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CASE SUMMARIES Q3/Q4 2014

We have prepared the following compilation of insurance coverage decisions by the Pennsylvania courts prior to the last six months, which may be of interest to you. Please contact us if you have any questions or would like a copy of any of these decisions.

 

AUTO-UM/UIM COVERAGE

In Heller v. Pa. League of Cities & Municipalities, 32 A.3d 1213 (Pa. 2011), the Pennsylvania Supreme Court held that a workers’ compensation exclusion in an employer-sponsored insurance policy of underinsured motorists coverage was unenforceable because it violated public policy.

 

AUTO-UM/UIM COVERAGE-REGULAR USE EXCLUSION

In Williams v. GEICO Gov’t Employees Ins. Co., 32 A.3d 1195 (Pa. 2011), the Pennsylvania Supreme Court held that a regular use exclusion that barred coverage for a state trooper who was injured in the scope of employment while operating a police car was not contrary to public policy and was, therefore, enforceable.

In Allstate Fire & Casualty Ins. Co. v. Hymes, 29 A.3d 1169 (Pa. Super. 2011), the Pennsylvania Superior Court held that an exclusion for “anyone while in, or, getting into or out of or when struck by a motor vehicle owned or leased by” an insured or resident relative barred coverage for the insured’s son who was injured in an accident involving his own motorcycle, even though his injury occurred, not while he was “on” the motorcycle, but when he was thrown to the ground after being struck by an automobile.

 

AUTO-UM/UIM COVERAGE-SOVEREIGN IMMUNITY

In Wright v. Denny, 2011 Pa. Commw. LEXIS 537 (Oct. 25, 2011), the Pennsylvania Commonwealth Court held that the Southeastern Pennsylvania Transportation Authority was not obligated to pay uninsured motorist benefits to a passenger who was injured when a bus was struck by an uninsured motorist because the bus was stopped at the time of the accident and, therefore, was not “in operation” for the purpose of the Motor Vehicle exception to sovereign immunity.

 

AUTO-UM/UIM-LEGALLY ENTITLED TO RECOVER

In Erie Ins. Exch. v. Conley, 29 A.3d 389 (Pa. Super. 2011), the Court held that an insured who was injured in the scope of his employment when he was struck by his employer’s vehicle could not recover underinsured motorist benefits because he was not legally entitled to recover damages from his employer, who was protected by workers’ compensation immunity.

 

BAD FAITH

In Portside Investors, L.P. v. Northern Ins. Co., 2011 Pa. Super. LEXIS 3757 (Pa. Super. Nov. 23, 2011), the Pennsylvania Superior Court held that, in a claim for first party coverage arising out of the collapse of a pier, insurer did not act in bad faith in insisting that it take an examination under oath of the insured’s recently indicted tenant where Grand Jury Presentment found that tenant knew the pier required considerable maintenance several years before the collapse and had learned the pier was in imminent danger of collapse at least two days before collapse occurred.

 

CONTRACTUAL INDEMNIFICATION

In Rung v. Pittsburgh Assocs., L.P., 2011 U.S. Dist. LEXIS 121365 (Oct. 20, 2011), the United States District Court for the Western District of Pennsylvania held that where the complaint alleged that plaintiff’s injury was caused by recklessness on the part of manager of baseball team’s park, manager was obligated to indemnify team under indemnification provision in management agreement, regardless of whether complaint also alleged recklessness on the part of the team.

 

DEDUCTIBLE/”MADE WHOLE” DOCTRINE

In Jones v. Nationwide Prop. & Cas. Ins. Co., 2011 Pa. LEXIS 3088 (Pa. Dec. 21, 2011), the Pennsylvania Supreme Court held that, in a collision auto coverage case, the “made whole” doctrine is not violated by the insurer’s practice of reimbursing the deductible on a pro rata basis calculated upon the percent of the insurer’s subrogation recovery from a third party.

 

DIRECTORS AND OFFICERS-AFFILIATED ENTITY COVERAGE

In Holy Ghost Carpatho-Russian Greek Catholic (Orthodox) Church of the E. Rite of Phoenixville, PA v. Church Mut. Ins. Co., 2011 U.S. Dist. LEXIS 131449 (November 14, 2011), the United States District Court for the Eastern District of Pennsylvania held that where the underlying complaint concerned a dispute between the insured Church and a nonprofit corporation, established by the parishioners for the purpose of holding title to Church property, the Church was entitled to coverage only under the limited Affiliated Entity Endorsement to the Directors and Officers Liability Coverage.

 

DUTY TO DEFEND

In Lafayette College v. Selective Ins. Co., 2011 U.S. App. LEXIS 22721 (3d Cir. Pa. Nov. 10, 2011), the United States Court of Appeals for the Third Circuit held that, where policy covered only additional insured’s vicarious liability for named insured’s acts, the insurer had an obligation to defend the additional insured because facts alleged in the underlying complaint potentially supported a claim for vicarious liability, even though complaint claimed that the additional insured was jointly and severally liable, rather than vicariously liable for plaintiff’s injuries.

In L.R. Costanzo Co. v. Am. Fire & Cas. Ins. Co., 2012 U.S. Dist. LEXIS 1655 (Jan. 6, 2012), the United States District Court for the Middle District of Pennsylvania held that the insurer was not obligated to defend claim against insured general contractor of construction project, where complaint asserted a claim of faulty workmanship, despite the opinions of engineers and consultants that the alleged property damage was caused by the poor design of the architect and not by any faulty workmanship of the insured.

 

EMOTIONAL DISTRESS

In Lipsky v. State Farm, 2011 Pa. Super. LEXIS 4299 (Pa. Super. Sept. 1, 2011), the Pennsylvania Superior Court held that emotional distress from witnessing a family member killed by a car qualifies as “bodily injury” within the meaning of motor vehicle liability coverage, even though the family member suffered no physical injury. Furthermore, each family member’s claim was a separate “bodily injury” claim for the purpose of the $100,000/$300,000 policy limit.

 

INSOLVENCY EXCLUSION

In ACE Capital Ltd. v. Morgan Waldon Ins. Mgmt., LLC, 2011 U.S. Dist. LEXIS 135902 (Nov. 28, 2011), the United States District Court for the Western District of Pennsylvania held that an exclusion for claims arising out of insolvency, bankruptcy or financial inability or unwillingness to pay claims, losses or benefits, barred coverage for actions alleging that employee benefits plans set up by the insured insurance agency were unable to satisfy claims because the plans were insufficiently funded.

 

LIQUOR LIABILITY EXCLUSION

In Penn-America Ins. Co. v. Peccadillos, Inc., 27 A.3d 259 (Pa. Super. 2011), the Pennsylvania Superior Court held a bar’s insurer was obligated to defend the bar for a claim by victims of auto accident with an intoxicated patron where liquor liability exclusion did not bar coverage for allegation that insured’s liability arose out of its ejection of two visibly intoxicated patrons from its premises, without summoning the police or taking other action to ensure that the patrons did not drive.

 

SELF-INSURED RETENTION

In Axis Specialty Ins. Co. v. Brickman Group Ltd., LLC, 2012 U.S. App. LEXIS 1328 (3d Cir. Pa. Jan. 23, 2012), the United States Court of Appeals for the Third Circuit held that an excess insurer could not recover from the insured the amount of the self-insured retention of the primary policy where the primary and excess insurers fully funded settlement of a third party claim, with no contribution from the insured.

 

If you have questions about any of the above decisions or would like a copy of any opinion, please contact us.

YOST & TRETTA, LLP