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Swartz Campbell LLC

October 2007

REARGUMENT GRANTED IN SACKETT

On October 16, 2007, the Pennsylvania Supreme Court granted the Application for Reargument filed by Nationwide Mutual Insurance Company in Sackett v. Nationwide Mut. Ins. Co., 519 Pa. 416, 919 A.2d 194 (2006). The Court held that the addition of a vehicle (not a replacement) to an auto policy invalidates all existing uninsured and underinsured motorist stacking waivers requiring that a new waiver be executed for all vehicles. The decision created administrative nightmares for auto insurers in Pennsylvania. A Petition for Reargument was filed. In an unprecedented move, the Supreme Court requested an amicus filing from the Insurance Department. The Court has now agreed to reconsider its decision. Justice Baldwin, the author of the original decision, dissented. A ruling is expected before the end of the year. Swartz Campbell LLC attorneys are co-counsel for the Nationwide Mutual Insurance Company in this matter. Click for a full copy of the Order and Dissenting Statement.

TWO-YEAR STATUTE OF LIMITATIONS FOR BAD FAITH ACTIONS

In Ash v. Continental Ins. Co., 2007 Pa. LEXIS 2139 (Oct. 11, 2007) the Supreme Court held that a §8371 bad faith action is subject to the two year statute of limitations. Following a July 2000 fire, the insureds filed a notice of loss which the insurer denied on November 21, 2000. On May, 3, 2002 insureds filed a complaint against their insurer alleging breach of contract. On June 23, 2003, insureds sought to amend their complaint to include an action under Pennsylvania’s bad faith insurance statute, 42 Pa. C.S. §8371. The Supreme Court agreed with the lower courts, finding that an action under §8371 is a statutorily-created tort action subject to the two-year statute of limitations under 42 Pa. C.S. §5524. Click here for a full copy of the decision.

VALIDITY OF UIM WAIVER

In Erie Ins. Exch. v. Grady, No. 05-10198, the Court of Common Pleas of Butler County held that the insurer had no obligation to provide underinsured motorist benefits of $500,000.00 to the estates of the decedents since such coverage had been waived. The administrator of the estates, the son of the decedents, challenged the propriety of the waiver. The waiver was originally signed and dated by the first named insured. After claim was made for coverage, the agent, who had retained the original waiver, added various information to the form; i.e. policy number, printed name of insured, etc. to assist the insurer in identifying the waiver as pertaining to the particular policy. The administrator contended that the modifications to the form rendered it invalid. The Court disagreed, finding the waiver form to be identical to the form mandated by the Financial Responsibility Law. The additional identifying information did not invalidate the waiver. Swartz Campbell LLC attorneys represented the insurer. Click here for a full copy of the decision.

UIM BENEFITS DENIED TO NON-RESIDENT MINOR

In Erie Ins. Exch. v. Weryha, 2007 Pa. Super 247, 2007 Pa. Super. LEXIS 2608 (August 20, 2007), the Superior Court held that because an insured’s minor child was neither a named insured nor resided with his father the insured, he was not entitled to underinsured motorist benefits. At the time of the accident, father and mother were separated. Mother had full custody of the child. The child did not go to school near father’s residence and did not regularly spend the night with his father. Father argued that because the child was unmarried and unemancipated he was a resident relative under the policy. The Court rejected this argument. The Court found that, based on the facts of the case, the child did not reside with the father at the time of the accident and thus was not considered a relative insured under the policy. Click here for a full copy of the decision.

ASSAULT AND BATTERY NOT COVERED

In Whiskey Tango, Inc. v. United States Liability Ins. Gp., 2007 Phila. Ct. Com. Pl. LEXIS 157, Judge Bernstein of the Court of Common Pleas of Philadelphia County held that a liquor liability policy which did not exclude coverage for assault and battery did not, nonetheless, provide coverage for injuries sustained in an altercation in a bar since the Complaint in the tort action did not allege that the incident was related to the sale, service, or furnishing of alcoholic beverages. The Court found that claims arising from an assault and battery would be covered only if the claim involved the sale or service of alcohol. Swartz Campbell LLC attorneys represented USLIG in this declaratory judgment action. Click here for a full copy of the decision.

PRODUCTS-COMPLETED OPERATIONS HAZARD EXCEPTION DOES NOT APPLY IN NEGLIGENT FAILURE TO WARN CASES

In Bombar et. al. v. West American Ins. Co. et. al., 2007 Pa. Super. 222, 2007 Pa. Super. LEXIS 2171 (July 26, 2007) the Superior Court held that injuries sustained as a result of insured’s failure to warn of the consequences of disconnecting a forklift alarm were not excluded under its’ commercial general liability policy. Bombar was severely injured by a forklift sold and serviced by Upright Material Handlings, Inc. (“Upright”). After the sale, Upright installed an alarm on the forklift. Thereafter, Bombar’s employer requested that the alarm be disconnected. Upright did not provide Bombar’s employer with any warnings about disconnecting the forklift. Upright was insured under a commercial general liability policy issued by Ohio Casualty Company (West American was a subsidiary of Ohio Casualty and was determined to be the proper defendant). The policy contained an “Exclusion Products-Completion Operations Hazard Exception” which stated, in relevant part, that the insured is not covered for “bodily injury or property damage which occurs away from the premises that the insured owns or rents and arises out of your product or your work.” The Court found that the exclusion consisted of two parts: a products liability exclusion and a completed operations hazard exclusion and that neither part of the exclusion barred coverage in this case. First, the Court determined that because Bombar’s claim rested on the theory of negligent failure to warn and not products liability, the products liability exclusion could not apply. Second, the Court found that since no warnings had ever been given by Upright about disconnecting the alarm, the service of the forklift had never been completed and thus this portion of the exclusion also did not apply. As the exclusion was not applicable, West American breached its duty to defend and indemnify Upright in this matter and thus was liable for bad faith. The dissent argued that the majority’s holding was in opposition to its previous decision in Harford Mutual Ins. Co. v. Moorhead, 578 A.2d 492 (Pa. Super. 1990) and warned that under the majority’s holding, a failure to warn claim could never be excluded from coverage in a commercial general liability policy. Click here for a full copy of the decision.

CERTIFICATE OF MERIT NOT REQUIRED ABSENT PROFESSIONAL DUTY

In Merlini v. Gallitzin Water Authority, 2007 Pa. Super. 274, 2007 Pa. Super. LEXIS 2681 (August 29, 2007), the Superior Court held that a property owner does not need to file a certificate of merit to sue engineers as the owner and the engineers did not have a professional relationship and the owner’s claims did not raise questions of professional judgment beyond the realm of common knowledge. In her Complaint, the property owner alleged that the engineers improperly installed a water pipe and deprived her of the full use of her property. The Court held that these allegations did not allege professional negligence but rather common law negligence. The Court further noted that professional judgment was not required to determine the location of the property and the right of way. As such, an expert would not be required to explain the existence of a breach of the engineers’ duty not to trespass on the subject property. Click here for a full copy of the decision.

JURY OF LESS THAN TWELVE PERMISSIBLE ONLY WHEN ALL PARTIES CONSENT

In Gianni v. William G. Phillips, Inc. et. al., 2007 Pa. Super. 284, 2007 Pa. Super. LEXIS 3051 (September 12, 2007), the Superior Court held that a trial court judge can not order parties to proceed to trial with only eight jurors when one party perfected a demand for twelve jurors and objected to ruling that case would be heard by only eight. A party who properly demands a twelve person jury is entitled to a verdict from twelve persons under the Pennsylvania Constitution. Click here for a full copy of the decision.

UIM COVERAGE NOT AVAILABLE TO LISTED DRIVER

In Nationwide Mut. Ins. Co. v. Kuentzler, 2007 U.S. Dist. LEXIS 43236 (M.D. Pa. 2007), the Federal District Court held that Nationwide Mutual Insurance Company did not have any obligation to make payment of underinsured motorist benefits to the estate of the deceased son of the named insured. The insureds contended that $500,000.00 in UIM benefits were due under two separate policies since: (1) the decedent was a resident of their household; and (2) the decedent was listed as a driver on one of the household policies. The Court agreed with Nationwide Mutual Insurance Company and found that the son had not regularly resided with his father since 1996 and, at the time of the accident, was living in Ohio with his daughter and fiancée. The fact that evidence that the son kept various belongings at his parent’s home, received some mail at their residence, and further intended to return to live in the same town as his parents did not establish residency for purposes of UIM coverage. More importantly, the Court determined that the listing of the decedent as a driver on one of the household policies did not establish a right to coverage not otherwise afforded by the policy. Listing a person by name as a driver does not make that person a named insured. In addition, the Court held that Nationwide Mutual Insurance Company was not estopped from denying UIM coverage because accidental death benefits and funeral expenses had been paid under the policy in question since two requirements for estoppel, namely, inducement and prejudice, were not present. Swartz Campbell LLC attorneys represented Nationwide Mutual Insurance Company in that matter. Click here for the full copy of the decision.

INNKEEPER LIABILTY ATTACHED WHEN MOTOR LODGE FAILED TO REASONABLY ANTICIPATE HARMFUL CONDUCT DURING A PARTY ON PREMISES

In Paliometros v. Loyola et. al., 2007 Pa. Super. 242, 2007 Pa. Super. LEXIS 2572 (August 13, 2007), the Superior Court held that a motor lodge had a legal duty under the theory of innkeeper liability to a party-goer who was assaulted by another party-goer on the business’s premises. Plaintiff was a guest at a fraternity party where several underage attendees consumed alcohol. Sometime during the party Plaintiff was assaulted. The Court determined that the motor lodge should have reasonably anticipated that underage drinking could have occurred when it rented two rooms to the fraternity and that harm towards party attendees, including the Plaintiff, could occur. Thus the motor lodge had a duty to Plaintiff. The Court then found that the motor lodge breached that duty when it deviated from the standard of care of innkeepers by failing to have any employees on the premises during the party. Therefore, the motor lodge was liable to Plaintiff for her injuries. Click here for a full copy of the decision.

LISTED DRIVER NOT ENTITLED TO STACK UIM COVERAGE

In Allstate Insurance Company v. Vargas, No. 2:06-CV-3368, the United States District Court for the Eastern District of Pennsylvania held that the listing of the claimant as a driver on a personal auto policy did not entitle the claimant, without more, to underinsured motorist benefits under a personal auto policy. The claimant was injured while operating a motor vehicle owned by her fiancée, with whom she lived. Although she was listed as an additional driver on the policy, she was not listed as an insured on the declarations page. Allstate paid the claimant unstacked underinsured motorist benefits but refused to provide stack recovery. The claimant argued that she was entitled to such recovery as she was (1) an intended beneficiary of the policy; and (2) had a reasonable expectation of coverage under the policy. The Court rejected both these arguments and held that the express terms of the policy precluded her from stacked benefits as she was not the policyholder or a resident, relative or spouse of the policyholder. The Court found that the claimant did not provide any evidence to show such that either her fiancée or the insurer intended for her to be an insured driver under the policy. Furthermore, the Court explained that absent a showing of misinformation by the insurer as to the scope of coverage available under the policy, no court could determine that the claimant’s expectation of coverage was reasonable. As such evidence of misinformation was not present in this case, the claimant’s belief that she was covered was unreasonable. Swartz Campbell LLC attorneys successfully represented the insurer in this declaratory judgment action. Click here for a full copy of the decision.

RESORT'S RELEASE ENFORCED AGAINST GUEST

In Wang v. Whitetail Mountain Resort, 2007 Pa. Super. 283, 2007 Pa. Super. LEXIS 3050 (September 11, 2007), the Superior Court held that an agreement releasing a resort from injuries to a guest resulting from snow tubing was enforceable. In her Complaint, the guest alleged that she was injured as a result of a resort employee’s negligent instruction. Prior to the accident, the guest had signed the resort’s release and assumption of risk agreement, wherein she agreed to assume all risks involved in the sport of snow tubing and agreed to release the resort from any liability for injures resulting from snow tubing. The Court found this release enforceable against her. In making this determination the Court noted that the release was placed prominently in the agreement, was in large font, and explicitly stated that the guest agreed to assume the risk of activities related to snow tubing. The Court found that these factors established the guest’s particularized expression of the intent to assume all risks related to snow tubing at the resort. Click here for a full copy of the decision.

JURY INSTRUCTION ON RES IPSA LOQUITUR DENIED

In MacNutt v. Temple University Hospital, Inc. et. al., 2007 Pa. Super. 279, 2007 Pa. Super. LEXIS 3048 (September 7, 2007), the Superior Court held that evidence in this medical malpractice case did not support a res ipsa loquitur jury instruction. During surgery, patient suffered a chemical burn to the left side of his shoulder allegedly resulting in severe pain. In his Complaint, patient alleged both standard negligence as well as res ipsa loquitur, arguing that a burn of this nature would not ordinarily occur absent negligence. The Court found that the patient had not produced adequate evidence to proceed under the theory of res ipsa loquitur. During trial, the experts disagreed as to the actual cause of the patient’s injury and the patient’s actual injury. The Court determined that these material disputes precluded the patient from satisfying the factors necessary to proceed under res ipsa loquitur. As the patient had not satisfied the elements of this theory, the Court found that a jury instruction on it would have been improper. Click here for a full copy of the decision.

WRONGFUL USE OF CIVIL PROCEEDINGS BARRED IN MEDICAL MALPRACTICE CASE

In D’Elia v. Folino, 2007 Pa. Super. 286, 2007 Pa. Super. LEXIS 3090 (September 14, 2007), the Superior Court held that a physician could not pursue a wrongful use of civil proceedings action against the lawyers for a malpractice plaintiff where there was not a favorable determination of the malpractice suit. A physician brought an action for wrongful use of civil proceedings under 42 Pa.C.S. §8351 against the attorneys for a malpractice plaintiff. The physician and the malpractice plaintiff entered into a settlement agreement and mutual release. The plaintiff agreed to discontinue the malpractice suit against the physician and his partners. In return, the physician agreed to dismiss the wrongful use of civil proceedings suit against only the plaintiff. The court held that the language of the settlement prevented appellant from succeeding in the present lawsuit. Based upon the fact that the physician and the plaintiff in the underlying medical malpractice case agreed jointly to end the underlying suit in a non-litigious manner, the liability of the underlying defendant, i.e., the physician in a wrongful use of civil proceedings suit, was never determined with finality. Although there had been no monetary payment between the physician and the malpractice plaintiff, it was clear that the settlement ended the underlying suit between the physician, his partners, and the malpractice plaintiff in a non-litigious fashion. Click here for a full copy of the decision.

DISCONTINUANCE IMPROPER WHILE MOTION PENDING

In Pohl v. NGK Metals Corp., 2007 PA. Super. 306 (October 11, 2007), the Superior Court held that a discontinuance was improper at a late stage of the litigation and the claimants were not entitled to medical monitoring without establishing the requisite factors, namely significantly increased risk of contracting a serious latent illness. The claimants sought medical monitoring for chronic beryllium disease (“CBD”) as a result of alleged exposure to beryllium. The alleged exposure resulted from the claimants residing in close proximity to NGK Metals’ plant. Only those persons with a specific immune response or allergy to beryllium can develop the disease and none of the claimants exhibited same. The claimants filed a praecipe to discontinue and later that day the trial court entered an order and opinion granting NGK Metals’ Motion for Summary Judgment. The court agreed with the trial court that the discontinuance at such a late stage in the litigation and while a dispositive motion was pending would have been an abuse of discretion. The court also held that the claimants were not entitled to medical monitoring as they had not established the required factors. Click here for a full copy of the decision.

INCLUSION OF DISMISSED DEFENDANT ON VERDICT SHEET

In Rose v. Annabi, 2007 Pa. Super. 308 (October 12, 2007), the Superior Court held that a dismissed defendant in a medical malpractice case will not be included on a verdict sheet nor will a comparative negligence instruction be given to the jury where the claimant failed to produce a qualified witness to testify to the standard of care that defendant. the claimant instituted a medical malpractice suit against two doctors and a hospital alleging that their medical negligence combined to cause the claimant harm by delaying the diagnosis of colon cancer, which if found earlier, would have been more easily treated or cured. The court found that the expert testimony produced, relative to the remaining defendants, was not applicable to the standard of care of the dismissed defendant. Click here for a full copy of the decision.

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