The Cincinnati Ins. Co. v. Selective Ins. Co.

J-A19034-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

THE CINCINNATI INSURANCE : IN THE SUPERIOR COURT OF
COMPANY, AS SUBROGEE OF LEONARD : PENNSYLVANIA
S. FIORE, INC., :
:
Appellant :
:
v. :
:
SELECTIVE INSURANCE COMPANY OF :
SOUTH CAROLINA AND DAVID :
PHILLIPS d/b/a DA-LYN CONTRACTORS : No. 446 EDA 2017

Appeal from the Order entered December 23, 2016
in the Court of Common Pleas of Philadelphia County,
Civil Division, No(s): December Term, 2014 No. 0175

BEFORE: BENDER, P.J.E., DUBOW and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.: FILED OCTOBER 18, 2017

The Cincinnati Insurance Company (“CIC”), as subrogee of Leonard S.

Fiore, Inc. (“Fiore”), appeals from the Order granting the Motion for

Summary Judgment filed by Selective Insurance Company of South Carolina

(“SIC”) and David Phillips d/b/a Da-Lyn Contractors (collectively

“Defendants”), and denying CIC’s Cross-Motion for Summary Judgment. We

affirm.

In its Opinion, the trial court set forth the relevant factual and

procedural background, which we adopt for the purpose of this appeal. See

Trial Court Opinion, 12/23/16, at 1-4.
J-A19034-17

On December 23, 2016, the trial court granted Defendants’ Motion for

Summary Judgment, and denied CIC’s Cross-Motion for Summary Judgment.

This timely appeal followed.1

On appeal, CIC raises the following issues for our review:

1. Whether the [t]rial [c]ourt erred in granting [D]efendants’
[M]otion for [S]ummary [J]udgment in ruling[,] as a matter
of law[,] that the [SIC] primary insurance policy [(“the SIC
policy”)] was excess over the [CIC] primary insurance policy
[(“the CIC policy”)] and the [CIC] umbrella policy [(“the CIC
umbrella policy”)?]

2. Whether the [t]rial [c]ourt erred in denying [CIC’s] [C]ross-
[M]otion for [S]ummary [J]udgment in ruling[,] as a matter
of law[,] that the [SIC] policy was not triggered[,] and
required to exhaust[,] prior to the [CIC] umbrella policy[?]

3. Whether the [t]rial [c]ourt erred in determining that the [SIC]
policy was not obligated to reimburse the defense costs
incurred by [CIC] in the defense of Fiore and Wal-Mart in the
Peterman lawsuit[?]

Brief for Appellant at 4.

As CIC’s issues are related, we will address them together. In its first

issue, CIC contends that SIC advanced only two arguments in support of its

Motion for Summary Judgment, namely, that (1) Fiore and Wal-Mart are

additional insureds under the SIC policy with respect to bodily injury caused

in whole or in part by the ongoing operations of Da-Lyn Contractors (“Da-

Lyn”); and (2) the Amended Complaint filed in the underlying Peterman

litigation lacks any allegations of Da-Lyn’s negligence. Id. at 10. CIC

1
The trial court did not order CIC to file a concise statement of matters
complained of on appeal, pursuant to Pa.R.A.P. 1925(a).

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J-A19034-17

asserts that both of SIC’s arguments were impliedly rejected pursuant to the

trial court’s finding that the allegations of the Amended Complaint filed in

the underlying Peterman litigation sufficiently articulated proximate

causation attributable to Da-Lyn. Id. at 10-11. CIC claims that, pursuant to

the indemnification provision in the contract between Fiore and Da-Lyn, Da-

Lyn was contractually obligated to indemnify Fiore and Wal-Mart for any

bodily injury caused by Da-Lyn’s negligence. Id. at 12-14. According to

CIC, SIC does not dispute that the SIC policy, although excess over the CIC

policy, applies before the CIC umbrella policy is triggered. Id. at 16-17.

In its second issue, CIC asserts that, pursuant to the contract between

Fiore and Da-Lyn, Da-Lyn was required to obtain commercial general liability

coverage with a personal and advertising injury limit of $1 million, and that

the SIC policy was, therefore, the primary coverage under the contract

between Fiore and Da-Lyn. Id. at 18.2 CIC claims that the contract

between Fiore and Da-Lyn also required that “[a]ll insurance must contain

an endorsement that the insurance coverage is primary to that of Wal-

Mart’s[,] and that Wal-Mart’s policies are excess.” Id. (quoting Exhibit C to

the Da-Lyn/Fiore Contract). CIC argues that, after the CIC policy was

exhausted during settlement of the Peterman lawsuit, the SIC policy should

2
CIC further asserts that, pursuant to the contract between Fiore and Da-
Lyn, Da-Lyn was also required to obtain umbrella liability coverage with a
limit of $3 million, but failed to do so. See Brief for Appellant at 18.

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J-A19034-17

have been exhausted before the CIC umbrella policy was triggered. Id. at

19. CIC contends that, in ruling that the SIC policy was excess over the CIC

umbrella insurance policy, the trial court failed to compare the language of

the SIC policy to the language of the CIC umbrella policy regarding the order

in which the policies were required to exhaust. Id. at 17. Specifically, CIC

points to the “Other Insurance” clause in the CIC umbrella policy, which

states as follows:

The insurance provided by this Coverage part is excess over any
other valid and collectible insurance, other than insurance
written specifically to be excess over this insurance, and shall
not be contributory.

Id. at 19 (quoting the CIC Umbrella Policy, Form US 101 UM 10 02, at p.

14). CIC asserts that, in ruling that the SIC policy was excess to the CIC

umbrella policy, the trial court relied exclusively on the “Blanket Additional

Insured” form included in the SIC policy, which reads as follows:

This coverage shall be excess with respect to the person or
organization included as an additional insured by its provisions:
any other insurance that person or organization has shall be
primary with respect to this insurance, unless this coverage is
required to be primary and not contributory in the contract,
agreement or permit referred to above.

Id. (quoting the SIC Policy, Blanket Additional Insured Form). CIC claims

that after the $1 million limit under the CIC policy was exhausted, the SIC

policy should have applied, pro rata, with the CIC umbrella policy until the

Peterman settlement was fully paid. Id. at 22. CIC argues that, because

Fiore and Wal-Mart are additional insureds under the SIC policy, the costs of

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J-A19034-17

defending them, as incurred by CIC, qualify as recoverable “damages” under

the SIC policy. Id. Finally, CIC contends that the contract between Fiore

and Da-Lyn is an “insured contract” under the SIC policy, and is not subject

to the contractual liability exclusion contained therein. Id.

In its third issue, CIC contends, in the alternative, that if the trial

court’s Order granting summary judgment in favor of SIC is affirmed, “there

must also be a finding that Da-Lyn’s insurance coverage with [SIC] is

primary and contributory over the coverage afforded to Wal-Mart.” Id. at

25.

We review orders granting summary judgment under the following

standard:

Summary judgment is proper only when the pleadings,
depositions, answers to interrogatories, admissions and
affidavits and other materials demonstrate 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 non[-]
moving 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.

Wall Rose Mut. Ins. Co. v. Manross, 939 A.2d 958, 962 (Pa. Super. 2007)

(citations omitted). When considering an order granting summary judgment

in the context of a declaratory judgment action, our scope of review is

plenary. Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial

Union Ins. Co., 908 A.2d 888, 895 (Pa. 2006). We will reverse the order of

the trial court only if we find that an error of law or an abuse of discretion

-5-
J-A19034-17

has occurred. Id. “The test is not whether we would have reached the

same result on the evidence presented, but whether the trial court’s

conclusion can reasonably be drawn from the evidence.” Nationwide Mut.

Ins. Co. v. Cummings, 652 A.2d 1338, 1341 (Pa. Super. 1994).

In its Opinion, the trial court addressed CIC’s issues, set forth the

relevant law, and determined that the issues lack merit. See Trial Court

Opinion, 12/23/16, at 4-10. As we discern no abuse of discretion or error of

law in the trial court’s analysis, we affirm its Order on this basis. See id.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/18/17

-6-
 Circulated 09/22/2017 03:24 PM

RECEIVED
OEC '2 2 101i
IN THE COURT F COMMON PLEAS OF PHILADELPHIA COUNTY
ROOM 521
FIRST UDICIALDISTRICT OF PENNSYLVANIA
TRIAL DIVISION-CIVIL

THE CINCINNATI INSURANCE COMPANY December Term, 2014

lain tiff Case No. 00175

v. Commerce Program

SELECTIVEINSURANCE OMPANYOF SOUTH CAROLINA
and
DAVID PHILLIPS d/b a/ DA-LYN CONTRACTORS Control Nos.

De endants 16062587, 16072073.

ORDER

AND Now, this ------1,_.~---·~_.-_,_,(
__ day of December, 2016, upon consideration

of the motion for summary udgment of defendants Selective Insurance Company of

South Carolina and David P illips d/b/a/ Da-Lyn Contractors, the cross-motion for

summary judgment of plain iff, The Cincinnati Insurance Company, the respective

answers in opposition, and he memoranda of law, it is ORDERED as follows:

I. The motion for sum ary judgment of defendants is GRANTED.

II. The motion for sum ary judgment of plaintiff, The Cincinnati Insurance

Company, is DENIED

DOCKETED
OEC 2 3 LOH~
R POSTEL.1•
COMMERCE rE·~,c:;·.;;:.:'-.Ji

The Cincinnat lnsuranc-WSJDM

111111111111111111111
14120 17500050
111111111
COPIES SENT PURSUANT TO Pa.R.C.P. 236 b) R. POSTELL 12/23/2016
 IN THE COURT F COMMON PLEAS OF PHILADELPHIA COUNTY
FIRST UDICIAL DISTRICT OF PENNSYLVANIA
TRIAL DIVISION-CIVIL

THE CINCINNATI INSURANCE COMPANY December Term, 2014

laintiff Case No. 00175

v. Commerce Program

SELECTIVEINSURANCE OMPANYOF socrn CAROLINA
and
DAVID PHILLIPS d/b a/ DA-LYN CONTRACTORS Control Nos.

De endants 16062587, 16072073.

MEMORANDUM OPINION

This is a declaratory udgment action arising out of a catastrophic accident which

occurred at a construction s te. The instant cross-motions of summary judgment

require the Court to determ ne whether a policy of insurance obtained by a

subcontractor was a prima policy or an excess policy with respect to any insurance

obtained by the general con ractor. For the reasons below, the Court finds that the

policy of insurance obtaine by the subcontractor was an excess policy.

BACKGROUND

Plaintiff, Cincinnati nsurance Company ("Cincinnati"), is licensed to issue

insurance policies in Penns lvania.1 Defendant Selective Insurance Company,

("Selective") is also licensed to issue insurance policies in Pennsylvania.s Defendant

David Phillips, d/b/a/ Da- Contractors C'Da-Lyn"), is a company engaged in the

1 Admission of plaintiff Cincinnat , complaint, ,i 4.
2
Admission of defendant Selecti e, answer to complaint, ,1 5.
1
construction trade. A non- arty to this action, Mr. Jody Peterman ("Peterman"), was an

employee of Da-Lyn in the ourse of a project at a Wal-Mart construction site. Another

non-party to this action, Le nard S. Fiore, Inc. ("Fiore"), is a corporation engaged in the

construction trade.

Pursuant to the term of a "Prime Contract," Fiore operated as a manager or

general contractor during c nstruction work at a "Wal-Mart" store. The Prime Contract

between Fiore and Wal-Ma t contained a provision requiring Fiore to indemnify Wal-

Mart from damages arising out of the actions or omissions of Fiore in the pursuit of its

duties as manager or gener 1 contractor.e At all times relevant to this action, Da-Lyn

operated as a subcontracto of Fiore, pursuant to the terms of a "Subcontract" dated

July 22, 2008.4 The Subco tract between Fiore and Da-Lyn also contained an

indemnification provision f r the benefit of Fiore. s

While acting as man ger or general contractor under the Prime Contract, Fiore

was under two layers of ins ranee protection: a commercial general liability policy and a

commercial umbrella liabili y policy, both of which had been issued by Cincinnati under

the same policy number, C P-089-36-36/CPA (respectively, the "Cincinnati Primary

Policy" and the "Cincinnati mbrella Policy").6 At all times relevant to this action,

defendant Da-Lyn was insu ed under a commercial general liability policy which had

been issued by defendant S lective, No. S-139960104 (the "Selective Policy").7

3
Prime Contract (Construction greement Between Owner and Contractor), Exhibit E to the motion for
summary judgment of Cincinnati motion control No. 16072073, Article 13.1.
4 Subcontract between Fiore and a-Lyn, Exhibit G to the motion for summary judgment of Cincinnati,
motion control No. 16072073.
s Id., 1! 13.
6
Cincinnati Primary Policy, Exhi it A to the motion for summary judgment of Cincinnati, motion control
No. 16072073; Cincinnati Umbre la Policy, Exhibit B to the motion for summary judgment of Cincinnati,
motion for summary judgment, otion control No. 16072073.
7 Selective Policy, Exhibit C to th motion for summary judgment of Cincinnati, motion control No.
16072073.

2
 On October 8, 2008 eterman fell from a ladder while working under Da-Lyn at

the Wal-Mart construction ite.s In April 2010, Peterman filed a lawsuit against Wal-

Mart, Fiore, and other defe dants, in the Court of Common Pleas, Philadelphia County

(the "Underlying Action").> In the amended complaint, Peterman inter alia alleged that

"as a direct and proximate esult of the carelessness, negligence and wrongdoing of

defendants ... [Peterman] .. suffered the functional loss of the lower part of his body.v=

Defendant Da-Lyn, as thee ployer of Peterman, was not a named party in the

Underlying Litigation.»

On June 15, 2010, Ci cinnati, on behalf of Fiore, claimed indemnification from

Selective, insurer of Da-L . On September 24, 2010, Selective replied to the claim for

indemnification and admitt d that Fiore was an additional insured underthe Da-Lyn

policy. However, Selective lso asserted that it had no obligation to provide a defense to

Fiore in the Underlying Liti ation. This letter specifically stated:

We have had n opportunity to review the contract [between
Fiore and Da- yn] and our policy. The contract does state
that Leonard . Fiore Inc. shall be named as an additional
[Selective] policy; however, the contract does
ur insured's [Da-Lyn's] policy shall be
primary. We cknowledge Leonard S. Fiore, Inc. as an
Additional In ured on our insured policy; however, it would
only be an ad itional insured on an excess basis.

***
To [sjummari e ... Fiore ... is an additional insured under the
Selective [P]o · cy, but only on an excess basis, and only with
respect to bod ly injury or property damage caused in whole

8 Inspection Narrative, the U.S. epartment of Labor, Occupational Safety and Health Administration
· ("OSHA"), p. 2, Exhibit I to them tion for summary judgment of Cincinnati, motion control No.
16072073.
9 Underlying Litigation: complai t, ,Jody Peterman v. Wal-Mart Stores. Inc .. Leonard S. Fiore et al.
Exhibit B to the motion for sum ary judgment of Selective, motion control No. 16062587.
JO Id., ii 34.
11 Id,, at caption.

3
 or in part by ur insured's ongoing operations. Accordingly,
since Selectiv is an excess carrier we have no obligation to
provide a def nse to ... Fiore ... in connection with [the
Underlying L'tigation].12

Subsequent to Selec ive's refusal to defend Fiore, Cincinnati settled the

Underlying Action and pai on behalf of Fiore and Wal-Mart the "per occurrence limit

of liability" under the Cinci nati Primary Policy, as well as a portion of the limit of

liability under the Cincinna i Umbrella Policy.» On November 26, 2014, Cincinnati

commenced the instant dee aratory judgment action and filed a complaint against

defendants Selective and D -Lyn, In the course oflitigation, this Court granted three

extensions to the case-man gement deadlines. On June 20, 2016, defendants Selective

and Da-Lyn filed a motion r summary judgment, and, on July 18, 2016, plaintiff

Cincinnati filed its cross- otion for summary judgment. The motion and cross-motion

have been fully briefed and re ripe for a decision.

DISCUSSION

Before addressing th issues presented by the cross-motion for summary

judgment, the Court notes t

[t]he proper c nstruction of an insurance policy is resolved
as a matter of aw in a declaratory judgment action .... The
Declaratory J dgments Act may be invoked to interpret the
obligations of he parties under an insurance contract,
including the uestion of whether an insurer has a duty to
defend and/ o a duty to indemnify a party making a claim
under the poli y.14

A court s first step in a declaratory judgment action

12 Letter dated September 24, 201 , from Selective to Cincinnati, Exhibit J to the motion for summary
judgment of Cincinnati, control o. 16072073, pp. 2-3.
13
Motion for summary judgment f Cincinnati, at~~ 31-33; admission of Selective at~~ 31-33 in its
response in opposition, motion c ntrol No. 16072073. The trial worksheet for the Underlying Action,
dated October 22, 2012 at Docket No. 1004-03751, shows that the case was settled "prior to assignment
for trial."
4 QBE Ins. Corp. v. Walters, 201 Pa. Super. 205 (Sept. 9, 2016).
1

4
 concerning i surance coverage is to determine the scope of
the policy's c verage ... .15

The q estion of whether a claim against an insured is
potentially co ered is answered by comparing the four
corners of th insurance contract to the four corners of the
complaint.w

If the omplaint against the insured avers facts that
would suppo t a recovery covered by the policy, then
coverage is tr ggered and the insurer has a duty to defend
until such ti e that the claim is confined to a recovery that
the policy do snot cover. The duty to defend also carries
with it a cond tional obligation to indemnify in the event the
insured is hel liable for a claim covered by the policy ....
Although the uty to defend is separate from and broader
than the duty to indemnify, both duties flow from a
determinatio that the complaint triggers coverage.w

I.

In their motion for s mmary judgment, defendants Selective and Da-Lyn assert

that Fiore and Wal-Mart, t ough additional insureds, have no coverage under the

Selective Policy because th amended complaint in the Underlying Action failed to allege

proximate causation as req ired to trigger coverage.i" Specifically, Selective argues that

Peterman's amended comp aint lacked any allegation of negligence attributable to Da-

Lyn; therefore, Selective co eludes that without any allegations of proximate causation

attributable to Da-Lyn, no overage could be triggered in favor of Fiore under the

Selective Policy.19 Opposin this argument, Cincinnati asserts that Peterman's amended

complaint did allege neglig nee attributable to Da-Lyn; consequently, the Underlying

5
Action sufficiently averred roximate causation under the Selective Policy.sv To decide

this issue, the Court turns t the pertinent language in the amended complaint filed by

Peterman in the Underlyin Action. The amended complaint stated as follows:

,i 27. At all t mes material hereto, plaintiff Jody Peterman
was an emplo ee in the course and scope of his relationship
with Da-Lyn onstruction which was under contract with
owners [Wal- art] and defendants [including Fiore,] for the
general const uction and/or repair of the aforesaid [Wal-
Mart] buildin .

,i 28. At all t mes material hereto, Defendants [such as
defendant Fi re] failed to insure that safety procedures were
being followe by all contractors and subcontractors to
minimize the azards related to the use of scaffolding and/or
ladders in cle r violation of safety regulations.

,i 29. On Oc ober 7, 2008, Plaintiff Jody Peterman was
attempting to descend from a ... scaffold using a portable
aluminum ex ension ladder, when the extended portion of
the ladder sliijped downward ... causing the ladder and
Plaintiff, Jody Peterman, to fall approximately 24 feet to the
ground result ng in serious and permanent bodily injuries.

,i,i 33-34. a direct and proximate result of the
carelessness, egligence and wrongdoing of defendants ...
Jody Peterma suffered fractured ribs ... sternum ... scapula,
punctured lu gs and a Tm -11 burst fracture resulting in
paraplegia.... 1

The language contai ed in Peterman's amended complaint leaves no doubt: in

the Underlying Action, Pet rman sufficiently alleged that Fiore's subcontractors, which

included Da-Lyn, had faile to adopt safety procedures related to the use of scaffolds

20 Response of Cincinnati in opp sition to the motion for summary judgment of Selective, ,i,i 52-57,
motion control No. 16062587.
~1 Underlying Litigation: amende complaint at ,128, ,Jody Peterman v. Wal-Mart Stores. Inc .. Leonard S.
Fiore et al. Exhibit B to the moti n for summary judgment of Selective, motion control No. 16062587
(emphasis supplied).

6
and ladders during work a the Wal-Mart construction site. The amended complaint in

the Underlying Action also sufficiently alleged that Peterman had suffered bodily

damage, including fractur d bones and paraplegia, all of which were proximately caused

by the alleged negligent ac rs or by the negligent omissions of Fiore and its

subcontractors, including a-Lyn. For this reason, the court finds that the amended

complaint in the Underlyi g Action sufficiently articulated proximate causation

attributable to Da-Lyn.

II. The Selective Pol c is excess to the Cincinnati Primar and Umbrella
Policies.

In the motion for su mary judgment, Selective asserts that its policy was excess

to both the Cincinnati Pri ary Policy and the Cincinnati Umbrella Policy. Selective

concludes that as an excess carrier, it was not required to pay for the defense in the

Underlying Action. Selecti e also concludes that it has no obligation to indemnify

Cincinnati because the sett ement with Peterman did not exhaust the primary insurance

limits under the two Cincinl ati policies. Selective relies on the language of its policy in

support of this argument. irst, Selective calls attention upon the following provision in

its policy:

WHO rs AN r SURED is amended to include as an additional
insured any p rson or organization with whom you [Da-Lyn]
have agree in writing in a contract, agreement or
permit that uch a person or organization be added as an
additional ins red on your policy. Such person or
organization i an additional insured only with respect to
liability for "b