Pacific Indem. Co. v. Linn
| Citation | 766 F.2d 754 |
| Decision Date | 17 June 1985 |
| Docket Number | 84-1461,84-1445,Nos. 84-1444,No. 84-1461,No. 84-1462,PACIFIC,No. 84-1445,84-1462,s. 84-1444 |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
| Parties | PACIFIC INDEMNITY COMPANY, v. LINN, Robert, D.O., Moses, Stephen D., D.O., Robert Linn Medical Associates, Smith, David H., Individually and as Administrator of the Estate of Patricia Smith, Deceased, Silberlicht, Jack, Executor of the Estate of Judith Silberlicht, Deceased, Aetna Insurance Company, Myrletus, William K., Director, Pennsylvania Professional Liability Catastrophe Loss Fund, Pennsylvania Professional Liability Joint Underwriting Association, Chicago Insurance Company, Interstate Fire & Casualty Company v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Pennsylvania Professional Liability Joint Underwriting Association 3rd Pty deft. Appeal of AETNA INSURANCE COMPANY. PACIFIC INDEMNITY COMPANY v. LINN, Robert, D.O., Moses, Stephen D., D.O., Robert Linn Medical Associates, Smith, David H., Individually and as Administrator of the Estate of Patricia Smith, Deceased, Silberlicht, Jack, Executor of the Estate of Judith Silberlicht, Deceased, Aetna Insurance Company, Myrletus, William K., Director, Pennsylvania Professional Liability Catastrophe Loss Fund, Pennsylvania Professional Liability Joint Underwriting Association, Chicago Insurance Company, Interstate Fire & Casualty Company v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Pennsylvania Professional Liability Joint Underwriting Association 3rd Pty deft. Appeal of NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Appellant inINDEMNITY COMPANY, Appellant in, v. LINN, Robert, D.O., Moses, Stephen D., D.O., Robert Linn Medical Associates, Smith, David H., Individually and as Administrator of the Estate of Patricia Smith, Deceased, Silberlicht, Jack, Executor of the Estate of Judith Silberlicht, Deceased, Aetna Insurance Company, Myrletus, William K., Director, Pennsylvania Professional Liability Catastrophe Loss Fund, Pennsylvania Professional Liability Joint Underwriting Association, Chicago Insurance Company, Interstate Fire & Casualty Company v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Pennsylvania Professional Liabili |
Charles W. Craven, Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, Pa., for appellant in No. 84-1444 Aetna Ins. Co.
Joseph T. Bodell, Jr., Kevin Canavan, Swartz, Campbell & Detweiler, Philadelphia, Pa., Counsel for appellant in No. 84-1445 Nationwide Mut. Fire Ins. Co.
Tina L. Nugent, J. Grant McCabe, III, Henry H. Janssen, Rawle & Henderson, Philadelphia, Pa., for appellant in No. 84-1461 Pacific Indem. Co.
Jay J. Lambert, Beatrice O'Donnell, Duane, Morris & Hecksher, Philadelphia, Pa., for appellant in No. 84-1462 Pa. Professional Liability Joint Underwriting Ass'n.
Jay S. Ruder, Walter W. Rabin, Meltzer & Schiffrin, Philadelphia, Pa., for appellees, Robert Linn, D.O., Stephen D. Moses, D.O., and Robert Linn Medical Associates.
John A. Guernsey, DeStefano & Guernsey, Philadelphia, Pa., for appellees, Interstate Before ALDISERT, Chief Judge, GIBBONS, Circuit Judge, and DIAMOND, District Judge. *
Fire and Cas. Co. and Chicago Ins. Co.
These complex appeals arise from a declaratory judgment action brought by Pacific Indemnity Company (Pacific) to determine which insurance company, if any, must defend and indemnify claims against Robert Linn, D.O., which have been or may be asserted on behalf of persons who read Dr. Linn's book, The Last Chance Diet, followed the diet program recommended in the book, and consequently suffered personal injury or death. We are called upon to apply general principles of Pennsylvania insurance law in this diversity action to claims of malpractice, professional negligence, breach of warranty, and products liability brought by readers of the physician's book (hereinafter referred to as bookreader claims). We affirm the district court in all respects. 590 F.Supp. 643.
Dr. Linn, an osteopath, specializes in nutritional and family medicine. In 1976, he began writing The Last Chance Diet, a program for a protein-sparing fast diet. The book repeatedly emphasized that the diet was a medical program. Persons following the diet were directed to do so only under medical supervision. Since the book was published, at least eleven lawsuits have been filed against Dr. Linn by persons who read the book but had no personal consultation, examination or treatment by Dr. Linn or his associates. As notice of each of these bookreader claims was given to the insurers, Pacific agreed, under a reservation of rights, to defend Dr. Linn on those cases that fell within its policy period. The other insurers--Aetna Insurance Company (Aetna), Pennsylvania Professional Liability Catastrophe Loss Fund (CATfund), Pennsylvania Professional Liability Joint Underwriting Association (JUA), Chicago Insurance Company (Chicago), Interstate Fire and Casualty Company (Interstate) and Nationwide Mutual Fire Insurance Company (Nationwide)--refused to defend Dr. Linn against any of the claims.
Pacific brought its declaratory judgment action in 1979. In 1981, the district court ruled on various summary judgment motions, denying certification of a nationwide class of bookreader claimants, holding Pennsylvania law applicable, dismissing all claims against Chicago, and resolving issues as to the duties of the insurers to defend against specific bookreader claims. The district court did not reach the duty to indemnify at that time because it did not consider that issue ripe for determination. After a trial in December 1981, the district court resolved the remaining duty to defend issues, which were concerned primarily with the applicability of certain policy exclusions. Aetna, Nationwide and Pacific appealed to this court. We dismissed the interlocutory appeals for lack of jurisdiction without prejudice to the certification by the district court under Rule 54(b), F.R.Civ.P. In the meantime, all but one of the underlying bookreader cases had terminated. The district court therefore deemed the indemnification issues ripe for decision and denied certification under Rule 54(b).
On June 27, 1984, the district court, after argument, entered judgment and issued a memorandum and order on all remaining issues of defense and indemnification. The court reconsidered its previous duty to defend determinations in light of more recent case law, but made no changes. Regarding the duty to indemnify, the court reasoned that because it was impossible to determine in those bookreader cases that were settled on what theories of liability, if any, the claimants would have prevailed, the duty to indemnify must follow the duty to defend. The court then addressed the issues of apportionment, contribution, reimbursement, and prejudgment interest. Finally, the court ordered Nationwide to reimburse the other parties for attorney's fees and costs incurred in maintaining the declaratory judgment action from December 1, 1982 to the date of the judgment for its refusal to defend in any of the bookreader cases after its duty to do so had been determined in the previous opinion. The district court certified the issues for appeal under Rule 54(b). Nationwide and Aetna appealed; Pacific and JUA filed cross-appeals.
These appeals require us to decide if Pacific, JUA, Aetna and Nationwide each had a duty to defend Dr. Linn in the underlying bookreader suits; whether the duty to indemnify followed the duty to defend in those bookreader suits that were settled; whether the court erred in its interpretation and application of the "other insurance" provisions of various policies and its conclusions regarding apportionment and contribution; whether the district court erred in its resolution of the motions for reimbursement; whether the court erred in awarding prejudgment interest at ten percent rather than the six percent legal rate; and whether the district court erred in awarding attorney's fees and costs only against Nationwide and only from December 1, 1982 to June 27, 1984. Because so many issues are presented and vigorously pressed, this opinion is more extensive than we would like, especially in a diversity case that has no binding precedential effect on the Pennsylvania court system.
Most of the issues raised in these appeals involve the interpretation of insurance contracts. Determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law. McDowell-Wellman Engineering Co. v. Hartford Accident & Indemnity Co., 711 F.2d 521, 525 (3d Cir.1983). Therefore, our review is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 102-03 (3d Cir.1981). Similarly, whether an insurance policy is ambiguous is a legal question over which our review is plenary. Viger v. Commercial Insurance Co., 707 F.2d 769, 774 (3d Cir.1983); Northbrook Insurance Co. v. Kuljian Corp., 690 F.2d 368, 371 (3d Cir.1982). Our review of factual disputes is governed by the clearly erroneous standard. Universal Minerals, 669 F.2d at 102; Rule 52(a), F.R.Civ.P.
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