Kelly, C. v. H.C. Kerstetter Co. ( 2016 )

J-A02045-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CARRIE KELLY, ADMINISTRATRIX OF : IN THE SUPERIOR COURT OF
ESTATE OF JUSTIN KELLY, DECEASED, : PENNSYLVANIA
AS ASSIGNEE OF DALLAS MATTHIAS, :
D/B/A DALLAS MATTHIAS TREE :
SERVICE :
:
:
v. :
:
H.C. KERSTETTER CO., CENTRAL :
INSURERS GROUP, INC. AND THOMAS :
BERICH :
: No. 696 MDA 2015
Appeal from the Order Entered March 20, 2015
in the Court of Common Pleas of Berks County Civil Division
at No(s): 09-7399
BEFORE: PANELLA, STABILE, and FITZGERALD,* JJ.
MEMORANDUM BY FITZGERALD, J.: FILED APRIL 27, 2016
Appellant, Carrie Kelly, Administratrix of Estate of Justin Kelly,
Deceased, as Assignee of Dallas Matthias,1 d/b/a Dallas Matthias Tree
Service, appeals from the order entered in the Berks County Court of
Common Pleas granting the motion for summary judgment of Appellees,
H.C. Kerstetter Co., Central Insurers Group, Inc., and Thomas Berich.
Appellant contends the trial court erred in finding that the claims against
Appellees were barred by the statute of limitations. We affirm.
*
Former Justice specially assigned to the Superior Court.
1
We note that there is a discrepancy in the spelling of Matthias. In certain
documents in the record, Matthias is spelled with one “t”.
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The trial court summarized the facts of this case as follows:
Dallas Mathias (hereinafter, Assignor) started a tree
service business in 2004. The business was organized as a
sole proprietorship with no employees. Justin Kelly
(hereinafter, Decedent) was one of several independent
contractors with his business.
Assignor obtained insurance for his business from
[Appellees]. [Appellee,] Tom Berich, was Assignor’s
insurance contact. Assignor never met [Appellee] or
anyone else from [Appellees’] companies. All business was
accomplished through telephone conversations or the
exchange of documents. Assignor obtained a commercial
auto insurance policy from United Financial Casualty
Company and a commercial general liability policy from
Nautilus Insurance Company through [Appellees].
Assignor did not purchase an umbrella policy for his
business. [Appellees] needed Assignor’s permission to
change or bind insurance on his behalf.
Assignor required the independent contractors to
maintain their own commercial general liability insurance
which was procured through [Appellees]. Assignor also
made his workers, including Decedent, sign a document
entitled “Sub-Contractor Agreement and Insurance Waiver
Acknowledgment” (Agreement). The purpose of
Agreement was to relieve Assignor from liability and to
make it clear to the workers for which insurance coverage
they were responsible and which he was. The workers
were responsible for liability, health, and worker’s
compensation insurance for their injuries. Assignor was
responsible for liability insurance for the work that was
performed on the jobs. Agreement included a provision
that Assignor would be held harmless if the worker
suffered bodily injury while performing his duties.
Assignor knew that the Nautilus policy did not provide
coverage to him for the workers’ injuries.
On November 2, 2006, Decedent sustained fatal injuries
after falling out of a bucket truck while working for
Assignor. A co-worker confirmed that Decedent had
smoked marijuana with him prior to their arrival on the
jobsite.
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[On March 14, 2007,] Nautilus denied coverage for
Decedent’s injuries. [On June 14, 2007,] Decedent’s
estate sued Assignor.[2] United provided a defense for
Assignor under a reservation of rights. [Appellant] and
Assignor entered into a Release and Assignment
Agreement on April 17, 2008. Pursuant to the settlement,
United paid $125,000.00 to [Appellant3]. Assignor agreed
to the entry of a consent judgment against himself[4] and
2
See Complaint, Carrie Kelly, Administratrix of the Estate of Justin D. Kelly,
Deceased v. Dallas Mathias, Jr., individually and t/a Dallas Mathias Jr. Tree
Service, 6/14/07, at R.R. 188a. For convenience, we refer to the reproduced
record where applicable.
3
The terms of the release were as follows:
II. RELEASE OF UNITED FINANCIAL CASUALTY
COMPANY
For and in consideration of its payment of $125,000 on
behalf of its insured, Dallas Mathias, Jr. t/a Dallas Mathias,
Jr. Tree Service, Carrie Kelly, as Administratrix of the
Estate of Justin D. Kelly, Deceased, hereby releases and
discharges United Financial Casualty Company from any
and all further claims, rights or causes of action based on
statutory law, common law or its policy of insurance which
were alleged or which may have been alleged in the Berks
County action titled Carrie Kelly, Administratrix of the
Estate of Justin D. Kelly, Deceased v. Dallas Mathias,
Jr., Individually and t/a Dallas Mathias, Jr. Tree
Service. The United Financial Casualty Company’s
declaratory judgment action will be marked settled,
discontinued and ended.
R.R. at 379a.
4
The agreement provided as follows:
III. JUDGMENT BY CONSENT
Dallas Mathias, Jr. hereby agrees that a judgment by
consent against him can be entered by Carrie Kelly as
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assigned to [Appellant] the right to pursue claims for one
million dollars from Nautilus and [Appellees5].
Administratrix of the Estate of Justin D. Kelly, Deceased,
for the total amount of $1,125,000 with an indication that,
upon payment of the $125,000 on his behalf from United
Financial Casualty Company, that $125,000 portion of the
judgment can be marked as satisfied.
Id.
5
Instantly, the assignment agreement provided as follows:
IV. ASSIGNMENT AGREEMENT
[Appellant], Carrie Kelly, as Administratrix of the Estate
of Justin D. Kelly, Deceased (“Assignee”), agrees and
covenants to postpone collection, enforcement,
garnishment and/or execution proceedings against
[Appellee] Dallas Mathias, Jr., his heirs, executors,
administrators, successors and assigns (“Assignor”) for
Assignor’s $1,000,000 portion of the $1,125,000 judgment
by consent.
Assignee’s agreement to postpone collection,
enforcement, garnishment and/or execution proceedings
against Assignor for the amount due and owing, is for, and
in consideration of Assignor’s assignment of any and all
rights, interests, claims, causes of action and/or potential
causes of action including, but not limited to, all
contractual and extra contractual claims, actions for
common law and statutory bad faith, actions for
declaratory judgment, breach of fiduciary duty, negligence,
breach of contract and misrepresentation and any other
claims or causes of action of any nature whatsoever, in law
or in equity, which Assignor has and/or may have against
H.C. Kerstetter Co. and any insurer other than United
Financial Casualty Company, as well as any parent
company or companies, affiliates, subsidiaries, or any
other entity or insurer other than United Financial Casualty
Company that may be required to provide coverage to,
and/or indemnify Assignor with regard to the Berks County
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Trial Ct. Op., 6/16/15, at 1-3.
Appellant filed a writ on June 15, 2009 and subsequently a complaint
on July 17, 2009. R.R. at 1a, 58a. Appellees filed a motion for summary
judgment. The trial court granted the motion. This timely appeal followed.
Appellant filed a court-ordered Pa.R.A.P. 1925(b) statement of errors
complained of on appeal. The trial court filed a responsive opinion.
Appellant raises the following issues for our review:
A. Where [Appellees] insurance brokers admit that the
insured tree trimming business was relying on them to
advise, procure and maintain proper coverage; where such
brokers failed to advise the insured that important
coverage was excluded; and insured’s expert has shown
that [Appellees] breached their duty of care; did the trial
court err in granting summary judgment where the record
raises genuine issues of material fact showing negligence
action of Carrie Kelly, as Administratrix of the Estate of
Justin D. Kelly, Deceased v. Dallas Mathias, Jr.
Id. at 380a.
We note that in Barr v. Gen. Accident Grp. Ins. Co. of N. Am., 520
A.2d 485 (Pa. Super. 1987), this Court held that
a plaintiff can agree to enter judgment against an insured
and also agree not to enforce the judgment directly
against the insured in exchange for the assignment of the
insured’s rights against his insurance company and their
agents. . . . [T]he assignee can seek recovery of the
judgment amount in an action against the insurance
company and their agents for failure to provide adequate
coverage and failure to defend.
Id. at 487.
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of [Appellees], insurance brokers, in failing to advise,
maintain, and procure adequate liability coverage for
assignor, contractor, Matthias, with respect to the lawsuit
on behalf of subcontractor, decedent, Justin Kelly?
B. Did the trial court err in giving effect to certain
purported exculpatory language in a sub-contractor
agreement?
C. Did the trial court erred [sic] in granting summary
judgment with respect to statute of limitations issues
where this action against insurance agents or brokers, for
failure to procure liability insurance coverage was filed
within two years of its accrual date, namely within two
years of the date of the filing of the Complaint in the
underlying action?
Appellant’s Brief at 3-4.
Appellant contends the trial court erred in granting summary judgment
because there are “material issues of fact that [Appellees] breached duties
of care with respect to advising, maintaining, and procuring adequate
liability coverage for the insured, assignor, Matthias, resulting in his lacking
adequate liability coverage with regard to the subject fatal accident to one of
his subcontractors, Justin Kelly . . . .” Id. at 15. Appellant argues that the
exculpatory language of the subcontractor agreement was unenforceable.
Id.
Appellant claims the statute of limitations “for a cause of action
against a broker for failure to procure adequate liability insurance is at
earliest the date the Complaint to be covered is filed against the insured.”
Id. at 20. Appellant avers that “[t]he date of the earlier pre-lawsuit denial
letter, relied upon by the lower court, does not change the fact this lawsuit
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was timely.” Id. Appellant argues that “the underlying Complaint whose
coverage was in issue was filed on June 14, 2007. This action regarding the
brokers’ failure to procure adequate liability insurance to cover that
complaint was timely filed within two years of that date in accord with
applicable procedural rules, on Monday, June 15, 2009.”6 Id. at 20.
Appellant concludes that the action was timely filed. Id.
We address Appellant’s third issue first because it is dispositive. Our
review is governed by the following principles:
The standards which govern summary judgment are well
settled. When a party seeks summary judgment, a court
shall enter judgment whenever there is no genuine issue of
any material fact as to a necessary element of the cause of
action or defense that could be established by additional
discovery. A motion for summary judgment is based on an
evidentiary record that entitles the moving party to a
judgment as a matter of law. In considering the merits of
a motion for summary judgment, a court views 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.
Finally, the court may grant summary judgment only when
the right to such a judgment is clear and free from doubt.
An appellate court may reverse the granting of a motion
for summary judgment if there has been an error of law or
an abuse of discretion. . . .
6
Appellant cites M & M High, Inc. v. Essex Ins. Co., 2002 WL 31681995
(Pa. Com. Pl. 2002), in support of his argument that the filing of the
complaint triggers the running of the statute of limitations against the
insurer. Appellant’s Brief at 17. However, Court of Common Pleas decisions
“are not binding precedent for this Court.” Discover Bank v. Stucka, 33
A.3d 82, 87–88 (Pa. Super. 2011).
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Varner-Mort v. Kapfhammer, 109 A.3d 244, 246-47 (Pa. Super. 2015)
(citation omitted).
In Adamski v. Allstate Ins. Co., 738 A.2d 1033 (Pa. Super. 1999),
the appellant, David Adamski, was driving a motorcycle and was involved in
an accident with an automobile driven by Ronald Miller, the insured. Id. at
1034. The appellant brought an action against the appellee, Allstate
Insurance Company, the insured’s assignee, for breach of duty to defend
and indemnify. Id. at 1035. The appellee filed a motion for summary
judgment based upon the statute of limitations. Id. The court entered
summary judgment in favor of the insurer.
On appeal in Adamski, this Court addressed the issue of when the
statute of limitations was triggered. The Court opined:
The . . . action was commenced on November 9, 1993,
when appellants filed a writ of summons. On January 17,
1997, appellants filed a complaint alleging that appellee
committed common law and statutory bad faith[7] by failing
to defend, indemnify or otherwise protect the interests of
Ronald Miller. On June 23, 1998, appellee filed a motion
for summary judgment. In its motion, appellee argued
that appellants’ claims for bad faith were barred by the
statute of limitations and should be dismissed for failure to
state a cause of action.
* * *
Although appellants did not receive an assignment from
Miller until August 19, 1992, more than two years after the
effective date of section 8371, they did not acquire greater
7
42 Pa.C.S. § 8371.
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rights than Miller possessed to pursue a bad faith action.
See Smith v. Cumberland Group, [ ] 687 A.2d 1167[,
1172] ([Pa. Super.] 1997) (“Where an assignment is
effective, the assignee stands in the shoes of the
assignor[.]”). Since all of the acts alleged by appellants
“[arose] from the original . . . denial of benefits” and were
not “independent of [the] initial denial of coverage,” they
do not constitute separate acts of bad faith. Accordingly,
since appellants do not allege any separate acts of bad
faith that occurred on or after the effective date of section
8731, their statutory bad faith claim is barred.
* * *
Initially, as noted, appellants misconstrue appellee’s letter
of April 2, 1986. It was not merely an initial “refusal to
pay benefits.” Instead, appellee clearly disclaimed any
and all obligations and refused all further actions
with regard to existing or future claims against
Miller. Thus, reasonably construed, the letter was a
refusal to cover, defend, indemnify or otherwise protect
Miller. Moreover, we reject appellants’ claim that they
were required to file suit only when “the full extent of
litigation damages” was known and “the need for
indemnification” arose. To the contrary, our Court has
repeatedly held that, for purposes of the statute of
limitations, a claim accrues when a plaintiff is harmed and
not when the precise amount or extent of damages is
determined. Instantly, the alleged harm to Miller (and
thus appellants as assignees) occurred when
appellee’s position was made clear by the 1986
letter and appellee maintained that position by
subsequently refusing to defend or indemnify Miller.
* * *
It is hornbook law that a statute of limitations begins to
run as soon as the right to institute suit arises.
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Id. at 1035, 1039, 1041-42 (some citations and footnotes omitted and
emphases added).8
8
Appellant’s reliance upon Selective Way Ins. Co. v. Hosp. Grp. Servs.,
Inc., 119 A.3d 1035 (Pa. Super. 2015) (en banc) is unavailing. See
Appellant’s Brief at 18. This Court in Selective addressed the issue of when
a cause of action for a declaratory judgment action filed by an insurance
company accrues, and rejected the denial of coverage as the triggering point
for the statute of limitations.
A cause of action for a declaratory judgment accrues when
an actual controversy exists between the parties. Our
Supreme Court has stated that “[t]he court’s role in the
declaratory judgment action is to resolve the question of
coverage to eliminate uncertainty. If the insurer is
successful in the declaratory judgment action, it is relieved
of the continuing obligation to defend.” Thus, according to
our Supreme Court, if an insurance company is
uncertain about its duty to defend an insured in a
third party’s action, it is expected and anticipated
that the insurance company will bring a declaratory
judgment action concerning its duty to defend prior
to denying coverage to an insured. The denial of
coverage certainly could be when an actual controversy
arises between an insurance company and an insured,
warranting the filing of a declaratory judgment action.
See, e.g., Zourelias [v. Erie Ins. Grp.], 691 A.2d [963,]
964 [Pa. Super. 1997]; see also 42 Pa.C.S.A. § 7534 (“A
contract may be construed [under the Declaratory
Judgments Act] either before or after there has been a
breach thereof.”). It cannot, however, be the only basis
for finding an actual controversy exists as Selective
advocates. Such a holding (that the denial of coverage is
the point in time when an actual controversy arises) would
eliminate an insurance company’s ability to bring a
declaratory judgment action prior to denying or
terminating the provision of a defense for an insured,
which is in direct contravention to the above-quoted
statement by our Supreme Court.
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In Rancosky v. Washington Nat. Ins. Co., 130 A.3d 79 (Pa. Super.
2015), citing Adamski, this Court opined:
Generally, for purposes of applying the statute of
limitations, a claim accrues when the plaintiff is
injured. See Adamski v. Allstate Ins. Co., 738 A.2d
1033, 1042 (Pa. Super. 1999). In the context of an
insurance claim, a continuing or repeated denial of
coverage is merely a continuation of the injury caused
by the initial denial, and does not constitute a new
injury that triggers the beginning of a new limitations
Selective’s argument that the statute of limitations for it
to file a declaratory judgment action regarding its duty to
indemnify an insured in a third party’s action should not
commence until it denies coverage fails for the same
reason. We agree with Selective that an insurance
company’s substantive duty to indemnify an insured in a
third party’s action does not arise until there is a verdict.
A declaration regarding an insurance company’s duty to
defend, however, is inextricably intertwined with its duty
to indemnify because both are based upon a determination
of whether the insurance policy in question provides
coverage for the claims made. See Gen. Acc. Ins. Co. of
Am. [v. Allen], 692 A.2d [1089,] 1095 [Pa. 1997]
(“Although the duty to defend is separate from and
broader than the duty to indemnify, both duties flow from
a determination that the complaint triggers coverage.”);
Mut. Ben. Ins. Co. v. Haver, [ ] 725 A.2d 743, 747
([Pa.] 1999) (“[I]n determining whether a carrier has a
duty to defend or indemnify an insured we look to the
complaint filed against the insured.”). If an insurance
company does not have a duty to defend an insured in a
third party’s action, it cannot have a duty to indemnify.
Am. Nat. Prop. & Cas. Companies v. Hearn, 93 A.3d
880, 884 (Pa. Super. 2014).
Id. at 1048-49 (emphasis in original and some citations omitted and
emphasis added). In the case sub judice, Appellee denied coverage prior to
the filing of the underlying complaint. Appellant, as assignee of the insured,
instituted the action against Appellee. See Barr, 520 A.2d at 487.
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period. See id. at 1042 (holding that the insured may not
separate initial and continuing refusals to provide coverage
into distinct acts of bad faith).
Id. at 99 (emphases added); see also Jones v. Harleysville Mut. Ins.
Co., 900 A.2d 855, 858 (Pa. Super. 2006) (“trial court correctly recognized
that the applicable limitations period for [the a]ppellants’ bad faith claim is
two years from the date of the first claim denial. See Ash v. Cont'l Ins.
Co., 861 A.2d 979, 984 (Pa. Super. 2004). Adamski v. Allstate Ins. Co.,
738 A.2d 1033, 1040 (Pa. Super. 1999).”
Instantly, the trial court opined:
[Appellant] submits that this court erred with respect to
statute of limitation issues because this case was filed
within two years of its accrual date, which is within two
years of the date of the underlying action. This issue is
without merit.
The statute of limitations for a claim of professional
liability is two years. The statute begins to run when the
professional breaches a duty, and is tolled only when the
client, despite the exercise of due diligence, does not
discover the injury or its cause. Assignor knew by letter
dated March 14, 2007, that [Appellee] Nautilus disclaimed
coverage. Assignor assigned his rights for all claims
against [Appellees] to [Appellant], but the assignment did
not affect the statute of limitations. [Appellant] did not file
a writ until June 15, 2009, which was three months after
the statute of limitations ran on March 14, 2009.[9]
9
We note that March 14th fell on a Saturday. See 1 Pa.C.S. § 1908
(providing that when last day of any period of time referred to in any statute
falls on Saturday, Sunday, or legal holiday, such day shall be omitted from
computation); In re Nomination Papers of Lahr, 842 A.2d 327, 333 n.6
(Pa. 2004) (“The courts have generally employed section 1908 in
circumstances that require counting forward”)”
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Trial Ct. Op. at 4-5. We agree no relief is due.
In the case sub judice, the March 14th denial of coverage letter
provided, inter alia, as follows:
Re: Company: Nautilus Insurance Company
Claim Number: 10028900
Insured: DALLAS MATHIAS JR
Claimant: Justin Kelly, deceased
Policy Number: C NC 0000549482
Date of Loss: 11/02/06
Policy Period: 05/03/2006 to 05/03/2007
Dear Mr. Mathias,
Nautilus Insurance Company is in receipt of the above
captioned claim . . . on behalf of the estate of Justin Kelly.
. . . [A]lso included [is] a copy of a draft Complaint that . .
. may [be] file[d] against you with regards to this incident.
It is alleged that Justin Kelly, while an employee of Dallas
Mathias Jr. Tree Service, fell from a bucket truck and
suffered fatal injuries. This letter will also confirm our
conversation of March 7, 2007 regarding this incident. For
reasons listed below, there is no coverage for this
claim.
* * *
It must be stated immediately that after reviewing the
policy relative to this loss, it is the position of Nautilus
Insurance Company that the Commercial General
Liability policy issued to you does not provide
coverage for the indemnification or defense of any
claims being made as a result of this loss. Therefore,
it is recommended that without delay you notify any and
all other insurance companies that insure you for the tree
service.
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R.R. at 281a.10
Appellant, as assignee, stands in the shoes of the Assignor. See
Adamski, 738 A.2d at 1039. Appellee clearly denied coverage for the claim
in its March 14, 2007 letter. Thus, the alleged harm to Assignor and thus
Appellant as assignee occurred when Appellee made its position clear in the
March 14th denial of coverage letter. See id. at 1041-42; accord
Rancosky, 130 A.3d at 99. The statute of limitations began to run on that
date. See Adamski, 738 A.2d at 1042. Appellant filed the writ on June 15,
2009, more than two years after the denial-of-coverage letter. Therefore,
the claim was barred by the statute of limitations. See id. Accordingly, we
discern no error of law or abuse of discretion by the trial court in finding that
Appellant’s claim was barred by the statute of limitations. See
Kapfhammer, 109 A.3d at 246-47. Accordingly, we affirm the order of the
trial court granting Appellees’ motion for summary judgment.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/27/2016
10
We note that the denial of coverage letter included a detailed recitation of
the terms of the policy. See R.R. at 281a-87a.
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