On the Pulse...Marshall Dennehey Is Happy To Celebrate Our Recent Appellate Victories

Kimberly Boyer-Cohen (Philadelphia, PA) and John Hare (Philadelphia, PA) successfully obtained an affirmance from the Pennsylvania Superior Court of a jury verdict for the defendant insurer in an insurance coverage case. The insurer had denied the plaintiff's claim for coverage after his boat was destroyed by fire. In denying coverage, the insurer concluded that the plaintiff was responsible for the fire and that he had made material misrepresentations concerning his whereabouts at the time of the fire. In its Answer to the plaintiff's Complaint, the insurer admitted that the plaintiff owned the boat. Less than two weeks before trial, however, the insurer uncovered evidence suggesting that the plaintiff did not own or have an insurable interest in the boat. The insurer did not move to amend its Answer, and trial proceeded. The jury ultimately concluded that the insurer lacked a sufficient basis for denying coverage based on arson and misrepresentation, but it found that the plaintiff lacked an insurable interest in the boat. A defense verdict was, therefore, entered. Kim and John became involved in post-trial motions and successfully amended the insurer's Answer to deny ownership. The plaintiff then appealed, arguing that the insurer's failure to disclose the lack-of-insurable-interest defense prior to trial resulted in a "trial by ambush," especially where the insurer had admitted ownership in its Answer. The Superior Court upheld the verdict on the basis that it was the plaintiff's own conduct that prevented the insurer from uncovering the lack-of-insurable-interest defense until shortly before trial. The Superior Court further held that the plaintiff could not have been prejudiced by the defense because it was part of the plaintiff's own burden of proof to demonstrate an insurable interest. Finally, because the plaintiff's own conduct prevented the insurer from uncovering the defense, and because the plaintiff suffered no prejudice from the defense, the Superior Court ruled that the trial court had properly allowed the insurer to amend its Answer after trial to conform to the trial evidence. Galati v. Windsor Mt. Joy Mutual Insurance Company, 3294 EDA 2009 (Pa. Super. 2010).

Audrey Copeland (King of Prussia, PA) succeeded in obtaining the Superior Court's affirmance of a grant of preliminary objections secured by Edwin Schwartz (Harrisburg, PA) in favor of the defendant law firm, which was corporate counsel for High Spec, Inc., a Florida corporation, and also allegedly personal counsel for plaintiff, approximately two dozen years ago. The case arose out of underlying litigation between the plaintiff and the defendant Estate involving High Spec. This suit has spun off numerous federal and state lawsuits. The Superior Court concluded that the trial court's dismissal of the amended complaint as factually and legally insufficient was proper and adopted its opinion which related that the complaint failed to set forth "even the most fundamental claims of negligence;" contained no mention of a duty, breach of duty or damages caused by such a breach; failed to plead facts sufficient to support a conversion claim; did not satisfy the elements of a breach of contract claim; and failed to set forth a viable claim for punitive damages. Further, the trial court's observation that the defendants raised the statute of limitations, res judicata and collateral estoppel to underscore the futility of allowing the amendment of the complaint was harmless error. Robert M. Mumma, II v. Boswell, Tinter, Piccola and Wickersham, et al, No. 1823 M.D. 2009 (Pa. Super., October 14, 2010). The Superior Court has since denied reargument/reconsideration.

Audrey Copeland (King of Prussia, PA) and Edwin Schwartz (Harrisburg, PA) were similarly successful in convincing the Third Circuit Court to affirm the District Court's order granting a defendant law firm's F.R.C.P. 12(b)(6) motion to dismiss a suit filed by the plaintiff against the firm and several other defendants, alleging that he was cheated out of loan monies and that his Fifth and Fourteenth Amendment due process rights were violated. The suit was properly dismissed because the claims were barred by Pennsylvania's two-year statute of limitations in that the plaintiff knew or should have known all of the facts needed to bring suit against the defendant law firm, which had represented some of the other defendants in an earlier action in Florida. Mere allegations of fraud do not eradicate the statutory times on claims arising from fraud, and the defendant's action (involving petitioning the Florida court on behalf of its clients) was not a "new violation" but, rather, a perpetuation of the original alleged due process violation, and the plaintiff was aware of the violation, which involved an alleged forgery of an agreement when it occurred. Robert M. Mumma, II v. High Spec, Inc. et al, No. 09-4667 (3rd Cir., November 5, 2010). The Third Circuit subsequently denied rehearing.

Walter Kawalec (Cherry Hill, NJ) won a decision in the New Jersey Appellate Division upholding a dismissal of an action for damages by a 16-year-old plaintiff who was struck by a car while riding his bicycle. The appellate panel held that the plaintiff, who at the time of the accident was covered under an auto insurance policy that contained the limitation-on-lawsuit option, failed to show that the scars he now has as a result of the accident constitute significant disfigurement or significant scarring sufficient to vault the limitation of liability threshold or that his dental injuries - one implant and composite bonding - constitute a permanent injury since he failed to show that his teeth no longer function properly. Sharp v. Steriotis, A-3062-09T2 (2010).

Audrey Copeland (King of Prussia, PA) successfully persuaded the Commonwealth Court to affirm the decision of the Insurance Commissioner who held that the carrier's (a Texas domiciled reciprocal insurance company that provided insurance to active, retired and separated military personnel and their dependents) refusal to write an insurance policy for the petitioner did not violate Act 68, 40 P.S. §§991.12001-991.2013. The carrier was permitted to decline to write a policy on the basis that the petitioner did not meet its membership guidelines because this reason was not specifically prohibited by Section 2003(a) and the carrier supplied the petitioner with written notice of refusal to write. The court rejected the petitioner's argument that this was a "cancellation" case and that Act 68 was violated because "his" insurance policy had been cancelled. The record revealed that the petitioner had, in fact, been added to his wife's policy (who was initially an assigned risk) upon their marriage and then removed after they separated because the policy did not cover non-resident spouse operators, and that the policy was never cancelled but, rather, continued with the wife as the policyholder. The court also rejected the petitioner's assertion that he became a policyholder by making premium payments and because of the styling of his name on the insurance packet and financial responsibility card (as a "named insured") and his "general expectations." There was only one policy and one policyholder, the petitioner's estranged wife; thus, any coverage enjoyed by the petitioner as an operator derived solely as a result of his status as the policyholder's spouse, and nothing in Act 68 (which was designed to regulate carriers' conduct with regard to policies of insurance not individual insureds) required the carrier to continue to insure the petitioner. Robbins v. Insurance Department, No. 1860 CD 2009 (Pa. Cmwlth., December 3, 2010).

Defense Digest, Vol. 17, No. 1, March 2011