Home Ins. v. La Offices of Jonathan Deyoung, P.C.

• Decision Date: 30 December 1998
• Docket Number: Civil Action No. 97-1659.
• Citation: 32 F.Supp.2d 219
• Parties: The HOME INSURANCE COMPANY, Plaintiff, v. The LAW OFFICES OF JONATHAN DEYOUNG, P.C., et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

32 F.Supp.2d 219

The HOME INSURANCE COMPANY, Plaintiff, v. The LAW OFFICES OF JONATHAN DEYOUNG, P.C., et al., Defendants.

Civil Action No. 97-1659.

United States District Court, E.D. Pennsylvania.

December 30, 1998.

COPYRIGHT MATERIAL OMITTED

Victor M. Verbeke, Cozen and O'Connor, Phila, PA, Victor M. Verbeke, Sherr, Joffe & Zuckerman, P.C., W. Conshohocken, PA, for The Home Insurance Company.

John L. Walfish, Law Offices of Jonathan De Young, King of Prussia, PA, for Deyoung, Walfish & Noonan, P.C., Ralph J. Saulino, C.P.A.

John L. Walfish, King of Prusia, PA, pro se.

Henry O'Hara, Kulpsville, PA, for Cecelia E. Garritt.

John J. Koresko, V, Baldwin Renner Clark & Koresko, King of Prussia, PA, for Elva Hoisington.

Morton Tirnauer, Wayne, PA, pro se.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

I. INTRODUCTION

Plaintiff, Home Insurance Co., provided professional liability insurance to defendants Law Offices of Jonathan DeYoung, P.C. ("Law Offices"), which later became DeYoung, Walfish & Noonan ("DWN"), and John Walfish, Esq. ("Walfish"), and Ralph Saulino, CPA ("Saulino"), as professional employees of the firm. The one-year claims-made policies ran from May 12, 1993 through May 12, 1994, and from May 12, 1994 through May 12, 1995. Jonathan DeYoung died on February 19, 1995. At the request of DWN, plaintiff provided tail coverage for Jonathan DeYoung, individually, effective May 12, 1995, for an unlimited period of time after his death. The defendants are either parties to pending lawsuits or have otherwise asserted claims alleging legal malpractice against Jonathan DeYoung, Law Offices, DWN, Walfish, and Saulino since Jonathan DeYoung's death. Plaintiff has brought this action seeking either rescission of the two (2) one-year claims-made insurance policies and the tail coverage, or a declaration that due to material misrepresentations on the renewal applications for liability insurance by Jonathan DeYoung, plaintiff had no duty to defend or indemnify the insured defendants under either the tail coverage or the claims-made policies against the lawsuits and claims brought by the defendant-claimants. Before the Court is plaintiff's motion for summary judgment.

In its motion for summary judgment, plaintiff argues on several grounds that it has no duty to defend or indemnify Jonathan DeYoung, Law Offices, DWN, Walfish, and Saulino under either the claims-made policies or tail coverage against the lawsuits and claims that have been brought by the defendant-claimants: (1) as to claimants Tirnauer, Sylk, Vagnoni, and Hoisington, their claims were made after the last claims-made policy had expired and were not within the policy period; (2) as to claimants Tirnauer, Vagnoni, and Hoisington, their pending lawsuits do not properly name the personal representative of the estate of Jonathan DeYoung as a defendant in the pending actions; and (3) as to Hoisington, coverage is excluded under the "professional services" exclusion because Jonathan DeYoung was not acting in his professional capacity as an attorney or fiduciary when the alleged malpractice occurred. The Court will grant plaintiff's motion for summary judgment as to defendant-claimants Tirnauer and Sylk, and will grant in part and deny in part the motion as to defendant-claimants Vagnoni and Hoisington.

II. BACKGROUND

On January 22, 1993, Jonathan DeYoung submitted to plaintiff a renewal application for professional liability insurance on behalf of defendant Law Offices of Jonathan DeYoung, P.C. ("Law Offices") and its employees, including John Walfish, Esq. ("Walfish") and Ralph Saulino, CPA ("Saulino"). Plaintiff thereby issued a one-year claims-made insurance policy for Law Offices and its employees with effective dates from May 12, 1993 through May 12, 1994. On January 6, 1994, Jonathan DeYoung submitted to plaintiff another renewal application on behalf of Law Offices and its employees, which plaintiff granted, covering the period from May 12, 1994 through May 12, 1995. On August 29, 1994, Law Offices requested, and plaintiff agreed, to change the named insured on the policy from Law Offices to DeYoung, Walfish & Noonan ("DWN"). On February 19, 1995, Jonathan DeYoung died. On April 6, 1995, the remaining partners of DWN requested unlimited tail coverage insurance for Jonathan DeYoung alone, which was granted by plaintiff, effective May 12, 1995. Also on May 12, 1995, coverage for DWN and its employees under the last one-year claims-made policy expired.

After Jonathan DeYoung's death, plaintiff received notice that several lawsuits and claims had been asserted by or on behalf of the defendant-claimants against Jonathan DeYoung, Law Offices, DWN, Walfish, and Saulino. As a result, plaintiff filed the instant complaint seeking either rescission of the claims-made and tail coverage policies because of alleged material misrepresentations by Jonathan DeYoung on the renewal applications, or declaratory judgment relief against the defendant-claimants. Thus far, some of the defendant-claimants have been dismissed as parties by plaintiff,¹ and others have had defaults entered against them for failing to file responsive pleadings.²³ Presently pending against Jonathan DeYoung, Law Offices, DWN, Walfish, and Saulino are the lawsuits and claims of defendant-claimants Morton Tirnauer, Thomas Sylk, Michael Vagnoni, and Elva Hoisington. Plaintiff filed the instant motion for summary judgment seeking a declaration from the Court that it has no duty to defend or indemnify Jonathan DeYoung, Law Offices, DWN, Walfish, and Saulino against any lawsuits and claims brought by defendant-claimants Tirnauer, Sylk, Vagnoni, and Hoisington.

III. LEGAL STANDARD

A. Summary Judgment

Summary judgment is appropriate if the moving party can "show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). When ruling on a motion for summary judgment, the Court must view the evidence in the light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court must accept the nonmovant's version of the facts as true, and resolve conflicts in the non-movant's favor. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993).

The moving party bears the initial burden of demonstrating the absence of genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has done so, however, the non-moving party cannot rest on its pleadings. See Fed.R.Civ.P. 56(e). Rather, the non-movant must then "make a showing sufficient to establish the existence of every element essential to his case, based on the affidavits or by depositions and admissions on file." Harter v. GAF Corp., 967 F.2d 846, 852 (3d Cir.1992); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Even if the non-movant has not responded to the motion for summary judgment under Rule 56(e), the Court has an obligation to determine that the movant is entitled to judgment as a matter of law. See Local Rule 7.1(c) (stating that summary judgment may not be entered on the ground that the motion for summary judgment is unopposed). The extent to which plaintiff is entitled to the declaratory relief it seeks, the Court is required to inquire into the basis of the entitlement to such relief. As to those defendants who have had defaults entered against them, the Court must nevertheless inquire into whether judgment is appropriate, and if so, the entitlement of the relief sought by plaintiff. Fed.R.Civ.P. 55(b)(2).

B. Review of Insurance Contracts

Under Pennsylvania law, it is the province of the Court to interpret contracts of insurance. Niagara Fire Ins. v. Pepicelli, Pepicelli, Watts and Youngs, P.C., 821 F.2d 216, 219 (3d Cir.1987). The primary consideration in interpreting an insurance contract is "to ascertain the intent of the parties as manifested by the language of the written instrument." Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (Pa.1983). In doing so, "an insurance policy must be read as a whole [by the court] and construed according to the plain meaning of its terms." C.H. Heist Caribe Corp. v. American Home Assurance Co., 640 F.2d 479, 481 (3d Cir.1981); see also Koval v. Liberty Mut. Ins. Co., 366 Pa.Super. 415, 531 A.2d 487, 489 (1987) ("[The court] must construe a contract of insurance as a whole and not in discrete units.").⁴ Where a provision of a contract of insurance is ambiguous, the provision must be construed in favor of the insured, and against the insurer, the drafter of the contract. Standard Venetian Blind Co., 469 A.2d at 566. However, "a court should read policy provisions to avoid ambiguities, if possible, and not torture the language to create them." St. Paul Fire & Marine Ins. Co. v. United States Fire Ins. Co., 655 F.2d 521, 524 (3d Cir.1981).

An insurer's duty to defend an insured arises "whenever the complaint filed by the injured party may potentially come within the policy's coverage." Pacific Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985). On the other hand, the duty to indemnify is more limited than an insurer's duty to defend, which arises only "if it is established that the insured's damages are actually within the policy coverage." Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 821 (3d Cir.1994). The insurer has the burden of showing that policy exclusions preclude coverage. American States Ins. Co. v. Maryland Cas. Co., 427 Pa.Super. 170, 628 A.2d 880, 887 (1993); Miller v. Boston Ins. Co., 420 Pa. 566, 218 A.2d 275, 277 (1966). Exclusions are strictly construed against the insurer. Selko v. Home Ins. Co., 139 F.3d 146, 152 n. 3 (3d Cir.1998). However, "[e]...