Youngman v. CNA Ins. Co.

• Decision Date: 22 January 1991
• Citation: 401 Pa.Super. 381,585 A.2d 511
• Parties: , 65 Ed. Law Rep. 437 John C. YOUNGMAN, Jr., Appellant, v. CNA INSURANCE COMPANY, American Casualty Company of Reading, Pennsylvania.
• Court: Pennsylvania Superior Court

Page 511

585 A.2d 511

401 Pa.Super. 381, 65 Ed. Law Rep. 437

John C. YOUNGMAN, Jr., Appellant, v. CNA INSURANCE COMPANY, American Casualty Company of Reading,

Pennsylvania.

Superior Court of Pennsylvania.

Argued Dec. 12, 1990.

Filed Jan. 22, 1991.

12 John C. Youngman, Jr., Williamsport, pro se.

Walter A. Tilley, III, York, for appellees.

Before CIRILLO, President Judge, and JOHNSON and BROSKY, JJ.

JOHNSON, Judge.

John C. Youngman appeals from an Order of the Court of Common Pleas which denies his Motion for Partial Summary Judgment and grants CNA Insurance Company's and American Casualty Company of Reading, Pennsylvania's (collectively hereinafter referred to as "Insurers") Motion for Judgment on the Pleadings. We are asked to examine the duty of an insurer to defend an appeal brought by a member of a school board, insured in his official capacity, from a judgment rendered against the school board collectively. As we determine that no judgment had been rendered against the school board member individually, either in a personal or in an official capacity, that, where the board voted eight to one not to appeal, the subsequent appeal by an individual member was outside the scope of that member's duties, and that the policy involved covered only acts done within the scope of the members' duties as school board members, we affirm the Order of the trial court granting judgment on the pleadings in favor of the insurers.

In 1982, during Youngman's tenure as a member of the Williamsport Area School District Board of Education, the Board voted to deny the use of school facilities during the school day to a group of students ("Petros") because of the religious nature of their organization. The students filed suit in the United States District Court for the Middle District of Pennsylvania against the school district, the nine members of the Board, the superintendent of the District, and the principal of the high school.

The students' claim was grounded in the First Amendment of the United States Constitution, specifically, the Free Exercise Clause, and the Freedom of Speech Clause. The district court granted summary judgment against the students on the free exercise claim, but in their favor on the freedom of speech claim. Bender v. Williamsport Area School District, 563 F.Supp. 697 (1983).

On May 31, 1983, the Board voted eight to one against appealing the district court ruling, Youngman casting the lone dissenting vote. In doing so, the Board elected to comply with the district court order and allow the Petros to meet on the same basis as other student clubs.

Despite the Board's vote not to appeal, in June of 1983, Youngman filed an appeal to the Third Circuit Court of Appeals, which reversed the district court and held that to allow the students to meet in the manner proposed violated the First Amendment establishment clause. 741 F.2d 538 (3rd Cir.1984).

After Youngman had petitioned for appeal, but before the Third Circuit rendered its opinion, the Bender plaintiffs filed a Bill of Costs with the district court for counsel fees and costs incurred in litigation at the district court level. The petition was premised on the theory that the students were the prevailing parties under 42 U.S.C. § 1988; and thus they were entitled to costs and attorneys' fees. The district court deferred ruling on the students' petition pending disposition of Youngman's appeal. Bender v. Williamsport Area School District, No. 82-0692 (M.D.Pa. Dec. 14, 1983).

After Youngman's successful appeal, the students petitioned for a Writ of Certiorari from the United States Supreme Court, which was granted. Declining to address the merits of the case, the Court held instead that Youngman had lacked standing to prosecute the appeal and that the Third Circuit, therefore, lacked jurisdiction. The judgment of the Court of Appeals was vacated, and the case was remanded with instructions to dismiss for want of jurisdiction.

Youngman thereafter brought suit in the Pennsylvania Court of Common Pleas of Lycoming County against Insurers for recovery of the legal expenses incurred in appealing to the Third Circuit Court. After pleadings were filed, Insurers filed a Motion for Judgment on the Pleadings. In response, Youngman filed a Motion for Partial Summary Judgment, asking the trial court to enter an order finding the following:

(a) [The Board of Education Liability policy in issue was] in effect at the time of the filing of the Bender action and at all times thereafter for the purposes of this suit;

(b) [Youngman] was an assured under this policy;

(c) [Youngman] suffered a loss during the litigation of the Bender action as a result of incurring legal fees, expenses, and costs and such loss was a covered loss under the policy; [and]

(d) the Defendant CNA and/or American Casualty breached their contractual agreement with the [school district] and [Youngman] ... by not paying legal fees, expenses and costs for ... Youngman during and after the underlying litigation and that [Insurers] are thereby responsible for all reasonable legal fees, expenses and costs incurred by Youngman in his defense and appeal of the Bender action.

Motion for Partial Summary Judgment, December 8, 1989, at 8-9. The trial court issued an order which denied Youngman's Motion for Partial Summary Judgment and granted Insurers' Motion for Judgment on the Pleadings. It is from this Order that Youngman appeals.

Initially, Youngman appeals the denial of his Motion for Partial Summary Judgment. While "an appeal may be taken as of right from any final order of a[ ] ... lower court," Pa.R.A.P. 341(a), an order denying summary judgment is not a final order, but, rather, interlocutory in nature and unappealable. Carraghan v. Obrecht, 122 Pa.Cmwlth. 562, 552 A.2d 359 (1989). Therefore, except to the extent that the arguments raised on this issue are argued as to other issues, we will not review them here.

Next, Youngman contends that the trial court erred by ruling in favor of Insurers' Motion for Judgment on the Pleadings. In reviewing an Order of the Trial Court awarding judgment on the pleadings, our standard of review is as follows:

[W]e must accept as true all well-pleaded statements of fact of the party against whom the motion is granted and and consider against him only those facts that he specifically admits. West Penn Administration Inc. v. Pittsburgh National Bank, 289 Pa.Super. 460, 467, 433 A.2d 896, 900 (1981) (citations omitted); Zelik v. Daily News Publishing Co., 288 Pa.Super. 277, 431 A.2d 1046 (1981); ... The parties cannot be deemed to admit either conclusions of law or unjustified inferences. Sinn v. Burd, 486 Pa. 146, 404 A.2d 672 (1979); West Penn, 289 Pa.Super. at 467, 433 A.2d at 900.

Jones v. Travelers Insurance Co., 356 Pa.Super. 213, 217, 514 A.2d 576, 578 (1986).

We begin our analysis by examining an insurance company's duty to defend. The purchase of insurance includes, not just the insurer's duty to indemnify for successful claims within the policy's coverage, but also the defense of such claims. Zeitz v. Zurich General Accident & Liability Insurance Co., 165 Pa.Super. 295, 67 A.2d 742 (1949); D'Auria v. Zurich Insurance Co., 352 Pa.Super. 231, 507 A.2d 857 (1986). The duty to defend is separate and greater than the duty to indemnify. Erie Insurance Exchange v. Transamerica Ins. Co., 516 Pa. 574, 533 A.2d 1363 (1987). This duty exists even where the claims made against an assured are groundless, false, and fraudulent. Zeitz, 165 Pa.Super. at 301-02, 67 A.2d at 746, D'Auria, 352 Pa.Super. at 234, 507 A.2d at 859. In Pennsylvania, the duty to defend an action brought against the assured is generally determined by comparing the facts alleged in the complaint against the coverage provided by the policy; the duty to defend arises where, if the facts as alleged are proven, coverage would exist under the terms of the policy. D'Auria, 352 Pa.Super. 235, 507 A.2d at 859.

Youngman contends, and the insurers concede, that the Bender plaintiffs' complaint sought, in addition to an injunction allowing them to meet on the school premises, reimbursement of attorneys' fees in accordance with 42 U.S.C. § 1988. The parties also agree that these fees were sought against the Board and each of the defendants "officially and individually." The issue, then, is whether Insurers were liable for the legal expenses incurred in Youngman's appeal of the trial court decision.

Youngman argues initially that he might have been personally liable for the Bender plaintiffs' attorneys' fees since the Bender plaintiffs prevailed, and that, therefore, the expense of appealing this action is covered by the policy. We disagree.

Initially, we hold, as did the trial court, that where the insured appeals, the rendered judgment, and not the allegations of the complaint, govern the insurer's duty regarding the appeal regardless of the allegations in the complaint. No case cited by Youngman, nor any that we have found, can be relied upon for a contrary result. Indeed, it offends reason to suggest that an insurer could be liable for the expenses of an appeal where no loss covered by the policy was in issue on appeal. The issue becomes, then, whether Youngman's appeal concerned a loss covered by the policy.

We look first to the policy to determine the scope of coverage. The Board of Education Liability [BEL] policy issued by Insurers contained an insuring clause which stated, in pertinent part:

The Insurer ... agrees as follows:

(a) With the Assureds that if, during the policy period any claim or claims are made against them, individually or collectively, for a Wrongful Act occurring during the policy period, the Insurer will pay on behalf of, in accordance with the terms of this policy, the Assureds, or any of them, ... for all loss which the said Assureds or any of them shall become legally obligated to pay.

Policy of Insurance, Section I(a) (emphasis added). The term, ...