Biborosch v. Transamerica Ins. Co.
| Decision Date | 27 February 1992 |
| Parties | Richard F. BIBOROSCH t/a the R.F. Biborosch Agency v. TRANSAMERICA INSURANCE COMPANY and Industrial Indemnity Company and Employers Reinsurance Corp. and Raymond B. Jewell. Appeal of TRANSAMERICA INSURANCE COMPANY and Industrial Indemnity Company, Appellant. Richard BIBOROSCH, t/a R.F. Biborosch Agency v. TRANSAMERICA INSURANCE COMPANY and Industrial Indemnity Company and Employers Reinsurance Corporation and Raymond B. Jewell. Appeal of EMPLOYERS REINSURANCE CORPORATION, Appellant. |
| Court | Pennsylvania Superior Court |
Leslie M. Cyr, Philadelphia, for appellant (at 990) and for Transamerica Ins., appellee (at 991).
Susan McLaughlin, Philadelphia, for appellant (at 991) and for Employers Reinsurance, appellee (at 990).
Robert R. Reeder, Philadelphia, for Biborosch, appellee.
Before MONTEMURO, BECK and TAMILIA, JJ.
In this appeal we are asked to decide whether three professional liability insurers have a duty to defend their insured, a general insurance agent and manager of a general insurance agency, against claims arising out of the insured's discharge of a soliciting agent working in the insured's agency.
The issue arises out of the following scenario. Appellee, Richard F. Biborosch, is a general insurance agent and manager of a general insurance agency engaged in the solicitation of applications for and the sale and servicing of the insurance products of Penn Mutual Life Insurance Company and Penn Insurance and Annuity Company (hereinafter collectively referred to as "Penn"). Pursuant to Biborosch's contracts with Penn, his duties as agency manager included the recruiting, training and supervision of soliciting agents and brokers. Biborosch contends that in connection with these duties, in late 1986 he and Penn became convinced that one of the soliciting agents working in Biborosch's agency, Raymond B. Jewell, was replacing Penn policies with policies of a competitor. In other words, instead of renewing Penn policies on behalf of the agency's clients, Jewell was thought to be obtaining new policies issued by a different insurer. As a result, Biborosch and Penn terminated Jewell and cancelled his license to sell Penn products.
On July 7, 1987, Jewell filed a multi-count complaint against Biborosch and Penn in the Chester County Court of Common Pleas (the "Jewell action"). He alleged tortious interference with contractual relations, breach of contract, wrongful discharge and breach of the duty of good faith and fair dealing.
Biborosch maintained professional liability insurance with three insurers, Transamerica Insurance Company, Employers Reinsurance Corporation, and The Industrial Indemnity Company. Upon being notified of the Jewell action, Biborosch requested that the three insurers undertake the defense of that action, contending that the claims raised in the Jewell action potentially fell within the coverage of the policies. All three insurers refused this request on the ground that Jewell's claims did not potentially fall within the coverage of the various policies. Biborosch responded to this refusal by instituting a declaratory judgment action against all three insurers in the Montgomery County Court of Common Pleas. He sought a declaration that the insurers owed him a duty of defense and indemnity under the policies. After the pleadings stage was completed and some discovery conducted, all parties filed motions for summary judgment. On March 9, 1990, the trial court denied the insurers' motions and granted Biborosch's motion to the extent that it requested a declaration that the insurers had a duty to defend the Jewell action. All three insurers appealed, and their appeals have been consolidated before this court.
The duty to defend is different from and greater than the duty to indemnify. If the factual allegations of the complaint against the insured state a claim which would potentially fall within the coverage of the policy, then the insurer has the duty to defend. See D'Auria v. Zurich Ins. Co., 352 Pa.Super. 231, 507 A.2d 857, 859 (1986) (citing, inter alia, Pacific Indem. Co. v. Linn, 590 F.Supp. 643 (E.D.Pa.1984), aff'd, 766 F.2d 754 (3d Cir.1985)). As the Supreme Court has stated, "[i]t is not the actual details of the injury, but the nature of the claim which determines whether the insurer is required to defend." Springfield Twp. v. Indemnity Ins. Co. of North America, 361 Pa. 461, 464, 64 A.2d 761 (1949). In making this determination, the factual allegations of the complaint are taken to be true and the complaint is to be liberally construed with all doubts as to whether the claims may fall within the coverage of the policy to be resolved in favor of the insured. Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 152 A.2d 484 (1959). Thus, we must look to two sources to decide whether a duty to defend exists. We must interpret the insurance policy to determine the scope of coverage. Then, we must analyze the complaint filed against the insured to determine whether the claims asserted potentially falls within that coverage. Id.; see also Seaboard Industries, Inc. v. Monaco, 258 Pa.Super. 170, 392 A.2d 738 (1978).
Since the terms of the three policies at issue are not identical, each containing its own distinct description of the coverage provided, we must conduct a separate analysis of the coverage provided under each policy in order to determine each insurer's duty to defend the Jewell action.
The Transamerica policy provides, in pertinent part, as follows:
I. COVERAGE--PROFESSIONAL LIABILITY AND PERSONAL INJURY:
To pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as DAMAGES because of:
A. Any act, error or omission of the INSURED, or any person for whose acts the INSURED is legally liable in the rendering or failing to render PROFESSIONAL SERVICES for others in the conduct of the NAMED INSURED'S profession as Life Underwriter, Licensed Life, Accident and Health Insurance General Agent or Manager, Licensed Life, Accident and Health Insurance Broker and Registered Representative while there is in effect a contract between the NAMED INSURED and the insurance company named in Item 1 of the Declarations;
....
D. Any actual or alleged negligent failure of an INSURED that is also a General Agent or Manager of the insurance company named in Item 1 of the Declarations to supervise, manage or train any NAMED INSURED.
....
H. "PROFESSIONAL SERVICES" shall mean those services necessary or incidental in the conduct of the insurance business of the NAMED INSURED including:
1. the sale and/or servicing of life insurance, disability income insurance, annuities, accident and health insurance plans (including Blue Cross/Blue Shield Organizations);
2. the sale and/or servicing of variable annuities....
3. the sale and/or servicing of employee benefit plans....
4. advice, consultation, administration and services in conjunction with all of the above, whether or not a separate fee is charged.
This provision can be reduced to three basic requirements. First, the policy requires that the damages the insured seeks to bring within the coverage of the policy arise from acts, errors or omissions of the insured in the rendering or failing to render professional services. Since the phrase "professional services" is defined in the Transamerica policy, this requirement must be construed in light of the policy definition. That definition contains two basic parts. Professional services 1) are services necessary or incidental to the conduct of the insurance business of the insured; and 2) specifically include the sale and/or servicing of various insurance products and advice, consultation, administration and services in conjunction therewith.
The second basic requirement of the policy is that the services must have been rendered to others. The phrase "to others" is undefined.
The third requirement is that the services must have been performed in the conduct of the insured's profession as, inter alia, an insurance broker and insurance general agent or manager.
Our task is to construe these requirements to determine if they are potentially fulfilled by the claims made in the Jewell action. This analysis must begin with a close examination of the complaint filed in that action to determine the nature of those claims. The Jewell action is premised almost entirely on the wrongful discharge of Jewell by Biborosch and Penn. The complaint alleges that the termination of Jewell from the Biborosch agency and the termination of his license to sell Penn insurance products are actionable both in tort, because they were motivated by ill will, constituted violations of public policy and were in breach of a duty of fair dealing, and in contract, because they were in breach of an alleged employment contract. The complaint further alleges that after Jewell was terminated, Biborosch and Penn intentionally interfered with Jewell's contractual relationship with a third party who was also a soliciting agent for Penn.
We view these allegations as potentially falling within the scope of the Transamerica policy. We reach this conclusion primarily because the Transamerica policy specifically insures Biborosch not only as an insurance broker, but also as a general agent or manager. This crucial aspect of the Transamerica policy brings the Jewell action potentially within the coverage of the policy, thereby giving rise to the duty to defend.
Clearly, the first requirement of the policy as stated above is fulfilled by Jewell's claims, all of which arise from his allegedly wrongful discharge and termination of his license to sell Penn products. Biborosch's termination of Jewell was clearly an act by Biborosch committed in the course of rendering professional services as general manager of the agency. Moreover, since professional services are defined...
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