J-A35029-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
AMPCO-PITTSBURGH CORPORATION, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
NEW HAMPSHIRE INSURANCE COMPANY
AND ARGONAUT INSURANCE COMPANY,
Appellees No. 304 WDA 2014
Appeal from the Order January 23, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 05-33193
BEFORE: BENDER, P.J.E., BOWES, J., and ALLEN, J.
MEMORANDUM BY ALLEN, J.: FILED JANUARY 13, 2015
Ampco-Pittsburgh Corporation, (“Appellant”), appeals from the trial
court’s order entered on January 23, 2014, granting the motion for
judgment on the pleadings filed by Argonaut Insurance, (“Argonaut”),
regarding Appellant’s second amended complaint. Appellant further
challenges the trial court’s prior dismissal, with leave to amend, of
Appellant’s first amended complaint. After careful consideration of the
record and applicable jurisprudence, we affirm.
The trial court set forth the factual and procedural background of this
action as follows:
New Hampshire Insurance Company issued standard
comprehensive general liability policies to [Appellant] for the
period from April 1, 1975 to March 31, 1977. Argonaut issued
similar policies to [Appellant] for the period from April 1, 1977 to
January 1, 1984.
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Each of the policies includes a provision that the insurance
company shall defend any suit against the insured seeking
damages on account of property damage, even if any of the
allegations of the suit are groundless, false, or fraudulent.
[Appellant] owned property in Bensalem, Pennsylvania,
from 1964 through 1987. On November 12, 1987, Hussey
acquired the property from [Appellant]. On November 24, 1987,
Hussey sold a portion of this property to Beak.
In 1995, Hussey/Beak learned that the property was
contaminated.
On November 25, 1997, Hussey/Beak instituted an action
against [Appellant] in this court at GD-97-019331 through the
filing of a writ. Subsequently, on or about November 21, 2001,
Hussey/Beak filed a Complaint in which its damage claim
included over $460,000 in cleanup activities, together with legal
fees relating to a contamination investigation and negotiations, a
diminution in value of the property, and consequential damages
in connection with an anticipated sale of the property.
The Complaint contained two counts based on provisions of
HSCA and a third count titled Contractual Indemnification.
The contractual indemnification claim is based on
provisions within the sales agreement between Hussey and
[Appellant] (“Sales Agreement”) in which Hussey agreed to
assume certain liabilities and obligations of [Appellant], and
[Appellant] agreed to assume any liabilities not specifically
assumed by the buyer.
To resolve the claims set forth in Hussey/Beak's lawsuit
against [Appellant], the parties agreed to participate in binding
common law arbitration. With one exception described below,
the arbitrator, through an August 15, 2003 Award, agreed with
[Appellant] that under the Sales Agreement, Hussey/Beak's
claims against [Appellant] covered property damage and other
losses that Hussey had agreed to assume (i.e., these were
retained liabilities).
The one exception was the provision in the Sales
Agreement (Article 1.4(c)) that the seller shall retain:
Any liabilities or obligations (or costs and expenses in
connection therewith) to the extent that such liabilities or
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obligations are covered by an insurer or insurance under a
policy issued to, or for the benefit of, Seller.
The arbitrator stated: "The issues raised by Article 1.4(c)
would remain open for further hearings and the presentation of
evidence as to the application of, and scope of any insurance
coverage."
In the present litigation, on December 22, 2005, the initial
Complaint was filed. In this Complaint, Beak, Hussey, and
[Appellant] were the plaintiffs; New Hampshire and Argonaut
were the defendants.
This Complaint included a single count in which Beak,
Hussey, and [Appellant] sought a declaration as to whether or
not defendants’ policies provided coverage to [Appellant] for the
liabilities and obligations for the environmental conditions at the
Bensalem facility which are the subject of claims made by
Hussey. In this Complaint, Hussey alleged that the claims were
covered by the New Hampshire and Argonaut policies.
[Appellant] made no allegations as to whether or not there was
coverage. [FN2: The apparent reason was that [Appellant] did
not have a dog in this fight. If Hussey prevailed, the insurance
companies would be liable. If the insurance companies
prevailed, the arbitrator would find that [Appellant] had no
obligations to Hussey.]
Subsequently, Beak and Hussey settled with New
Hampshire and Argonaut so the only remaining plaintiff was
[Appellant] which had not raised any allegation of coverage.
On June 20, 2012, [Appellant] filed an Amended Complaint
for declaratory judgment. In its Complaint, [Appellant] was the
only plaintiff; the Complaint named New Hampshire, Argonaut,
Beak, and Hussey as the defendants. The Amended Complaint
addressed only defense costs and policy limits. The only relief
sought was a declaration that New Hampshire and Argonaut are
obligated to pay [Appellant] the costs, including attorney fees, it
incurred in connection with the claims that Beak has asserted
against [Appellant], and a declaration that New Hampshire's
settlement payment to Beak does not erode the policy limits
under the policies New Hampshire issued to [Appellant].
[On December 6, 2012, in response to Argonaut’s
preliminary objections to Appellant’s amended complaint, the
trial court], dismissed both counts [of Appellant’s amended
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complaint], with leave to amend Count I (defense costs),
because (1) a declaratory judgment cannot be brought where
the claim is nothing more than a breach of contract, and (2)
there was, at this time, no case or controversy regarding policy
limits.
On January 1, 2013, [Appellant] filed its Second Amended
Complaint which is the subject of the Motions for Judgment on
the Pleadings [filed by Argonaut and New Hampshire][.] The
Second Amended Complaint raises only a breach of contract
claim against Argonaut and New Hampshire in which [Appellant]
seeks defense costs incurred in the underlying action.
Trial Court Memorandum and Order, 1/23/14, at 1-4 (some footnotes
omitted).
On January 23, 2014, the trial court granted Argonaut’s motion for
judgment on the pleadings. On February 4, 2014, Appellant filed a motion
for reconsideration of the trial court’s January 23, 2014 order. On February
12, 2014, the trial court denied Appellant’s motion for reconsideration. On
February 21, 2014, Appellant filed a praecipe to settle and discontinue the
action as to New Hampshire Insurance Company only. On February 21,
2014, Appellant filed a notice of appeal. The trial court did not order
Appellant compliance with Pa.R.A.P. 1925. On February 26, 2014, the trial
court entered an order indicating that “pursuant to Pa.R.A.P. No. 1925(a),
the reasons for my January 2[4], 2014 Order of Court are set forth in my
Memorandum accompanying the Order of Court.” Order, 2/26/14, at 1.
Appellant presents two issues for our consideration:
A. Whether the trial court erred in granting judgment on the
pleadings to [Argonaut] based upon its conclusion that
Appellant's claims against [Argonaut] did not relate back to
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Appellant's original Complaint, and therefore were barred by
the statute of limitations.
B. Whether the trial court erred in sustaining preliminary
objections in the nature of a demurrer based upon its
conclusion that Appellant could not assert a claim for
declaratory judgment regarding the existence of the duty to
defend.
Appellant’s Brief at 7.
The following standard of review guides our analysis:
[A]ppellate review of a trial court's decision to grant or
deny judgment on the pleadings is limited to determining
whether the trial court committed an error of law or whether
there were facts presented which warrant a jury trial. In
conducting this review, we look only to the pleadings and any
documents properly attached thereto. Judgment on the
pleadings is proper only where the pleadings evidence that there
are no material facts in dispute such that a trial by jury would be
unnecessary.
In passing on a challenge to the sustaining of a motion for
judgment on the pleadings, our standard of review is limited.
We must accept as true all well pleaded statements of fact of the
party against whom the motion is granted and consider against
him only those facts that he specifically admits. We will affirm
the grant of such a motion only when the moving party's right to
succeed is certain and the case is so free from doubt that the
trial would clearly be a fruitless exercise.
Erie Ins. Exchange v. Conley, 29 A.3d 389, 391-392 (Pa. Super. 2011)
(internal citation omitted).
Appellant contends:
In each of [Appellant’s] three Complaints in this Action,
[Appellant] asserts the same cause of action. Specifically,
[Appellant] asserts that:
[Appellant] maintained comprehensive general liability
(CGL) policies with New Hampshire and Argonaut. Original
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Complaint, ¶ 18; First Amended Complaint at ¶ 19; Second
Amended Complaint at ¶ 5 (R. 13a; R. 207a; R. 497a);
Argonaut issued CGL policies providing coverage to
[Appellant] from 4/1/1977 to 1/1/1984, including the
following.... Original Complaint, ¶ 20; First Amended
Complaint at ¶ 21; Second Amended Complaint at ¶ 7 (R.
14a; R. 208a; R. 497a);
After receiving notice of Hussey Marine's claims as
described above, on February 7, 1997, [Appellant] notified
Argonaut and New Hampshire of Hussey Marine's claims.
Original Complaint ¶ 22; First Amended Complaint at ¶ 23;
Second Amended Complaint at ¶ 23 (R. 14a; R. 208a; R.
499a);
Argonaut did not respond to [Appellant’s] notice of Hussey
Marine's claims in 1997. Original Complaint ¶ 23; First
Amended Complaint at ¶ 24; Second Amended Complaint
at ¶ 27 (R. 14a; R. 208a; R. 500a);
On May 12, 2004, [Appellant] requested a coverage
determination from Argonaut concerning the Bensalem
facility. Original Complaint IT 27; First Amended
Complaint at ¶ 28; Second Amended Complaint at ¶ 28 (R.
15a; R. 209a; R. 500a);
By letter dated June 22, 2004, Argonaut confirmed the
issuance of the above-referenced policies to [Appellant]
and informed [Appellant] that "Argonaut must respectfully
deny coverage...." Original Complaint, ¶ 28; First
Amended Complaint at ¶ 29; Second Amended Complaint
at ¶ 29 (R. 15a; R. 209a, and R. 500a); and
[Appellant] is seeking court adjudication of certain rights
and obligations of Argonaut and [Appellant] under the
Policies. Original Complaint at ¶ 33-34; First Amended
Complaint at ¶¶ 47, 55; Second Amended Complaint at ¶¶
46-47 (R. 16a; R. 211a-212a; R. 501a-502a).
These facts establish the existence of the contracts between
[Appellant] and Argonaut, the fact that [Appellant] sought to
enforce its rights under the contracts, and the fact that Argonaut
refused to perform its obligations under the contracts.
Regardless of whether [Appellant’s] claim is styled as one for
breach of contract or one for declaratory judgment, the facts and
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thus the cause of action underpinning [Appellant’s] claim
remained unchanged since originally pleaded in 2005.
Appellant’s Brief at 19-21.
The trial court disagreed with Appellant’s contention that its pleadings
have remained unchanged since the inception of their action. Specifically,
the trial court determined:
I am granting Argonaut's Motion for Judgment on the Pleadings
based on its statute of limitations defense.
On June 22, 2004, Argonaut denied coverage. A breach of
contract claim is governed by a four-year limitation period.
[Appellant] never raised a claim in this proceeding that Argonaut
breached any obligations owed to [Appellant] under the
Argonaut policies until it filed its Amended Complaint on June 20,
2012. This was almost eight years after Argonaut advised
[Appellant] that it was denying coverage.
Claims that the denial of coverage on June 22, 2004 constituted
a breach of Argonaut's contractual obligations owed to
[Appellant] were not raised in the initial Complaint. See ¶ 30 of
the initial Complaint which reads as follows:
30. Hussey Marine contends that the Insurance Policies provide
coverage to [Appellant] for the liabilities and obligations for the
environmental conditions at the Bensalem facility which are the
subject of the claims made by Hussey Marine, and that Hussey
Marine is entitled to the proceeds.
Nowhere in the initial Complaint does [Appellant] claim that the
New Hampshire and/or Argonaut insurance policies provide
coverage to [Appellant] for the liabilities and obligations arising
out of the environmental conditions at the Bensalem facility.
If the [2012] Amended Complaint was, instead, the initial
Complaint, the Complaint would be dismissed because the claims
raised in this Complaint had to be filed within four years of the
denial of coverage. The fact that the initial Complaint was filed
within four years of the denial of coverage does not change the
merits of the statute of limitations defense since the initial
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Complaint did not raise any claims raised by [Appellant] that
Argonaut breached contractual obligations owed to [Appellant].
Furthermore, in the initial Complaint, the declaratory relief that
was sought was a declaration as to whether the New Hampshire
and Argonaut policies provided coverage to [Appellant] for the
liabilities and obligations arising out of the environmental
conditions at the Bensalem facility. In the Amended Complaint
and Second Amended Complaint, [Appellant] did not seek a
declaration regarding coverage but, instead, sought costs of
defense from New Hampshire and Argonaut.
Trial Court Memorandum and Order, 1/23/14, at 4-5.
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.
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).
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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)
(emphasis in original).
Chaney v. Meadville Medical Center, 912 A.2d 300, 303-304 (Pa. Super.
2006) (emphasis supplied).
“Amendments adding new causes of action after the statutes of
limitations have run are prejudicial to defendants because they subject them
to claims without permitting them to raise the statute of limitations defense,
which would otherwise be available to them.” Department of
Transportation v. Pennsylvania Insdustries for Blind and
Handicapped, 886 A.2d 706, 715 n.14 (Pa.Cmwlth. 2005) (allowing an
amendment after the expiration of the statute of limitations where plaintiff
“has pursued the same legal theory since inception of this litigation” and the
“amendment did not introduce a new legal theory”) citing Hodgen v.
Summers, 555 A.2d 214, 216 (Pa. 1989).
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In Hodgen, we observed:
“In determining whether a wholly different cause of
action is introduced by the amendment, technical
considerations or ancient formulae are not controlling;
nothing more is meant than that the defendant shall not
be required to answer a wholly different legal liability or
obligation from that originally stated. The test is not
whether, under technical rules of pleading, a new cause of action
is introduced, but rather, the test is whether an attempt is made
to state facts which give rise to a wholly distinct and different
legal obligation against the defendant.” 61A Am.Jur.2d Pleading
§ 322. “The tests to be applied when the question
presented is whether an amended [complaint] presents a
new and different cause of action are, would a judgment
bar any further action on either, does the same measure
of damages support both, is the same defense open in
each, and is the same measure of proof required?”
Sanchez v. City of Philadelphia, supra at 187, 448 A.2d at 589-
590, quoting Saracina v. Cotoia, 417 Pa. 80, 85, 208 A.2d 764,
767 (1965).
Hodgen, 555 A.2d at 215 (emphasis supplied).
We find that Appellant’s second amended complaint introduced a new
cause of action. Obtaining a judgment in the declaratory action would not
have barred Appellant from pursuing a timely breach of contract action.
Indeed, the Declaratory Judgments Act specifically allows for a declaration to
be sought even before a contract has been breached. See 42 Pa.C.S.A. §
7533 (“Any person interested under a … written contract, or other writings
constituting a contract, or whose rights, status, or other legal relations are
affected by a … contract … may have determined any question of
construction or validity arising under the … contract, … and obtain a
declaration of rights, status, or other legal relations thereunder”); § 7534
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(“A contract may be construed either before or after there has been a breach
thereof.”).
Moreover, Appellant’s second amended complaint challenging
Argonaut’s failure to pay for Appellant’s defense costs incurred in the
underlying action implicated different elements, measure of damages and
proof, and defenses than the coverage issue raised in the original complaint.
See American and Foreign Ins. Co. v. Jerry’s Sport Center, Inc., 948
A.2d 834, 845 (Pa. Super. 2008) (“The duty to defend [an insured] is a
distinct obligation, separate and apart from the insurer's duty to provide
coverage … [and] [i]n order to determine whether a claim may potentially
come within the coverage of the policy, we must first ascertain the scope of
the insurance coverage and then analyze the allegations in the complaint.”);
see also Erie Ins. Exchange v. Claypoole, 673 A.2d 348, 355-356 (Pa.
Super. 1996) (en banc) (internal citations omitted) (“It is well established
that the duty to defend and pay the costs of defense is broader than the
duty to indemnify [an insured]. This duty to defend, however, is not
activated by every allegation raised against the insured. The nature of the
allegations themselves, not the details surrounding the injuries suffered, are
the basis upon which the insurer’s duty to defend the insured arises. Thus,
only allegations contained within the underlying complaint pertaining to
injuries which are either actually or potentially within the scope of the
insurance policy obligate the insurer to defend the insured.”).
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Therefore, while Appellant contends that “as long as all material facts
upon which [Appellant] bases its Second Amended Complaint are also found
in the Original Complaint, the Second Amended Complaint will relate back to
the Original Complaint,” our established jurisprudence refutes Appellant’s
contention; undue prejudice or surprise resulting from an amendment
following an expired limitation, and the introduction of a new cause of action
where the amendment following the limitation period “proposes a different
theory … than the one previously” raised, will serve to bar an amendment.
Appellant’s Brief at 18; Chaney, 912 A.2d at 303-304.
Here, accepting all of the factual allegations within Appellant’s second
amended complaint as true, and considering against Appellant only those
facts which Appellant admits, it is clear and free from doubt that Appellant’s
action is untimely, such that Argonaut is entitled to judgment. Appellant’s
breach of contract claim against Argonaut based on Argonaut’s denial of
coverage is governed by a four-year statute of limitations. See 42 Pa.C.S. §
5525. We have explained that “[t]he purpose of [statute of] limitation
periods is to expedite litigation and thus discourage delay and the
presentation of stale claims which may greatly prejudice the defense of such
claims. In light of the important purpose served by limitations periods, this
Court has held that statutes of limitation are to be strictly construed.”
Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565, 575 (Pa. Super. 2007)
(internal citation omitted). Argonaut denied coverage to Appellant on June
22, 2004. Accordingly, Appellant had until June 22, 2008 to initiate a breach
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of contract action against Argonaut. Appellant’s 2013 second amended
complaint asserting a breach of the insurance contract is therefore time
barred.
A fair reading of the original declaratory judgment action does not
reflect an assertion by Appellant of the cause of action Appellant raises
against Argonaut in its second amended complaint. We are not persuaded
that Appellant’s second amended complaint was merely amplifying, as
opposed to altering, the original action. Rather, we find that Appellant’s
second amended complaint presented a new cause of action against
Argonaut. We therefore find that the trial court did not err in granting
Argonaut’s motion for judgment on the pleadings.
Appellant’s second issue challenges the trial court’s December 6, 2012
order sustaining the preliminary objections filed by Argonaut to Count I of
Appellant’s first amended complaint which sought defense costs Appellant
incurred in defending the underlying action. Appellant argues that the trial
court erred in holding “that a claim for declaratory judgment is not an
appropriate vehicle for adjudicating an insurer’s defense obligations”, and in
stating “[w]e don’t use declaratory judgments when there is — a contract
action will answer everything.” Appellant’s Brief at 24. We disagree.
A declaratory judgment is not obtainable as a matter of right.
Whether a trial court should exercise jurisdiction over a
declaratory judgment action is a matter of sound judicial
discretion. American Nuclear Insurers v. Metro. Edison Co., 399
Pa. Super. 375, 582 A.2d 390, 393 (1990); see 42 Pa.C.S.A. §
7537.
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Osram Sylvania Products, Inc. v. Comsup Commodities, Inc., 845 A.2d
846, 848 (Pa. Super. 2004). Discerning no abuse of discretion in the trial
court’s determination that Appellant’s action should be in assumpsit rather
than for declaratory relief, we find that Appellant’s second issue fails.
Further, we are mindful that in reviewing a trial court’s order
sustaining preliminary objections, our standard of review “is to determine
whether the trial court committed an error of law.” Feingold v. Hendrzak,
et al., 15 A.3d 937, 941 (Pa. Super. 2011). We recognize:
Preliminary objections in the nature of a demurrer test the legal
sufficiency of the complaint. When considering preliminary
objections, all material facts set forth in the challenged pleadings
are admitted as true, as well as all inferences reasonably
deducible therefrom. Preliminary objections which seek the
dismissal of a cause of action should be sustained only in cases
which it is clear and free of doubt that the pleader will be unable
to prove facts legally sufficient to establish the right of relief. If
any doubts exists as to whether a demurrer should be sustained,
it should be resolved in favor of overruling the preliminary
objections.
Id. citing Haun v Community Health Systems, Inc., 14 A.3d 120, 123
(Pa. Super. 2011).
We have explained that “a cause of action for a declaratory judgment
does not arise or accrue until an ‘actual controversy’ exists[,] … [and that
an] ‘actual controversy’ surrounding the interpretation of [an] insurance
policy … did not arise until [the insurance company defendant] denied
appellant’s request for coverage.” Zourelias v. Erie Insurance Group,
691 A.2d 963, 964 (Pa. Super. 1997). We further expressed that “the
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statute of limitations for a declaratory judgment action is four years.” Id.
Here, Appellant’s 2012 first amended complaint, seeking for the first time
declaratory relief under Count I for defense costs Appellant incurred in the
underlying action, was untimely because it was not raised on or before June
22, 2008, four years after Argonaut denied coverage. Moreover, based on
our discussion supra, to the extent that Appellant’s claim for defense costs
was a claim that Argonaut breached its contractual obligation to pay for such
costs, Appellant’s first amended complaint was barred as untimely, such that
the trial court did not err in dismissing Appellant’s 2012 first amended
complaint. Appellant’s challenge to the trial court’s dismissal of Appellant’s
first amended complaint is unavailing.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/13/2015
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Ampco-Pittsburgh v. New Hampshire Insurance
Combined Opinion