Redevelopment Authority of Cambria County v. International Ins. Co.

• Decision Date: 25 November 1996
• Citation: 685 A.2d 581,454 Pa.Super. 374
• Parties: REDEVELOPMENT AUTHORITY OF CAMBRIA COUNTY v. INTERNATIONAL INSURANCE COMPANY, Erie Insurance Group, Barr Township, Marsteller Community Water Authority, P. Joseph Lehman, Inc., Turjan Construction Company, Inc., and Kukurin Contracting, Inc. Appeal of ERIE INSURANCE GROUP.
• Court: Pennsylvania Superior Court

Page 581

685 A.2d 581

454 Pa.Super. 374

REDEVELOPMENT AUTHORITY OF CAMBRIA COUNTY v. INTERNATIONAL INSURANCE COMPANY, Erie Insurance Group, Barr Township, Marsteller Community Water Authority, P Joseph Lehman, Inc., Turjan Construction Company, Inc., and Kukurin Contracting, Inc Appeal of ERIE INSURANCE GROUP.

Superior Court of Pennsylvania.

Argued May 6, 1996.

Filed Nov. 25, 1996.

[454 Pa.Super. 377] David Kaltenbaugh, Ebensburg, for appellant.

Pamela G. Cochenour, Pittsburgh, for appellee Intern. Ins. Co.

Michelle A. Tokarsky, Johnstown, for participating party.

Before McEWEN, President Judge, CAVANAUGH, J., CIRILLO, President Judge Emeritus, DEL SOLE, BECK, POPOVICH, FORD ELLIOTT, SAYLOR and EAKIN, JJ.

McEWEN, President Judge:

This appeal has been taken from the order entered in response to the cross-motions for summary judgment filed by the parties to this declaratory judgment action instituted by appellee, the Redevelopment Authority of Cambria County, (hereinafter "Redevelopment Authority"), seeking a declaration that appellant, Erie Insurance Group (hereinafter "Erie"), and appellee International Insurance Company (hereinafter "International"), owed a duty to defend and to indemnify appellee Redevelopment Authority in the action filed against the Authority in 1992 by Barr Township and Marsteller Community Water Authority (hereinafter "MCWA"). We conclude that the learned trial court erred when it found that Erie was required, pursuant to the contract of insurance issued by Erie to the Redevelopment Authority, to defend the Redevelopment Authority in the action filed against it by the Township and the MCWA which sought damages arising from the alleged failure of the township water system (1) to comply with DER standards, and (2) to deliver potable water. We are, therefore, constrained to vacate the judgment entered in favor of the Redevelopment Authority.

The complaint filed by Barr Township against the Redevelopment Authority in the underlying action alleged that the Redevelopment Authority had entered into a contract with Barr Township and the MCWA, the entity created by Barr Township to own and operate the water system, to administer in excess of $525,000 in community block grant funds received from the Department of Community Affairs, and to provide the services necessary to supervise the construction of certain improvements to the water system. ¹ The Township and the MCWA claimed, in the three count complaint filed against the Redevelopment Authority, that the Redevelopment Authority had failed to "properly perform" the duties it had assumed under the contract, had been negligent, and had been unjustly enriched as a result of the retention of the monies paid to it to administer the project. The Redevelopment Authority contacted Erie and International Insurance Company upon receipt of the complaint, requesting that each insurance company defend and indemnify the Redevelopment Authority. Both companies denied that their policies imposed any duty to defend or to indemnify the Redevelopment Authority against the claims made by the Township and the MCWA.

In response, the Redevelopment Authority instituted the instant declaratory judgment action, seeking a declaration that Erie and International were obligated to defend the Redevelopment Authority in the action instituted against it by Barr Township and the MCWA, and that Erie and International were obligated to indemnify the Redevelopment Authority in the event that the Redevelopment Authority was found liable to the Township and the MCWA in the underlying action.

The trial court found that the Non-Profit Organization Liability Insurance policy issued by International did not require that International provide a defense to any action filed against the Authority but that Erie was obligated, pursuant to the terms of its general liability policy, to defend the Redevelopment Authority in the action instituted against it by the Township and the MCWA. The trial court declined to make a

"determination at this juncture as to whether Erie and/or International are required to indemnify the Authority if the township is successful.... While we have no doubt as to Erie's duty to defend, the answer to the question of whether Erie must indemnify the Authority in the event the township's action is successful is far removed from the certainty required for the entry of summary judgment. It is impossible to know on what basis (negligence, breach of contract, unjust enrichment) the township might recover (if at all) against the Authority; there are numerous exclusions in the Erie policy which could prelude coverage, depending upon the theory of recovery."

I. Jurisdiction of Superior Court

On March 8, 1995, Erie filed a notice of appeal at No. 00488 Pittsburgh 1995, as of right, pursuant to Pa.R.A.P. 341(a), from the order of February 7, 1995. Erie, for reasons addressed hereinafter, also filed on March 8, 1995, a motion requesting that the trial court certify the order of February 7, 1995, pursuant to Pa.R.A.P. 341(c)(1), ² and filed an alternative motion requesting that the trial court amend the order of February 7, 1995, by adding the language specified in 42 Pa.C.S. § 702(b) so as to permit Erie to seek allowance of appeal pursuant to Pa.R.A.P. 312 and Pa.R.A.P. 1311. The trial court denied the request for certification of finality under Pa.R.A.P. 341(c)(1) by order dated March 8, 1995, and Erie filed a petition in the Superior Court at No. 29 Misc.Dkt. 1995, pursuant to Pa.R.A.P. 341(c)(2), for review of the order which had denied certification of the order of February 7, 1995. This petition for review was denied by order of the Superior Court dated April 18, 1995.

The trial court, however, by order dated April 5, 1995, amended, in response to the second petition filed by Erie, the order of February 7, 1995, to provide, pursuant to Section 702(b) of the Judicial Code, that a substantial ground for difference of opinion concerning Erie's duty to defend the Authority existed, so that an immediate appeal from the order of February 7, 1995, would advance the ultimate determination of the controversy. See: 42 Pa.C.S. § 702(b); Pa.R.A.P. 1311. Erie then filed at No. 52 Misc.Dkt. 1995, on May 5, 1995, a petition requesting leave to file an interlocutory appeal, which was denied by this Court by order dated July 19, 1995. On August 18, 1995, Erie sought allowance of appeal in the Supreme Court at No. 456 W.D.Allo.Dkt. 1995 from the Superior Court order of July 19, 1995. Although the Supreme Court initially granted allowance of the appeal by order dated February 27, 1996, at 9 W.D.Appeal Dkt. 1996, the appeal was subsequently dismissed by that Court on May 31, 1996. ³

International, on May 3, 1995, filed a motion to quash the appeal which Erie had filed as of right at No. 488 Pittsburgh 1995 on the ground that the appeal had been improperly taken from an interlocutory order. By order dated July 19, 1995, the Superior Court denied International's motion to quash and International, on August 2, 1995, requested reconsideration of the order which had denied its motion to quash the appeal filed by Erie at No. 00488 Pitts.1995. Thus, despite the diligent advocacy of counsel for the Authority, the sole appeal now pending before this Court is the direct appeal as of right from the order entered by Judge Leahey on February 7, 1995, an appeal which International contends we must quash as interlocutory.

The Superior Court has jurisdiction to entertain appeals taken (1) as of right from a final order, Pa.R.A.P. 341, 42 Pa.C.S. § 742; (2) from interlocutory orders by permission, Pa.R.A.P. 312, Pa.R.A.P. 1311, 42 Pa.C.S. § 702(b); (3) from certain interlocutory orders as of right, Pa.R.A.P. 311; 42 Pa.C.S. § 702(a); and (4) from certain collateral orders, Pa.R.A.P. 313. See, e.g.: Continental Bank v. Andrew Building Co., 436 Pa.Super. 559, 563-565, 648 A.2d 551, 553 (1994).

A final order is (1) any order that disposes of all claims or of all parties, (2) any order that is expressly defined as a final order by statute, or (3) any order entered as a final order pursuant to subsection (c) of Pa.R.A.P. 341. See, e.g., Miller v. Steinbach, 452 Pa.Super. 194, 681 A.2d 775 (1996); Hahalyak v. Integra Financial Corp., 451 Pa.Super. 171, 172, 678 A.2d 819, 819 (1996); Jerry Davis, Inc. v. Nufab Corp., 450 Pa.Super. 696, 697-699, 677 A.2d 1256, 1257 (1996).

An action for declaratory judgment is available to obtain a declaration of the existing legal rights, duties, or status of the parties where the declaration will aid in the determination of a genuine, justiciable controversy. Fidelity Bank v. Pennsylvania Turnpike Commission, 498 Pa. 80, 88-90, 444 A.2d 1154, 1158-1160 (1982); Nationwide Mutual Insurance Co. v. Cummings, 438 Pa.Super. 586, 590-591 n. 5, 652 A.2d 1338, 1340 n. 5 (1994), allo. denied, 540 Pa. 650, 659 A.2d 988 (1995). A declaratory judgment action is particularly appropriate in construing contracts of insurance in order to determine whether an insurer is obligated to defend and/or indemnify one claiming under the policy. Liberty Mutual Insurance Co. v. S.G.S. Co., 456 Pa. 94, 95-99, 318 A.2d 906, 907-908 (1974); 42 Pa.C.S. § 7533 (construction of documents). See also: Redevelopment Authority of the City of Philadelphia v. Insurance Company of North America, 450 Pa.Super. 256, 675 A.2d 1256 (1996). The proper construction of an insurance policy is an issue which may be resolved as a matter of law in a declaratory judgment action. Alexander v. CNA Insurance Co., 441 Pa.Super. 507, 509-511, 657 A.2d 1282, 1284 (1995). The Declaratory Judgment Act provides, inter alia:

Courts of record, within their respective jurisdictions, shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is...