Plasticert, Inc. v. Westfield Ins. Co.

• Decision Date: 01 May 2007
• Parties: PLASTICERT, INC., Appellant v. WESTFIELD INSURANCE COMPANY, et al., Appellee Plasticert, Inc., Appellee v. Westfield Insurance Company, et al., Appellant.
• Court: Pennsylvania Superior Court

923 A.2d 489

PLASTICERT, INC., Appellant v. WESTFIELD INSURANCE COMPANY, et al., Appellee Plasticert, Inc., Appellee v. Westfield Insurance Company, et al., Appellant.

Superior Court of Pennsylvania.

Argued November 28, 2006.

Filed May 1, 2007.

Steven E. Grubb, Harrisburg, for Plasticert.

Allan C. Molotsky, Philadelphia, for Westfield.

BEFORE: FORD ELLIOTT, P.J., LALLY-GREEN, and JOHNSON, JJ.

OPINION BY LALLY-GREEN, J.:

¶ 1 Appellant/Cross-Appellee Plasticert, Inc., and Appellee/Cross-Appellant Westfield Insurance Company, appeal from the trial court's order of February 22, 2006. We affirm.

¶ 2 On July 12, 2004, Plasticert filed a declaratory judgment action against Westfield, its insurer, to determine coverage under a Commercial General Liability policy and an Umbrella Insurance policy. The coverage dispute stems from an underlying contract action filed against Plasticert by one of its customers, Westfalia Technologies, Inc. Westfield denied coverage under the policies, and the trial court determined that the policies exclude coverage for the underlying lawsuit. The trial court found the following facts:

The pleadings of this case and the underlying action indicate that, after a lengthy period of testing and tooling production, Plasticert began making thermoplastic wheels for use in Westfalia's new gravity flow product line on April 6, 2000. As part of the agreement with Plasticert, Westfalia required Plasticert to use Stanuloy ST-150 or an equivalent material in manufacturing the wheels. Westfalia purchased Plasticert's wheels until the end of 2002.

Beginning in March of 2003, Westfalia received complaints from several gravity flow purchasers who claimed that the wheels were breaking, cracking, and shattering. Westfalia conducted destructive testing on field samples of the wheels which confirmed the complaints. During this testing period, Westfalia noticed that the Plasticert wheel containers wore labels reading "Ashley Polymers Ashlene R6714." Westfalia replaced several of Plasticert's thermoplastic wheels with wheels obtained from undisclosed sources. By letter dated January 23, 2004, Westfalia's counsel informed Plasticert that his client suffered damages due to Plasticert's "nonconforming wheels."

Westfalia filed suit against Plasticert on March 26, 2004. The Amended Complaint contains the following counts: Count I — Breach of Contract; Count II — Rejection/Revocation; Count III — Breach of Express Warranty; Count IV — Breach of Implied Warranties; Count V — Common Law Fraud; Count VI — Fraud in the Inducement; Count VII — Promissory Estoppel; and Count VIII — Unjust Enrichment. Plasticert joined Ashley Polymers as a defendant on June 18, 2004.

On November 1, 2002, Westfield insured Plasticert via a Commercial General Liability (hereinafter "CGL") policy and a Commercial Umbrella (hereinafter "Umbrella") policy, the terms of which will be addressed in detail below. In anticipation of Westfalia's suit being filed, Plasticert contacted Westfield to put them on notice of their duty to defend. Westfield denied coverage via letter on May 3, 2004. After Plasticert asked Westfield to reconsider, Westfield again denied coverage.

Plasticert initiated this action via Complaint on July 12, 2004. An Amended Complaint was filed on the 30th, which seeks declaratory judgment on three issues: (1) that Westfield must defend Plasticert in the underlying action until the facts reveal that the policies do not apply; (2) that the allegations are, in fact, covered by either or both policies; and (3) that Westfield has a duty to indemnify Plasticert for "any verdict, judgment or settlement in the underlying lawsuit."

. . .

This case has been stayed since June 30, 2005, pursuant to a suggestion of bankruptcy filed by Plasticert on June 30, 2005. The parties have indicated, via letter from Westfield's counsel dated January 26, 2006, that they have agreed to lift the stay for the sole purpose of deciding the dueling motions for judgment on the pleadings in this action.

Trial Court Opinion, 2/22/06, at 1-4 (record citations omitted).

¶ 3 On February 22, 2006, the trial court granted Westfield's motion for judgment on the pleadings and denied a similar motion from Plasticert. The trial court found that the sistership exclusion, which is contained in substantially similar language in both polices, barred coverage with respect to the underlying lawsuit. Plasticert filed a timely notice of appeal on March 22, 2006. On March 23, 2006, the trial court ordered Plasticert to file a concise statement of matters complained of on appeal pursuant to Pa.R.A.P.1925(b). Plasticert filed a timely concise statement on April 5, 2006.

¶ 4 Westfield filed a notice of cross-appeal on April 4, 2006. On April 7, the trial court ordered Westfield to file a 1925(b) concise statement within 14 days and properly served that order on Westfield. Westfield filed an untimely concise statement on April 26. Westfield's failure to comply with the trial court's 1925(b) order results in waiver of Westfield's cross-appeal. Karn v. Quick & Reilly, 912 A.2d 329 (Pa.Super.2006).

¶ 5 We note, however, that the issues Westfield raises in its brief simply offer alternative bases on which we may affirm the trial court. Westfield correctly notes that we may affirm the trial court's order on any valid basis. Craley v. State Farm & Cas. Co., 586 Pa. 484, 895 A.2d 530, 532-533 (2006). Westfield's waiver of its cross-appeal does not preclude this Court from reviewing alternative bases on which to affirm the trial court's order. Indeed, a cross-appeal was unnecessary because Westfield won a complete victory before the trial court. Westfield could have avoided much hassle by simply filing an appellee's brief. We now turn our attention to the merits.

¶ 6 Plasticert raises the following issue for our review:

Did the lower court commit an error of law in applying the "Sistership Exclusion" contained in the Commercial General Liability and Umbrella Insurance policies, thus denying Appellant insurance coverage and legal defense costs in a related claim?

Plasticert's Brief at 3.¹

¶ 7 We review the trial court's grant of judgment on the pleadings according to the following standard:

Our scope and standard of review in an appeal of an order granting a motion for judgment on the pleadings is well settled: this Court applies the same standard as the trial court and confines its consideration to the pleadings and documents properly attached thereto. We must determine whether the trial court's action respecting the motion for judgment on the pleadings was based on a clear error of law or whether there were facts disclosed by the pleadings which should properly go to the jury. We will affirm the grant of judgment on the pleadings only if the moving party's right to succeed is certain and the case is so free from doubt that trial would clearly be a fruitless exercise.

DeSantis v. Prothero, 2007 PA Super 9 at ¶ 5, 916 A.2d 671.

¶ 8 We interpret the terms of an insurance policy according to the following standard:

The interpretation of an insurance policy is a question of law that we will review de novo. Our primary goal in interpreting a policy, as with interpreting any contract, is to ascertain the parties' intentions as manifested by the policy's terms. When the language of the policy is clear and unambiguous, we must give effect to that language. Alternatively, when a provision in the policy is ambiguous, the policy is to be construed in favor of the insured to further the contract's prime purpose of indemnification and against the insurer, as the insurer drafts the policy, and controls coverage.

Kvaerner Metals v. Commercial Union Ins. Co., 589 Pa. 317, 908 A.2d 888, 897 (2006).

¶ 9 The CGL and umbrella policies at issue contain several similarly worded exclusions that potentially bar coverage with regard to the underlying lawsuit. The parties concede that the outcome of the instant matter will be the same under both policies. Coverage may be triggered under either policy in the event of an "occurrence" that results in "property damage." "Occurrence" and "property damage" are defined terms in both polices. The trial court concluded that the facts alleged in the underlying lawsuit are sufficient to meet the definition of "occurrence" and "property damage." The trial court nonetheless found that exclusion "n" barred coverage in the instant matter, and therefore granted judgment on the pleadings in favor of Westfield.

¶ 10 Westfield argues that the trial court erred in finding that the facts alleged in the underlying lawsuit constitute an "occurrence" that resulted in "property damage." Westfield argues in the alternative that the trial court correctly found that exclusion "n" applies. Finally, Westfield argues that several exclusions not addressed by the trial court also bar coverage with...