Modern Equipment Sales & Rental Co. v. Main Street America Assurance Co.

J-E03005-14
2014 Pa. Super. 275
MODERN EQUIPMENT SALES & RENTAL IN THE SUPERIOR COURT OF
CO., PENNSYLVANIA
Appellant
v.
MAIN STREET AMERICA ASSURANCE
COMPANY, UNITED CONSTRUCTION
SERVICES, INC., AND RUICK AND HOLLY
ROLLAND, H/W
Appellees No. 3494 EDA 2012
Appeal from the Order Dated November 29, 2012
In the Court of Common Pleas of Chester County
Civil Division at No(s): 11-11713-CT
BEFORE: BENDER, P.J.E., BOWES, J., PANELLA, J., DONOHUE, J.,
SHOGAN, J., ALLEN, J., LAZARUS, J., WECHT, J., and STABILE, J.
OPINION BY BENDER, P.J.E.: FILED DECEMBER 15, 2014
Modern Equipment Sales & Rental Co. (Modern) appeals from the
order dated November 29, 2012, denying partial summary judgment to
Modern and granting summary judgment to Main Street America Assurance
Company (Main Street) in this declaratory judgment action. Following our
review of the record, it is apparent that the order issued by the trial court
does not dispose of all relevant claims in this matter. Therefore, relying
upon precedent set forth in U.S. Orgs. for Bankr. Alts., Inc. v. Dep’t of
Banking, 26 A.3d 474 (Pa. 2011) (Bankruptcy Alternatives), and Pa.
J-E03005-14
Bankers Ass'n v. Pa. Dep't of Banking, 948 A.2d 790 (Pa. 2008) (Pa.
Bankers), we quash.
In August 2009, United Construction Services, Inc. (UCS) leased a
track loader from Modern. Through its agent, Bruce Irrgang, UCS permitted
and/or directed Senn Landscaping, Inc. (Senn Landscaping) to use the track
loader to remove silt from a pond located on the Irrgang property. Stephen
Senn, Jr., a ten-year-old child, operated the track loader. During the course
of his operation, the child lost control of the track loader, which struck and
injured Ruick Rolland. As a result, Mr. Rolland’s left leg was amputated.
A complaint filed on behalf of Mr. Rolland and his wife, Holly Rolland,
alleged numerous acts and omissions of negligence, recklessness, and strict
liability. The complaint named, inter alia, Modern and UCS as defendants.
The lease for the track loader was governed by an agreement, which
required UCS “to defend, indemnify and hold harmless Modern” for claims of
personal injury for which Modern may be held liable “even if caused in whole
or in part by any act, omission or negligence of Modern or any third parties.”
See Modern First Amended Complaint, Exhibit B (Lease), at 2
(unnumbered). Further, the agreement required UCS “to add [Modern] as
[an] additional insured on its commercial general liability insurance policy.”
Id.
-2-
J-E03005-14
UCS maintained an insurance policy issued by Main Street. See
Modern First Amended Complaint, Exhibit A (Main Street Policy). The policy
afforded coverage to additional insureds, defined as follows:
Any person(s) or organization(s) who is the lessor of leased
equipment leased to you, and required by the lease to be
included as an additional insured but only with respect to liability
for “bodily injury”, “property damage” or “personal use or
advertising injury” caused in whole or in part, by your
maintenance, operation or use by you of equipment leased to
you by such person(s) or organization(s).
Main Street Policy, “Contractors Extension Endorsement,” at 1. The terms,
“you” and “your,” as set forth above, are defined in the policy to mean UCS
and Spackle Drywall, LLC (not a party to this or the underlying case). See
Main Street Policy, “Business Owners Coverage Form, Section II – Liability,”
at 1; Main Street Policy, “Schedule of Named Insured(s),” at 1 (modifying
the named insured identified in the “Businessowners Common
Declarations”).
In May 2011, Modern tendered its defense to UCS, citing the Lease,
and Main Street, premised upon its claimed status as an additional insured
under the Main Street Policy. UCS and Main Street declined to contribute to
Modern’s defense in the Rolland action under either the Lease or the Main
Street Policy. See Modern First Amended Complaint, Exhibit G (Letter,
dated October 27, 2011), at 1-4; Modern First Amended Complaint, Exhibit
D (Letter, dated June 23, 2011), at 1.
-3-
J-E03005-14
Thereafter, Modern commenced this action by writ of summons in
October 2011. In June 2012, Modern filed a first amended complaint in four
counts, seeking declaratory relief on the grounds that (1) UCS breached its
contractual obligation to defend and indemnify Modern per the terms of the
Lease; (2) Main Street violated its duty to defend and (3) indemnify Modern
Equipment as an additional insured per the Main Street policy; and (4) Main
Street engaged in bad faith. See Modern First Amended Complaint, at 9-
14.1
____________________________________________
1
Specifically, in Count I, Modern pleaded that “to the extent that” Main
Street declined to defend it, Modern sought the following relief:
1. This [trial court] declare that UCS has a duty to provide insurance
coverage to Modern with respect to the Rolland Action;
2. This [trial court] declare that UCS has breached its Lease with
Modern; and
3. This [trial court] declare that Modern is entitled to be paid for its
defense costs to date and all future costs incurred.
Modern First Amended Complaint, at 10 (emphasis in original). In Count II,
Modern pleaded its right to a defense as an additional insured under the
Main Street Policy and requested:
1. This [trial court] declare Modern to be an additional insured under
the [Main Street] Policy;
2. This [trial court] declare that [Main Street] has a duty to defend
Modern with respect to the Rolland Action;
3. This [trial court] declare that UCS has a duty to defend Modern as
a self-insurer of Modern, having failed to secure contractually required
insurance;
(Footnote Continued Next Page)
-4-
J-E03005-14
The parties filed cross-motions for summary judgment. Modern
sought partial summary judgment on its claim that Main Street violated its
duty to defend Modern with respect to the Rolland action. See Modern
Second Motion for Partial Summary Judgment, 08/31/2012, at 10-11
(unnumbered). For its part, Main Street sought summary judgment relative
to Counts II, III, and IV of Modern’s complaint, requesting a declaration that
Main Street had no duty to defend or indemnify Modern as an additional
insured under its policy, and, therefore, it was not liable for bad faith. See
Main Street Second Motion for Summary Judgment, 09/13/2012, at 3-6
(unnumbered).
Neither party sought summary relief on Modern’s breach of contract
claim directed against UCS. Id.; see also Modern Second Motion for Partial
Summary Judgment. To the contrary, Main Street, in its motion, specifically
acknowledged the claim, then pleaded that Count I was “not the subject of
this motion.” Id. at 2 (unnumbered). In its answer, Modern did not
challenge this averment. See Modern Answer to Second Motion for
Summary Judgment, 09/28/2012, at 2 (unnumbered).
_______________________
(Footnote Continued)
4. This [trial court] declare that Modern is entitled to be paid for its
defense costs to date and all future costs incurred; and
5. Such other and further relief as the [trial court] deems just and
proper.
Id. at 11-12.
-5-
J-E03005-14
The trial court denied Modern’s motion for partial summary judgment
and granted Main Street’s motion for summary judgment. Modern timely
appealed and filed a court-ordered Pa.R.A.P. 1925(b) statement; the trial
court filed a responsive opinion.
The questions presented in this appeal involve an insurer’s duty to
defend its insured and the proper interpretation of a contract for insurance.
However, Modern’s claims, as set forth in its complaint, pose questions
broader in scope, unaddressed by the parties, and unanswered by the trial
court. Therefore, preliminarily, we must address our jurisdiction to entertain
this appeal. See Riley v. Farmers Fire Ins. Co., 735 A.2d 124, 127 (Pa.
Super. 1999) (“[T]he appealability of an order is a question of jurisdiction
and may be raised sua sponte.”).
The Superior Court has “exclusive appellate jurisdiction of appeals
from final orders of the courts of common pleas,” notwithstanding certain
exceptions. 42 Pa.C.S. § 742. Generally, a final order is one that “disposes
of all claims and all parties.” Pa.R.A.P. 341(b)(1). However, a final order
may also be defined as such by statute or designated final under
circumstances in which an immediate appeal would facilitate resolution of
the case. See Pa.R.A.P. 341(b)(2), (3).
Section 7532 of the Pennsylvania Declaratory Judgment Act (DJA), 42
Pa.C.S. § 7531 et seq., provides:
Courts of record, within their respective jurisdictions, shall have
power to declare rights, status, and other legal relations whether
-6-
J-E03005-14
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 prayed for. The declaration
may be either affirmative or negative in form and effect, and
such declarations shall have the force and effect of a final
judgment or decree.
Interpreting this provision, the Supreme Court of Pennsylvania has held that
an order in a declaratory judgment action that affirmatively or negatively
declares the rights of parties is final and appealable, even if other claims in
the case remain pending. See Nationwide Mut. Ins. Co. v. Wickett, 763
A.2d 813, 818 (Pa. 2000) (Wickett).2
However, in Pa. Bankers, the Supreme Court narrowed the holding of
Wickett, quashing an appeal where some, but not all, of the alternative
claims for declaratory relief were resolved. Pa. Bankers, 948 A.2d at 798.
In that case, various members of the banking industry challenged Section
517 of the Credit Union Code, 17 Pa.C.S. § 517, exempting credit unions
from taxation, on constitutional grounds and sought declaratory relief. Id.
____________________________________________
2
In Wickett, there is no discussion concerning the nature of the remaining
claims. Nevertheless, in at least one case, this Court has distinguished
implicitly claims seeking declaratory relief from those which seek monetary
or injunctive relief. See Pa. Servs. Corp. v. Tex. E. Transmission, LP, 98
A.3d 624, 626 n.1 (Pa. Super. 2014) (denying a motion to quash an appeal
where the order appealed from declared the rights of the parties pursuant to
Section 7532, but where several claims seeking injunctive relief remained
unresolved); but see Pa. Servs. Corp., 98 A.3d at 636 (Ott, J., concurring)
(agreeing with the majority’s denial, but expressly concluding that Wickett
should control because the order “fully resolved the parties’ competing
declaratory judgment claims, and the claims that remain pending are non-
declaratory judgment claims”).
-7-
J-E03005-14
at 791-92. The Commonwealth Court denied relief on two of several
grounds raised, and the banks appealed. Id. Distinguishing Wickett, the
Supreme Court noted that the Commonwealth Court had not dismissed all of
the banks’ claims seeking declaratory relief but, rather, “merely narrowed
the scope of the [b]anks’ broader declaratory judgment action, which raised
alternative theories of relief.” Id. at 798.
Several years later, the Supreme Court once again revisited the
Wickett holding. In Bankruptcy Alternatives, a trade organization
(USOBA) challenged certain regulations affecting debt settlement services
(DSS) providers on several constitutional grounds. Bankruptcy
Alternatives, 26 A.3d at 475-76. The Commonwealth Court granted
declaratory relief in part, and the Department of Banking appealed. Id. at
476. The Department relied on Wickett to argue that the decision of the
Commonwealth Court was a final order, appealable as of right under
Pa.R.A.P. 341(b)(2). Id. at 478.
As in Pa. Bankers, however, the Supreme Court quashed the appeal.
Id. at 480. The Court explained its decision as follows:
In the lower court, USOBA requested relief in the form of a
declaration that Act 117 in its entirety, as applied to DSS
providers, is unconstitutional. But, when USOBA requested a
summary adjudication, the Commonwealth Court granted relief
in part, striking only two provisions of Act 117. The lower court
did not address several of USOBA's arguments and did not
ultimately decide whether USOBA was entitled to the full relief
originally requested, which remains available via USOBA's
alternate arguments. Essentially, the lower court simply
narrowed the scope of USOBA's declaratory judgment action,
-8-
J-E03005-14
without ultimately deciding the case. Under the rule announced
in [Pa.] Bankers, the Commonwealth Court's order is
interlocutory and not appealable. The Department appealed an
order which, in light of USOBA's original challenge to Act 117,
granted USOBA only a partial declaration of the parties' rights,
status, or legal relations.
Id. at 479.
Recent precedent of this Court suggests the continued vitality of
Wickett in certain circumstances. See, e.g., Titeflex Corp. v. Nat’l Union
Fire Ins. Co. of Pittsburgh, Pa, 88 A.3d 970, 975-76 (Pa. Super. 2014)
(citing Wickett favorably and denying a motion to quash an appeal
challenging declaratory judgment, in which the trial court had concluded an
insurance company incurred a duty to defend its insured and the only
remaining issue involved a determination as to the amount of
indemnification); see also Nat’l Cas. Co. v. Kinney, 90 A.3d 747, 753-55
(Pa. Super. 2014) (citing Wickett favorably and concluding that by denying
appellant’s motion for summary judgment, the trial court had effectively
resolved all issues presented in appellant’s declaratory judgment action).
Nevertheless, this Court has previously recognized the import of Pa.
Bankers and Bankruptcy Alternatives.
[O]ur Supreme Court made clear that its holding in Wickett did
not render an order, that did not fully release a party or
completely resolve the dispute, a final order. Rather such an
order would be deemed a partial declaration of the parties' rights
and would not be immediately appealable.
Sw. Energy Prod. Co. Forest Res., LLC, 83 A.3d 177, 184 (Pa. Super.
2013) (citing Pa. Bankers) (emphasis added).
-9-
J-E03005-14
In this matter, the trial court did not address all of Modern’s claims for
declaratory relief. Thus, it did not completely resolve the dispute. Modern
sought a declaration that either UCS or Main Street was required to provide
it with a defense in the Rolland action. In the event the trial court declined
to recognize that Main Street incurred a duty to defend Modern as an
additional insured under the Main Street Policy, Modern pursued an
alternative theory of relief, requesting that “to the extent” Main Street
declined to defend Modern, UCS was obligated to pay for Modern’s defense.
See Modern First Amended Complaint, at 10, 11-12. Thus, as in Pa.
Bankers and Bankruptcy Alternatives, in disposing of the parties’
motions for summary judgment, the trial court merely narrowed the scope of
Modern’s claims and granted Modern only a partial declaration of its rights.
Finally, we recognize our Supreme Court’s “well-documented efforts of
avoiding piecemeal litigation.” Pa. Bankers, 948 A.2d at 798.
[A]voiding piecemeal litigation conserves scarce judicial
manpower as well as the time of witnesses, jurors, and the use
of public resources. Moreover, this Court has noted that a policy
that allows for piecemeal appeals serves only to increase the
cost of litigation, and favors the party with the greater
resources, who can strategically delay the action at the expense
of the indigent party. Finally, we note that piecemeal litigation,
in addition to being inefficient and costly, can often lead to
inconsistent results.
Id. at 798-99 (citations and quotation marks omitted). Were this Court to
address Modern’s arguments on appeal, we would risk undermining those
efforts.
- 10 -
J-E03005-14
In summary, Modern sought to secure a defense in the Rolland Action.
In its complaint, Modern presented alternative theories of relief, seeking a
declaration that either UCS or Main Street incurred the duty to defend it.
The trial court afforded Modern a partial declaration of its rights, concluding
that Modern was not entitled to coverage as an additional insured under the
Main Street Policy. Although the trial court disposed of the issues raised by
the parties in their cross-motions for summary judgment, the court did not
address Modern’s alternative request for relief that UCS incurred a duty to
defend Modern per the terms of the Lease.3 Accordingly, Modern has not
appealed from a final order.
Appeal quashed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/15/2014
____________________________________________
3
We express no opinion regarding the trial court’s disposition of the parties’
motions for summary judgment.
- 11 -