Kearney, J. and L. v. Millers Capital Ins. Co.

J-S14039-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JOHN AND LOIS KEARNEY, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellants
v.
MILLERS CAPITAL INSURANCE
COMPANY,
Appellee No. 1359 MDA 2015
Appeal from the Judgment Entered July 2, 2015
In the Court of Common Pleas of Lackawanna County
Civil Division at No(s): 14 CV 7406
BEFORE: FORD ELLIOTT, P.J.E., PANELLA, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED MARCH 03, 2016
Appellants John and Lois Kearney, husband and wife, t/a Kearney Real
Estate Co.,1 appeal from the judgment entered by the Court of Common
Pleas of Lackawanna County sustaining the preliminary objections of
Appellee Millers Capital Insurance (“Millers”) and dismissing Appellants’
cause of action sounding in breach of contract and bad faith. Herein,
Appellants contend that the lower court improperly considered evidence
outside of the complaint to dispose of legal issues raised in the preliminary
objections. Admitting all material facts averred in the complaint and
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1
In their Notice of Appeal filed in this Court, Appellants appealed in the
name of “John Kearney and Lois Kearney, husband and wife, t/a Kearney
Real Estate Co,” consistent with their captioned party name in the action
filed in the Court of Common Pleas of Lackawanna County.
*Former Justice specially assigned to the Superior Court.
J-S14039-16
attached exhibits as true, as we must under our standard of review, we
discern error with the order granting preliminary objections and dismissing
the action. We, therefore, vacate and remand.
By way of background, we glean the following pertinent facts from
Appellants’ civil complaint and attached exhibits filed on December 5, 2014.
On or about November 5, 2013, a windstorm sheared a large limb from a
tree located on Appellants’ premises, Keystone Business Center at 2
Keystone Industrial Park, causing significant damage to a maintenance
structure located below. The structure was owned, installed, and used by a
closely-related commercial Lessee—John P. Kearney & Associates, Inc., an
electrical contracting company—leasing space at the Keystone Business
Center.
Appellants, named insureds under a Millers commercial liability
umbrella policy (“the policy”) covering the office complex at Keystone
Business Center, filed a claim of loss implicating the Keystone Business
Center as the covered premises. Millers denied the claim, however,
purportedly because Appellants neither owned the damaged structure nor
stood as lessor in the lease agreement with Lessee.2 Millers’ refusal to cover
the loss has forced Appellants to pay all relevant repair and replacement
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2
The lease agreement, a copy of which was attached to the complaint,
inconsistently described the lessor as “Keystone Business Center” at the
outset but “Kearney Real Estate Co.” as the party signator.
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costs and to assume responsibility for additional, future costs relating to
Lessee’s resultant loss of business. Appellants subsequently instituted the
present action.
Millers filed preliminary objections that the complaint described an
uncovered loss given Appellants’ lack of ownership interest in the damaged
maintenance structure and the absence of facts otherwise allowing for
coverage of third-party property losses under the policy. In its
memorandum in support of preliminary objections, Millers expounded that
the cloth maintenance structure could not qualify for coverage as part of
Appellants’ building because it was clearly distinct from the “joisted
masonry” Keystone Business Center building described in the declarations
page of the policy. Nor did the complaint implicate policy provisions
extending coverage to certain third-party personal property, Millers
continued. Required to ultimately secure such coverage would be proof that
Appellants exercised care, custody or control of Lessee’s structure, which, in
turn, was situated within 100 feet of the covered premises, Millers
maintained. Appellants could make no such showing, Millers posited, where
their complaint admitted they had no ownership or use interest in the
structure and, in any event, failed to allege the structure was within 100 feet
of the Keystone Business Center.
The lower court granted preliminary objections and, in so doing,
dismissed Appellants’ claims by adoption of the factual allegations and
corresponding arguments raised in Millers’ supporting memorandum:
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[Appellants] state that they have set forth a valid breach of
contract claim, and refer to Millers’ claims in support of their
demurrer as “defenses” to a lawsuit and not reasons to grant
this Preliminary Objection. The Court disagrees. What [Millers]
has argued, with factual support, is that the damaged property is
not covered under the policy. It has pointed out policy specifics
and set forth precisely what, and what is not, covered under this
insurance policy. Millers has demonstrated convincingly that
coverage did not extend to this maintenance shed. Since the
maintenance shed for which [Appellants] filed a first party claim
is not their property and is not covered under any of the
provisions of the Building and Personal Property Coverage Form,
we find that [Appellants’] claim for breach of contract arising
from the denial of their claim is insufficient as a matter of law
because it is clear that no provision of the insurance contract
was breached.
***
A demurrer is to be sustained when it is clear with no doubt that
no claim has been asserted for which relief can be granted. In
this instance, Millers has shown with no doubt that a valid claim
has not been asserted in the Complaint, and this has not been
effectively countered or contradicted by [Appellants].
Lower Court Memorandum and Order, filed July 2, 2015, at 3. Appellants
timely appealed from this order.3
Appellants ask this Court to consider whether the trial court erred in
granting Millers’ preliminary objections and dismissing the complaint in this
matter. Appellants’ brief at 2. Our standard of review of an appeal from an
order granting preliminary objections in the nature of a demurrer is well-
settled:
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3
Appellants timely filed with the trial court a motion for reconsideration, but
the trial court took no action on the motion within the 30-day time for
appeal.
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In determining whether the trial court properly sustained
preliminary objections, the appellate court must examine the
averments in the complaint, together with the documents and
exhibits attached thereto, in order to evaluate the sufficiency of
the facts averred. The impetus of our inquiry is to determine the
legal sufficiency of the complaint and whether the pleading
would permit recovery if ultimately proven. This Court will
reverse the trial court's decision regarding preliminary objections
only where there has been an error of law or abuse of discretion.
When sustaining the trial court's ruling will result in the denial of
claim or a dismissal of suit, preliminary objections will be
sustained only where the case is free and clear of doubt.
Clausi v. Stuck, 74 A.3d 242, 246 (Pa.Super. 2013) (quoting Conway v.
The Cutler Group, Inc., 57 A.3d 155, 157–158 (Pa.Super. 2012) (citation
omitted)). Moreover, in the insurance context, “the factual allegations of the
complaint are taken to be true and the complaint is to be liberally construed
with all doubts as to whether the claims may fall within the coverage of the
policy to be resolved in favor of the insured.” Unionamerica Insurance
Co. Ltd. v. J.B. Johnson, 806 A.2d 431, 434 (Pa.Super. 2002).
Close examination of the Appellants’ complaint and exhibits reveals
the following averments: Appellants owned the Keystone Business Center (¶
3); the office building complex at Keystone Business Center was covered
under an insurance policy issued by Millers (¶ 10, 11); Lessee, a third-party
commercial tenant, occupied part of the Keystone Business Center (¶ 4); a
windstorm caused a limb to break off a tree located on Appellants’ property
and fall onto a maintenance structure that Lessee owned and had placed on
the leased grounds (Exhibit A ¶ 1.h., ¶ 10); the Keystone Business Center
was “the property in issue” with respect to a general liability claim seeking
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payment for losses incurred as a result of damage to Lessee’s maintenance
structure (¶¶ 9, 10); and Appellants have been forced to expend large sums
of money in repair, maintenance and replacement costs and will incur even
more costs in the future in light of Millers’ refusal to provide an insurance
award for the claim (¶ 19).
Millers reiterates the position it took in its preliminary objections that
the insurance policy itself, attached as Exhibit B to the complaint, provides a
definition of “Covered Property” that clearly excludes the maintenance
structure as described in the complaint. The policy provides the following
with respect to “Covered Property”:
BUILDING AND PERSONAL
PROPERTY COVERAGE FORM
***
A. Coverage
We will pay for direct physical loss of or damage to Covered
Property at the premises described in the Declarations caused
by or resulting from an Covered Cause of Loss.
1. Covered Property
Covered Property, as used in this Coverage part, means
the type of property described in this Section, A.1, . . . .
a. Building, meaning the building or structure described
in the Declarations, . . . .
b. Your Business Personal Property located in or on
the building described in the Declarations or in the open
(or in a vehicle) within 100 feet of the described
premises, consisting of the following . . .:
(1) Furniture and fixtures;
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(2) Machinery and equipment;
(3) “Stock”;
(4) All other personal property owned by you and
used in your business;
...
c. Personal Property of Others that is:
(1) In your care, custody or control; and
(2) Located in or on the building described in the
Declarations or in the open (or in a vehicle) within
100 feet of the described premises.
****
Complaint, filed 12/5/14, Exhibit A at pp. 1 of 14, 2 of 14; R.R. at 062a-
063a.
Millers argues that the maintenance structure cannot qualify for
section A.1.a. coverage because its cloth construction differs fundamentally
from the “joisted masonry” construction of the covered “building” described
in the Declarations page. Section A.1.b. provides no coverage where the
complaint alleges that Lessee, not Appellants, owns the structure, Millers
continues. Nor does section A.1.c. pertain because Appellants “never
alleged that it [structure] was in their own care, custody or control,” Millers
argues. Instead, by admitting that Lessee exclusively owned and used the
structure, Millers maintains, Appellants precluded any possibility of proving
the structure was committed to their “care, custody or control” as required
under the policy.
When viewed in light of the standard governing review of preliminary
objections, this case was hardly free and clear from doubt. Initially, we
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agree with Appellants that the limited and general descriptions of the
maintenance structure appearing in both the complaint and the attached
lease agreement, respectively, did not take the structure outside the scope
of A.1.a coverage for a “building” as a matter of law. It may be that Millers’
description of the structure as a cloth maintenance shed comprising a
construction kind and quality different from the buildings described on the
policy’s declarations page will eventually prove accurate, but neither the
complaint nor its attached exhibits substantiated this difference. As such,
the lower court exceeded the proper scope of review in relying upon novel
information alleged in Millers’ memorandum to decide the sufficiency of
averments and facts pled by Appellants.4
Furthermore, we find in Appellants’ complaint and attachments the
averment of material facts creating at least the possibility that their
insurance claim qualified for coverage under section A.1.c. of the policy. The
complaint sufficiently addressed the “personal property of others” element of
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4
In this regard, we deem inapposite Millers’ reliance on Ryan Homes, Inc.
v. Home Indemnity Company, 647 A.2d 939, 940 (Pa.Super. 1994) as
bearing on our review of an order granting preliminary objections, for Ryan
Homes, Inc. involves review of an order granting a motion for summary
judgment. It is well-settled that “[w]hen reviewing preliminary objections
the trial court looks to the pleadings, but, in considering a motion for
summary judgment the trial court weighs the pleadings, depositions,
answers to interrogatories, admissions and affidavits.” Abbott v. Anchor
Glass Container Corp., 758 A.2d 1219, 1223 (Pa.Super. 2000) (quoting
Rosenfield v. Pennsylvania Automobile Ins. Plan, 636 A.2d 1138, 1142
(Pa.Super. 1994).
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A.1.c. by alleging Lessee owned the structure and placed it on leased
grounds.5 As to the “care, custody or control” element of A.1.c., the
averments alleged plainly that Appellants “have been forced to expend large
sums of money in repair, maintenance and replacement costs” as a result of
the damage sustained to the maintenance structure. A reasonable inference
arises from such expenditures that Appellants owed and acted upon a duty
of care, custody or control with respect to the maintenance structure.
Finally, the complaint and attached exhibits raised a question of
material fact as to whether the maintenance structure was located within
100 feet of the described premises as required by section A.1.c. The
complaint attributes the claimed loss to a limb falling from a tree located on
insured property, allowing for a reasonable inference that the structure
situated below the limb was within 100 feet of said insured property. The
lease agreement, moreover, describes the 2,550 square foot area containing
the maintenance structure as representing part of Appellants’ “premises” at
the Keystone Business Center. Finally, the insurance policy describes the
insured property as a vast, 51,300 square foot office complex at the same
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5
There appears to be at least a possibility that the structure Lessee owned,
used, and placed at the site qualifies as “personal property” under the policy.
On this question, the broad description of “personal property” appearing in
section A.1.b., supra, and presenting a non-exhaustive list including, inter
alia, fixtures, equipment, machinery, and all other personal property owned
and used in one’s business is salutary in construing the same term,
“personal property,” as it appears in section A.1.c.
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address, creating a reasonable inference that the grounds upon which the
tree and structure stood were covered premises under the policy. This
collection of averments and exhibits sufficed to preclude a determination
that Appellants could not, as a matter of law, obtain relief under section
A.1.c. based on the pleadings they filed.
As noted above, the test for sustaining preliminary objections is
whether it is clear and free from doubt, given all facts pleaded, that the
pleader will be unable to prove facts legally sufficient to establish his or her
right to relief. Clausi, supra. This test was not met, for Appellants’
complaint and exhibits set forth facts and averments that would appear to
permit recovery under the insurance policy if ultimately supported by a fully
developed factual record. Accordingly, deeming the complaint sufficient to
withstand Millers’ preliminary objections, we vacate the order entered below
and remand for proceedings consistent with this decision.
Judgment vacated. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/3/2016
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