Mountainside Holdings v. American Dynasty Surplus

J-A12040-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MOUNTAINSIDE HOLDINGS, LLC, IN THE SUPERIOR COURT OF
DOUGLAS R. COLKITT, M.D., JOANNE PENNSYLVANIA
RUSSELL, AND JEROME DERDEL, M.D.,
Appellants
v.
AMERICAN DYNASTY SURPLUS LINES
INSURANCE COMPANY AND GREAT
AMERICAN INSURANCE COMPANY,
Appellees No. 1243 MDA 2014
Appeal from the Order entered June 30, 2014,
in the Court of Common Pleas of Centre County,
Civil Division, at No(s): 2003-127
BEFORE: BOWES, DONOHUE, and ALLEN, JJ.
MEMORANDUM BY ALLEN, J.: FILED JUNE 25, 2015
Mountainside Holdings, LLC, (“Mountainside”)1, Douglas R. Colkitt,
M.D., (“Dr. Colkitt”), Joanne Russell, (“Ms. Russell”), and Jerome Derdel,
M.D., (“Dr. Derdel”), (collectively “Appellants”), appeal from the trial court’s
June 30, 2014 order which granted summary judgment in favor of American
Dynasty Surplus Lines Insurance Company and Great American Insurance
Company, (“American Dynasty” and “GAF”2, respectively, or collectively,
____________________________________________
1
Mountainside Holdings, LLC is the “assignee of EquiMed, Inc., (“EquiMed”).
See Appellants’ Brief at 16.
2
GAF is also known as Great American Fidelity. See Appellants’ Brief at 3
n.1.
J-A12040-15
“Insurers”), relative to Appellants’ breach of contract and bad faith claims.
Appellants further appeal from the trial court’s December 12, 2012 order,
which granted Insurers’ preliminary objections in the nature of a demurrer,
and which dismissed Appellants’ claims of intentional interference with
contractual relations against Insurers as time-barred. Finding waiver, we
affirm the trial court’s orders.
The trial court set forth the factual background of this action as
follows:
[EquiMed] was a corporation with a principal place of
business in State College, Centre County, Pennsylvania.
EquiMed was incorporated on February 2, 1996 as a Delaware
Corporation. EquiMed was a management company which,
through its subsidiaries, provided comprehensive services to
specialty medical providers, including radiation oncologists.
[Dr. Colkitt] was an officer and director of EquiMed. [Ms.
Russell] and [Dr. Derdel] are individuals who were officers and
directors of EquiMed, Inc.
On May 9, 1996, Steadfast Insurance Company [Steadfast]
issued a Director and Officers Liability insurance Policy
(hereinafter "Steadfast Policy") to [EquiMed]. The Steadfast
Policy was a Primary Policy. The Steadfast Policy limit was $5
million. An insured person [was] defined as a "duly elected
director or duly elected or appointed officer of the Company."
Policy § III(F). A claim [was defined as] "a civil proceeding
commenced by the service of a complaint or similar pleading ...
against any Insured Person for a Wrongful Act, including any
appeal therefrom." Policy § III(A)(2). A Loss [was defined as]
"the amount which the Insured Persons become legally obligated
to pay on account of each Claim ... made against them for
Wrongful Acts for which coverage applies, including but not
limited to, damages, judgments, settlements, and Defense
Costs." Policy § III(H). The language of the "Pending or Prior
Date" clause (hereinafter "PPD clause") states Claim made
against any Insured Person ... based upon, arising out of, or
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attributable to any demand, suit or proceeding pending, or
order, decree or judgment entered against the Company or any
Insured Person on or prior to the Pending or Prior Date set for in
Item 8 of the Declarations, or the same or substantially the
same fact, circumstance or situation underlying or alleged
therein. Policy § IV(A)(2). The PPD clause date [under the
Steadfast Policy was] January 24, 1996.
Around the time of the issuance of the Steadfast Policy,
Reliance National Insurance Company [Reliance] issued an
excess Director and Officers Liability Insurance Policy
(hereinafter “Reliance Policy”) to [EquiMed]. The Reliance Policy
was an excess policy, secondary to the Steadfast Policy. The
Reliance Policy limit was $5 million.
On or about February 25, 1997, Great American Insurance
Company [GAF] issued a Director and Officers Liability insurance
Policy (hereinafter "Policy" or "GAF Policy") to [EquiMed]. The
GAF Policy was an excess policy, tertiary to the Steadfast Policy
and Reliance Policy. The GAF Policy limit was $10 million. The
GAF Policy was issued retroactively, so that the initial policy
period was January 24, 1997 through January 24, 1999. A
pertinent portion of key language of the [GAF] Policy stated:
... this Policy shall then apply subject to the following:
A. the terms, conditions, exclusion and endorsements of
the Underlying Insurance; and
…
C. the terms, conditions, exclusions and endorsements of
this Policy.
The Language of the "Prior or Pending Litigation" exclusion of
the [GAF] Policy states[:]
The Insurer shall not be liable to make any payment for
loss by reason of or in connection with any litigation,
proceeding, administrative act or hearing brought prior to
or pending as of 1/24/97 as well as any future litigation,
proceeding, administrative act or hearing based upon any
such pending or prior litigation, proceeding, administrative
act or hearing or derived from the essential facts or
circumstances underlying or alleged in any such pending or
prior litigation, proceeding, administrative act or hearing.
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On February 3, 1995, Sayed Rahman, M.D. filed suit
against Oncology Associates, P.C., Oncology Services
Corporation, and [Dr. Colkitt], alleging breach of contract, fraud,
and tortious interference with contract in connection with Dr.
Rahman's termination from employment at the Union Memorial
Cancer Center in Baltimore, MD (hereinafter "Rahman Action").
[EquiMed] was not named in this action, nor could it be, as
[EquiMed] did not exist until February 2, 1996. In his
Complaint, Dr. Rahman alleged he was terminated from his
position as a radiation oncologist, in part, because he questioned
the billing practices of Oncology Services Corporation and
Oncology Associates, P.C. As part of that litigation, [Appellants]
(defendants in the Rahman action) filed a Motion In Limine To
Exclude Evidence Of Alleged Overbilling. [Insurers’] Ex. 4. [Dr.]
Colkitt was dismissed from the action prior to judgment being
rendered.
On August 2, 1995, a qui tam complaint, brought pursuant
to the False Claims Act, 31 U.S.C. §§3729-33, was filed against
Oncology Associates, P.C., Oncology Services, [Dr. Colkitt], and
[Dr. Derdel]. [EquiMed] was not named in this action, nor could
it be, as [EquiMed] did not exist until February 2, 1996. The qui
tam complaint was filed under seal in camera and was not
served on any of [Appellants].
On August 12, 1996, an amended qui tam complaint was
filed. The amended complaint was filed under seal in camera.
The amended complaint added [EquiMed] and others to the
action.
Oncology Associates, P.C. and Oncology Services were not
at any time subsidiaries or associates of [EquiMed].
In December 1997, [EquiMed] learned of the qui tam
action.
In a letter dated February 20, 1998, Marcy L. Colkitt [Dr.
Colkitt’s sister] informed Steadfast and Reliance that
[Appellants] had learned in December of 1997 of the qui tam
action, and that they had retained the law firm of Freishtat &
Sandler to represent them.
On August 24, 1998, the United Stated intervened in the
qui tam action and filed a Complaint. At the same time, the seal
on the action was lifted. The Complaint was served on
[Appellants].
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On August 25, 1998, Marcy Colkitt notified [Insurers] and
the other carriers that the seal had been lifted and subsequently
provided a copy of the Government qui tam Complaint, and
requested defense and indemnification.
On October 29, 1998 and November 10, 1998,
[Appellants] notified [Insurers] of two new claims (Neheme v.
EquiMed, et al, and Skarinsky v. EquiMed) [FN3: Securities Class
Action suits], requesting the retention of Wolf-Block, Schorr and
Solis-Cohen as lead counsel and Marcy L. Colkitt & Associates,
P.C. as defense counsel.
In a letter dated May 17, 1999, [Insurers] sent a letter to
[Appellants] denying coverage on the basis that coverage was
barred by the Policy's Prior and Pending Litigation Exclusion.
[Insurers’] letter went on to state that there may be as many as
eight other reasons as to why coverage would be denied;
however, given the conclusive bar of the Prior and Pending
Litigation Exclusion on which [Insurers’] denial of coverage was
premised, there was no need for [Insurers] to discuss them in
detail. [Insurers’] letter also stated "If you have any additional
information or materials that you would like [Insurers] to
consider in connection with this matter, please contact me."
On May 6, 1999, [EquiMed] and [Appellants] filed a case
against the primary insurer, Steadfast, in the Court of Common
Pleas of Centre County, Pennsylvania — EquiMed, Inc., et al v.
Steadfast Insurance Company, No 1999-0585 (hereinafter
"EquiMed I”) — seeking an injunction to force Steadfast to cover
[Appellants’] defense costs in the qui tam action. On March 24,
2000, Reliance was brought into the action. [Insurers] in the
instant action were never brought into [the] EquiMed I action.
Steadfast claimed that their PPD clause barred [Appellants] from
coverage based on the Rahman action. This Court held that the
Steadfast Policy's PPD clause did not exclude [Appellants] from
defense coverage from Steadfast in the qui tam action.
In December 1999 — January 2000, [Appellants] and the
U.S. government agreed to settle the qui tam action for $10
million.
In February 2000, an involuntary chapter 7 bankruptcy
petition was filed against [EquiMed] before the settlement could
be memorialized and funded. A multitude of subsequent
litigation ensued, and a final settlement for the qui tam action
was renegotiated and approved.
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The funding for the qui tam settlement was as follows: [Dr.
Colkitt personally paid $122,000 dollars. National Medical
Financial Services, a publically traded company which was never
an EquiMed subsidiary and not insured by Insurers, paid
$1,200,000 dollars. Three additional entities not owned by
EquiMed or Dr. Colkitt paid $400,000 dollars respectively for a
combined payment of $1,200,000 dollars. Onco. Services, a
defendant in the Rahman action which was never an EquiMed
subsidiary, paid $1,364,000 dollars. Nine additional professional
corporations which were 100% owned by Dr. Colkitt, but which
were never EquiMed subsidiaries nor insured by Insurers, paid a
combined amount of $3,360,000 dollars. The U.S. Government
withheld, due to overbilling, $2,961,000 dollars from these
professional corporations, and used said monies as setoff funds
towards the settlement.]
The qui tam settlement has been paid in full.
On October 3, 2001, Reliance was declared insolvent and
placed into liquidation.
On January 14, 2003, [Appellants] filed a Writ of Summons
in this Court, giving rise to the case, at bar.
In early 2004, [Appellants] settled with Reliance for
$376,703.76.
On November 9, 2010, [Appellants] filed their Complaint.
On October 11, 2011, after Preliminary Objections were
sustained in part, [Appellants] filed an Amended
Complaint, adding a third count—Intentional Interference
With Contractual Relations.
On November 4, 2011, [Insurers] filed Preliminary
Objections, seeking dismissal on the grounds that [Appellants]
did not seek leave to amend the Complaint beyond the limited
resubmission authorized by the Court.
On December 12, 2012, the Court sustained in part
[Insurers’] Preliminary Objections precluding [Appellants] from
proceeding with Count III—Intentional Interference With
Contractual Relations—of their claim, but allowing [Appellants]
to proceed with the rest of the action.
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On January 27, 2014, [Insurers] filed … [a] Motion for
Summary Judgment. Both parties have submitted their briefs.
On April 21, 2014, the Court held Oral Arguments.
Trial Court Opinion and Order on [Appellants’] Motion for Summary
Judgment, (“Trial Court Opinion”), 6/30/14, at 2-9.
As to the action’s procedural posture, the trial court set forth the
following additional history:
On January 14, 2003, [Appellants] filed a Praecipe For Writ
of Summons in a Civil Case against [Insurers]. On November 9,
2010, [Appellants] filed a Complaint alleging Breach of Contract
and Bad Faith. On February 22, 2011, [Insurers] filed
Preliminary Objections, in which they objected to, inter alia,
[Appellants’] Complaint being defective under Pa.R.C.P. 1019(1),
as [Appellants] had not included a copy of the insurance policy
they referenced in the Complaint under which they were suing.
On September 21, 2011, the Court sustained [Insurers’]
objection and [o]rdered [Appellants] to file an Amended
Complaint to cure the defect. On October 12, 2011, [Appellants]
filed an Amended Complaint, adding Count III - Intentional
Interference With Contractual Relations. On December 12,
2012, the Court dismissed [Appellants’] Count III, as said Count
was added without consent of the adverse party or by leave of
Court, as required by Pa.R.C.P. 1033, and Count III cannot
succeed as it had passed the statute of limitations. On
December 20, 2012, [Appellants] filed a Motion for
Reconsideration Of Order Dated December 12, 2012 Sustaining,
In Part, [Insurers'] Preliminary Objections, Or In The Alternative,
To Certify Said Order To Allow [Appellants] To File An
Interlocutory Appeal Under [42] Pa.C.S.A. Sec 702(b). On
December 2, 2013, [Appellants] filed a renewed Motion for
Reconsideration. On January 6, 2014, the Court DENIED
[Appellants’] Motion for reconsideration, and included language
in the Order to allow [Appellants] to file an interlocutory appeal,
to wit:
The Court finds this Order involves a controlling question
of law as to which there is substantial ground for difference
of opinion and an immediate appeal from this Order may
materially advance the ultimate termination of this matter.
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On January 27, 2014, [Insurers] filed a Motion for
Summary Judgment on Counts I and II of the Amended
Complaint. On June 30, 2014, the Court issued an Opinion and
Order GRANTING [Insurers’] Motion for Summary Judgment on
both Counts. On July [7], 2014, [Appellants] timely filed a
Notice of Appeal. On August 19, 2014, [Appellants] filed a
Concise Statement of Matters Complained of On Appeal, in
accordance in Pa.R.A.P. 1925(b).
Response to Concise Statement of Matters Complained of on Appeal,
9/22/14, at 1-2. In its September 22, 2014 Response to Appellants’
Pa.R.A.P. 1925(b) statement, the trial court adopted as its Pa.R.A.P. 1925(a)
opinion the trial court’s prior December 12, 2012 and June 30, 2014 opinions
and orders.
Appellants present the following issues for our consideration:
1. Did the trial court err in its Opinion and Order dated
December 12, 2012 which sustained [Insurers’] Preliminary
Objections and denied [Appellants’] Motion to Proceed With the
Amended Complaint Containing Count III?
2. Did the trial court err in holding that [Appellants’] claim for
Intentional Interference With Contractual Relations [was] time-
barred and [Appellants] could not proceed upon same, even
though [Appellants] pled that they discovered same within the
two-year limitations period?
3. Did the trial court err in its Opinion and Order dated entered
[sic] on June 30, 2014, which granted [Insurers’] motion for
summary judgment on Count I (breach of contract) and Count II
(bad faith) of the Amended Complaint?
4. Did the trial court err in holding that [Appellants] could not
assert an insurance bad faith claim based on [Insurers’]
interference with [Appellants’] defense of claims asserted under
the policy and [Insurers’] interference with the two underlying
insurance carriers ([Steadfast] and [Reliance])?
5. Did the trial court err in holding that [Appellants’] bad faith
claim is time-barred?
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6. Did the trial court err in holding that an insured's claim that
an excess insurer acted in bad faith for denying a claim in bad
faith is triggered when the claim is denied, even if at the time
the excess carrier denies the claim, it had no duty to pay either
defense or to indemnify the insured?
7. Did the trial court err in finding that [Appellants’] breach of
contract claim failed because [Insurers] did not owe a duty of
indemnification to [Appellants]?
8. Did the trial court err in holding that the excess insurance
policy did not cover the claim such that [Insurers] [did not]
breac[h] in failing to cover the claim?
Appellants’ Brief at 1-3.
Initially, we note that Appellants’ issues are waived for appellate
review due to Appellants’ deficient Pa.R.A.P. 1925(b) statement. Appellants’
Pa. R.A.P. 1925(b) statement only sets forth the following six issues:
1. The trial court erred in its Opinion and Order dated December
12, 2012 which sustained [Insurers’] Preliminary Objections
and denied [Appellants’] Motion to Proceed With the Amended
Complaint Containing Count III.
2. The trial court erred when it found that [Appellants’] claim for
Intentional Interference With Contractual Relations was time-
barred and [Appellants] could not proceed upon same.
3. The trial court erred in its Opinion and Order dated entered
[sic] on June 30, 2014, which granted [Insurers’] motion for
summary judgment on Count I (breach of contract) and
Count II (bad faith) of the Amended Complaint.
4. The trial court erred in its determination that [Appellants’]
bad faith claim cannot proceed based on [Insurers’]
interference with litigation defense and interference with the
two underlying insurance carriers ([Steadfast] and
[Reliance]).
5. The trial court erred in finding that [Appellants’] bad faith
claim is time-barred.
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6. The trial court erred in finding that [Appellants’] breach of
contract claim failed because [Insurers] did not owe a duty of
indemnification to [Appellants].
Appellants’ Concise Statement of Matters Complained of on Appeal, 8/19/14,
at 1-2. Appellants’ Pa.R.A.P. 1925(b) statement did not assert, explain, or
elucidate how, and in what respects, the trial court erred. Id. Appellants
did not incorporate or reference any prior pleadings, arguments, briefs, or
memoranda, or reiterate any arguments which Appellants had raised before
the trial court. Id. Appellants’ Pa.R.A.P. 1925(b) statement failed to include
issues number 6 and 8, which Appellants set forth in their appellate brief.
Compare Appellants’ Brief at 2-3; Appellants’ Concise Statement of Matters
Complained of on Appeal, 8/19/14, at 2. Response to Concise Statement of
Matters Complained of on Appeal, 9/22/14, at 3.
The trial court in its September 22, 2014 response to Appellants’
Pa.R.A.P. 1925(b) statement observed that Appellants’ statement was “too
vague to allow the Court to respond.” Response to Concise Statement of
Matters Complained of on Appeal, 9/22/14, at 3. Specifically, the trial court,
citing Commonwealth v. Lemon, 804 A.2d 34, 37 (Pa. Super. 2007),
expressed:
‘When the trial court has to guess what issues an appellant is
appealing, that is not enough for meaningful review.’ … ‘When an
appellant fails adequately to identify in a concise manner the
issues sought to be pursued on appeal, the trial court is impeded
in its preparation of a legal analysis which is pertinent to those
issues.’ … ‘In other words, a Concise Statement which is too
vague to allow the court to identify issues raised on appeal is the
functional equivalent of no Concise Statement at all.’
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Response to Concise Statement of Matters Complained of on Appeal,
9/22/14, at 3. We agree with the trial court. Indeed, we have found
waiver where:
Appellant's Rule 1925(b) statement announced a very
general proposition; namely, that the trial court erred when it
granted [defendant’s] summary judgment motion. Appellant's
Rule 1925(b) statement did not reiterate the arguments
Appellant raised in her opposition to Wyeth's motion for
summary judgment. Appellant's statement was in fact so vague
the trial court suggested Appellant had failed to preserve any
issue for appellate review. In light of Dowling, supra and Rule
1925(b), we agree Appellant's issues are essentially waived on
appeal.
Lineberger v. Wyeth, 894 A.2d 141, 148-149 (Pa. Super. 2006).
Based on the foregoing, Appellants’ issues are waived for appellate
review. Moreover, Appellants’ issue number 6 and 8 as set forth in their
appellate brief are additionally waived for Appellants’ failure to include them
in their Pa.R.A.P. 1925(b) statement. Even absent waiver, Appellants’ six
issues as listed in their Pa.R.A.P. 1925(b) statement, and restated in their
appellate brief, fail.
Appellants’ first and second issues challenge the trial court’s order
sustaining Insurers’ preliminary objections in the nature of a demurrer
regarding Appellants’ claim of intentional interference with contractual
relations. We recognize:
As a trial court's decision to grant or deny a demurrer
involves a matter of law, our standard for reviewing that decision
is plenary. Preliminary objections in the nature of demurrers are
proper when the law is clear that a plaintiff is not entitled to
recovery based on the facts alleged in the complaint. Moreover,
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when considering a motion for a demurrer, the trial court must
accept as true all well-pleaded material facts set forth in the
complaint and all inferences fairly deducible from those facts.
Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479, 854 A.2d
425, 436 (2004) (citations and internal quotation marks
omitted). Accord, Friedman v. Corbett, ––– Pa. ––––, 72 A.3d
255, 257 n. 2 (2013). Furthermore,
Our standard of review of an order of the trial court
overruling or granting preliminary objections is to determine
whether the trial court committed an error of law. When
considering the appropriateness of a ruling on preliminary
objections, the appellate court must apply the same standard as
the trial court.
Preliminary objections in the nature of a demurrer test the
legal sufficiency of the complaint.... Preliminary objections which
seek the dismissal of a cause of action should be sustained only
in cases in which it is clear and free from doubt that the pleader
will be unable to prove facts legally sufficient to establish the
right to relief. If any doubt exists as to whether a demurrer
should be sustained, it should be resolved in favor of overruling
the preliminary objections.
Joyce v. Erie Ins. Exch., 74 A.3d 157, 162 (Pa. Super.2013)
(citation omitted).
Little Mountain Community Ass’n, Inc. v. Southern Columbia Corp.,
92 A.3d 1191, 1195 (Pa. Super. 2014).
We have explained:
Amendments to pleadings are permitted at any time,
including before, during and after trial. PA.R.C.P., Rule 1033, 42
PA. Cons.Stat. Ann.; Winterhalter v. West Penn Power Co., 355
Pa.Super. 17, 512 A.2d 1187, 1189 (1986). In discussing Rule
1033, this Court has stated:
Although no absolute right to amend exists, the courts of
this Commonwealth have liberally construed the principle
embodied in this rule. Consequently, courts have allowed
amendments of pleadings at any time, as provided by the
specific language of this statute.
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Id. at 1189 (emphasis in original). Leave to amend pleadings is
to be liberally granted. Stalsitz v. Allentown Hospital, 814 A.2d
766, 776 (Pa. Super. 2002), appeal denied, 578 Pa. 717, 854
A.2d 968 (2004). A party is to be given leave to amend its
pleadings when allowing the amendment will not unduly
prejudice or surprise the adverse party. Somerset
Community Hosp. v. Allan B. Mitchell & Associates, Inc., 454
Pa.Super. 188, 685 A.2d 141, 147 (1996). Undue prejudice in
this analysis has been defined as something more than a
detriment to the other party, as any amendment would
likely have the effect of harming the adverse party's
interests. The policy underlying this rule of liberal leave to
amend is to insure that parties get to have their cases decided
on the substantive case presented, and not on legal formalities.
Laursen v. General Hospital of Monroe County, 494 Pa. 238, 244,
431 A.2d 237, 240 (1981); Gallo v. Yamaha Motor Corp., U.S.A.,
335 Pa.Super. 311, 484 A.2d 148, 150 (1984).
However, “[a]n amendment introducing a new cause
of action will not be permitted after the Statute of
Limitations has run in favor of a defendant.” Stalsitz, 814
A.2d at 776 (citation omitted). Only if the proposed
amendment merely amplifies, as opposed to altering, the
cause of action already averred, will it be allowed if the
statute of limitations has run. Id.
***
A new cause of action does arise, however, if the
amendment proposes a different theory or a different
kind of negligence than the one previously raised or if the
operative facts supporting the claim are changed. 2B
Anderson Pennsylvania Civil Practice, §§ 1033.28 and
1033.31.
[Reynolds v. Thomas Jefferson University Hospital,], 676 A.2d
[1205,] 1210 [Pa. Super. 1996] (quotation omitted).
Chaney v. Meadville Medical Center, 912 A.2d 300, 303-305 (Pa. Super.
2006) (emphasis supplied).
Applying the above precepts, Appellants’ first and second issues lack
merit because Appellants’ Count III claim for intentional interference with
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contractual relations is time-barred. We have determined that a claim for
intentional interference with contractual relations “is subject to a two-year
statute [of limitations].” Maverick Steel Co., L.L.C. v. Dick
Corporation/Barton Malow, 54 A.3d 352, 355 (Pa. Super. 2012).
Appellants’ original November 9, 2010 complaint averred that Insurers’ May
17, 1999 denial of coverage “caused [Steadfast] and [Reliance] … to deny”
Appellants’ request for coverage under the Steadfast and Reliance insurance
policies. Complaint, 11/9/10, paragraph 84. Appellants cite, inter alia,
Insurers’ May 17, 1999 denial and its effect on the underlying carriers as the
basis for Appellants’ October 2011 amended complaint seeking to add Count
III against Insurers for their intentional interference with Appellants’
contractual relations with Steadfast and Reliance. See generally Amended
Complaint, 10/12/11. Appellants’ original complaint specifically averred that
Steadfast’s denial of coverage “parroted” Insurers’ denial letter. Complaint,
11/9/10, at paragraph 45. Appellants emphasized that this was evidence
that Insurers’ “ploy” to cause Steadfast and Reliance to deny Appellants’
insurance claims “worked.” Id. Accordingly, accepting as true Appellants’
allegations that Insurers’ May 17, 1999 denial of coverage intentionally
interfered with Appellants’ contractual relations with Steadfast and Reliance,
causing those carriers to deny coverage, it is clear that Appellants’ Count III
claim for intentional interference with contractual relations within its October
12, 2011 amended complaint is untimely. Moreover, because Count III
“proposes a different theory” of recovery against Insurers following the
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expiration of the statute of limitations, Count III unduly prejudices and
surprises Insurers by introducing an untimely new cause of action. Chaney,
supra, at 303-305. Therefore, the trial court did not err in sustaining
Insurers’ preliminary objections in the nature of a demurrer and dismissing
Count III as time-barred.
Appellants’ third, fourth, and fifth issues challenging the trial court’s
June 30, 2014 order granting summary relief to Insurers regarding
Appellants’ bad faith claims likewise fail. In reviewing a trial court’s grant of
summary relief, we review “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.” Chris Falcone,
Inc. v. Ins. Co. of the State, 907 A.2d 631, 635 (Pa. Super. 2006)
(citation omitted). “Only where there is no genuine issue as to any material
fact and it is clear that the moving party is entitled to judgment as a matter
of law will summary judgment be entered.” Id.Instantly, the trial court determined that Appellants’ bad faith claims
were time-barred. Bad faith claims are subject to a two-year statute of
limitations pursuant to 42 Pa.C.S.A § 8371. See Ash v. Continental
Insurance Company, 932 A.2d 877, 885 (Pa. 2007). “Where the statute
of limitations is at issue, the burden of proof falls on the plaintiff to
demonstrate that the cause of action is not barred by the passage of time
and that his or her failure to file the action in timely fashion is excusable.”
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Jones v. Harleysville, 900 A.2d 855, 858 (Pa. Super. 2006) citing
Corbett v. Weisband, 551 A.2d 1059, 1067 (1988).
Here, Appellants specifically averred that Insurers acted in bad faith
when they denied coverage in their May 17, 1999 letter, and when Insurers
subsequently successfully influenced Steadfast and Reliance to reject
Appellants’ insurance claims. Moreover, as the trial court observed:
In their Amended Complaint, [Appellants] allege,
[Insurers] acted in bad faith by inter alia, interfering with
[Appellants’] defense, failing to investigate the claim for
coverage of the Government Qui Tam Complaint promptly,
by failing to investigate the claim in the time period
proscribed by the Unfair Claim Settlement Act 31 P.S.
Sec. 146.1 et seq., by violating the Unfair Insurance
Practice Act, 40 P.S. Sec. 1171.5 for, inter alia, not
promptly acknowledging and acting upon communications
with the insured, for denying the claim and others based
upon the actual knowledge and/or the knowingly reckless
disregard for the truth, that the basis for the denial was in
fact false and without merit, by investigating the claims
with the intent to deny them regardless of their actual
merit and by investigating the claims with animus towards
its Insureds.
[Appellants’] Am. Compl. ¶ 145.
According to [Appellants’] Amended Complaint, [Insurers’]
alleged acts, or failures to act, which gave rise to the instant Bad
Faith claim, along with the dates in which they occurred, are as
follows:
• Interfering with Plaintiffs' defense: May 17, 1999 (¶ 52); June
22, 1999 (¶ 104);
• Failing to investigate the claim for coverage of the Government
qui tam Complaint promptly: February 20, 1998 through May 17,
1999 (¶ 51);
• Failing to investigate the claim: September 18, 1998 (¶ 35);
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• Not promptly acknowledging and acting upon communications
with the insured: February 20, 1998 (¶ 28); August 25, 1998 ¶¶
29, 30, 98); October 29, 1998 (¶¶ 32, 33); December 2, 1998
(¶¶ 37, 38); December 8, 1998 (¶¶ 39, 40); March 24, 1999 (¶¶
43, 44);
• Denying the claim: May 17, 1999 (¶ 48);
• Investigating the claims with the intent to deny: February 22,
1999 and February 23, 1999 (¶ 101).
[Appellants] began this action on January 14, 2003. As
such, under Ash, supra, all alleged Bad Faith allegations
occurring prior to January 14, 2001, fall outside the statute of
limitations. Referring to [Appellants’] own Complaint, all of
[Insurers’] alleged Bad Faith conduct occurred prior to the
January 14, 2001 cut-off date; therefore, [Appellants’] Bad Faith
claim is time-barred.
Trial Court Opinion, 6/30/14, at 15-16.
Appellants were aware of Insurers’ allegedly tortious bad faith
behavior as early as May 17, 1999. Therefore, Appellants’ November 2010
complaint alleging bad faith, even when related back to the January 2003
writ of summons, is untimely. See Adamski v. Allstate Insurance Co.,
738 A.2d 1033, 1042 (Pa. Super. 1999).
While Appellants contend that they had only “recently … discovered
GAF’s tortious activity” prior to their amended October 12, 2011 complaint,
this argument does not entitle them to relief. Appellants’ Brief at 22; see
Patton v. Com. Trust Co., 119 A. 834, 836 (Pa. 1923) (internal citation
omitted) (“If by diligence a fact can be ascertained the want of knowledge so
caused is no excuse for a stale claim. The test is not what the plaintiff
knows, ‘but what he might have known, by the use of the means of
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information within his reach, with the vigilance the law requires of him.’”);
see also Schaffer v. Larzelere, 189 A.2d 267, 269 (Pa. 1963) (“Mere
mistake, misunderstanding or lack of knowledge is not sufficient to toll the
running of the statute.”). Moreover, the record does not reflect that
Insurers’ actions were dilatory. See Jones, 900 A.2d at 858 (finding that an
insured’s bad faith claim against his insurer was time-barred, we expressed
that “we [could] not agree that the actions of [the insurer] had any impact
on [a]ppellants' ability to seek recourse for the denial of coverage under the
policy[.]”). Appellants’ third, fourth, and fifth issues fail.
Appellants’ challenge discounts their own acknowledgment of the
“well-established rule that a party’s claim does not accrue until it is harmed.”
Appellants’ Brief at 28. Appellants have repeatedly averred, as cited above,
that Insurers’ bad faith and tortious behavior towards Appellants harken
back to 1998 and 1999, and well before the two-year period prior to the
filing of Appellants’ January 14, 2003 writ of summons. Appellants averred
throughout their pleadings that Insurers’ bad faith behavior harmed
Appellants’ ability to secure coverage from Steadfast and Reliance.
Appellants even averred that Steadfast’s June 17, 1999 coverage denial
letter parroted Insurers’ May 17, 1999 letter, and was a direct result of
Insurers’ strategy to preclude Appellants’ coverage by Steadfast and
Reliance. Accordingly, the trial court did not err in determining that under
the circumstances of this case, Insurers’ allegedly tortious bad faith behavior
against Appellants accrued well before the January 2003 writ of summons,
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such that Appellants’ bad faith claims are untimely. The trial court did not
err in granting summary relief to Insurers regarding Appellants’ time-barred
bad faith claims. See Ash, 932 A.2d at 885.
Appellants’ sixth issue as listed in their Pa.R.A.P. 1925(b) statement
challenges the trial court’s treatment of Appellants’ breach of contract claim.
In their brief, Appellants maintain that “the trial court err[ed] in finding that
[Appellants’] breach of contract claim failed because [Insurers] did not owe
a duty of indemnification to [Appellants][.]” Appellants’ Brief at 2. We
disagree. In its lengthy opinion granting summary relief to Insurers, the
trial court, viewing the record in the light most favorable to Appellants,
assumed arguendo that Appellants expended a total of $5,099,053.04 in
relation to the underlying qui tam actions. The trial court determined that
“[t]his amount falls short, by almost half, of the amount required to trigger a
duty for [Insurers] to indemnify [Appellants] under the policy.” Trial Court
Opinion, 6/30/14, at 27. The trial court reasoned that “[s]ince the duty for
[Insurers] to indemnify [Appellants] was never triggered, [Appellants’]
Breach of Contract claim must fail[.]” Id. We concur with the trial court’s
rationale. See Donegal Mutual Insurance Company v. Long, 597 A.2d
1124, 1127-1128 (Pa. 1991) (excess carrier is not required to “drop down”
to cover losses that are within underlying carriers’ layers of coverage, and
observing “that the decision to refuse to transform an excess carrier into a
primary carrier is consistent with the decisions of [multiple other]
jurisdictions which have been called upon to address this issue”); see also
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Lexington Insurance Co. v. Charter Oak Fire Ins. Co., 81 A.3d 903, 910
(Pa. Super. 2013) (payment for losses will not be triggered under an excess
policy prior to “actual payment of the relevant primary insurance”).
Appellants seek to enlarge the monetary amount of their losses
beyond the $5,099,053.04 as set forth by the trial court by including, inter
alia, monetary losses relative to Dr. Colkitt’s defense and settlement of the
underlying qui tam claims which involved additional co-defendants consisting
of other medical companies which Dr. Colkitt personally owned, and by citing
Dr. Colkitt’s loss of future income in relation to the sale of those entities.
See Appellants’ Brief at 36-44. As the trial court observed, however, those
additional entities were never insured by Insurers, and therefore the losses
pertaining to the closure of those entities or to monies expended in
connection with the defense and settlement of qui tam claims on behalf of
those entities cannot be converted into losses recoverable under Insurers’
excess policy. Trial Court Opinion, 6/30/14, at 23-24.
We again note that Appellants included two additional issues in their
appellate brief which were never included in their Pa.R.A.P. 1925(b)
statement. Specifically, issue number 6 in their appellate brief asserts that
“the trial court err[ed] in holding that an insured's claim that an excess
insurer acted in bad faith for denying a claim in bad faith is triggered when
the claim is denied, even if at the time the excess carrier denies the claim, it
had no duty to pay either defense or to indemnify the insured.” Appellants’
Brief at 2. Appellants’ issue number 8 asserts that the “trial court err[ed] in
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holding that the excess insurance policy did not cover the claim such that
[Insurers] [did not] breac[h] in failing to cover the claim[.]” Id. Since
these issues were not included in Appellants’ Pa.R.A.P. 1925(b) statement,
we decline to reach them. See Pa.R.A.P. 1925; see also Commonwealth
v. Hill, 16 A.3d 484, 494 (Pa. 2011) (“Our jurisprudence is clear and well-
settled, and firmly establishes that: Rule 1925(b) sets out a simple bright-
line rule, which obligates an appellant to file and serve a Rule 1925(b)
statement, when so ordered; any issues not raised in a Rule 1925(b)
statement will be deemed waived; the courts lack the authority to
countenance deviations from the Rule's terms; the Rule's provisions are not
subject to ad hoc exceptions or selective enforcement; appellants and their
counsel are responsible for complying with the Rule's requirements[.]”).
In sum, Appellants’ issues are waived for appellate review due to the
deficiencies within their Pa.R.A.P. 1925(b) statement. Waiver
notwithstanding, Appellants’ issues fail. We affirm the trial court’s December
12, 2012 order sustaining Insurers’ preliminary objections in the nature of a
demurrer as to Count III for intentional interference with contractual
relations. Likewise, we affirm the trial court’s June 30, 2014 order granting
summary judgment in favor of Insurers and against Appellants regarding the
bad faith and breach of contract claims.
Orders affirmed.
Judge Bowes concurs in the result.
Judge Donohue concurs in the result.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/25/2015
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