Insurance Agents & Brokers Liability

The Pennsylvania Superior Court recently affirmed the Philadelphia County Court of Common Pleas’ dismissal of breach of contract claims asserted against an insurance broker in Thuong Erin Wasielewski, Individually and as Administratrix of the Estate of Thuong D. Nguyen, Deceased v. Goebel Insurance Agency, Inc. and Christopher Goebel, 2025 WL 66728. Marshall Dennehey attorneys Dana Gittleman and Timothy Ventura represented the defendants, Goebel Insurance Agency, Inc. and Christopher Goebel, in the trial court action, and appellate attorney Carol Vanderwoude handled the appellate briefing and argument. 

The Philadelphia County Court of Common Pleas granted the defendants’ motion for judgment on the pleadings, which was premised on the expiration of the statute of limitations before the plaintiff initiated suit. On appeal, the Superior Court of Pennsylvania affirmed the decision, finding that the plaintiff’s claims were time-barred based on the date(s) on which the plaintiff was notified of a lack of coverage and, resultantly, a potential claim against the defendants. 

The case arose from an underlying wrongful death lawsuit, Thuong Erin Wasielewski v. Lee’s Café & Bistro and Lee’s Café & Bistro, LLC, d/b/a Lee’s Café & Bistro, Lee Hung, Wong Family Investment, LLC and Wong Family Investment (wrongful death action) and a related declaratory judgment lawsuit, Erie Insurance Exchange v. Lee’s Café and Bistro, LLC, Lee Hugh a/k/a Lee Quach and Thuong Erin Wasielewski (declaratory judgment action). The instant matter was initiated by a complaint filed on July 27, 2022.

On March 2, 2018, the wrongful death action was initiated, alleging wrongful death, premises liability and negligent security against a restaurant, Lee’s Café & Bistro, LLC, for an employee’s (plaintiff-decedent Nguyen’s) March 3, 2016, murder at the business premises. Lee’s Café tendered its defense for the wrongful death action to its insurer, Erie Insurance Exchange, which had issued a commercial general liability and property insurance policy procured by the defendants. On June 13, 2018, Erie filed the declaratory judgment action, seeking a declaration that it did not owe a defense and/or indemnity to Lee’s Café for the wrongful death action pursuant to the employer’s liability exclusion. On May 8, 2019, Erie filed a motion for summary judgment in the declaratory judgment action, which was granted on November 15, 2019. Accordingly, Erie was determined not to have a duty to defend or indemnify Lee’s Café in the wrongful death action. Prior to the trial of the wrongful death action, the owner and operator of Lee’s Café, and Lee’s Café entered into a settlement agreement and covenant not to enforce with the plaintiff, agreeing to settle the claims in the wrongful death action and assigning their rights against the defendants to the plaintiff.

The Erie policy was issued pursuant to an application and supplemental application signed by Ms. Chung on December 23, 2014, which—along with the policy itself—identified the scope of coverage provided, i.e. commercial general liability and property protection. The policy coverages did not include workers’ compensation, and the exclusion at issue, employer’s liability exclusion, was unambiguously disclosed in the Erie policy. 

On April 22, 2016, upon receipt of Lee’s Café’s notice of claim on March 4, 2016, Erie issued a reservation of rights letter, outlining potential grounds for disclaiming coverage and stating that the injuries to employees were excluded under the policy; thus, decedent Nguyen’s injury would be precluded. Erie advised Lee’s Café that it “may want to notify [its] Workers’ Compensation insurance carrier of this loss.” On May 16, 2016, Erie reiterated its coverage position under the subject Erie policy. Thus, as of April 22, 2016, and May 16, 2016, Lee’s Café knew of a potential coverage issue regarding the Nguyen claim under the Erie policy and that it did not have workers’ compensation insurance under the Erie policy. Further, on November 1, 2016, Lee’s Café signed a State Workers’ Insurance Fund application, stating the business did not have previous workers’ compensation insurance coverage in Pennsylvania. On April 20, 2018, Erie issued a denial letter, disclaiming coverage for the wrongful death action, citing the employer’s liability exclusion.

The trial court held the plaintiff’s breach of contract claims arising out of the defendants’ alleged failure to obtain “all necessary coverages,” including liability coverage for the employees of Lee’s Café that would have covered the March 3, 2016, loss, were time-barred by the applicable four-year statute of limitations. Defendants’ counsel raised several instances of notice of the alleged loss (no insurance coverage) including: December 2014 policy application and inception; December 2015 policy renewal; April 22, 2016, and May 16, 2016, coverage denial letters; April 20, 2018, Erie denial letter; and June 13, 2018, declaratory judgment action.

The trial court judge identified the dates plaintiff’s cause of action potentially accrued, all of which were more than four years prior to the inception of the instant lawsuit against Defendants on July 27, 2022. The court further rejected plaintiff’s argument that the claims did not accrue until after Erie won summary judgment in the declaratory judgment action (when Lee’s Café allegedly sustained an “actual injury”), despite the several times preceding that date when Lee’s Café was put on notice that employees were not covered under the Erie policy. The court further rejected plaintiff’s argument that Lee’s Café could not bring the suit against Defendants while Erie was providing a defense in the wrongful death action. 

On appeal, the Pennsylvania Superior Court found no error by the trial court, reiterating that the loss for which coverage was sought was the March 3, 2016, murder. Moreover, as of June 14, 2018, when Erie denied coverage, all necessary elements were present to trigger a potential breach of contract claim against the defendants. The Superior Court found the breach occurred in December 2015, when the defendants allegedly failed to follow instructions and procured a policy other than that which they had been contracted to procure, and the loss occurred on March 3, 2016. At the time Erie denied coverage in June 2018, “Defendants became liable to [Lee’s Café] for breach of contract.” The court further commented that Lee’s Café failed to allege facts to show that it did not know of the alleged injury on June 14, 2018, when Erie filed the declaratory judgment action. This June 2018 filing date served as the latest discovery date of the plaintiff’s purported injury, and the statute of limitations for a breach of contract claim against the defendants arising from the procurement of the Erie policy expired on or about June 14, 2022. 

The Superior Court’s ruling clarifies and expands the general dearth of case law regarding the commencement of the statute of limitations applicable to claims against insurance brokers. Indeed, where, as here, there are multiple potential dates of notice or “discovery” pursuant to the discovery rule, the commencement date is, at the latest, the date a declaratory judgment action or other definitive coverage denial notification is tendered to the plaintiff. 

This decision is meaningful for insurance brokers, and the attorneys who defend them, as it sets forth a bright line test for suit preclusion in a currently ambiguous legal landscape. Further, the decision outright rejects the plaintiff’s theory that the claim did not accrue until Erie prevailed in the declaratory judgment action, a formality given that Erie’s coverage position was staunchly established by its reservation of rights and denial letters which preceded the declaratory judgment action filing. 

Insurance brokers should remain vigilant when an insurance customer’s claim is denied by the carrier and monitor any related coverage litigation. Doing so can assist in developing procedural defenses to a subsequent professional negligence claim asserted against the insurance professional, as well as substantive grounds for potential causation defenses.  

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_{Legal Update for Insurance Agents & Brokers - February 2025, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}