J-S10020-15
2016 PA Super 31
WESTFIELD INSURANCE COMPANY IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
ASTRA FOODS INC., JOSE NOE
CASTILLO RAMOS, AND AMERICAN
GUARANTEE AND LIABILITY INSURANCE
COMPANY
APPEAL OF: ASTRA FOODS INC.
No. 1392 EDA 2014
Appeal from the Order dated March 19, 2014
In the Court of Common Pleas of Philadelphia County
Civil Division at No: February Term, 2012 No. 00902
BEFORE: GANTMAN, P.J., STABILE, and PLATT,* JJ.
OPINION BY STABILE, J.: FILED FEBRUARY 12, 2016
Appellant/defendant Astra Foods Inc. (“Astra”) appeals from the March
19, 2014 order of the Court of Common Pleas of Philadelphia County (trial
court), which granted summary judgment in favor of Appellee/plaintiff
Westfield Insurance Company (“Westfield Insurance”) and denied Astra’s
cross-motion for summary judgment. Upon review, we affirm.
The facts and procedural history underlying this appeal are
undisputed. As summarized by the trial court in its Pa.R.A.P. 1925(a)
opinion:
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
J-S10020-15
This is an appeal taken from [the trial court’s] grant of a
[m]otion for [s]ummary [j]udgment in an insurance coverage
dispute regarding a workplace injury suffered by Jose Noe
Castillo Ramos (Ramos) while employed by BK Packaging
Services, Inc. (BK) (formerly known as JRI Contracting Services,
Inc.) at a facility operated by [Astra]. In 2009, Ramos suffered
a severe injury to his hand and arm while cleaning an exhaust
fan, for which he filed a workers’ compensation claim.
In January 2012, Workers’ Compensation Judge [(WCJ)]
Denise Krass rendered a decision on Ramos’ claim. Her decision
included a finding that Ramos was employed by BK, and that
Ramos was not a “borrowed employee” of Astra at the time of
the injury. [Westfield Insurance], which had issued both a
[commercial general] liability policy [(CGL Policy)] and a
workers’ compensation policy to Astra, was a party to that
proceeding. As a result of [WCJ] Krass’ ruling, there was no
coverage for Ramos’ injuries under the Westfield [Insurance]
workers’ compensation policy.
In June 2013, a jury verdict was rendered for Ramos
against Astra in a personal injury action, and [Ramos] was
awarded $763,413. Westfield [Insurance] filed a declaratory
judgment action, arguing that the [CGL Policy] did not cover the
incident. Westfield [Insurance] and Astra filed cross-motions for
summary judgment,[1] and the [trial court] granted summary
judgment for Westfield [Insurance] and denied it for Astra.
Trial Court Rule 1925(a) Opinion, 7/31/14 at 1-2. Astra subsequently
moved for reconsideration of the trial court’s summary judgment order. In
response, the trial court issued an order vacating its summary judgment
order and directing Westfield Insurance to file a response to the
reconsideration motion. On March 19, 2014, the trial court issued an order
reinstating its summary judgment order “with the exception that the
____________________________________________
1
Westfield Insurance specifically argued that the “employer’s liability”
exclusion provision of the CGL Policy applied to this case, barring Astra from
obtaining a defense and indemnity in the underlying action because Ramos
was an employee of Astra’s by satisfying the definition of “leased worker”
under the CGL Policy. See Westfield Insurance’s Summary Judgment
Motion, 7/19/13, at ¶¶ 43-44.
-2-
J-S10020-15
statement that [American Guarantee and Liability Insurance Company
(AGLIC)] was in privity with Astra is stricken.”2 Trial Court Order, 3/19/14.
Astra timely appealed to this Court.3
On appeal, Astra raises the following issues for our review:
1. Whether the grant of motion for summary judgment in favor
of [Westfield Insurance] constituted an error of law and/or an
abuse of discretion when such opinion and order was based upon
the following:
(i) in disregarding an adjudication in a prior action
that Ramos was not an Astra employee and failing to
apply the doctrine of collateral estoppel to preclude
Westfield [Insurance] from asserting otherwise in the
action[;]
(ii) in failing to apply the doctrine of judicial estoppel
to preclude Westfield [Insurance] from taking
inconsistent positions with regard to Ramos’
employment status in the action[; and]
(iii) in failing to declare that the [CGL Policy]
exclusion categorizing Ramos as an employee by
defining him as a leased worker properly excluded
from coverage under [the CGL Policy] is
unconscionable and void as against public policy[.]
2. Whether the denial of [Astra’s] cross-motion for summary
judgment constituted an error of law and/or an abuse of
discretion when such opinion and order was based upon
disregarding a finding in a prior adjudication that Ramos was not
an employee or borrowed employee of Astra.
Astra’s Brief at 9 (capitalization omitted).
We are mindful that:
[o]ur scope of review of a trial court’s order granting or denying
summary judgment is plenary, and our standard of review is
____________________________________________
2
Astra’s umbrella insurer and additional defendant AGLIC is not a party to
this appeal.
3
Our review of the docket indicates that the trial court did not order Astra to
file a Pa.R.A.P. 1925(b) statement of errors complained of on appeal.
-3-
J-S10020-15
clear: the trial court’s order will be reversed only where it is
established that the court committed an error of law or abused
its discretion.
Summary judgment is appropriate only when the record clearly
shows that there is no genuine issue of material fact and that
the moving party is entitled to judgment as a matter of law. The
reviewing court must view the record in the light most favorable
to the nonmoving party and resolve all doubts as to the
existence of a genuine issue of material fact against the moving
party. Only when the facts are so clear that reasonable minds
could not differ can a trial court properly enter summary
judgment.
Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting
Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)).
Astra first argues the trial court erred in granting Westfield Insurance’s
summary judgment motion because Westfield Insurance was barred by the
doctrine of collateral estoppel from challenging Ramos’ employment status
with Astra. In this regard, Astra argues that the CGL Policy’s definition of a
leased worker—who is considered an employee—is identical to the doctrine
of borrowed employee, which was at issue in the prior workers’
compensation proceeding in which Westfield Insurance participated. Astra’s
Brief at 16-17. Astra, therefore, argues that, because WCJ Krass
determined Ramos was not employed by Astra on the basis of the borrowed
employee doctrine, Westfield Insurance must be barred from re-litigating the
issue of Ramos’ employment status with Astra under the terms of the CGL
Policy. Id. We disagree.
It is settled that:
Collateral estoppel applies if (1) the issue decided in the prior
case is identical to one presented in the later case; (2) there was
a final judgment on the merits; (3) the party against whom the
plea is asserted was a party or in privity with a party in the prior
case; (4) the party or person privy to the party against whom
-4-
J-S10020-15
the doctrine is asserted had a full and fair opportunity to litigate
the issue in the prior proceeding and (5) the determination in
the prior proceeding was essential to the judgment. Collateral
estoppel, sometimes referred to as issue preclusion, operates to
prevent a question of law or an issue of fact which has once
been litigated and adjudicated finally in a court of competent
jurisdiction from being relitigated in a subsequent suit.
Kituskie v. Corbman, 682 A.2d 378, 382 (Pa. Super. 1996) (citations and
quotation marks omitted).
The decision to allow or to deny a prior judicial determination to
collaterally bar relitigation of an issue in a subsequent action
historically has been treated as a legal issue. As such, this Court
is not bound by the trial court’s conclusions of law and we may
draw our own conclusions from the facts as established.
Meridian Oil & Gas Enters., Inc. v. Penn Cent. Corp., 614 A.2d 246, 250
(Pa. Super. 1992), appeal denied, 627 A.2d 180 (Pa. 1993).
As with all questions of law, an appellate court’s review of an
insurance contract is plenary. Burton v. Republic Ins. Co., 845 A.2d 889,
893 (Pa. Super. 2004). In interpreting the terms of an insurance contract,
the appellate court examines the contract in its entirety, giving all of the
provisions their proper effect. Id. The court’s goal is to determine the
intent of the parties as exhibited by the contract provisions. Id. In
furtherance of its goal, the court must accord the contract provisions their
accepted meanings, and it cannot distort the plain meaning of the language
to find an ambiguity. Id.
Instantly, Astra does not dispute that the terms of the CGL Policy are
reasonable and unambiguous or that Ramos failed to satisfy the definition of
a leased worker under the CGL Policy. See Astra’s Brief at 22. Rather,
Astra argues only that the contractual definition of a leased worker is
-5-
J-S10020-15
identical to the legal doctrine of borrowed employee, which was litigated
before WCJ Krass. As a result, Astra argues that the doctrine of collateral
estoppel precludes Westfield Insurance from re-litigating Ramos’
employment status with Astra. We, however, reject Astra’s collateral
estoppel argument because the doctrine of borrowed employee at issue in
the workers’ compensation proceedings is not identical to the definition of a
leased worker under the CGL Policy. In other words, in this case, the legal
doctrine of borrowed employee is not identical to the contractual definition
of a leased worker.
Explaining the doctrine of borrowed employee, our Supreme Court has
remarked:
The test for determining whether a servant furnished by one
person to another becomes the employee of the person to whom
he is loaned is whether he passes under the latter’s right of
control with regard not only to the work to be done but also to
the manner of performing it. The entity possessing the right to
control the manner of the performance of the servant’s work is
the employer, irrespective of whether the control is actually
exercised. Other factors which may be relevant include the right
to select and discharge the employee and the skill or expertise
required for the performance of the work. The payment of
wages may be considered, but is not a determinative factor.
Although the examination of these factors guides the
determination, each case must be decided on its own facts.
JFC Temps, Inc. v. Workers’ Comp. Appeal Bd. (Lindsay), 680 A.2d
862, 864 (Pa. 1996) (citation omitted); accord Mullins v. Sun Co., 763
A.2d 398, 400 (Pa. Super. 2000). Under the CGL Policy, a leased worker is
defined as “a person leased to [Astra] by a labor leasing firm under an
agreement between [Astra] and the labor leasing firm, to perform duties
-6-
J-S10020-15
related to the conduct of [Astra’s] business.” CGL Policy, 4/1/09, at
§§ I(2)(e), V(5), (10).
Here, a cursory look at the elements of the doctrine of a borrowed
employee and the contractual definition of a leased worker reveals glaring
differences between the two. “The definition of ‘borrowed employee,’ . . .
comes from case law and is clearly much narrower than the definition of
‘leased worker,’ as it focuses on which party controls the worker’s
performance, and the manner in which it is performed.” Trial Court Rule
1925(a) Opinion, 7/31/14, at 3. Thus, upon careful review of the entire
record, viewed in the light most favorable to Astra as the non-moving party,
we must agree with the trial court’s conclusion that the issue of a leased
worker under the CGL Policy was never properly before WCJ Krass because
the CGL Policy was not at issue in the workers’ compensation proceeding.
As the trial court noted:
[T]he legal question of [Ramos’] employment status considered
by [WCJ Krass] is not identical to the question of Ramos’
employment status under the [CGL] Policy. [WCJ] Krass
considered whether Ramos was a “borrowed employee”
according to the common law, while [the trial court] must
determine whether Ramos meet the definition of “leased worker”
under the [CGL] Policy.
Trial Court Opinion, 12/30/13, at 5-6. Accordingly, the trial court did not err
in granting summary judgment in favor of Westfield Insurance and against
-7-
J-S10020-15
Astra by concluding that the doctrine of collateral estoppel did not apply to
whether Ramos was a leased worker under the CGL Policy.4
Astra next argues the trial court erred in granting summary judgment
in favor of Westfield Insurance, because Westfield Insurance was judicially
estopped from challenging Ramos’ employment status with Astra. In
particular, Astra argues that Westfield Insurance’s position on Ramos’
employment status in the case sub judice is inconsistent with Westfield
Insurance’s position before WCJ Krass, where Westfield Insurance asserted
that Ramos was not a borrowed employee of Astra.
Our Supreme Court has held that as a general rule, a party to an
action is estopped from assuming a position inconsistent with his
or her assertion in a previous action, if his or her contention was
successfully maintained. Accordingly, judicial estoppel is properly
applied only if the court concludes the following: (1) that the
appellant assumed an inconsistent position in an earlier action;
and (2) that the appellant’s contention was successfully
maintained in that action.
Black v. Labor Ready, Inc., 995 A.2d 875, 878 (Pa. Super. 2010)
(citations and quotation marks omitted) (emphasis in original). “The
purpose of this doctrine is to uphold the integrity of the courts by preventing
parties from abusing the judicial process by changing positions as the
moment requires.” Bugosh v. Allen Refractories Co., 932 A.2d 901, 912
(Pa. Super. 2007) (citation and quotation marks omitted). However, “[o]ur
Supreme Court has not definitively established whether the second element
____________________________________________
4
Because we conclude Astra failed to satisfy the first prong of the collateral
estoppel doctrine, we need not analyze the other four prongs.
-8-
J-S10020-15
(successful maintenance) is strictly necessary to implicate judicial estoppel
or is merely a factor favoring the application.” Vargo v. Schwartz, 940
A.2d 459, 470 n.8 (Pa. Super. 2007) (citing In re Adoption of S.A.J., 838
A.2d 616, 620 n.3 (Pa. 2003)); see also Ballestrino v. Ballestrino, 583
A.2d 474, 478 (Pa. Super. 1990) (holding that “it is not improper for the
court to refuse to entertain a later claim” which is inconsistent with a
previous position that appellant did not successfully maintain but from which
she obtained other relief).
Instantly, we need not address Astra’s judicial estoppel argument
because, based upon our review of the entire record, we conclude that Astra
has waived this argument by failing to raise it before the trial court. See
Pa.R.A.P. 302(a) (“Issues not raised in the lower court are waived and
cannot be raised for the first time on appeal.”); see Agostinelli v.
Edwards, 98 A.3d 695, 700 (Pa. Super. 2014). However, even if we were
to address the merits of Astra’s judicial estoppel argument, we would reject
the argument because Westfield Insurance never assumed any position
before WCJ Krass with respect to the definition of a leased worker under the
CGL Policy. As noted earlier, the CGL Policy or its terms were not at issue in
the workers’ compensation proceeding.
We now turn to Astra’s third argument. Astra argues the trial court
erred in granting summary judgment in favor of Westfield Insurance based
on the CGL Policy because the employer’s liability exclusion provision of the
CGL Policy at the core of this case “is unconscionable and against public
-9-
J-S10020-15
policy because it results in illusory coverage, and provides [Westfield
Insurance] with a windfall from the substantial premiums collected from
Astra while providing no coverage” under either the workers’ compensation
policy or CGL Policy. Astra’s Brief at 23. We construe Astra’s argument as
challenging the inclusion of a “leased worker” in the employer’s liability
exclusion of the CGL Policy. Simply put, Astra finds it unconscionable that
the term “employee” in the CGL Policy includes a leased worker. Thus, we
must determine whether the employer’s liability exclusion of the CGL
Policy—with respect to a leased worker—is unconscionable as against public
policy. As our Supreme Court has explained:
Generally, courts must give plain meaning to a clear and
unambiguous contract provision unless to do so would be
contrary to a clearly expressed public policy. Public policy is to
be ascertained by reference to the laws and legal precedents and
not from general considerations of supposed public interest. As
the term public policy is vague, there must be found definite
indications in the law of the sovereignty to justify the
invalidation of a contract as contrary to that policy. Only
dominant public policy would justify such action. In the
absence of a plain indication of that policy through long
governmental practice or statutory enactments, or of violations
of obvious ethical or moral standards, the [c]ourt should not
assume to declare contracts contrary to public policy. The courts
must be content to await legislative action.
It is only when a given policy is so obviously for or against
the public health, safety, morals or welfare that there is a virtual
unanimity of opinion in regard to it, that a court may constitute
itself the voice of the community in so declaring that the
contract is against public policy.
Heller v. Pennsylvania League of Cities & Municipalities, 32 A.3d 1213,
1220-21 (Pa. 2011) (citation and quotation marks omitted) (emphasis
added).
- 10 -
J-S10020-15
Here, as noted above, Astra does not argue the employer’s liability
exclusion provision of the CGL Policy, which includes a leased worker, is
unclear or ambiguous.5 Rather, it argues only that the exclusion provision is
against public policy to the extent it includes a leased worker. In support of
its public policy argument, Appellant points out that “[u]nder the factual
circumstances of this case, . . . the ‘leased workers’ exclusion works to
preclude coverage under both companion policies issued by Westfield
Insurance, resulting in Westfield Insurance insulating itself from affording
coverage under either policy, making the coverage illusory.”6 Astra’s Brief at
22.
Astra principally relies on Heller to underscore its claim that the CGL
Policy is illusory and therefore against public policy. Appellant’s reliance on
Heller, however, is misplaced, as Heller is distinguishable from the instant
case. In Heller, our Supreme Court was asked to determine whether “it
[was] a violation of public policy to exclude from underinsured motorist
(UIM) coverage a claim by an individual eligible for workers’ compensation
benefits.” Heller, 32 A.3d at 1215. The appellant (Heller) was severely
injured in an automobile accident during the course of his employment as a
____________________________________________
5
With the exception of the inclusion of a leased worker within the definition
of employees, Astra accepts the employer’s liability exclusion provision of
the CGL Policy. See Astra’s Brief at 22.
6
As stated earlier, Westfield Insurance issued to Astra a workers’
compensation policy as well as the CGL Policy.
- 11 -
J-S10020-15
police officer for Sugarcreek Borough. Id. Subsequently, Heller sought UIM
benefits from the borough under a policy issued by the appellee, who
ultimately denied Heller’s claim under a policy exclusion providing that UIM
coverage did not apply to “[a]ny claim by anyone eligible for workers’
compensation benefits.” Id.
The Supreme Court noted that the borough voluntarily elected to
purchase the optional UIM coverage and paid a premium to the appellee for
the coverage. Id. at 1222. The Supreme Court therefore found persuasive
Heller’s argument that the borough purchased illusory coverage. Id. at
1223, 1228. As the Supreme Court observed:
Instantly, we are presented with the situation where a
mandatory offering under the [Motor Vehicle Financial
Responsibility Law (MVFRL)] was accepted by the [b]orough,
who paid a premium for UIM coverage to provide additional
protection to its employees who operate or occupy its vehicles.
The vehicles in question are used by borough employees during
the course and scope of their employment. Thus, the vast
majority of all UIM claims likely will be made by borough
employees who are eligible for workers’ compensation.
The subject exclusion, however, operates to deny UIM benefits
to anyone who is eligible for workers’ compensation.
Therefore, we find that [the appellee] sold the borough
additional coverage that, in effect, will not attach by
virtue of an exclusion. Under the facts of this case and as
applied to borough employees, the exclusion renders the
coverage illusory. Further, the exclusion operates to convert
[the appellee’s] statutory obligation into a sham offering. [The
appellee] received a windfall by charging the borough a premium
for the coverage.
Heller, 32 A.3d at 1223 (emphasis added). The court further remarked:
To uphold the exclusion would thwart the purpose of the MVFRL
by allowing an insurer to deny benefits for which their insured
paid a premium. Thus, permitting the exclusion to stand
provides a disincentive for insureds to pay premiums for
coverage that is not statutorily required and relieves the insurer
of its obligation to provide benefits for which the insured paid.
While the borough may have received a reduced premium in
- 12 -
J-S10020-15
exchange for what [the appellee] deems “limited” coverage, an
insured cannot contract for illusory coverage.
Id., at 1225. The court also determined that the “workers’ compensation
exclusion violated the statutory scheme for coordination of benefits evident
in the MVFRL” because the legislature intended “to place the burden for
payment of benefits on the tortfeasor or the UM/UIM carrier where a third-
party causes a work-related injury.” Id.
The case sub judice is distinguishable from Heller. First, Astra does
not argue that Westfield Insurance, unlike the appellee in Heller, was
required to offer coverage to Astra for personal injury claims made by
workers not directly employed by Astra. Second, unlike Heller, where the
borough specifically purchased optional UIM coverage for its employees, the
vast majority of whom were eligible for workers’ compensation, Astra does
not argue it purchased the CGL Policy to insulate itself principally against
personal injury claims made by workers not directly employed by Astra. The
record indicates Astra principally purchased the CGL Policy from Westfield
Insurance to cover itself against third-party (non-employee) liability claims.
The leased worker exclusion simply is an exception to such coverage
because leased workers are subsumed within the definition of employees
under the CGL Policy. Third, unlike the appellant in Heller, Astra does not
allege that the employer’s liability exclusion—with the exception of a leased
worker—“operates to foreclose the majority of expected claims” under
the CGL Policy. Id. at 1228 (emphasis added); see also Meridian Mut.
Ins. Co. v. Richie, 544 N.E.2d 488, 489 (Ind. 1989) (holding that if an
- 13 -
J-S10020-15
insured could not have benefited from his insurance coverage under any set
of circumstances, the policy is illusory and in violation of public policy)
(emphasis added). On the contrary, Astra asserts only that “[u]nder the
factual circumstances of this case,” the exclusion renders the CGL Policy
illusory because of how it defines a leased worker, i.e., as an employee.
Astra’s Brief at 21, 22 (“The exclusion of leased [workers] in the [CGL
P]olicy at issue is void against public policy under the factual circumstances
of this case[.]”) (emphasis added).
In summary, because Westfield Insurance was not required to offer
coverage to Astra for personal injury claims by workers not directly
employed by Astra, Astra did not purchase the CGL Policy principally to
cover leased workers, and the leased worker exclusion does not operate to
foreclose the vast majority of Astra’s expected claims, we decline to hold the
CGL Policy illusory, and therefore as against public policy. 7 See Heller,
supra.
Order affirmed.
Platt, J. joins the majority opinion.
Gantman, P.J. files a concurring opinion in which Platt, J. joins.
____________________________________________
7
Based on the outcome of this case, we need not address Astra’s remaining
arguments.
- 14 -
J-S10020-15
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/12/2016
- 15 -