Continental Cas. Co. v. Pro Machine

• Decision Date: 17 January 2007
• Citation: 916 A.2d 1111
• Court: Pennsylvania Superior Court
• Parties: CONTINENTAL CASUALTY COMPANY, Appellee v. PRO MACHINE, Randy Egbert and Paul Massey t/a and Paul Massey, Individual Appeal of Paul Massey. Paul Massey, Appellant v. Chris Rahley, CNA Insurance, Continental Casualty Company, Burns & Burns Associates, and Leland C. King Agency, Inc., Appellees.

916 A.2d 1111

CONTINENTAL CASUALTY COMPANY, Appellee v. PRO MACHINE, Randy Egbert and Paul Massey t/a and Paul Massey, Individual

Appeal of Paul Massey.

Paul Massey, Appellant v. Chris Rahley, CNA Insurance, Continental Casualty Company, Burns & Burns Associates, and Leland C. King Agency, Inc., Appellees.

Superior Court of Pennsylvania.

Argued October 4, 2006.

Filed January 17, 2007.

Jeffrey S. Tarker, New Castle, for appellant.

John C. Grugan, Philadelphia, for CNA and Continental, appellees.

Cathie J. Fagan, Pittsburgh, for Continental, appellee.

BEFORE: HUDOCK, ORIE MELVIN and BENDER, JJ.

OPINION BY HUDOCK, J.:

¶ 1 Paul Massey (Massey), a partner in Pro Machine (Pro Machine or the Partnership), appeals from an order granting summary judgment to Continental Casualty Company (Continental) in the latter's declaratory judgment action. In this case of first impression, we are asked to determine whether Massey is entitled to under-insured motorist (UIM) benefits under a business automobile policy issued by Continental to Pro Machine. Upon careful review, we reverse and remand for further proceedings.

¶ 2 Pro Machine is a Pennsylvania partnership, registered as a fictitious name, under which Massey and Randy Egbert (Egbert) trade as a machine shop. In 2001, Massey owned a Harley Davidson motorcycle (the motorcycle) and a Grand Prix, both of which were titled in his name; he used these vehicles to make customer calls on behalf of Pro Machine. Massey Deposition, 5/25/02, at 8, 23-24; Egbert Deposition, 11/22/04, at 32. In May 2001, Massey and Egbert filled out an application on behalf of Pro Machine with the Burns & Burns agency for a commercial insurance package, including automobile insurance. Thereafter, Continental issued Policy No. B2050146716 (effective June 26, 2001, through June 25, 2002) (the Policy). Declaratory Judgment Complaint, Exhibit A.

¶ 3 On August 15, 2001, Massey was seriously injured while operating the motorcycle in an automobile accident caused by the negligence of Angela M. Flaisman. Massey recovered $15,000.00 in policy limits from Ms. Flaisman's insurer, Allstate Insurance Company. Massey also recovered $15,000.00 in UIM benefits under a policy he purchased from Dairyland Insurance Company for coverage on the motorcycle. In search of additional UIM coverage, Massey filed a claim with Continental for the $100,000.00 UIM coverage limits of the Policy.

¶ 4 Continental denied UIM coverage, claiming that Massey was not a "Named Insured" under the Policy and that the motorcycle was not a "covered motor vehicle" pursuant to the UIM "household" exclusion. Consequently, Massey initiated a law suit against Continental at No. 10528-02 by writ of summons on May 14, 2002. On June 26, 2002, Continental filed a declaratory judgment action at No. 10699-02. Massey filed his complaint on July 23, 2003, alleging bad faith, negligence, and breach of contract against Continental for failing to pay Massey UIM benefits (the bad faith action). On November 25, 2003, the two lawsuits were consolidated for discovery purposes only.

¶ 5 On January 11, 2005, Continental filed a motion for summary judgment in its declaratory judgment action, to which Massey filed a reply and a cross-motion for summary judgment. All of these post-discovery pleadings were filed under both docket numbers. On August 11, 2005, the trial court disposed of the cross-motions for summary judgment in the declaratory judgment action in favor of Continental. Again, that order was filed under both dockets. Massey filed a timely notice of appeal from the order granting Continental summary judgment in the declaratory judgment action (No. 730 WDA 2006). Out of extreme caution, Massey simultaneously filed a notice of appeal in the bad faith case (No. 731 WDA 2006).

¶ 6 Initially, we must determine if the appeal at No. 731 WDA 2006 is properly before us. "[A]n appeal may be taken as of right from any final order of an administrative agency or lower court." Pa.R.A.P. 341. An order is final if (1) it disposes of all claims and all parties in an action, Pa.R.A.P. 341(b)(1); (2) it is expressly defined as a final order by statute, Pa.R.A.P. 341(b)(2); or (3) the trial court files a determination of finality with regard to that order, Pa.R.A.P. 341(b)(3) and (c)(1). Recall that the bad faith and declaratory judgment actions were consolidated for discovery purposes only, a fact conceded by both parties. Although included on the bad faith docket, cross-motions for summary judgment were filed only in the declaratory judgment action. No motion for summary judgment was filed in the bad faith case; consequently, there is no corresponding order of court in that case. Although included on the bad faith docket, the order granting summary judgment to Continental was entered only in the declaratory judgment action. That was a final order in the declaratory judgment action because it formally disposed of all the claims and parties therein. Pa. R.A.P. 341(b)(1). However, the final order in the declaratory judgment action does not qualify under any of the above definitions as a final order in the bad faith action. Accordingly, the appeal at No. 731 WDA 2006 is quashed because no final order of court has been entered in the bad faith case from which an appeal could be taken.

¶ 7 In the appeal at No. 730 WDA 2006, Massey presents three questions for our consideration:

Did the trial court err in granting summary judgment in favor of Continental where Massey was a Named Insured under the policy at issue and the household exclusion did not apply to defeat his claim for UIM coverage under the Business Auto Coverage Form issued by Continental?

Did the trial court err in granting summary judgment in favor of Continental where, assuming arguendo that the legal fiction of a partnership can be the sole Named Insured for purposes of UIM coverage without necessarily including the individual (and legally responsible) partners as Named Insureds, the identification of a partnership alone or in conjunction with the individual partners creating such partnership as Named Insureds within a policy of insurance creates an ambiguity with regard to the coverage afforded thereunder which must be resolved in favor of coverage for the insured?

Whether, in light of the trial court's errors of law with regard to the identification of Massey as a Named Insured, the presence of ambiguities which must be resolved in favor of coverage, and the resultant inapplicability of the "household exclusion," the trial court abused its discretion by failing to determine that UIM coverage did exist with regard to Massey's accident and enter an order consistent with that outcome?

Massey's Brief at 4. Because these questions are interrelated and all challenge the trial court's grant of summary judgment, we shall address them together. Our scope of review of an order granting summary judgment is plenary. We apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 60-61 (Pa.Super.2006) (citation omitted).

¶ 8 Motions for summary judgment implicate the plaintiff's proof of the elements of his cause of action. Chenot, 895 A.2d at 61 (citation omitted). Summary judgment is proper "if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury." Pa.R.C.P. 1035.2(2). In other words, "whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report," Pa. R.C.P. 1035.2(1), and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Thus, a record that supports summary judgment either (1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action or defense. Chenot, 895 A.2d at 61.

¶ 9 When reviewing a grant of summary judgment, we are not bound by the trial court's conclusions of law, but may reach our own conclusions. Id. We will disturb the trial court's order only upon an error of law or an abuse of discretion. "Judicial discretion requires action in conformity with law on facts and circumstances before the trial court after hearing and consideration." Chenot, 895 A.2d at 61 (citation omitted). Consequently, the court abuses its discretion if, in resolving the issue for decision, it misapplies the law, exercises its discretion in a manner lacking reason, or does not follow legal procedure. Id. (citation omitted).

¶ 10 Where the discretion exercised by the trial court is challenged on appeal, the party bringing the challenge bears a heavy burden. It is not sufficient to persuade the appellate court that it might have reached a different conclusion if charged with the duty imposed on the court below; it is necessary to go further and show an abuse of the discretionary power. Chenot, 895 A.2d at 61 (citation omitted). An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied or the judgment exercised is manifestly unreasonable or the result of partiality, prejudice, bias or ill-will, as shown by the evidence or the record, discretion is abused. Id. at 61-62 (citation omitted).

¶ 11 Viewing the record in the light most favorable to Massey as the non-moving party and resolving all doubts in his favor, we conclude that the trial court...