author: BERNSTEIN, J.,

text:
    Executive Risk Indemnity Inc. v. Cigna Corporation

      C.P. of Philadelphia County,
    November Term 2004,
    no. 1495.

      Ronald P Schiller, for plaintiff.

      Peter J. Hoffman and Christopher Thomson, for defendant.

      August 18, 2006
   BERNSTEIN, J.,

This is a coverage dispute in connection with a number of federal and state class actions and individual lawsuits filed against defendant Cigna Corporation Inc. The underlying actions were resolved without trial. Plaintiff Executive Risk Indemnity Inc. seeks a declaration that no coverage is afforded and Cigna in its counterclaim seeks indemnification. Presently before the court are numerous discovery motions filed by Cigna. For the reasons discussed below, the motions are granted in part and denied in part.

BACKGROUND

Cigna operates and administers managed care organizations throughout the United States. Cigna enters into contractual agreements with designated physician and other providers who treat individuals who have become members of its managed care organization or who are employed by organizations that have entered into agreements with Cigna to serve as administrator of the employer organization’s self-funded third party health plan (Subscribers).

In or about 1999, a number of lawsuits were filed against Cigna throughout the United States in connection with the operation and administration of its managed care organizations. These Subscriber lawsuits alleged that Cigna failed to provide health care coverage based upon “medically necessary criteria” as determined by a medical professional. The Provider lawsuits alleged that Cigna failed to promptly pay Providers for medically necessary services as required under the Provider agreements. Some Provider and Subscriber lawsuits were consolidated and transferred to the Federal Judicial Panel on Multidistrict Litigation to the United States District Court for the Southern District of Florida where they were placed on one of two tracks, the Subscriber track or the Provider track. On September 26,2002, the Multidistrict Litigation Court denied class certification for the Subscriber class litigation, and on May 14,2003 the Subscriber litigation was dismissed.

Lloyds of London was Cigna’s primary professional liability insurer for the policy period of March 30,1999 through March 30, 2002 and provided the first non-captive professional liability insurance coverage to Cigna. The Lloyds policy of insurance contained a liability limit of $50,000,000, subject to a $15,000,000 self insured retention per professional liability claim.

Executive Risk entered into an insurance agreement with Cigna to participate in the first excess layer of insurance coverage for the same policy period as Lloyds. Agricultural Excess and Surplus Insurance Company (AESIC), Travelers Insurance Company, Steadfast Insurance Company, Gulf Insurance Company, ACE Bermuda Insurance Ltd. and Reliance National Insurance Company (First Excess Layer Insurers) also entered into insurance agreements with Cigna as excess insurers.

Cigna provided notice of the Multidistrict Litigation to its insurers in March 2000.

In or about February or March 2002, plaintiff Executive Risk and Cigna’s other insurers entered into an oral joint defense agreement in anticipation of Cigna’s claim for coverage.

On September 4,2003, Cigna reached a settlement with the Providers and demanded that Lloyds advance payment or reimburse Cigna’s defense costs associated with both the Subscriber litigation and the Provider litigation and demanded that Lloyds and the excess carriers, including plaintiff Executive Risk, indemnify Cigna for the costs associated with settlement of the Provider litigation.

On May 11, 2004, the First Excess Layer Insurers collectively issued a coverage analysis and reservation of rights letter to Cigna denying coverage for the claims presented in the Multidistrict Litigation. On June 18, 2004, Lloyds also denied coverage.

On May 13, 2004, the First Excess Layer Insurers and certain members of the Second Excess Layer Insurers, Steadfast Insurance Company, ERC Frankona Reinsurance Limited, London, UK, XL Insurance Company Ltd., Great Lakes Reinsurance (UK), PLC and Liberty International, attended a meeting with Cigna wherein Cigna proposed an excess carrier-only mediation to resolve the coverage issues surrounding the Multidistrict Litigation. Following that meeting, the First Excess Layer Insurers proposed mediation with all insurers including Lloyds, the primary carrier. Cigna agreed and all began working on protocol for the mediation including date, place, proposed list of mediators and information required for exchange.

In September 2004, Cigna informed the First Excess Layer Insurers that it would not participate in mediation with all Carriers but would participate in mediation with the First Excess Layer Insurers only. Four of the First Excess Layer Insurers, AESIC, Gulf, Travelers and Steadfast, agreed to participate in the mediation with Cigna excluding Lloyds. They developed a protocol for the mediation and scheduled the mediation for November 9,2004. Plaintiff Executive Risk and ACE Bermuda were not consulted on the mediation protocol.

On September 29,2004, because Cigna failed to provide a response to the First Excess Layer Insurers’ coverage position and failed to explain its refusal to participate in mediation with Lloyds, plaintiffExecutive Risk was unable to determine whether it would attend the mediation. On October 19, 2004, Cigna informed the First Excess Layer Insurers that it had settled with Lloyds and that the policy issued by Lloyds had been fully tendered.

On November 9,2004, four of the First Excess Layer Insurers and Cigna mediated the coverage dispute in New York City. Counsel for Executive Risk arrived to attend the mediation on Executive Risk’s behalf. However, counsel for Executive Risk was asked to leave. At the conclusion of the mediation, AESIC, Gulf, Steadfast and Travelers settled with Cigna.

On November 11,2004, plaintiffExecutive Risk filed this complaint against Cigna. Cigna filed a counterclaim against plaintiff Executive Risk for breach of contract and bad faith. Plaintiff Executive Risk inadvertently produced in discovery the handwritten notes of Peter Blejwas, Esquire, a claims examiner responsible for handling Cigna’s Multidistrict Litigation claims against plaintiffExecutive Risk. Cigna returned these documents and filed a motion for their production. Cigna has filed three other discovery motions, a motion to compel reinsurance and valuation information, a motion to determine the application of the joint defense privilege, attorney-client privilege and work product privilege and a motion to issue commissions for the depositions of three insurer adjuster attorneys. Each of these motions will be discussed seriatim.

A. Cigna’s Motion to Compel Reinsurance and Valuation Information

Cigna filed a motion seeking to compel Executive Risk to produce reinsurance information together with valuation and reserve information established in the Multidistrict Litigation. Specifically, Cigna served the following discovery requests on plaintiff Executive Risk:

“(10) all of the facts and circumstances and identify all witnesses and documents that reflect or relate to ERIFs valuation of Cigna’s coverage, claims, including but not limited to, their potential settlement value.

“(11) all of the facts and circumstances and identify all witnesses and documents that reflect or relate to the Other Insurers’ valuation of Cigna’s coverage claims including, but not limited to, their potential settlement value.

“(13) all of the facts and circumstances and identify all witnesses with knowledge of and documents that relate or refer to, any reinsurance policies that potentially provide coverage for Cigna’s claims.

“(14) all facts and circumstances and identify all witnesses with knowledge of, and documents that relate or refer to, all notices, reports, memoranda, correspondence, e-mails, faxes and other communications to or from ERIFs reinsurers relating to ERIFs excess insuring agreement issued to Cigna.

“(15) all of the facts and circumstances and identify all witnesses with knowledge of, and documents that relate or refer to, ERIFs procurement of reinsurance for ERIFs excess insuring agreement issued to Cigna.

“(16) all of the facts and circumstances and identify all witnesses with knowledge of, and documents that relate or refer to, any bordereaux, computer entries, notations, postings or any other documentation which was required to be maintained by ERIFs reinsurance policies and which reflect Cigna’s claims.

“(17) identify the person or persons who placed the reinsurance for ERII’s excess insuring agreement issued to Cigna.

“(1) Produce all documents identified in ERII’s responses to the third set of interrogatories set forth above.

“(2) Please produce all documents, including but not limited to, correspondence, emails, notes, memoranda, phone logs, and any other medium, that relates or refers to any of the documents produced in response to request to produce no. 1 above.

“(3) Please produce all documents, including but not limited to, correspondence, emails, notes, memoranda, phone logs, and any other medium, that relates or refers to any of ERIFs responses to the third set of interrogatories.”

1. Reinsurance

Pennsylvania Rule of Civil Procedure 4003.2 provides:

“a party may obtain discovery of the existence and terms of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment....”

As stated in the explanatory comment, this rule codifies the Pennsylvania Supreme Court’s decision in Szarmack v. Welch, 456 Pa. 293, 299-300, 318 A.2d 707, 709-10 (1974), permitting discovery of insurance coverage. In Szarmack, the Supreme Court held that knowledge of insurance coverage is essential to the settlement process and fosters a just, speedy and inexpensive determination. Thus, even though inadmissible at trial, insurance information is discoverable. Cigna’s discovery request for reinsurance coverage presents the same issue as those presented in a routine automobile accident case. Cigna is entitled to discover the existence and terms of plaintiff Executive Risk’s reinsurance agreements applicable to Cigna and the Multidistrict Litigation.

Cigna is also entitled to discover communications to or from plaintiff Executive Risk’s reinsurers relating to reinsurance agreements applicable to Cigna and the Multidistrict Litigation. Cigna alleges in Count III of its counterclaim that plaintiff Executive Risk denied coverage in bad faith. To prove statutory bad faith, an insured must demonstrate by clear and convincing evidence that there was no reasonable basis for denying benefits and knew or recklessly disregarded this fact in denying the claim. The communications between plaintiff Executive Risk and its reinsurer may lead to evidence concerning the true reasonable basis for denying coverage. Any communications between plaintiff Executive Risk and Cigna concerning reasons for denying coverage is discoverable.

2. Valuation

Cigna also seeks to discover plaintiff Executive Risk’s and the “other insurers” valuations of Cigna’s claim. Pennsylvania law requires insurance companies to establish reserves upon notice of losses potentially covered by policies. This requirement guarantees that insurance companies have the funds to pay claims as they become due. This requirement enables the insurance department to monitor the financial condition of insurance companies to protect consumers and hopefully maintain solvency despite unliquidated pending claims.

Cigna seeks Executive Risk’s reserve information to prove its claim of bad faith. Reserve information can be discoverable if relevant to an issue presented in a bad faith action. Reserve information is relevant to a bad faith claim based upon an insurer’s failure to settle or based upon a disputed issue of value of the claim or whether the insurance company made any reasonable settlement offer. These bad faith claims do not exist in this case. This claim is exclusively grounded in plaintiff Executive Risk’s denial of coverage. This claim does not involve the value of the claim or plaintiff Executive Risk’s estimation of liability. The issue presented in this case is whether Executive Risk’s denial was based on a reasonable interpretation of the insurance policy. The amount established as reserves does not demonstrate that the insurers expected such claims to be covered by the policy. Reserves are required both by statute and responsible insurance practice and are independent of litigation strategy. The reserve information requested is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. Cigna’s motion to compel reserve information is denied.

B. A Joint Defense Agreement Existed Between Executive Risk and the Other Insurers Prior to September 29, 2004

Pennsylvania Rules of Civil Procedure 4003.1,4003.3 and 4011 prevent the discovery of privileged documents. The attorney-client privilege codified at 42 Pa.C.S. §5928 provides:

“In a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial of the client.”

The attorney-client privilege applies to confidential communications made by a client to an attorney in connection with legal services. The attorney-client privilege also covers confidential communications from an attorney to the client when based upon confidential facts that the client has disclosed. Where the client is a corporation, the privilege extends to communications between its attorney and agents or employees authorized to act on its behalf.

This privilege is intended to foster candid communications between legal counsel and the client so that counsel can provide legal advice based upon the most complete information possible. Confidentiality is key to the privilege. The attorney-client privilege is lost if the client discloses an otherwise privileged communication to a third party. The presence of a third party during attorney-client communications will generally negate the privilege. Presumably the client does not intend communications to be confidential if heard by someone else.

In Commonwealth v. Scarfo, 416 Pa. Super 329, 611 A.2d 242 (1992), the Superior Court was asked to determine whether attorney-client privilege protected attorney communications when shared with other criminal defendants and their attorneys as part of a joint defense. In Commonwealth v. Scarfo, eight jointly tried defendants were found guilty of first-degree murder and received mandatory sentences of life in prison. Prior to trial all defendants jointly participated with their attorneys in a joint defense, sharing information in furtherance of this strategy. At trial, however, one of the defendants decided to plead guilty and testify for the Commonwealth. Through the cooperating defendant the government received access to the discussions between the remaining defendants and all counsel. The Superior Court said this possibility raised “the potential for devastation to the effective representation of the accused — ” Noting that the attorney-client privilege is needed to permit free, open and candid communications between legal counsel and clients so that legal advice and legal representation can be grounded in the most candid, correct and complete information possible, the Superior Court continued: “Any criminal justice system must recognize that privacy and communications between the accused and his or her lawyer is necessary to effectuate the right to effective assistance of counsel.”

The Superior Court held that since numerous defendants were the subject of a common group defense, “it would be reasonable for a defendant to assume that the other defendants are allied with him or her and that the confidentiality of statements made for the benefit of good preparation would stay confidential within the group until the appropriate time for disclosure, perhaps at trial.” Quoting the Harvard Law Review Note, “Government Intrusions into the Defense Camp: Undermining the Right to Counsel,” 97 Harv. L. Rev. 1143 (1984), the court said, “Defendants have both the right to prepare a group defense and the right to communicate privately with counsel; constitutional principles forbid requiring a defendant to waive one of these rights in order to exercise the other.” The Superior Court has explicitly acknowledged that communications protected by the attorney-client privilege extends to multiple defendants engaged in a joint criminal defense. The presence of specific third parties who are involved jointly in the defense does not negate the protection of the attorney-client privilege.

Judge Black of Lehigh County had occasion to review the joint defense privilege in the context of a civil case in Young v. Presbyterian Homes Inc., 50 D.&C.4th 190 (2001). Judge Black found that the attorney-client privilege extended by the Superior Court to a joint defense agreement in criminal matters also applied in civil cases. Judge Black further reasoned that the exact parameters of the joint defense privilege did not have to be spelled out in a written agreement. Judge Black held that joint defense agreements are created “where the defendants have a common interest in defending against the plaintiff’s claims, but they also have a potential conflict that, although theoretical, requires each to retain separate counsel.” “[I]t would be reasonable for a defendant to assume that the other defendants are allied with him or her and that the confidentiality of statements made for the benefit of group preparation would stay confidential within the group until the appropriate time for disclosure, perhaps at trial.”

The protection of privilege has been provided to confidential communications by a client to investigators, paralegals, secretaries or other employees of the attorney when necessary to secure proper legal advice. It is no real extension to hold that is also applies to co-defendants and their lawyers working collectively. The attorney-client privilege is not waived where the third party shares a common interest in developing a legal strategy against identical claims.

Of course the privilege extends only to counsel and parties who have entered into a joint defense agreement and share a common interest in legal strategy. A shared common business interest is insufficient to afford protection. Most importantly, unless an individual attorney-client privilege independently shields material from discovery, the otherwise common interest among the parties is of no consequence.

The same reasoning applies to the work product doctrine. The work product doctrine is found only in Pa.R.C.P. 4003.3, which reads:

“Subject to the provisions of Rules 4003.4 and 4003.5, a party may obtain discovery of any matter discoverable under Rule 4003.1 even though prepared in anticipation of litigation or trial by or for another party or by or for that other party’s representative, including his or her attorney, consultant, surety, indemnitor, insurer or agent. The discovery shall not include disclosure of the mental impressions of a party’s attorney or his or her conclusions, opinions, memoranda, notes or summaries, legal research or legal theories. With respect to the representative of a party other than the party’s attorney, discovery shall not include disclosure of his or her mental impressions, conclusions or opinions respecting the value or merit of a claim or defense or respecting strategy or tactics.”

The protection against the discovery of work product is a limited protection for the mental processes of an attorney, providing a privileged area within which she can analyze and prepare her client’s case. The protection afforded to an attorney’s and a representative’s work product is limited. The explanatory note to Rule 4003.3 specifically acknowledges that work product is discoverable where the legal opinion of an attorney or another representative is a relevant issue in an action. The explanatory note states in part:

“There may be situations where his [attorney’s] conclusions or opinion as to the value or merit of a claim, not discoverable in the original litigation, should be discoverable in subsequent litigation. For example, suit is brought against an insurance carrier for unreasonable refusal to settle, resulting in a judgment against the insured in an amount in excess of the insurance coverage. Here discovery and inspection should be permitted in camera where required to weed out protected material....”

If legal opinions, conclusions, memoranda, notes or summaries, legal research or legal theories are specifically relevant to issues in a case, the requesting party is not even required to show undue hardship to obtain discovery elsewhere.

Plaintiff Executive Risk entered into an oral agreement to share privileged information with other insurers as part of a joint defense effort. All insurers had a commonality of interest in defense of Cigna’s claim for coverage of the Multidistrict Litigation. The participation of other parties and attorneys acting in concert does not waive the privilege. Plaintiff Executive Risk and all other insurers intended that all communications in furtherance of their interests remain confidential. Both attorney-client privilege and the work product privilege are applicable to all communications and documents exchanged between plaintiff Executive Risk and the other insurers prior to September 29,2004 when the joint defense agreement terminated.

Attorney-client privilege and work product privilege have been waived as to communications or documents exchanged between plaintiff Executive Risk and the other insurers after September 29, 2004. A clear divergence of interest occurred once plaintiff Executive Risk expressed its unwillingness to attend the mediation. The interests of plaintiff Executive Risk were no longer identical with the other insurers. The joint defense agreement ceased to exist. Accordingly, Cigna’s motion to compel is granted as it pertains to any documents exchanged after September 29, 2004 between plaintiff Executive Risk and the other insurers and denied as to documents prior to that date.

C. Cigna’s Motion To Produce Handwritten Notes of Peter Blejwas Is Granted in Part and Denied in Part

Cigna seeks discovery of handwritten notes prepared by plaintiff Executive Risk’s claims examiner assigned to the Multidistrict Litigation. These notes have been produced for in camera inspection. After examination, the court finds that most of these notes contain contemporaneous communications recorded during conferences with either in house counsel or counsel for the joint defense group and concern legal opinions on the insuring agreement, forum selection, this declaratory action and the terms of the multidistrict settlement. These communications are protected by the joint attorney-client privilege and are not discoverable.

The one document designated as ERII0336864 does not record any protected communications. Neither does it appear to contain any mental impressions, conclusions or opinions. Cigna’s motion to compel is granted as to ERII0336864.

D. Cigna’s Petition for the Issuance of Commissions Is Granted

Cigna seeks the issuance of commissions for the out-of-state depositions of Evan Shapiro, Esquire, claims counsel for AESIC; Stephanie Lebowitz, Esquire, claims counsel for Steadfast; and Haralyn Isaac, Esquire, claims counsel for AESIC, to determine the circumstances under which plaintiff Executive Risk left the mediation. Cigna’s request to depose counsel regarding the circumstances in which plaintiff Executive Risk left the mediation is granted. After September 29, 2004, plaintiff Executive Risk and the First Excess Carriers no longer shared a commonality of interest and no joint defense agreement existed. Communications between counsel for plaintiff Executive Risk and the First Excess Layer Insurers after September 29, 2004 are not protected by either the attorney-client privilege or the work product privilege.

Neither are communications outside of the mediation itself protected by the mediation privilege. Either the Pennsylvania or New York mediation privilege applies. The Pennsylvania choice of law analysis initially requires a determination of whether the laws of the competing states actually differ. If there is no significant difference, no further analysis is necessary. Only if a court determines a conflict of law exists must it determine which state has the greater interest in the application of its law.

The Pennsylvania mediation privilege is codified at 42 Pa.C.S. §5949:

“(a) General rule. Except as provided in subsection (b), all mediation communications and mediation documents are privileged. Disclosure of mediation communications and mediation documents may not be required or compelled through discovery or any other process. Mediation communications and mediation documents shall not be admissible as evidence in any action or proceeding, including, but not limited to, a judicial, administrative or arbitration action or proceeding ...

“By its language, the mediation privilege in 42 Pa.C.S. §5949 is one of the broadest privileges in Pennsylvania. It absolutely protects not only results but all communications including any demands for settlement or offers in compromise from disclosure. The only exceptions are for evidence necessary for litigation surrounding a settlement itself and for criminal conduct during the mediation.”

In New York, parties are encouraged to be candid and to disclose fully their circumstances and positions in mediation and therefore all disclosures that are relevant to the subject of mediation or litigation made in the context of mediation are confidential even though the adversary party is present.

Both states protect from disclosure all mediation communications or documents between actual parties to the mediation. The court in United States Fidelity and Guaranty Company v. Bilt-Rite Contractors Inc., an Eastern District of Pennsylvania case applying Pennsylvania law, set out the purpose of the mediation privilege thusly:

“If participants cannot rely on the confidential treatment of everything that transpires during [mediation] sessions then counsel of necessity will feel constrained to conduct themselves in a cautious, tightlipped, noncommittal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive at a just resolution of a civil dispute. This atmosphere if allowed to exist would surely destroy the effectiveness of a program which has led to settlements..., thereby expediting cases at a time when . . . judicial resources ... are sorely taxed.”

This description is appropriate for both states privileges. The laws of New York and Pennsylvania do not differ in the protections afforded mediations communications.

Plaintiff Executive Risk does not have standing to claim the mediation privilege protection. Plaintiff Executive Risk did not participate in the preparation for the mediation, did not sign the mediation agreement and was asked to leave when its representatives arrived. Communications between plaintiff Executive Risk and the First Excess Insurers are not subject to the mediation privilege. AESIC’s, Steadfast, Travelers and Gulf’s signed the mediation agreement and participated in the mediation. AESIC’s, Steadfast, Travelers and Gulf’s may assert any applicable mediation privilege. Cigna’s motion to compel the commissions is granted.

CONCLUSION

For the foregoing reasons, Cigna’s motions to compel are granted in part and denied in part:

(1) Defendant Cigna Corporation’s motion to compel reinsurance information is granted and Executive Risk shall respond to the requested discovery within 20 days.

(2) Defendant Cigna Corporation’s motion to compel valuation information is denied.

(3) Cigna Corporation’s petition for issuance of commissions for out of state depositions of Evan Shapiro, Esquire, Stephanie Lebowitz, Esquire and Haralyn Isaac, Esquire is granted.

(4) Cigna Corporation’s motion to compel the production of Peter Blejwas’ handwritten notes is granted only to the extent that plaintiff Executive Risk shall produce ERII0336864 within 20 days of this order.

The court further finds that a joint defense agreement existed between Executive Risk and the other insurers between February 2002 to September 29, 2004. A new case management order is issued herewith. An order consistent with this opinion will follow.

ORDER

And now, August 18, 2006, upon consideration of Cigna Corporation’s motions to compel discovery and petition for issuance of commissions, responses in opposition, memoranda and in accord with the contemporaneous memorandum opinion, it hereby is ordered that said motions are granted in part and denied in part:

(1) Defendant Cigna Corporation’s motion to compel reinsurance information is granted and Executive Risk shall produce the requested reinsurance information within 20 days.

(2) Defendant Cigna Corporation’s motion to compel valuation information is denied.

(3) Cigna Corporation’s petition for issuance of commissions for out of state depositions of Evan Shapiro, Esquire, Stephanie Lebowitz, Esquire and Haralyn Isaac, Esquire is granted.

(4) Cigna Corporation’s motion to compel the production of Peter Blejwas’ handwritten notes is granted only to the extent plaintiff Executive Risk shall produce ERII0336864 within 20 days of this order.

The court further finds that a joint defense agreement existed between Executive Risk and the other insurers between February 2002 to September 29, 2004 and a joint defense privilege is applicable.

A new case management order is issued herewith.

      . In PECO v. Insurance Company of North America, 852 A.2d 1230 (Pa. Super. 2004), the Superior Court affirmed a trial court’s decision permitting discovery of reinsurance information.

      . Terletsky v. Prudential Properly and Casualty Insurance Company, 437 Pa. Super. 108, 125, 649 A.2d 680, 688 (1999).

      . See 40 Pa.C.S. §71.

      . See Fidelity and Deposit Company of Maryland v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996).

      . See North River Ins. Co. v. Greater New York Mutual Insurance Co. 872 F. Supp. 1411 (E.D. Pa. 1995) (Reserve information discoverable where the primary insurer acted in bad faith in failing to settle within its policy limits before trial); Maiden Creek T. V. Appliance Inc. v. General Casualty Insurance Company, 2005 U.S. Dist. Lexis 14693 (E.D. Pa. 2005) (Discovery of reserve information permitted since the contract liability was undisputed and the insurer’s value of the plaintiff’s claim was relevant).

      . Fretz v. Mutual Benefit Insurance Company, 37 D.&C.4th 173 (Allegheny Cty. 1998).

      . The Pennsylvania Supreme Court in PECO v. Insurance Company of North America, 852 A.2d 1230 (Pa. Super. 2004), reversed the trial court’s order compelling the production of reserve information finding that reserve information was not relevant to the claims at issue in a non bad faith scenario. While no Pennsylvania cases exist discussing the discoverabil ity of reserve information in a bad faith case involving failure to provide coverage, at least two district court cases have ruled that reserve information is not discoverable. See Fidelity and Deposit Company of Maryland v. McCulloch, 168 F.R.D 516 (E.D. Pa. 1996), and Safeguard Lighting Systems Inc. v. North American Specialty Insurance Company, 2004 U.S. Dist. Lexis 26136 (E.D. Pa. December 30, 2004).

      . Slusaw v. Hoffman, 861 A.2d 269, 273 (Pa. Super. 2004).

      . Upjohn Company v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981).

      . Commonwealth v. Chmiel, 558 Pa. 478, 738 A.2d 406 (1999).

      . Johnston v. Johnston, 346 Pa. Super. 427, 433, 499 A.2d 1074, 1077(1985).

      . Young v. Presbyterian Homes Inc., 50 D.&C.4th 190, 198-99 (2001)

      . Young v. Presbyterian Homes Inc., 50 D.&C.4th 190, 196 (2001) (quoting Commonwealth v. Scarfo, 416 Pa. Super. 329, 377-78, 611 A.2d 242, 266 (1992).

      . Commonwealth v. Noll, 443 Pa. Super. 602, 607, 662 A.2d 1123, 1126 (1995), appeal denied, 543 Pa. 726, 673 A.2d 333 (1996) (confidential statement to accident reconstructionist hired by attorney to determine whether the client should sue is privileged).

      . Commonwealth v. Mrozek, 441 Pa. Super. 425, 428, 657 A.2d 997, 999-1000 (1995) (inculpatory statement to attorney’s secretary made while defendant was seeking to retain attorney for legal representation and advice is privileged).

      . Commonwealth v. Hutchinson, 290 Pa. Super. 254, 262-65, 434 A.2d 740, 744-45 (1981) (inculpatory statement made to investigator for public defender’s office is privileged).

      . The Birth Center v. The St. Paul Companies Inc., 727 A.2d 1144 (Pa. Super. 1999) (overruled in part for other grounds by Mishoe v. Erie Insurance Co. 573 Pa. 267, 824 A.2d 1153 (2003)).

      . Pa.R.C.P. 4003.3 explanatory note.

      . Pa.R.C.P. 4003.3 explanatory note.

      . The Birth Center v. The St. Paul Companies Inc., 727A.2d 1144 (Pa. Super. 1999) (overruled in part for other grounds by Mishoe v. Erie Insurance Co. 573 Pa. 267, 824 A.2d 1153 (2003)).

      . Exhibits “C” — deposition of Peter Blejwas dated October 27, 2005 p. 31; and exhibit “D” — notes of Peter Blejwas to Executive Risk’s brief in support of application of joint defense privilege. Plaintiff Executive Risk’s exhibit “E,” exhibit “F,” exhibit “G,” exhibit “H,” exhibit “I” and exhibit “J” which were produced in camera.

      . The documents in question are ERII036838-842, ERII036843847, ERII036848-863, ERII0336864-66, ERII36871-872, ERII036873885, ERII036886-908 and ERII0369014-916.

      . Ratti v. Wheeling Pittsburgh Steel Corp., 758 A.2d 695, 702 (Pa. Super. 2000).

      . Bernstein, 2006 Pa. Rules of Evidence, comment 19 to Pa.R.E. 501 (Gann).

        . Bauerle v. Bauerle, 206 A.D.2d 937, 940 (N.Y.App. Div. 1994) (citing American Airlines v. National Mediation Bd., 588 F.2d 863; see also, Judiciary Law §849-b(6); Demuth, “Theories for Protecting Mediation,” reprinted in Confidentiality in Mediation: A Practitioner’s Guide 155-64 (American Bar Assn. 1980)).

      . 2005 U.S. Dist. Lexis 9299, *18 (E.D. Pa. 2005) (citing Lake Utopia Paper Ltd. v. Connelly Containers Inc., 608 F.2d 928, 930 (2d Cir. 1979)).

      . The court assumes that counsel was integrally involved in the claims handling of the multidistrict litigation and therefore not afforded the protections of the attorney-client or work product privileges. See The Birth Center v. The St. Paul Companies Inc., 727 A.2d 1144 (Pa. Super. 1999) (overruled in part for other grounds by Mishoe v. Erie Insurance Co. 573 Pa. 267, 824 A.2d 1153 (2003)); see also, General Refractories Co. v. Fireman's Fund Insurance Co., 45 D.&C.4th 159, 169-70 (Phila. Cty. 2000) (holding that where counsel is integrally involved with the denial of the claim or the legal opinion of an attorney is otherwise relevant to the bad faith claim, the attorney’s advice or opinions are not shielded from discovery by the work product doctrine).


source: Caselaw Access Project

author: DYCH, J,

license: Public Domain

text:
    Hopkins v. Robinson

      C.P. of Philadelphia County,
    April Term 2002,
    no. 2263.

      Holland Thomas More, for plaintiff.

      Kevin R. McNulty, for defendant.
    November 22, 2006
   DYCH, J,

Demetris Hopkins appeals this court’s order of September 5,2006, granting the motion to strike judgment and strike writ of attachment of American Independent Insurance Co. (AIICO), garnishee in the above-captioned matter.

PROCEDURAL HISTORY

In April of2002, Hopkins sued Michael Robinson for damages and personal injuries arising out of a motor vehicle accident on June 3, 2000. Judgment by default was entered against Robinson on August 12, 2002, and on December 11, 2002, an arbitration panel awarded Hopkins $50,000 which has not yet been paid. The case was marked “disposed” on January 16, 2003, no appeal having been taken.

On April 20, 2006, Hopkins filed a praecipe to issue a writ of attachment against AIICO, allegedly holder of an insurance policy in the name of defendant’s sister, the owner of the car driven by Robinson and involved in the accident. The writ was never served. Hopkins filed a second writ against AIICO on June 29,2006, along with interrogatories addressed to AIICO. Hopkins directed service of this second writ on “AIICO c/o Bank of America at 1600 John F. Kennedy Boulevard, Philadelphia,” and the sheriff served the writ on the Bank on July 3,2006. Although the Bank is neither a party nor a named garnishee in the case, it responded to Hopkins’ interrogatories. On the basis of the Bank’s responses, Hopkins filed a praecipe for judgment against garnishee American Independent Insurance Company c/o Bank of America in the amount $15,000; a copy of the Bank’s interrogatory responses was attached to the praecipe.

Judgment by admission was entered against AIICO on August 15, 2006, and on August 18, 2006, AIICO responded with an emergency motion to set aside service. On September 5,2006, after oral argument on August 30, this court granted AIICO’s motion, striking the August 15 judgment against it and striking all writs of attachment that had been issued in the case; the order also directed the Bank to restore all withheld funds to AIICO. Hopkins’ notice of appeal from the September 5 order was docketed on October 11, 2006, and on November 3, 2006, he filed a statement pursuant to Rule 1925(b), Pa.R.A.R

MATTER COMPLAINED OF ON APPEAL

Hopkins maintains that he properly served the writs of execution “on AIICO in care of Bank of America, its fiduciary” and that, therefore, the court’s September 5 order setting aside that service and striking all attachments in the case deprived him of substantive and procedural due process.

DISCUSSION

The single issue before the court is whether AIICO was entitled under Rule 3121(d), Pa.R.C.P., to have the writ set aside. Rule 3121(d) provides that a writ may be set aside where a party in interest shows that the writ (1) contains a defect, (2) concerns property subject to an exemption or immunity, or (3) presents any other equitable grounds therefore. AIICO contends, and this court agrees, that Hopkins’ service of the writ was defective for two reasons.

First, Hopkins may not direct service of a writ of execution on the garnishee’s bank in lieu of service on the garnishee itself. Service of a writ on a garnishee is governed by Rule 3111 (a), Pa.R.C.P, which provides that a “writ shall be served by the sheriff upon the garnishee in the manner prescribed by Rule 402(a) . . . .” Rule 402(a) provides for service by handing a copy to a corporate defendant [garnishee] “at any office or usual place of business of the defendant [garnishee] to his agent or to the person for the time being in charge thereof.” In this case, AIICO’s bank (Bank of America) is neither a defendant nor a garnishee in this action. Further, Hopkins has not shown that the Bank is an “office or usual place of business” of AIICO, much less that service was effected on AIICO’s agent or person in charge of its operations at that place. The writ is patently defective.

Hopkins contends that service of the writ on the Bank is proper because the Bank is AIICO’s “fiduciary.” There is no support in the rules or the law for the proposition that service may be made on fiduciaries that are not otherwise named parties. It is true that the rules define a “garnishee” as any person who “holds as fiduciary property in which the defendant has an interest.” Rule 3101(b), Pa.R.C.P. The rules plainly contemplate a fiduciary relationship between the garnishee and the defendant, however, and not between the garnishee and its bank.

Second, it follows that the interrogatories addressed to AIICO and attached to the writ were also improperly served on the Bank. The fact that the Bank (again, neither a party nor a garnishee) responded does not cure the defect. Nor can the Bank’s responses serve to bind AII-CO upon the plaintiff’s praecipe to enter judgment against the garnishee “for the property of the defendant admitted in the answer to interrogatories to be in the garnishee’s possession.” Rule 3147(b), Pa.R.C.P. Thus, the August 15, 2006 “judgment entered by admission” of the Bank, a non-party and non-gamishee, was properly stricken.

Defective service is not merely a technical matter; it implicates the proper jurisdiction of the courts over parties and, in this case, garnishees. It also threatens the notice rights of putative litigants. For this reason, the Pennsylvania Supreme Court has held that the rules relating to service of process must be strictly followed. Dubrey v. Izaguirre, 454 Pa. Super. 504, 508, 685 A.2d 1391, 1393 (1996), citing Sharp v. Valley Forge Medical Center & Heart Hospital Inc., 422 Pa. 124, 127, 221 A.2d 185, 187 (1966). Here, the plaintiff obtained ajudgment against AIICO on the basis of an improperly served writ and on the basis of discovery responses of another non-party. The rules concerning service operate to prevent just this type of error.

CONCLUSION

Hopkins did not make proper service of his writ of execution on garnishee AIICO. Further, he obtained judgment against AIICO on the basis of discovery responses that are not binding on the garnishee. For these and the foregoing reasons, Hopkins’ appeal should be denied, and this court’s September 5,2006 order should be affirmed.

      . No question has been raised as to whether AIICO is a garnishee as defined by Rule 3101(b), Pa.R.C.R For the purposes of this opinion, the court assumes that AIICO would be a garnishee subject to service in this case.

      . Exceptions under Rule 3111 (a) concerning service of writs against real property are inapplicable in this case.

      . Similarly, Rule 242 concerning service of original process on “corporations and similar entities,” requires service on executives, officers, managers, or authorized agents, or on authorized managers or clerks at a regular place of business. Rule 242, Pa.R.C.P.


author: ADDY, J.,

text:
    Commonwealth v. Gerhart

      C.P. of Carbon County,
    nos. 441-CR-06, 440-CR-06.

      Joseph J. Matika, assistant district attorney, for Commonwealth.

      Paul J. Levy, for defendant.
    March 8, 2007
   ADDY, J.,

On December 4, 2006, the defendants filed motions to dismiss the criminal in-formations in these cases, which are in the nature of a writ of habeas corpus, challenging the finding of a prima facie case at the preliminary hearing by the magisterial district judge. After a hearing held on January 12,2007, we grant the motions to dismiss.

FACTS

The Commonwealth relies on the transcript of the preliminary hearing held before Magisterial District Judge Bruce F. Appleton on July 26,2006 to establish a prima facie case against the defendants. The Commonwealth’s evidence, as contained in the transcript, is summarized below.

On July 29, 2004, Joshua, who was 1 year old, was picked up by his father, Joshua Gerhart, for a court ordered period of partial physical custody to last until August 1, 2004. During this period of partial physical custody, Joshua was staying at Mr. Gerhart’s house along with his stepmother, Stephanie Gerhart, and two other children. On August 1, 2004, Joshua’s mother, Amanda Lang, picked Joshua up at Mr. Gerhart’s house. At the time that Ms. Lang picked Joshua up, Mrs. Gerhart was presumably watching Joshua, as she was the person who delivered Joshua to Ms. Lang. Mrs. Gerhart told Ms. Lang that Joshua’s diaper had just been changed and that he should be fine until he got his bath later in the evening. At this point, Ms. Lang took Joshua home.

Once home, Joshua played outside with his grandfather for a few minutes and then came inside to get his evening bath. When Ms. Lang undressed Joshua for his bath, she discovered bruising and swelling of his genitalia area that was not there when Joshua was sent to Mr. Gerhart’s house on July 29. At this point, Ms. Lang screamed for her mother to come and her mother then took pictures of the affected area. Ms. Lang then took Joshua to the emergency room at Gnaden Huetten Hospital. From there, they were transferred to Lehigh Valley Hospital for more tests. Finally, Joshua was taken to see Andrea Taroli M.D., at Pegasus Child Advocacy Center in Carbondale, Pennsylvania. Dr. Taroli specializes in the evaluation of children who are alleged to be abused or neglected.

After examining Joshua, Dr. Taroli concluded, within a reasonable degree of medical certainty, that the swelling and bruising of Joshua’s genitalia resulted from the genitalia being “grabbed as a whole, forcibly, and twisted. And essentially crushed... within the adult’s hand.” (Transcript of preliminary hearing, pp. 68-69.) Dr. Taroli further concluded that this bruising and swelling occurred a day or two prior to being discovered on August 1. This would place the date that the injury occurred on July 30 and/or July 31, which is during Mr. Gerhart’s period of partial physical custody.

Subsequently, Mr. Gerhart and Mrs. Gerhart were both charged with conspiracy, 18 Pa.C.S. §903(a)(l), and recklessly endangering the welfare of a child, 18 Pa.C.S. §4304(a).

DISCUSSION

The defendants’ motions to dismiss challenge the finding by the magisterial district judge that a prima facie case was established against the defendants. Essentially, the defendants’ motions are in the nature of a pretrial writ of habeas corpus.

In Commonwealth v. Jackson, 809 A.2d 411 (Pa. Super. 2002), the Superior Court reviewed the standard for reviewing a pretrial writ of habeas corpus as follows:

“We begin with Commonwealth v. Morman, 373 Pa. Super. 360, 541 A.2d 356 (1988), wherein it is written in relevant part:...

“As a starting point, we must recognize the importance and history of the writ of habeas corpus in our system of government. ‘The writ of habeas corpus has been called the “great writ.” It is an ancient writ, inherited from the English common law, and lies to secure the immediate release of one who is detained unlawfully.’...

“The writ of habeas corpus exists to vindicate the right of personal liberty in the face of unlawful government deprivation....

“The purpose of a preliminary hearing is much the same as the purpose of the pretrial petition for habeas corpus relief. As has often been stated:

“The primary reason for the preliminary hearing is to protect an individual’s right against unlawful arrest and detention. It seeks to prevent a person from being imprisoned or required to enter bail for a crime which was never committed, or for a crime with which there is no evidence of his connection....

“We find that the scope of evidence which a trial court may consider in determining whether to grant a pretrial writ of habeas corpus is not limited to the evidence as presented at the preliminary hearing. On the contrary, we find that the Commonwealth may present additional evidence at the habeas corpus stage in its effort to establish at least prima facie that a crime has been committed and that the accused is the person who committed it....

“In the pretrial setting, the focus of the habeas corpus hearing is to determine whether sufficient Commonwealth evidence exists to require a defendant to be held in government ‘custody’ until he may be brought to trial. To make this determination, the trial court should accept into evidence the record from the preliminary hearing as well as any additional evidence which the Commonwealth may have available to further prove its prima facie case. Morman, 541 A.2d at 358-60. (citations omitted) (emphasis in original)

“Further, at a habeas corpus hearing, the Commonwealth need not produce evidence of such character and quantum of proof as to require a finding by a jury of the accused’s guilt beyond a reasonable doubt. But it should be such as to present ‘sufficient probable cause to believe, that the person charged has committed the offense stated[.]’ Commonwealth ex rel. Scolio v. Hess, 149 Pa. Super. 371, 374, 27 A.2d 705, 707 (1942). (citations omitted)” Jackson, supra, 809 A.2d at 416-17.

The Commonwealth’s burden at a preliminary hearing is aptly summarized in 26 Standard Pennsylvania Practice 2d §132:357 as follows:

“At a preliminary hearing, the Commonwealth bears the burden of establishing at least a prima facie case that a crime has been committed and that the accused is probably one who committed it. Commonwealth v. Phillips, 700 A.2d 1281 (Pa. Super. 1997), reargument denied, (Oct. 29, 1997) and appeal denied, 555 Pa. 718, 724 A.2d 934 (1988). The Commonwealth establishes a prima facie case of the defendant’s guilt at a preliminary hearing when the Commonwealth produces evidence that, if accepted as true, would warrant a trial judge to allow case to go to jury. Commonwealth v. Martin, 727 A.2d 1136 (Pa. Super. 1999), reargument denied, (April 23, 1999) and appeal denied, 1999 WL 791129 (Pa. 1999). At the preliminary hearing, the Commonwealth need not prove the elements of a crime beyond a reasonable doubt; rather, the prima facie standard requires evidence of the existence of each and every element of the crime charged. Commonwealth v. Martin, 727 A.2d 1136 (Pa. Super. 1999), reargument denied, (April 23, 1999) and appeal denied, 1999 WL 791129 (Pa. 1999); Commonwealth v. Allbeck, 715 A.2d 1213 (Pa. Super. 1998), appeal granted (Pa. October 22, 1999).

“To meet its burden at the preliminary hearing, the Commonwealth is required to present evidence with regard to each of the material elements of the charge and to establish sufficient probable cause to warrant belief that the accused committed the offense. Commonwealth v. Phillips, 700 A.2d 1281 (Pa. Super. 1997), reargument denied, (Oct. 29, 1997) and appeal denied, 555 Pa. 718, 724 A.2d 934 (1998).”

In the present case, the defendants have each been charged with conspiracy and recklessly endangering the welfare of a child. We shall review whether the Commonwealth has established a prima facie case on each charge, separately, below.

A. Conspiracy

Section 903(a) of the Pennsylvania Crimes Code, 18 Pa.C.S. §903(a), provides as follows:

“A person is guilty of conspiracy with another person or persons to commit a crime if with the intent of promoting or facilitating its commission he:

“(1) agrees with such other person or persons that they or one or more of them will engage in conduct which constitutes such crime or an attempt or solicitation to commit such crime; or

“(2) agrees to aid such other person or persons in the planning or commission of such crime or of an attempt or solicitation to commit such crime.” 18 Pa.C.S. §903(a).

A conspiracy can be established by circumstantial evidence; and conspiracies can be either express or tacit. See Commonwealth v. Reed, 276 Pa. Super. 467, 419 A.2d 552 (1980) (Commonwealth is not required to prove explicit or formal agreement in order to establish existence of conspiracy, which may be proven by circumstantial evidence); Commonwealth v. Tumminello, 292 Pa. Super. 381, 437 A.2d 435 (1981) (Commonwealth is not required to establish existence of conspiracy by direct proof or explicit or formal agreement); Commonwealth v. Davalos, 779 A.2d 1190 (Pa. Super. 2001), appeal denied, 567 Pa. 756, 790 A.2d 1013 (2001) (a conspiracy can be proven inferentially by showing the relation, conduct, or circumstances of the parties).

In the present case, there was simply no testimony or evidence presented at the preliminary hearing that would establish a prima facie case of conspiracy. Specifically, the transcript contains no evidence of an agreement, either express or tacit, between the defendants. Moreover, the transcript contains no evidence, either direct or circumstantial, that the defendants acted in concert. Consequently, the conspiracy count against each defendant must be dismissed.

B. Recklessly Endangering the Welfare of a Child

Section 4304 of the Pennsylvania Crimes Code, 18 Pa.C.S. §4304, provides that:

“A parent, guardian, or other person supervising the welfare of a child under 18 years of age commits an offense if he knowingly endangers the welfare of the child by violating a duty of care, protection or support.” 18 Pa.C.S. §4304.

To support a conviction for endangering the welfare of a child, the Commonwealth must establish that the accused acted knowingly by demonstrating that each of the following elements are met:

(1) the accused is aware of his/her duty to protect the child;

(2) the accused is aware that the child is in circumstances that could threaten the child’s physical or psychological welfare; and

(3) the accused has either failed to act or has taken action so lame or meager that such actions cannot reasonably be expected to protect the child’s welfare. See Commonwealth v. Retkofsky, 860 A.2d 1098 (Pa. Super. 2004); Commonwealth v. Wallace, 817 A.2d 485 (Pa. Super. 2002), reargument denied, appeal denied, 574 Pa. 774, 833 A.2d 143 (2003), certiorari denied, 124 S.Ct. 1610, 158 L.Ed.2d 251, 2004 WL 414109.

In Commonwealth v. Miller, 411 Pa. Super. 33, 600 A.2d 988 (1992), a case involving a charge of endangering the welfare of a child, the Superior Court addressed the elements for this charge as follows:

“Appellant has challenged, in particular, that the evidence presented at trial was insufficient to prove the intent element of the crime with which she [is] charged. 18 Pa.C.S. §4304 does, indeed, require proof of a specific intent element:

“,Section 4304. Endangering welfare of children

“A parent, guardian, or other person supervising the welfare of a child under 18 years of age commits a misdemeanor of the first degree if he knowingly [emphasis added] endangers the welfare of the child by violating a duty of care, protection or support.

“18 Pa.C.S. §4304. The criminal code further defines knowingly: (2) A person acts knowingly with respect to a material element of an offense when:

“(i) if the element involves the nature of his conduct or the attendant circumstances, he is aware that his conduct is of that nature or that such circumstances exist; and

“(ii) if the element involves the result of his conduct, he is aware that it is practically certain that his conduct will cause such a result.

“18 Pa.C.S. §302(b)(2). Moreover, it is clear that section 4304 contemplates endangerment either by act or by omission to act. See Commonwealth v. Cardwell, 357 Pa. Super. 38, 43, 515 A.2d 311, 314 (1986), allocatur denied, 515 Pa. 573, 527 A.2d 535 (1987).

“In Cardwell, supra, this court established a three-prong standard for testing the sufficiency of evidence of the intent element under section 4304:

“We hold that evidence is sufficient to prove the intent element of the offense of endangering the welfare of a child, 18 Pa.C.S. §4304, when the accused is aware of his or her duty to protect the child; is aware that the child is in circumstances that threaten the child’s physical or psychological welfare; and has either failed to act or has taken actions so lame or meager that such actions cannot reasonably be expected to be effective to protect the child’s physical or psychological welfare.

“Cardwell, 515 A.2d 311, at 315. If proof fails on any one of these prongs, the evidence must be found insufficient.” Miller, supra at 37-38, 600 A.2d at 990.

In the present situation, in attempting to establish a prima facie case, the Commonwealth apparently relies upon the invocation of the exclusive custody doctrine. This doctrine provides that when an adult is given sole custody of a child of tender years for a period of time and, during that time, the child sustains injuries which may have been caused by a criminal agency, the fact-finder may examine any explanation offered and if they find that explanation insufficient, they may reject it and find the person having custody responsible for the wounds. Commonwealth v. Meredith, 490 Pa. 303, 416 A.2d 481 (1980).

To invoke the exclusive custody doctrine however, the Commonwealth must show (1) serious injury or death; (2) that the injury was neither accidental nor self-inflicted; (3) that the injury was inflicted within a specific time period; and (4) that the defendant had exclusive custody of the victim during the time of the injury.

In the present case, although there is clearly prima facie evidence contained in the transcript of the preliminary hearing to establish that this young child was physically abused, the transcript does not contain sufficient evidence to establish, on aprima facie basis, which defendant, if either, committed the abuse. The transcript indeed contains prima facie evidence of the first three prongs of the exclusive custody doctrine, but the transcript does not contain any evidence as to which defendant, if either, had exclusive custody and care of Joshua during the relevant time period. Further, there is no evidence contained in the transcript that either defendant made any admissions or engaged in any conduct that reveals a consciousness of guilt. Moreover, there is no evidence in the transcript from which a fact-finder could reasonably infer that either defendant was aware of the abuse or the subsequent visible manifestation of the physical injuries sustained by Joshua (the bruising and swelling). Therefore, the requisite element of “knowingly” in the charge of recklessly endangering the welfare of a child is lacking. Accordingly, the charge of recklessly endangering the welfare of a child against each defendant must also be dismissed.

CONCLUSION

Based upon the evidence presented at the preliminary hearing, we are constrained to grant the defendants’ motions to dismiss.

ORDER

And now, March 8, 2007, upon consideration of the defendants’ motions to dismiss, and after a hearing thereon, in accordance with the foregoing opinion, it is hereby ordered and decreed that the defendants’ motions to dismiss are granted and, accordingly, the criminal informations in the above captioned cases are dismissed.


author: MOTTO, P.J.,

text:
    Ruckert v. Ottaviani
    C.P. of Lawrence County,
    no. 10692 of 2006, C.A.

      Gregory S. Fox, for plaintiffs.

      Gene G. Dimeo, for defendants.

      February 26, 2007
   MOTTO, P.J.,

Before the court for disposition are defendants’ preliminary objections to plaintiffs’ amended complaint seeking to enjoin defendants from utilizing an unopened portion of a roadway located within the subdivision plan in which plaintiffs are lot owners to access defendants’ land that abuts the subdivision plan.

The defendants’ preliminary objections contend that plaintiffs’ amended complaint must be dismissed because:

(1) The amended complaint fails to allege any legal title of plaintiffs in the unopened roadway; therefore, a demurrer must be granted because plaintiffs have not stated a cause of action.

(2) There exists a lack of capacity to sue in that plaintiffs have no standing because of their lack of title to the disputed area.

(3) The plaintiffs have failed to join Wayne Township as a necessary party where the roadway is located within the township, and it is alleged that Wayne Township has lost any right it had to dedicate the roadway to public use.

(4) Plaintiffs have failed to exhaust a statutory remedy because they have not petitioned the Board of Supervisors of Wayne Township to vacate the roadway in question.

Plaintiffs, Jay D. Ruckert and Ellen L. Ruckert, reside at 290 Renlee Avenue, Ellwood City, Pennsylvania. Plaintiffs, David A. Houk and Doreen L. Houk, reside at 289 Renlee Avenue, Ellwood City, Pennsylvania. Plaintiffs together own lots 256 through 264, 299 through 300, 265 through 266, and 210 through 218 of the Ellwood Heights plan of lots recorded in Lawrence County plot book volume 8, page 9C. Renlee Avenue is depicted as a street in the plot plan and is maintained by Wayne Township up to the point of the Ruckert driveway that is located at the western portion of the lots owned by the Ruckerts. Renlee Avenue is not maintained by Wayne Township from the Ruckert driveway to the intersection of Union Street. Union Street is also a roadway depicted as a street in the plot plan, but has never been maintained or utilized by the township and is not a public street at the location relevant to this lawsuit.

Defendants own real estate located to the east of Union Street. Union Street separates the property owned by defendants adjoining the plot plan from the plaintiffs’ property. Defendants’ land is accessible from a public road other than Renlee Avenue.

Plaintiffs use the area of Renlee Avenue to gain access to the eastern portion of their property. However, defendants have placed a large amount of bricks, stones and other materials upon the unopened portion of Renlee Avenue and Union Street in order to construct a road. Plaintiffs further allege that defendants have been utilizing the unopened portions of Renlee Avenue and Union Street to access their property, which is not located within the subdivision plan, without any legal right to do so. Plaintiffs claim that continued construction of the road and use of Renlee Avenue and Union Street by defendants should be enjoined.

The foregoing facts are gleaned from the amended complaint and for purposes of this proceeding must be accepted as true.

LEGAL INSUFFICIENCY OF A PLEADING AND LACK OF CAPACITY TO SUE

Defendants’ preliminary objections in the nature of a demurrer and seeking dismissal on the basis of lack of capacity to sue may be considered together as both arguments are based on the nature of the legal interest plaintiffs have in the subject roadways. In deciding preliminary objections, the court must admit “for present purposes every well pleaded material fact set forth in the pleading to which it is addressed, as well as the inferences reasonably deducible therefrom.” Schott v. Westinghouse Electric Corporation, 436 Pa. 279, 282, 259 A.2d 443, 445 (1969). In order to sustain preliminary objections that would cause a dismissal, the test is whether it is clear and free from doubt that the facts in the pleading will be legally insufficient to establish their right to relief. Bourke v. Razaras, 746 A.2d 642, 643 (Pa. Super. 2000)..

Defendants contend that plaintiffs do not allege legal title in plaintiffs to the road in question. However, case law holds where landowners’ property abuts an unused road, the landowner has title in fee to one half of the roadway, which is then subject to a private easement of passage for each of the landowners in a plan of lots containing the roadway or abutting the street. McLaughlin v. Cybulski, 192 Pa. Super. 7, 10, 159 A.2d 14, 16 (1960) (citing Rahn v. Hess, 378 Pa. 264, 106 A.2d 461 (1954)). See also, Leininger v. Trapizona, 165 Pa. Commw. 493, 645 A.2d 437 (1994) where the court held that plaintiffs, as landowners adjoining a roadway, retained a fee simple interest in the street up to the centerline, and would have been able to enjoin the defendant from building a road if they would not have consented to the construction and allowed the defendant to expend great effort and money*

In the case sub judice, it is clear that plaintiffs have alleged a sufficient legal interest in the roadway where they allege that the road in question was never opened for public use, that plaintiffs own land that abuts the unopened road, and that plaintiffs own lots in the plan of lots which includes the road. Plaintiffs retain legal title in the form of a fee simple interest in the road, which is subject to a private right of easement created in favor of any member of the plan.

In a similar case, the Pennsylvania Supreme Court has held that the owners of an easement in a private road laid out in a plot plan were entitled to injunctive relief against the owner of land abutting the plot plan seeking to use the private road to benefit the abutting land. Kao v. Haldeman, 556 Pa. 279, 286-87, 728 A.2d 345, 349 (1999).

In Kao, the issue was whether or not easement owners were entitled to obtain injunctive relief to prevent trespassers thereon. The easement owners were the owners of lots in a subdivision plan that included West Watson Avenue. The easement owners owned residential properties along the edge of the easement. The Haldemans owned property at the eastern end of the easement, but not in the subdivision plan, and used the easement for access to their abutting property. The paved portion of the easement terminated midway in front of the property of Kao, and the remaining length of the easement at that point to the Haldeman border was maintained in grass and shrubbery. It was alleged that the Haldemans drove over the unpaved portion of the easement, causing it to deteriorate. The properties of the easement holders were part of a common subdivision plan created in 1919 that encompassed West Watson Avenue. The land had been offered for dedication to public use, but the borough did not accept it. The statutory period for acceptance expired and West Watson Avenue forever lost its potential as a public street. The effect of the ownership of land in the plot plan containing West Watson Avenue was that the lot owners owned title and fee extending from their respective lots to the center line of West Watson Avenue, and that ownership in fee was subject to an easement for the right of passage of all who shared in the easement. That easement extended to any lot owner who was a part of the subdivision plan, as the easement is acquired by implication. The Kao case cited Sentz v. Crabbs, 428 Pa. Super. 205, 208, 630 A.2d 894, 895 (1993) for the proposition that an easement by implication arises after it is clear that a particular division of property was created by a common grantor and, without specifying that an easement over one of the estates was granted, by implication the use of the parcel would not be possible without the existence of the easement. Kao, 556 Pa. at 282, 728 A.2d at 347.

The Kao case also noted that it has long been recognized that intrusions upon private easements may be enjoined (citing Mershon v. Walker, 215 Pa. 41, 64 A. 403 (1906)) where injunctive relief was granted against the owner of a building that adjoined a private alley that required the removal of structural features that encroached over the easement for the alley. Kao, 556 Pa. at 283-84, 728 A.2d at 347-48 further noted that an easement for a private road is private property that can be protected through appropriate legal process. Citing Chambersburg Shoe Mfg. Co. v. Cumberland Valley R.R. Co., 240 Pa. 519, 524, 87 A. 968, 970 (1913), the Kao court said that when, as occurred here, lots are sold according to a subdivision plan on which a street has been plotted by the grantor, the purchasers acquire property rights in the use of the street. “Such a right is sometimes called an easement of access which means the right of ingress and egress to and from the premises of the lot owners. It is a property right appurtenant to the land which cannot be impaired or taken away without compensation ... .Id. at 524-25, 87 A. at 970. But that this is a private right of property in the lot owner and not a public right of passage existing independently of the grant, must be considered as settled law in our state. Id. at 525, 87 A. at 970.” (emphasis in original)

In Kao, the Haldemans had no private right to, or ownership in, the easement, but treated the roadway as a public street even though the street forever lost its character as a public way when the borough failed to accept its dedication to public use. Kao concluded that West Watson Avenue was a private road that exists only for the benefit and use of those owning its easement. It merely permits ingress and egress to and from the premises of the lot owners: it is not a public street to be used for access to other destinations, citing Chambersburg Shoe Mfg. Co., supra; and Kanefsky v. Dratch Construction Co., 376 Pa. 188, 195, 101 A.2d 923, 926 (1954), holding that easements cannot be used for access to lands to which they are not appurtenant.

In Kao, the court further rejected two arguments of the Haldemans which are similar to the arguments being raised here by the defendants. The Haldemans contended in Kao that trespassers cannot be excluded unless they have interfered with the rights of passage of the easement holders. This argument was totally rejected as Kao reasoned that to hold otherwise would mean that private roads would be deemed to be public roads, subject only to the requirement that the public not interfere with the use of the private owners. Kao specifically stated that private roads, quite simply, are not dedicated public use and are not to be burdened with such use, and that inquiry into whether there has been an actual interference with the owners rights of passage is not required. Kao, Id. at 285, 728 A.2d at 349.

In Kao, the Haldemans also asserted that the only party with standing to object to a trespasser’s use of the easement is the owner of the fee that underlies the easement. In rejecting that argument, the court noted that the easement holders share in the entire length and width of the easement, not merely the portion between the center line of the road and their individual lots. Their full interest in the easement can be protected against unauthorized intrusions and that as owners of the easement for West Watson Avenue, the easement holders were entitled to obtain injunctive relief to prevent trespasses anywhere thereon. Id. at 284-85, 728 A.2d at 348.

The foregoing discussion of Kao clearly demonstrates that as alleged owners of an easement in a private roadway, plaintiffs had sufficiently alleged a property interest that can be protected through the legal process of seeking an injunction and that easement holders have standing to prevent unauthorized use of the easement.

NON-JOINDER OF A NECESSARY PARTY

Defendants contend that plaintiffs’ amended complaint should be dismissed because plaintiffs failed to join a necessary party, Wayne Township, to this cause of action under Pa.R.C.P. 2227.

Pa.R.C.P. 2227 addresses compulsory joinder, which states:

“(a) Persons having only a joint interest in the subject matter of an action must be joined on the same side as plaintiffs or defendants.”

A party is indispensable to an action when their rights are connected with the claims of the litigants in such a way that a decree cannot be made without impairing those rights. Mechanicsburg Area School District v. Kline, 494 Pa. 476, 481, 431 A.2d 953, 957 (1981).

“The determination of an indispensable party question involves at least these considerations: (1) Do absent parties have a right or interest related to the claim? (2) If so, what is the nature of that right or interest? (3) Is that right or interest essential to the merits of the issue? (4) Can justice be afforded without violating the due process rights of absent parties?” Id.

Here, all that plaintiffs seek to adjudicate is the defendants’ right to utilize the roadway in which plaintiffs claim an easement. The rights of the township cannot be foreclosed by this proceeding. No due process right of the township will be violated by any decision in this case nor will any decision be binding on the township. The non-joinder of the township does not prevent defendants from proving the roadway is in fact a public way, if such proof exists.

FAILURE TO EXHAUST STATUTORY REMEDIES

Defendants also contend that plaintiffs failed to pursue statutory remedies before filing suit in this court.

A township board of supervisors may by ordinance open or vacate all roads within a township. A petition presented to the board of supervisors making such a request is authorized under 53 P.S. §67304. Also, the court shall have the authority under law to vacate roads in whole or in part because the road has become useless or burdensome pursuant to 36 P.S. §1981. A complaint filed pursuant to 36 P.S. §1961 may be adjudicated by the court without a petition being presented to the board of supervisors. In re Watzel Ave. in Ransom Township, 175 Pa. Super. 339, 104 A.2d 173 (1954).

Here, the foregoing statutes are irrelevant. Neither procedure relates to enjoining the interference with a private right of easement in a private roadway. Neither statute could in any way provide a vehicle for relief to plaintiffs based on the facts as alleged by plaintiffs. Kao v. Haldeman, supra, has expressly approved a proceeding for injunctive relief as the appropriate legal process to address plaintiffs’ claim. It would be nonsensical to require plaintiffs to first petition the township to vacate a roadway where plaintiffs contend the township has never accepted any dedication of that roadway nor made any use of the same.

Defendants have also included in their preliminary objections a claim for attorney fees on the basis that the amended complaint is devoid of any merit. Since the court will deny the defendants’ preliminary objections above referenced, there can be no basis for an award of attorney fees at this juncture of the case.

ORDER

And now, February 26,2007, for the reasons set forth in the accompanying opinion of even date herewith, it is ordered, adjudged and decreed that defendants’ preliminary objections to plaintiffs’ amended complaint are denied. Defendants shall file an answer to the amended complaint within 20 days of the date this order is docketed.