Casper v. American Guarantee & Liability Ins. Co.
| Decision Date | 25 September 1962 |
| Citation | 408 Pa. 426,199 Pa.Super. 33,184 A.2d 247 |
| Parties | Jack CASPER, trading as Jack Casper Co., Appellant, v. AMERICAN GUARANTEE & LIABILITY INSURANCE CO. |
| Court | Pennsylvania Supreme Court |
Samuel I. Sacks, Philadelphia, Lee B. Sacks, Philadelphia, for appellant.
Louis S. Cali, Cogan & Turner, Philadelphia, for appellee.
Before BELL, C. J., and JONES, COHEN, EAGEN, and O'BRIEN, JJ.
Appellant is a brickwork contractor who, as a sub-contractor, participated in certain remodeling of the ground floor and basement of a building in Philadelphia. The second floor of the building was occupied by a clothing merchant, Engel, Inc., which continued its operations during the remodeling. Engel brought suit in trespass against the prime contractor and the subcontractors involved in the remodeling, including appellant, alleging negligent damage to its premises and goods.
During the period when appellant was on the remodeling job, he was insured by appellee under a comprehensive general liability policy. Upon being sued by Engel, appellant forwarded the complaint to appellee, which denied coverage and refused to defend. Appellant engaged counsel and the matter came to trial, resulting after 3 1/2 weeks of trial, in a jury disagreement. Subsequently, the parties compromised their differneces and appellant paid to Engel, as his share of the settlement, $600.00. To recover this sum, as well as $7,500.00 in legal fees for defense of Engel's action against him, appellant sued appellee in assumpsit, alleging a breach by appellee of its duty to defend the action brought by Engel against appellant.
Appellee filed an answer and new matter which, in essence, denied any duty to defend, inasmuch as the Engel claim was allegedly without the coverage of the policy. Appellant's reply to new matter denied that the claim was beyond the purview of the policy and appellee moved for judgment on the pleadings. The court below granted judgment on the pleadings in favor of appellee and that judgment is the subject of the instant appeal.
The insurance policy which forms the basis of this litigation, contains the following relevant provisions:
(Emphasis supplied.)
'(a) defend any suit against the insured alleging such injuries, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *.' (Emphasis supplied.)
The gravamen of appellant's cause of action is that appellee wrongfully refused to defend the action brought against him by Engel. We must determine whether appellee was under a contractual duty to defend the action and, in making this determination, we are guided by the law enunciated in Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 589, 152 A.2d 484, 488, 72 A.L.R.2d 1242 (1959).
'It is clear that where a claim potentially may become one which is within the scope of the policy, the insurance company's refusal to defend at the outset of the controversy is a decision it makes at its own peril. See University Club v. American Mutual Liability Insurance Company, 124 Pa.Super. 480, 189 A. 534. In the leading case of Lee v. Aetna Casualty & Surety Company, 2 Cir., 1949, 178 F.2d 750, 752, an insured brought suit on a policy of liability insurance. The complaint was in two counts, the first seeking relief for a judgment which plaintiff was forced to pay to an injured party and the second seeking his costs in defending that suit. The United States Court of Appeals for the Second Circuit, speaking through Judge Learned Hand, held that the insurer was not obligated to pay the amount of the judgment recovered against the insured as the recovery was not one within the coverage of the policy. However, the Court went on to grant the insured his costs of defending that suit. The insurance policy in that case, as in this one, required the insurance company to defend only those claims covered by the policy. The court said, that so long as the complaint filed by the injured party covered an injury which 'might or might not' fall within the coverage of the policy the insurance company was obliged to defend. In the course of the opinion they said: '* * * the injured party might conceivably recover on a claim, which, as he had alleged it, was outside the policy; but which, as it turned out, the insurer was bound to pay. Such is the plasticity of modern pleading that no one can be positive that that could not happen. In such a case of course the insurer would not have to defend; yet, even then, as soon as, during the course of the trial, the changed character of the claim appeared, we need not say that the insured might not insist that the insurer take over the defence. When, however, as here, the complaint comprehends an injury which may be within the policy, we hold that the promise to defend includes it.''
We agree with the analysis and reasoning of the court below, which in its able opinion stated:
'As heretofore set out, defendant has obligated itself to indemnify plaintiff against certain damages resulting from accident. The ultimate question to be decided, therefore, is whether Engel, in its original suit against Casper, pleaded any facts alleging injury to itself, at the hands of Casper, caused by accident.
'The definition of the term accident is set forth in M. Scholl [Schnoll] & Sons Inc. v. Standard Accident Insurance Company, Apln't, 190 Pa.Super. 360 (1959). The particular coverage clause there under consideration was couched in the following language:
"To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed on him by law for damages because of injury to destruction of property, including loss of use thereof caused by accident and arising out of any of the hazards hereinafter defined with respect to which insurance is afforded...
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