Consulting Engineers, Inc. v. Insurance Co. of North America
| Citation | 710 A.2d 82 |
| Parties | CONSULTING ENGINEERS, INC. and Paul K. Goldberg, Appellants, v. INSURANCE COMPANY OF NORTH AMERICA, Selective Way Insurance Company and Lucjan Zlotnicki and Andrei Neuman, Appellees. |
| Decision Date | 09 June 1998 |
| Court | Superior Court of Pennsylvania |
Stephen J. Springer, Philadelphia, for appellant.
Andrew J. Braunfeld, Norristown, for Insurance Company of North America, appellee.
Andrew J. Gallogly, Philadelphia, for Selective Way Insurance Company, appellee.
Before CAVANAUGH, DEL SOLE and HOFFMAN, JJ.
Consulting Engineers, Inc. and Paul K. Goldberg ("appellants") initiated the present action pursuant to the Declaratory Judgment Act, 42 Pa.C.S.A. § 7531 et seq., seeking a judicial declaration that the Insurance Company of North America ("INA") and/or Selective Way Insurance Company ("Selective") were required to provide appellants with a defense and indemnification in an underlying lawsuit for Wrongful Use of Civil Proceedings. 1 The trial court rejected this claim for
defense and indemnification and entered an order that denied appellants' motion for partial judgment on the pleadings and granted judgment on the pleadings in favor of INA and Selective. In a case of first impression in this Commonwealth, we must determine whether INA and Selective, under the applicable insurance policies, are required to defend and indemnify appellants for damages flowing from the tort of Wrongful Use of Civil Proceedings, where the alleged wrongful suit was commenced by appellants before the INA and Selective coverage periods began but continued after the policies were in effect. After careful review and for the reasons that follow, we affirm. 2
On May 12, 1989, appellants commenced a lawsuit against Lucjan Zlotnicki and Andrei Neuman in the Court of Common Pleas of Montgomery County. 3 Summary judgment was granted against appellants in that action in April 1993. This Court affirmed the grant of summary judgment and the case was finally terminated in Zlotnicki's and Neuman's favor when the Supreme Court denied allocatur in July 1994. Thereafter, Zlotnicki and Neuman filed the underlying lawsuit against appellants, alleging they maliciously initiated, prosecuted and continued the prior lawsuit without probable cause, for a purpose other than securing proper discovery, joinder and adjudication of claims and to harass and cause harm. This suit is currently pending in the Court of Common Pleas of Philadelphia County.
The action for declaratory judgment was occasioned by INA's and Selective's refusal to defend and indemnify appellants in conjunction with the underlying lawsuit filed by Zlotnicki and Neuman. INA had previously issued a commercial general liability policy to appellants for the period from December 19, 1990 to December 19, 1992, covering personal injury caused or committed during the policy period. Selective issued a business owner's policy to appellants for the period from January 21, 1996, covering personal injury occurring during the policy period. INA and Selective refused to indemnify and defend appellants because the allegedly wrongful suit filed by appellants, upon which the underlying lawsuit is premised, was commenced on May 12, 1989, which was outside the applicable policy periods of the policies issued by each company.
The trial court, in granting judgment on the pleadings in favor of INA and Selective, concluded "that the triggering 'event', in an instance of wrongful use of civil proceedings, which determines whether the carrier must provide coverage under an 'occurrence' policy is when the allegedly wrongful civil suit is commenced." Because the allegedly wrongful suit was instituted before either the INA or Selective policies took effect, the court ruled that neither insurer was required to defend and indemnify appellants and granted judgment on the pleadings. This appeal followed.
A motion for judgment on the pleadings should be granted only where the pleadings demonstrate that no genuine issue of fact exists, and the moving party is entitled to judgment as a matter of law. Pa.R.C.P Kelly v. Nationwide Ins. Co., 414 Pa.Super. 6, 10, 606 A.2d 470, 471-72 (1992).
1034; Giddings v. Tartler, 130 Pa.Cmwlth. 175, 177, 567 A.2d 766, 767 (1989). Thus, "[i]n reviewing a trial court's decision to grant judgment on the pleadings, the scope of review of the appellate court is plenary; the reviewing court must determine if the action of the trial court is based on a clear error of law or whether there were facts disclosed by the pleadings which should properly go to the jury." Vogel v. Berkley, 354 Pa.Super. 291, 296, 511 A.2d 878, 880 (1986), quoted in Keystone Automated Equip. v. Reliance, 369 Pa.Super. 472, 475 [535 A.2d 648] (1988), alloc. den. 519 Pa. 654, 546 A.2d 59. An appellate court must accept as true all well-pleaded facts of the party against whom the motion is made, while considering against him only those facts which he specifically admits. Jones v. Travelers Ins. Co., 356 Pa.Super. 213, 217, 514 A.2d 576, 578 (1986); West Penn Administration, Inc. v. Pittsburgh National Bank, 289 Pa.Super. 460, 467, 433 A.2d 896, 900 (1981). Neither party can be deemed to have admitted either conclusions of law or unjustified inferences. Sinn v. Burd, 486 Pa. 146, 149, 404 A.2d 672, 674 (1979); Jones, supra, 356 Pa.Super. at 217, 514 A.2d at 578. Moreover, in conducting its inquiry, the court should confine itself to the pleadings themselves and any documents or exhibits properly attached to them. Jones, supra, at 217, 514 A.2d at 578; Gallo v. J.C. Penney Casualty Ins. Co., 328 Pa.Super. 267, 270, 476 A.2d 1322, 1324 (1984). It may not consider inadmissible evidence in determining a motion for judgment on the pleadings. 6 Pennsylvania Standard Practice 2d § 31:19 at 172. Only where the moving party's case is clear and free from doubt such that a trial would prove fruitless will an appellate court affirm a motion for judgment on the pleadings. Jones, supra, 356 Pa.Super. at 217, 514 A.2d at 578; Gallo, supra, 328 Pa.Super. at 270, 476 A.2d at 1324
The Declaratory Judgments Act may be invoked to interpret the obligations of the parties under an insurance contract, including the question of whether an insurer has a duty to defend and/or a duty to indemnify a party making a claim under the policy. Liberty Mutual Insurance Company v. S.G.S. Company, 456 Pa. 94, 318 A.2d 906 (1974); Redevelopment Authority of Cambria County v. International Insurance Company, 454 Pa.Super. 374, 685 A.2d 581 (1996). A court's first step in a declaratory judgment action concerning insurance coverage is to determine the scope of the policy's coverage. Lucker Manufacturing v. Home Insurance Company, 23 F.3d 808 (3d Cir.1994); see also Erie Insurance Exchange v. Transamerica Insurance Company, 516 Pa. 574, 533 A.2d 1363 (1987). After determining the scope of coverage, the court must examine the complaint in the underlying action to ascertain if it triggers coverage. If the complaint against the insured avers facts that would support a recovery covered by the policy, then coverage is triggered and the insurer has a duty to defend until such time that the claim is confined to a recovery that the policy does not cover. The duty to defend also carries with it a conditional obligation to indemnify in the event the insured is held liable for a claim covered by the policy. Pacific Indemnity Company v. Linn, 766 F.2d 754 (3d Cir.1985). Although the duty to defend is separate from and broader than the duty to indemnify, both duties flow from a determination that the complaint triggers coverage.
General Accident, supra at 706, 692 A.2d at 1095.
Appellants present three arguments: (1) that the INA and Selective policies are not "occurrence" policies; (2) that the tort of Wrongful Use of Civil Proceedings is a continuing injury and, therefore, insurance coverage is triggered under a policy of insurance which was in effect at any time from initiation of the allegedly wrongful lawsuit until its termination; and (3) there are disputed issues of fact which preclude the entry of judgment on the pleadings in favor of INA and Selective.
We begin with the insurance policies at issue. "An 'occurrence' policy protects the policy holder from liability for any act done while the policy is in effect, whereas a 'claims made' policy protects the holder only against claims made during the life of the policy." St. Paul Fire and Marine Insurance Co. v. Barry, 438 U.S. 531, 535 n. 3, 98 S.Ct. 2923, 2927 n. 3, 57 L.Ed.2d 932, 937 n. 3 (1978). The trial court concluded that both the INA and Selective policies were written on an "occurrence" basis. After careful examination of the policies, we agree.
The INA policy provides:
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which this insurance applies.
b. This insurance applies to "personal injury" only if caused by an offense:
(1) Committed in the "coverage territory" during the policy period; and
(2) Arising out of the conduct of your business.
* * * * * *
"Personal Injury" means injury, other than "bodily injury," arising out of one or more of the following offenses:
b. Malicious Prosecution.
(quotes in original).
The Selective policy provides:
We will pay for the benefit of insureds all sums which they become legally obligated to pay as damages because of bodily injury, property damage, or personal injury caused by an occurrence covered by this insurance.
* * * * * *
Personal Injury means injury which arises out of any of the following offenses committed in the conduct of your business which occurs during the policy period.
False arrest, detention or imprisonment, or malicious prosecution.
(emphasis in original). 4
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