, was in the driver seat and never relinquished control of the gas or brake pedals.  Additionally, the court also noted other jurisdictions had previously held a passenger grabbing a steering wheel did not constitute possession.  Consequently, the court agreed with the trial court and held there was no coverage under the State Farm Policy because Dooner never was in “possession” of the vehicle.

Accordingly, this case offers some insight into the relevant facts a court may look to when analyzing whether an insured is in possession of a vehicle for purposes of coverage under an automobile policy.

Thanks to Colleen Hayes for her contribution to this post.

Close Call on Change of Venue, So the “Ruling on the Field” Stands (PA)

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The Pennsylvania Superior Court affirmed a trial court’s decision to transfer a case involving a motor vehicle accident based on the location of the accident and the address listed in the affidavit of service for the defendants.  In Collins v Maragelis, No. 3256 EDA 2017 (Pa. Super. Jul. 23, 2018), Amanda and Wayne Collins alleged that George and Panagiotis Maragelis were negligent when their motor vehicle collided with the Collins vehicle on Interstate 95 near the Commodore Barry Bridge in March of 2015.  The defendants were served in Newtown Square, Delaware County, Pennsylvania.

The case was originally venued in Philadelphia County, however Maragelis filed preliminary objections to transfer the case to Delaware County. In support of their preliminary objections, Maragelis relied on the fact that the accident occurred near the Commodore Berry Bridge, which is located in Delaware County, and also that the defendants resided in Delaware County; not Philadelphia.  Following a hearing on the preliminary objections, the trial court in Philadelphia transferred the case to Delaware County in August 2017.  Collins appealed the order transferring the case.

In support of their appeal, Collins argued that the court erred in sustaining the preliminary objections because it essentially relied on “the bare allegations of the objecting party,” and did not secure any additional facts or evidence that the venue in Philadelphia was in fact improper.  Collins also asserted that the trial court failed to hold Maragelis (the objecting party) to their burden of proving that venue in Philadelphia was improper, as Maragelis did not provide any additional affidavits or evidence beyond the location of the accident and the address listed on the proof of service.  While Collins conceded that the court did not err in taking judicial notice that the location of the accident (the Commodore Berry Bridge) was indeed in Delaware County, they argued that the proof of service only indicated that venue was proper in Delaware County; it did not however, establish that venue was improper in Philadelphia County.

The Superior Court articulated that the standard of review was whether the trial court’s decision to transfer venue was reasonable in light of the facts presented.  The court also explained that, pursuant to Pennsylvania case law, if there was any basis to affirm a trial court’s decision to transfer venue, the decision must stand.  Finally, the court concluded that, the trial court’s decision to transfer venue from Philadelphia to Delaware County was reasonable in light of the facts that the accident occurred in Delaware County and the defendants were properly served in Delaware County.  Thus, the Superior Court affirmed the lower court’s transfer of venue to Delaware County.

While this may seem relatively minor, it is a reminder for defense attorneys in Pennsylvania that it is worthwhile to engage in the initial analysis of whether to file preliminary objections before Answering a plaintiff’s complaint.  In this instant case, the removal of a case from the notoriously plaintiff-friendly jurisdiction of Philadelphia, to the markedly more conservative Delaware County could very likely have a real impact in the overall framing and value of the case.

And, much like in the NFL, the “ruling on the field” stood, and the Superior Court affirmed the trial court’s decision based upon the standard of review.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

Separate Negligent Acts Prevent Joinder Status as Defendants (PA)

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In Element Construction, LLC v. Dougherty, Lunar Agency, Inc. et al v. ProBuild Company et. al., the Philadelphia Court of Common Pleas examined the circumstance when joinder plaintiffs may seek contribution / indemnity from joinder defendants, where the parties did not “act together” in causing the alleged injury.

Element was a manager of a construction project that took place in Philadelphia. In order to procure insurance policies for the project, Element hired Lunar Agency, a brokerage firm of which Brian Dougherty was a shareholder. During the construction project, ProBuild, a subcontractor of Element, allegedly negligently crashed into a wall while operating a forklift. This impact resulted in a partial building collapse to the tune of approximately $3 million. After the incident, Element commenced this lawsuit. Element alleged that Dougherty and Lunar failed to timely notify the insurer of the accident which resulted in an almost complete denial of the claim on that basis. Subsequently, Lunar and Dougherty filed a joinder complaint against the allegedly negligent subcontractor, ProBuild. Lunar and Dougherty pleaded for contribution as a joint tortfeasor and common law indemnity.

In response, ProBuild filed preliminary objections asserting that it could not be a joint tortfeasor, because the alleged negligence leading to the construction accident had nothing in common with the alleged negligence of Lunar’s failure to timely notify the insurer. In other words, the alleged negligence of Lunar and the alleged negligence of ProBuild were from two separate and unrelated events.

The Court sustained the preliminary objections and agreed that ProBuild and Lunar “did not act together” in committing the wrong and also could not plausibly allege that their “independent actions united to cause a single injury”. This case illustrates the usefulness in filing preliminary objections as a joinder defendant if the alleged negligent acts do not arise from the same duty or act.  Thanks to Matthew Care for his contribution to this post.  Please email Vincent Terrasi with any questions.