author: MINORA, J,

text:
    Upright Material Handling Inc. v. Ohio Casualty Group

      C.P. of Lackawanna County,
    no. 01-CV-1260.

      Robert W. Munley, for plaintiffs.

      Jerry A. Snyder, for defendant.
    January 19, 2005
   MINORA, J,

INTRODUCTION

This matter is before the court by way of plaintiff’s and defendant’s, Ohio Casualty Group’s, cross motions for summary judgment pursuant to Pa.R.C.P. 1035. Following a jury trial held before this court, wherein a verdict has essentially been rendered, the parties filed their timely motions, responses and briefs, all addressing insurance coverage questions. The parties have presented their respective arguments to this court. Accordingly, this matter awaits disposition.

STATEMENT OF THE CASE

On March 15, 1995, Suzanne Bombar, an employee of Lord Label Inc., located in Dunmore, Pennsylvania, was struck and severely injured by a forklift while at work. Suzanne Bombar sustained extensive injuries to her right leg which eventually led to amputation. At the time of the accident, the forklift, which struck the plaintiff, was operated by another employee of Lord Label who drove it in reverse through a plastic curtained opening that obstructed the operator’s view.

The forklift was manufactured by Linde Inc., a German company, and shipped to Baker Inc, a subsidiary of Linde Inc. Baker in turn sold the forklift to Upright Material Handling Co., in Avoca, Pennsylvania. Upright is in the business of selling such industrial equipment and servicing the same. Lord Label purchased the forklift used the day of the accident from Upright without a back-up alarm or strobe light which engage when the forklift is driven in reverse. The forklift was shipped from the manufacturer to Upright without a manufacturer’s backup alarm installed.

The forklift was later equipped with an after-market back-up alarm installed by an employee of Upright upon Lord Label’s request. Due to the annoyance of the alarm’s sound, the evidence indicated that the alarm was intentionally disconnected by Lord Label employees on several occasions including the date on which the accident occurred. There was also evidence that the wiring got caught on structures at Lord Label causing it to disconnect as well. The alarm and strobe light were both battery powered. The manner in which the alarm was installed allowed the wires to be exposed on the outside of the forklift pipe frame near the roll bar. Upright’s agent simply mounted the alarm by wrapping the wires around the outside of the roll bar rather than passing the wires through the center of the roll bar as intended by the manufacturer. Upright had been called several times to reinstall the alarm before the accident occurred. There was a factual dispute as to whether the alarm wires were intentionally disconnected or whether they caught and were pulled off during normal operations due to the wires’ exterior mounting.

In March of 1994, Upright purchased an insurance policy from First Insurance Center, an agency who used Ohio Casualty Insurance Company, as an underwriter. The Insuring Agreement states it will pay damages that the insured may be legally obligated to pay because of “bodily injury” or property damage in which the policy applies. (See Commercial general liability coverage form, p. 1.) Furthermore, the insurer will hold the right to defend the insured against any “suit” seeking such damages under the application of the insurance policy. (See Commercial general liability coverage form, p. 1.) Yet, the insurer will not pay sums that the insured may be obligated to pay or defend suits that encompass a matter to which the insurance policy does not apply. (See Commercial general liability coverage form, p. 1.) Additionally, under the business owner’s section of the policy lays a specific endorsement no. CG ******** labeled “Exclusion — products-completed operations hazard” exception, whereby the insurer will not cover the insured for “bodily injury” or “property damage” which occurs away from the premises the insured owns or rents and arises out of “your product” or “your work.” (See Commercial general liability coverage form, p. 5.)

After the incident involving the forklift truck, the principals of Upright, Patrick Conflitti and Arthur Watkins met with Matt Alferio, the owner of First Insurance Center and notified him of the accident. During that meeting, Mr. Alferio told Mr. Conflitti and Mr. Watkins that no insurance coverage was available. At that time, First Insurance Center did not notify its underwriter, Ohio Casualty Inc., of the accident Upright had reported involving the forklift truck. Subsequently, Upright Inc. purchased “products-completed hazard coverage.”

On May 24,1996, Suzanne Bombar filed a complaint against both Baker Inc. and Upright Inc. including claims in strict liability and negligence. Upon service of process, Upright took the complaint to its attorney, Ralph P. Carey, Esq., who entered a defense. In April 1999, during discovery proceedings, a request was made upon Upright to produce a copy of its insurance policy and, in turn, Upright referred the request to First Insurance Company. First Insurance Company denied coverage due to the “products and completed operations exclusion” by a letter sent to Upright Inc.

In June 1999, plaintiff Bombar sent a copy of the complaint to Ohio Casualty who later notified the plaintiff, by letter dated June 30,1999, that there was no coverage due to the exclusion. This letter was never sent to the insured.

Deposition testimony indicates that Ohio Casualty Insurance Co. was fully aware of the accusations made against the insured upon receipt of Bombar’s complaint, but throughout the entire proceedings the insurance agents’ attempts to investigate the claim were only cursory, at best. The local claims manager conceded that he made the decision to inform plaintiff’s counsel that there would be no coverage provided to Upright due to the exclusion. (See plaintiff’s exhibit D, D.T. Culotta.) Mr. Klatt, the local adjuster, was given instructions by the local manager to obtain statements from the owners of Upright Inc. by contacting its counsel, Ralph Carey, Esq. Apparently, Klatt only scheduled a meeting and retained statements from one of the insured. Klatt remained the adjuster for four months, and then resigned. The matter was next referred to Don Osbourne. Mr. Osbourne made several attempts to schedule a meeting with the owners of Upright by mail; three of these letters were misaddressed. Osborne contacted the Law Offices of Ralph Carey on a monthly basis by phone. During one of these phone conversations, Mr. Osbourne was informed that mediation was in progress and that the matter most likely was going to trial. Yet, Ohio never issued a reservation of rights letter to Upright during this time, nor did it notify Upright that its coverage was denied in writing, or enter a defense. It has been noted that neither Upright, nor its counsel, ever made written demand for a defense on Ohio in the instant suit.

On January 19,2001, a jury returned a verdict against Upright in negligence for $1,800,000. Upright appealed the action to the Superior Court of Pennsylvania which was later abandoned upon plaintiff’s motion to mold the verdict to include delay damages. The verdict was ultimately molded to $2,393,458.65.

On March 21,2001, Upright filed the present declaratory judgment action claiming that Ohio Casualty should have defended it during the course of the initial action and that Ohio should indemnify it for the verdict, and pay damages for alleged bad faith in handling the claim. Original plaintiff, Suzanne Bombar, filed a petition to intervene as the real party in interest, which was granted by order of this court on April 29, 2002. The intervenor complaint was filed May 24,2002. On October 18,2002, Suzanne Bombar was assigned all rights that Upright may have under its policy of liability insurance issued by Ohio Casualty. Plaintiff and defendant, Ohio Casualty Insurance Company, ask that this court grant their respective motions for summary judgment.

The prime question addressed to this court is whether either motion for summary judgment may be granted in favor of one party over the other? To answer this question we must first lay a brief foundation of the requirements needed for a grant of summary judgment in a declaratory judgment action.

Declaratory Judgment/Summary Judgment Action

“[T]he purpose of the Declaratory Judgment Act is to afford relief from uncertainty and insecurity with respect to legal rights, status and other relations.” Keystone Aerial Surveys Inc. v. Pennsylvania Property & Casualty Insurance Association, 777 A.2d 84, 88 (Pa. Super. 2001), citing Juban v. Schermer, 751 A.2d 1190, 1193 (Pa. Super. 2000). The Declaratory Judgment Act, 42 Pa.C.S. §§7531, 7541, grants the trial court the power to pronounce the status and rights of the parties involved in an action, regardless of whether further relief can be sought. Keystone Aerial Surveys Inc. v. Pennsylvania Property & Casualty Insurance Association, 777A.2d 84, 88 (Pa. Super. 2001) citing Juban v. Schermer, 751 A.2d 1190, 1193 (Pa. Super. 2000). The Superior Court further established that “[ojrdinary summary judgment procedures are applicable to declaratory judgment actions.” Keystone Aerial Surveys Inc., supra at 88; see Lititz Mutual Insurance Company v. Steely, 746 A.2d 607, 609 (Pa. Super. 1999). Therefore, “[i]n examining this matter, as with all summary judgment cases, we must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.” Keystone Aerial Surveys Inc., supra at 89. The Superior Court stated:

“In order to withstand a motion for summary judgment, the non-moving party must adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof such that a jury could return a verdict in his favor. Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Id. (citations omitted)

After a review of current case law, it is evident that summary judgment can properly be granted in the clearest of cases where a review of the record shows that the moving party is entitled to judgment as a matter of law. Pestalozzi v. Philadelphia Flyers Ltd., 394 Pa. Super. 420, 576 A.2d 72 (1990). With that being said, it is upon this court to determine if either party is entitled to judgment as a matter of law.

The most recent decision analogous to the case before the court was decided in Allstate Insurance Co. v. Fodor, 49 D.&C.4th 541 (Monroe Cty. 2000). The court noted that summary judgment is appropriate within a declaratory judgment action. To determine whether the grant of summary judgment is proper the court must take into account all pleadings, depositions, interrogatories, admissions on file with any affidavits to ascertain if any genuine issue of material fact exists. Allstate Insurance Co., 49 D.&C.4th 541, 545-46; see also, Aetna Casualty & Surety Co. v. Roe, 437 Pa. Super. 414, 420, 650 A.2d 94, 97 (1994); Neil v. Allstate Insurance Co., 379 Pa. Super. 299, 302, 549 A.2d 1304, 1305 (1998). Moreover, the record must be viewed in a light most favorable to the non-moving party and all well-pleaded facts must be accepted as true while the non-moving party should be given the benefit of all reasonable inferences drawn therefrom. Neil, supra at 302, 549 A.2d at 1305. To withstand an insurer’s motion for summary judgment, the contesting party must establish that there are genuine issues of material fact within the policy language or its application. Allstate Insurance Co., supra at 555.

One decision directly on point was rendered by the Pennsylvania Superior Court in Gamble Farm Inn Inc. v. Selective Insurance Co., 440 Pa. Super. 501, 656 A.2d 142 (1995). There the trial court granted summary judgment in favor of an insured where it found that a policy exclusion was inapplicable. The court relied on the Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 469 A.2d 563 (1983) decision wherein it stated that the interpretation of insurance contracts is a question of law, not a question of fact that can be decided by the court rather than the jury. Gamble Farm Inn Inc., 440 Pa. Super, at 505, citing Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 469 A.2d 563 (1983). (citations omitted)

With this standard in mind we will address the issues presented by both parties’ motions. The materiality of these issues will be confronted individually in the following discussion.

Discussion

(1) Whether a Negligence Claim Is Excluded From Coverage Under the Ohio Casualty Insurance Policy Pursuant to the Products-Completed Operations Hazard Exclusion?

We will begin our analysis by first addressing Upright’s position advanced by its motion for summary judgment. The main issue involved in the instant action concerns an Ohio Casualty Insurance commercial liability policy labeled BKW* *******, which was purchased by Upright Materials Handling Inc. The effective dates of this policy were June 4,1994 through June 4, 1995. This policy carried a special endorsement no. CG ** ** ** ** entitled the “products-completed operations hazard” exclusion. The said policy was in full effect at the time of Suzanne Bombar’s accident at Lord Label on March 17, 1995. The defendant, Ohio Casualty, asserts that coverage is not available under the instant policy due to the “products-completed operations hazard” exclusion. Yet, the exclusion which Ohio relied upon does not exclude coverage of claims for negligence, including negligent failure to warn. Instead, the policy states, injuries that result from a product itself are excluded from coverage. In the underlying case, a negligence claim has been made and proven. A verdict, including delay damages, has been returned in negligence in favor of plaintiff for $2,393,458.65. As a result, Ohio, under the terms of its policy, must provide coverage to its insured since the exclusion provided by endorsement is not applicable.

The issue presented involves the applicability of a contract for an insurance policy. It must be made clear how the interpretation of those policy provisions operate in light of the insured. It has been settled that where a policy provision is ambiguous, the policy is to be construed in favor of the insured, who lacks bargaining power regarding the terms of the contract, and against the insurer, the drafter of the contract. Gamble Farm Inn Inc., supra at 505. See also, Venetian Blind Co., supra; Rusiski v. Pribonic, 511 Pa. 383,515 A.2d 507 (1986). Yet, when the language of a contract is found to be clear, a court is required to give effect to that language. Gamble Farm Inn Inc., supra. It ultimately is the determination of the court to decide whether a writing is clear and unambiguous. Id. citing Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385 (1986). Furthermore, the court in Gamble Farm Inn, in dictum, explains the purpose of insurance coverage when it states “[a]n insurer contracts with an insured to provide coverage for certain risks, in return for payment of premiums which are calculated based upon those risks. It is reasonable and understandable that, when issuing an ordinary commercial CGL policy, an insurer undertakes to cover the risks which may [possibly] occur.” Id. at 510-11. (emphasis added) In interpreting the language of contract provisions, the reasonable expectations of the insured must not be defeated. Harford Mutual Insurance Co. v. Moorhead, 396 Pa. Super. 234, 240, 578 A.2d 492, 495 (1990), citing Huffman v. Aetna Life and Casualty Co., 337 Pa. Super. 274, 486 A.2d 1330 (1984). Ambiguities in insurance contracts must be resolved in favor of the insured and read in a manner consistent to the insured’s reasonable expectation at the time of contracting. Federal Kemper Insurance Co. v. Jones, 111 F. Supp. 405 (1991). Accordingly, the Ohio insurance contract provisions must be read in a light favorable to the insured while allowing a reasonable interpretation of the parties’ intent.

To fully examine the crux of both parties’ arguments several tiers of analysis are required. Specifically, the subject matter that must first be addressed is the coverage issue under the “products-completed operations hazard” exclusion. Additionally, we must establish whether the theories in which a complaint is pled are outcome determinative on whether the Ohio exclusion will apply to exclude coverage to Upright, the insured, or not. These questions will be addressed and answered as follows.

The Superior Court of Pennsylvania in Harford Mutual Insurance Co. v. Moorhead, 396 Pa. Super. 234, 251, 578 A.2d 492, 501 (1990), found that where “a claim is brought under the auspices of ‘negligent failure to warn,’ it is appropriate to view the claim as one charging improper conduct, and not one of making a defective product. ” (emphasis in original) In that case, the defendants, the Moorheads, operated a business which sold wine-making supplies. The Moorheads sold sulphur strips, needed in the wine-making process, to co-defendant, Mr. Stevens, who used them for killing bacteria in the wine-making process by igniting the strips and placing them in a wine vessel/whislcey barrel. When placed in the barrel, the strips ignited with the preexisting whiskey vapors and exploded, injuring the plaintiff. Defendants had been insured under a comprehensive liability policy issued by Harford Mutual covering business operations. Harford denied coverage maintaining that the products-hazard exclusion barred coverage of the claim. The Superior Court looked to the language of an identical policy exclusion which noted that the “products hazard” applied to damage that arose out of the named insured’s products. The action litigated involved conduct, specifically, negligent failure to warn. Ultimately, the court found that the “products hazard” exclusion did not apply, “but only when a product, rather than a service, is the [alleged] cause in fact of damages or injury to a third person.” Harford, supra (emphasis added) citing Friestad v. Travelers Indemnity Co., 260 Pa. Super. 178, 393 A.2d 1212 (1978). The court also noted the definition of products hazard is defined as an injury “arising out of the named insured’s products----” Harford, supra at 253,578 A.2d at 502. The court continued by stating that “[njowhere does it purport to exclude injuries arising out of negligent conduct, and we decline to so expand the definition.” Id. at 253, 578 A.2d at 502, citing Chancier v. American Hardware Mutual Insurance Co., 109 Idaho 841, 712 P.2d 542, 547-48 (1985).

Likewise, the Friestad court noted that, under a comprehensive business owner’s insurance policy, it is preferable to define products hazard in terms of products liability law and apply the exclusion only when a product rather than a service is the cause in fact of the complained of damages or injury. Friestad, supra at 188, citing Henderson, Insurance Protection for Products Liability and Completed Operations — What Every Lawyer Should Know, 50 Neb.L.R. 415, 430-31 (1971). In Friestad, the appellant, Andreas Friestad, trading as Superior Heating Co., carelessly installed a Sears’ brand furnace in a consumer’s home which resulted in a fire destroying the home and contents. Judgment was entered in the homeowner’s favor against Sears, which sought indemnity from Friestad. The insured, Friestad, notified its insurance company of the claim but it denied coverage. That policy included exclusions for “products hazard” and “completed operations,” which were defined separately. It was ultimately held that coverage was not available to Friestad since the incident arose from the service of installing the furnace and therefore came within the ambit of the “completed-operations hazard.” The Friestad court affirmed that the principal thrust of “completed operations” is the insured’s provision of a service, while the principal thrust of the “products hazard” involves the insured’s production or sale of a product. Id. at 182.

The court in Keystone Spray Equipment Inc. v. Regis Insurance Co., 767 A.2d 572 (Pa. Super. 2001), takes this analysis a step further when it considered the necessary criteria for a “completed” service. There the court held that the insured’s negligent misrepresentation was not regarded as complete, for the purpose of a “completed operations” exception until the negligence was relied upon and caused an injury. This rule applies even where the service provider has left the premises and surrendered control to the customer. This is true because one cannot be injured by negligence until the misrepresentation is relied upon. Keystone Spray Equipment Inc., supra at 575, citing Eastcoast Equipment Co. v. Maryland Casualty Co., 207 Pa. Super. 383, 218 A.2d 91 (1996). See also, Reed Roller Bit Co. v. Pacific Employers Insurance Co., 198 F.2d 1 (5th Cir. 1952), cert denied, 344 U.S. 920, 73 S.Ct 386, 97 L.Ed. 709 (1953). The Eastcoast court noted that “this rule applies equally to negligent misrepresentation and negligent failure to warn theories because the underlying policy is the same to prevent an insurer from refusing coverage for an injury caused by negligence at the time of installation simply because the injury cannot be discovered until after the installation is complete and the installed equipment is put into service. Eastcoast, supra at 98 (rejecting contrary law in New Jersey). To hold otherwise would eviscerate the coverage because a failure to warn has no effect until the party to whom the warning was owed suffers an injury. Id. at 99. Thus, a ‘completed operations’ exclusion does not absolve an insurer of its contractual duty to defend an insured in a negligent failure to warn claim when the lack of warning is the alleged cause of the injury.” Keystone Spray Equipment Inc., supra at 575-76.

Additionally, the Superior Court in Pennsylvania National Mutual Casualty Insurance Co. v. Kaminski Lumber Co. Inc., 397 Pa. Super. 484, 580 A.2d 401 (1990), similarly ruled that an exclusion for products hazard does not apply to claims regarding negligent failure to warn. The Kaminski court relied upon both Harford and Friestad in determining that such exclusion applies only to claims that are grounded in products liability not in negligence. Id. at 488, 580 A.2d at 402. After a careful review of the foregoing cases, it can be affirmed that the basis of an insured party’s complaint is outcome determinative. Should the injured party’s complaint sound in negligence, including negligent failure to warn or negligent misrepresentation, then recovery from the insurer is likely when a “product-completed operation hazard” exclusion is at issue.

Accordingly, Ohio Casualty’s exclusion is identical to those referenced in the above mentioned cases. Ohio’s exclusion, as defined in the policy, was a “products-completed operations hazard” exclusion which included products and maintenance, service, repair of products occurring away from the insured’s premises. (See plaintiff’s exhibit A, Commercial general liability coverage form.) Yet, under this same exclusion the insurer denied coverage for installation negligently completed by the insured, including a count for negligent failure to warn. The thrust of Suzanne Bombar’s complaint and verdict rests upon negligence including negligent failure to warn of defects in the alarm and negligent installation, service and maintenance of the alarm, among other counts, and not products liability.

The Superior Court in Harford pointed out that in the harshest of states to establish a ground of recovery against an insurer, the plaintiff must prove negligence in a failure to warn claim properly. Harford, supra at 248, 578 A.2d at 499. Here this burden has been met. Should the Ohio insurance policy exclusion be applied to deny coverage over the claim in the foregoing suit, then the underlying purpose of carrying liability insurance would surely be circumvented. The defendant, Ohio Casualty, must provide coverage for its insured based upon the foregoing precedent and analysis.

(2) Whether a “Products-Completed Operations Hazard” Provision Enables an Insurer To Avoid the Duty To Defend an Insured in a Suit Based on Negligence?

“It is well established that an insurer need only defend an insured in a claim if the insurance contract provides coverage for a suit of that nature.” Keystone Spray Equipment Inc., supra at 574, citing Gene’s Restaurant v. Nationwide Insurance Co., 519 Pa. 306, 548 A.2d 246 (1988). To decide if the duty to defend exists, the court must evaluate the allegations in the complaint against the provisions of the insurance contract and establish whether the insurer must indemnify the insured if the claims in the complaint are proven. Keystone Spray Equipment Inc., supra.

To determine if Ohio Casualty did have a duty to defend Upright against Bombar’s claim, we must compare the negligence allegation with the provisions of the Ohio Casualty insurance contract including the “products-completed operations hazard” exclusion. The allegations asserted in Bombar’s complaint included counts of negligence for failure to warn, inspection, installation, improper issuance of warnings among other charges against Upright, the insured. Additionally, Bombar declared counts of strict liability, implied warranty, express warranty and a claim for punitive damages against Upright. The insurance contract that was in place at the time of the accident defined “products-completed operations hazard” as follows:

“ ‘Bodily injury’ and ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’ except:
“(1) Products that are still in your physical possession; or
“(2) Work that has not yet been completed or abandoned. However, ‘your work’ will be deemed completed at the earliest of the following times:
“(a) When all of the work called for in your contract has been completed.
“(b) When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.
“(c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.
“(3) Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.
“ ‘Your work’ means:
“(a) Work or operations performed by you or on your behalf; and
“(b) Materials, parts or equipment furnished in connection with such work or operations.
“ ‘Your work’ includes:
“(a) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of ‘your work,’ and
“(b) The providing of or failure to provide warnings or instructions.”

In reading both the policy and the complaint, at first glance it may appear that coverage may not exist. Yet, as noted above in the discussion, the installation of the backup alarm by Upright was a service, but it was not completed at the time the accident occurred because the installation was both faulty and negligent, which the jury concluded and gave rise to the complained of injury. See supra text p. 315. The appearance of policy coverage over the claim alone does not determine whether there is a duty to defend by the insurer. “An insurer who refuses to defend its insured from the outset does so at its own peril.” The Board of Public Education ofthe School District of Pittsburgh v. National Union Fire Insurance Co. of Pittsburgh, Pa., 709 A.2d 910,913 (Pa. Super. 1998), citing Aetna Casualty and Surety Co. v. Roe, 437 Pa. Super. 414, 423, 650 A.2d 94, 99; Stidham v. Millvale Sportsmen’s Club, 421 Pa. Super. 548, 564, 618 A.2d 945, 953 (1992). “[T]he duty to defend remains with the insurer until it is clear the claim has been narrowed to one beyond the terms of the policy.... An insurer who disclaims its duty to defend based on a policy exclusion bears the burden of proving the applicability of the exclusion.” Board of Public Education of the School District of Pittsburg, supra at 913. (citations omitted)

Based upon precedent, the defendant, Ohio Casualty, carried the duty to defend until it met its burden of proving the applicability of its exclusion. The facts do not indicate that Ohio Casualty met its burden of proof in establishing the applicability of the exclusion, nor did it make any attempt to defend the insured in the initial claim. Deposition testimony indicates that Ohio’s agent was first notified of the claim in May 1999 by a phone conversation with plaintiff’s counsel. (See plaintiff’s exhibit D, D.T. Culotta pp. 35-39.) Ohio Casualty’s Scranton Claims Manager, Gary Culotta, was sent a memorandum by Cathy Anthony of First Insurance Center on June 9, 1999, informing him of the claim made against Upright Material Handling Inc. in May of 1996. This memo was followed by additional correspondence advising Ohio Casualty of the claim against the insured. By letter dated June 30, 1999, Mr. Culotta responded to a previous letter sent by Attorney Munley, indicating that there would be no coverage provided by Ohio Casualty relying on the “products-completed operations exclusion.” Mr. Culotta provided no explanation in his letter to Attorney Munley as to the denial of coverage only a copy of the policy exclusion. (See plaintiff’s exhibit C.) Furthermore, in Mr. Culotta’s deposition, he stated that he alone made the determination to deny coverage without consulting with counsel. Ohio Casualty did not contact the insured prior to denial of coverage, nor did they conduct a complete investigation of the claim, nor did it provide an explanation as to why the claim would be denied. Only a verbal denial was provided by Ohio Casualty. (See plaintiff’s exhibit D, D.T. Cullotta pp. 35-39.)

According to insurance industry standards, as provided by Mr. Chett’s expert report, on the face of an insurance policy it may appear that coverage may not be available for a particular loss. (See plaintiff’s exhibit P, expert report of Mr. Chett, p. 7.) Yet, there are factors that may void policy exclusions and interpretations of the insuring agreements which include: ambiguity of policy provisions, statutoiy or case law, and facts of the accident or loss. Ohio Casualty has provided no indication that any of the above listed factors had even been considered let alone investigated. Id. Furthermore, in an opinion written specifically for the initial proceeding, it is stated that “an insurer will be guilty of having breached its duty to defend in virtually all cases in which it does not defend the insured and a judgment is entered that is covered by the policy. (See plaintiff’s exhibit M, opinion.) “An insurer must defend its insured if the underlying complaint alleges facts which, if true, would actually or potentially bring the claims within the policy coverage.” The Board of Public Education of the School District of Pittsburgh, supra at 913. (emphasis in original) Any doubts in regarding the insurer’s duty to defend must be resolved in favor of the insured. American Contract Bridge v. Nationwide Mutual Fire Insurance, 752 F.2d 71, 76 (3d Cir. 1985). Ohio Casualty made no investigation, not even to determine whether the insured would be covered should the facts asserted in the complaint be true. Also, the testimony provided indicates that no documentation has been made under the investigation of the claim. (See plaintiff’s exhibit D, D.T. Culotta). It is evident that Ohio failed to meet its burden to show that coverage was not applicable. Additionally, Ohio made no attempt to defend the insured as is required according to the above enumerated cases. Therefore, the defendant Ohio Casualty should be held liable for its actions and inactions in denying Upright a defense in the initial suit, even under a reservation of rights.

(3) Whether Coverage Has Been Voided on Account of the Actions Or Inactions of the Insured?

The defendant asserts that the actions and inactions of Upright voided any possible responsibility Ohio might have in providing insurance coverage. An insured’s breach of a duty to cooperate may relieve the insurer from liability under the insurance policy if the breach is substantial. Forest City Grant Liberty Associates v. Genro II Inc., 438 Pa. Super. 553, 559, 652 A.2d 948, 951 (1995). The breach may be used as a defense only where the insurer suffered prejudice because of the breach. Forest City Grant Liberty Associates, 438 Pa. Super, at 559, 652 A.2d at 951. Essentially, the question raised here by the defendant, as to whether the insured committed a material breach of its duty to cooperate, is a non-issue. A breach of a duty to cooperate is accomplished “where the insured neglects to disclose information needed by the insurer to prepare a defense, does not aid in securing witnesses, refuses to attend hearings or appear and testify at trial or otherwise fails to ‘render all reasonable assistance necessary to the defense of the suit.’ ” Id. at 560, 652 A.2d at 952; see also, 8 Appleman, Insurance Law and Practice §4741. This is not the present case.

The evidence establishes that Upright, through two of its stockholders, notified their insurance agent, Matt Alferio, of the accident within one month of the occurrence. (See plaintiff’s exhibit T, D.T. Alferio p. 36.) The deposition testimony of both Patrick Conflitti and Arthur Watkins, the stockholders of Upright, indicates that throughout the proceedings Upright acted reasonably in attempting to provide notice to Ohio Casualty for the claim and to keep Ohio informed. (See plaintiff’s exhibits U and V.)

Conversely, the deposition testimony of Ohio Casualty agents reveals that the insurance company had not received notice of the claim and lawsuit until May of 1999, approximately four years after the complaint was filed. (See plaintiff’s exhibitD, D.T. Cullottapp. 35-39.) Furthermore, under the insurance policy, section IV Commercial General Liability Conditions paragraph (2) Du ties in the event of occurrence, offense, claim or suit states that

“(a) You must see to it that we are notified as soon as practicable of an ‘occurrence’ or an offense which may result in a claim. To the extent possible, notice should include:
“(1) How, when and where the ‘occurrence’ or offense took place;
“(2) The names and addresses of any injured persons and witnesses; and
“(3) The nature and location of any injury or damage arising out of the ‘occurrence’ or offense.
“(b) If a claim is made or ‘suit’ is brought against any insured, you must
“(1) Immediately record the specifics of the claim or ‘suit’ and the date received; and
“(2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or ‘suit’ as soon as practicable.” (See plaintiff’s exhibit A.)

Upright asserts that it did notify the insurer as soon as practicable after the occurrence involving the forklift truck. Testimony has been provided by the insured in which they state that two of its stockholders met with Matt Alferio, the owner of First Insurance Company, to notify him of the events which took place. (See plaintiff’s exhibits U and V.) Upon that meeting the owners of Upright were notified that coverage would be denied. Id. Whether or not the insured fulfilled their duty under the insurance contract is not absolute upon their testimony alone. There still remains a question as to whether the act of the stockholders informing Matt Alferio, owner of First Insurance Company, and agent of Ohio Casualty is the same as providing notice to Ohio Casualty Insurance Co. directly. The fact that Matt Alferio and First Insurance Company are the agents of Ohio Casualty Insurance Company has never been disputed. Matt Alferio clearly is an insurance agent employed by First Insurance Company, which is an insurance agency. Ohio Casualty, as principal, can be held liable to third parties for the wrongful conduct of their employees and their agents if the services rendered by the employees and agents were done in furthering the interests, activities, affairs or business of the principal. The agency relationship results from (1) the manifestation by the principal that the agent shall act for him or her, (2) the agent’s acceptance of the undertaking, and (3) the understanding of the parties that the principal is to be in control of the undertaking. Basile v.H&R Block Inc., 563 Pa. 359, 761 A.2d 1115 (2000); see also, Restatement (Second) of Agency §1, comment b (1958). Our analysis of the facts shows that Alferio and First Insurance wrote the policy and initially opined the denial of coverage. These actions were never disavowed by Ohio Casualty. Later, Ohio also opined the denial of coverage as well. Accordingly, all three elements of Basile are met. Resultantly, then, the doctrine of vicarious liability applies and Ohio is accountable for their own actions by their employees, as well as those of Matt Alferio and First Insurance Company. There really has been no factual dispute regarding these matters submitted to this court for its consideration. Myszkowski v. Penn Stroud Hotel Inc., 430 Pa. Super. 315, 634 A.2d 622 (1993).

Based on the above analysis, Upright’s reporting by its two stockholders to Matt Alferio and First Insurance would be the equivalent of a direct report to Ohio Casualty Insurance. The communication breakdown between Alferio, First Insurance and Ohio would seem to be a matter between those parties and better left to another day.

(4) Do the Actions of Ohio Casualty Insurance Constitute Bad Faith Toward the Insured?

Several Pennsylvania courts have recognized that there is no common-law remedy in this state for bad faith on the part of insurers. Terletsky v. Prudential Property & Casualty Insurance Co., 437 Pa. Super. 108, 125, 649 A.2d 680, 688 (1994); D ’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 494 Pa. 501, 507, 431 A.2d 1228, 1232 (1994). The Pennsylvania Legislature has instead created a statutory remedy in 42 Pa.C.S. §8371 which provides that:

“In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all the following actions:
“(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3 percent.
“(2) Award punitive damages against the insurer.
“(3) Assess court costs and attorney fees against the insurer.”

Numerous Pennsylvania courts have also revealed that “bad faith” denotes a particular connotation in the insurance arena as defined in Black’s Law Dictionary 139 (9th ed. 1999):

“Insurance. ‘Bad faith’ on part of insurer is any frivolous or unfounded refusal to pay proceeds of a policy; it is not necessary that such refusal be fraudulent. For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e., good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith.” See Adamski v. Allstate Insurance Co., 738 A.2d 1033, 1036 (Pa. Super. 1999); Terletsky, supra at 125, 649 A.2d at 688.

Additionally, the Pennsylvania Superior Court established a two-prong test that plaintiff must prove by clear and convincing evidence in order to establish a claim of bad faith against the defendant: (1) the insurer did not have a reasonable basis to deny benefits under the policy; and (2) the insurer knew or recklessly disregarded its lack of a reasonable basis. Terletsky, supra. In addition, when an insurer acts with disregard or indifference to the rights of the insured, such actions may constitute bad faith. Polselli v. Nationwide Mutual Fire Insurance Co., 23 F.3d 747, 751 (3d Cir. 1994).

The plaintiff asserts that the defendant insurance company acted under a guise of bad faith in both investigating the claim and refusing to defend the insured. To apply the Superior Court’s two-part test it first must be established whether the insurer had a reasonable basis to deny benefits to the insured in the first place. The testimony of the Ohio Casualty agents suggests that there were no guidelines in place within the company as to the time frame of investigations and determination of claims. (Plaintiff’s exhibit D, D.T. Cullotta.) Furthermore, Mr. Culotta, the insurance agent who found that the “products-completed operations hazard” applied, provided in his deposition that he alone made the decision to dishonor the insured’s claim without a review of Pennsylvania law, or without referring the matter to counsel. Id. Mr. Culotta never referred to any instructions as to the manner in which an investigation should be handled because no written guidelines had been instituted by the company for the handling of claims. Mr. Klatt, another insurance adjuster, did nothing more than set up a meeting with Mr. Watkins of Upright to secure a statement. (Plaintiff’s exhibit D, D.T. Cullotta.) Mr. Osbourne was the last adjuster assigned to the claim who mailed several letters and placed a few phone calls. (Plaintiff’s exhibit E, D.T. Osbourne.)

According to insurance industry standards, an insurer shall complete the investigation of a claim within 30 days of notification, unless the investigation cannot be completed within such time. See 31 Pa. Code §146.6. If additional time is necessary, within every 45 days, the insurer shall present the insured a written explanation for delay and state when a decision may be expected. 31 Pa. Code §146.6. The evidence that any investigation was performed by the Ohio insurance agents is lacking, let alone enough information to make a determination as to whether the policy exclusion applied. The evidence produced by the plaintiff shows the insurer did not have a reasonable basis to deny benefits to its insured. Furthermore, after the initial determination that coverage would not apply under the “products-completed operations” exclusion, no further contact was made with the insured. As Mr. Chett noted in his expert report, “Ohio Casualty had no reasonable basis for their outrageous conduct.” (See plaintilf’s exhibit P, expert report of Mr. Chett, p. 18.)

The definition of bad faith, within the insurance context as provided by Black’s Law Dictionary, applies when there has been a breach of a known duty by the insurer. The evidence provided by both parties substantiates there has been a blatant and reckless disregard on the part of the insurer. Ohio has breached its duty to investigate the claim as it provided it would do under the terms of the insurance policy. Ohio breached its duty to defend the insured as was also provided in the policy. The insurer had little if any contact with its insured throughout the entire proceedings. Without any standards in place as how investigations should be conducted, the company has permitted single individuals to arbitrarily determine whether or not a claim will be covered by the policy; this is a breach of industry standards. This behavior on the part of Ohio Casualty is surely reckless and denotes bad faith. The insurer must be held liable to the insured for any damages it caused due to its indifference and lack of professionalism.

(5) Indemnification and Punitive Damages Due to Bad Faith.

Indemnification

Plaintiff contends that because the defendant acted with bad faith, it is now liable for the excess verdict awarded to Suzanne Bombar by the jury. The plaintiff relies on The Birth Center v. The St. Paul Companies Inc., 567 Pa. 386, 406, 787 A.2d 376, 389 (2001). There the Supreme Court of Pennsylvania stated that “Requiring insurers, who act in bad faith, to pay excess verdicts protects insured[s] from liability that, absent the insurer’s bad faith conduct, the insured would not have incurred.” The Birth Center, supra at 406, 787 A.2d at 388. (footnote omitted) Like determining whether a duty to defend exists, the court must look to the provisions of the insurance contract and determine whether the insurer would have a duty to indemnify if the allegations in the complaint are proven. Unionamerica Insurance Co. Ltd. v. J.B. Johnson t/a Johnson Roofing Co., 806 A.2d 431 (Pa. Super. 2002). The duty to indemnify is a conditional obligation which arises only if, after trial on the third-party claim, it is established that the loss suffered is covered by the terms of the policy. Unionamerica, supra at 434.

Under the Insuring Agreement, the policy states that it will pay those sums that: “the insured becomes legally obligated to pay as damages because of ‘personal injury’ ... to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages. However, we will have no duty to defend the insured against any ‘suit’ seeking damages for ‘personal injury’... to which this insurance does not apply.” (See plaintiff’s exhibit A, commercial general liability coverage form, coverage B personal and advertising injury liability.)

According to the language of the insurance contract, it is clear that indemnification is dependant upon overall coverage of the policy. (See plaintiff’s exhibit A, section I.) The contract states that the insurer will pay those amounts that the insured becomes legally obligated to pay as damages to which the insurance applies. Id. As discussed above, the Ohio insurance contract does apply to the instant claim. Moreover, in reading the contract it is apparent that the third-party loss suffered is covered by the terms of the policy where it is stated that the insurer will pay damages because of “personal injury.” Indemnification is a conditional obligation and these conditions have been met; a verdict has been returned from the trial of the third-party claim, and that claim fits squarely within the parameters of the insurance policy. Ohio Casualty should be liable for the total excess verdict amount entered against Upright.

Punitive damages

Plaintiff requests that punitive damages be awarded from the defendant due to the allegations of bad faith. The Superior Court in Hollock v. Eric Insurance Exchange, 842 A.2d 409 (Pa. Super. 2004), relies upon language found within 42 Pa.C.S. §8371 which empowers the trial court to award punitive damages to the insured if the insurer has acted with bad faith toward the insured. The statute also states that the only prerequisite to an award of punitive damages is a finding of bad faith. 42 Pa.C.S. §8371. It has been revealed by the plaintiff that the nature of Ohio’s investigation was cursory at best. The agents investigating the claim had only a mere familiarity with the claim. No reservation of rights letter was ever sent or even discussed. The insurer to date has not denied the claim in writing to the insureds, nor presented any explanation for the denial aside from a brief verbal denial. For the forgoing reasons and those discussed earlier within this memorandum, the plaintiff may be entitled to recover punitive damages from the insured.

After close scrutiny of both Pennsylvania Rules of Civil Procedure, statutory law and case law, it is only proper that this court grant the plaintiff’s motion for summary judgment and deny the defendant’s motion. Clearly, the basis of our inquiry centered squarely on the interpretation of insurance contracts which is a legal issue within the confines of the authority of this court. The initial claim as pled by Suzanne Bombar does fit squarely within Upright’s insurance policy coverage provided by Ohio Casualty Insurance. Furthermore, the application of the policy parameters set forth by the Ohio Casualty Insurance contract is also a question that may be resolved by the court. Therefore this court finds that no genuine issue exists as to material fact. We therefore grant Upright’s motion for summary judgment and deny Ohio Casualty’s motion for summary judgment.

An appropriate order follows.

ORDER

And now, to wit, January 19, 2005, upon consideration of the plaintiff’s and defendant’s, Ohio Casualty Insurance Co., the verbal and written arguments of counsel and in accordance with the preceding memorandum it is hereby ordered and decreed that the plaintiff’s motion for summary judgment will be granted as follows:

(1) The court hereby declares that the insurance policy at issue covers the underlying accident involving Suzanne Bombar.
(2) The court finds that the defendant, Ohio Casualty Insurance Company, is liable for the entire amount of the verdict rendered by the jury in the underlying action including interest in the rate of 3 percent above the prime rate of interest from the date the claim was made.
(3) The court awards punitive damages against the defendant, Ohio Casualty Insurance, with attorney’s fees and costs in an amount to be determined after a hearing.
(4) The court awards compensatory damages to the insured, Upright Materials Handling.

Based on the aforementioned, the defendant’s motion for summary judgment will be denied.

      . In Allstate Insurance Co. v. Fodor, 49 D.&C.4th 541 (Monroe Cty. 2000), the Fodors, Allstate insurance policyholders, commenced an action against Butler Park Self Storage and Stanley Works for injuries sustained by their minor daughter from an automatic security gate on the Butler Park premises. The Fodors were eventually joined as additional defendants. At that point the Fodors requested Allstate Insurance to provide them with a defense and indemnification. Allstate responded by filing a declaratory judgment action alleging that it was not required to provide a defense or indemnity to the policyholders pursuant to exclusionary language within the policy. The insured next filed a motion for summary judgment which was granted.

      . In Pennsylvania National Mutual Casualty Insurance Co. v. Kaminski Limber Co. Inc., 397 Pa. Super. 484, 580 A.2d 401 (1990), the injured party was struck by a board rejected from a saw while completing the duties of his employment. The injured employee sued the saw manufacturer and wholesaler, Kaminski, who sold the saw to his employer, for negligent failure to warn. Kaminski was issued a comprehensive general liability policy from the insurance company which refused coverage for the claim based upon the products hazard exception in the policy.


source: Caselaw Access Project

author: REIBMAN, J,

license: Public Domain

text:
    Velasquez v. Nickischer

      C.P. of Lehigh County,
    no. 2002-C-2880V.

      Nadeem A. Bezar, for plaintiff.

      Mary Ann Martillotti and Alan W. Focht, for defendants.
    December 23, 2004
   REIBMAN, J,

Plaintiff Renee Velazquez filed suit, alleging defendants were negligent in failing to diagnose the heart condition which apparently led to the death of her husband, Raul Velazquez, in the form of a catastrophic cardiac event. Plaintiff has secured an expert who produced a report. Defendants contend the report is defective in various respects and thus move in limine to preclude testimony at trial based on that report. Plaintiff, in turn, moves to preclude testimony by defendants’ experts on the grounds that such evidence would be merely cumulative and that one of the experts lacks qualification in the appropriate field of medicine. The motions will be addressed seriatim.

BACKGROUND

Gleaned largely from the report of plaintiff’s expert, Richard N. Podell M.D., the facts are as follows. On September 16,1999, Raul Velazquez (decedent) appeared at the offices of defendant Emergicenter complaining of pain in his left elbow and knee. He came under the care of defendant Brent Nickischer D.O., who performed a full physical examination. Standing five feet, 11 inches tall, Mr. Velazquez weighed in at 321.4 pounds. Defendant Nickischer’s records also indicate that Mr. Velazquez reported that he smoked a pack of cigarettes a day and consumed alcohol. His blood pressure registered at 138 over 84, and he exhibited a total cholesterol reading of 202 and an HDL level at 22mg percent. Dr. Nickischer prescribed Celebrex for the joint pain.

The parties appear to dispute what follow-up care was ordered at that point. In any event, Mr. Velazquez next presented himself to Dr. Nickischer on July 26, 2000, complaining of continued pain in his knee. His weight had increased to 329.4 pounds and his blood pressure remained relatively constant at 138 over 86. Records kept by Dr. Nickischer do not indicate that he discussed cardiac risk factors with Mr. Velazquez or performed a physical examination of his heart. Dr. Nickischer apparently did, however, draw blood for a liver-function test. He then wrote a prescription for 60 doses of Celebrex at 200mg, with 12 refills.

In July 2001, Mr. Velazquez’ wife, Renee, contacted Dr. Nickischer, apparently requesting a note so that Mr. Velazquez could attend Boy Scout camp with his sons. Plaintiff alleges that without actually examining Mr. Velazquez, but instead relying on Mrs. Velazquez’ representation that her husband was doing well, Dr. Nickischer provided a medical form indicating Mr. Velazquez was medically fit to participate in camp activities and that his cardiovascular and skeletomuscular systems were normal.

Before ever attending the camp, however, Mr. Velazquez experienced severe back pain and began sweating. He fell unconscious and could not be revived by emergency medical personnel. An autopsy dated July 15,2001, indicated that Mr. Velazquez had an “abnormal heart” and died of “coronary artery atherosclerosis.” Mrs. Velazquez subsequently commenced this action against Emergicenter and Dr. Nickischer alleging negligence in the failure to diagnose Mr. Velazquez’ heart condition. Both sides have filed motions in limine to preclude certain testimony at the upcoming trial.

CAUSATION TESTIMONY

In their widest-ranging motion, defendants argue that plaintiff’s expert should be precluded from offering any causation testimony because his report fails to state with reasonable medical certainty that the alleged deviations from care resulted in the harm suffered by the decedent. Plaintiff disagrees, maintaining that the report meets the applicable standard for causation testimony in this Commonwealth.

The Superior Court has held that in order to state a prima facie case for medical malpractice, a plaintiff must proffer an expert opinion stating “to a reasonable degree of medical certainty that the acts of the [allegedly negligent] physician deviated from good and acceptable medical standards, and that such deviation was the proximate cause of the harm suffered.” Hoffman v. Brandywine Hospital, 443 Pa. Super. 245, 255, 661 A.2d 397, 402 (1995) (quoting Mitzelfelt v. Kamrin, 526 Pa. 54, 62, 584 A.2d 888, 892 (1990)). Hoffman involved a plaintiff suing on behalf of her deceased mother who had contracted and succumbed to AIDS as a result of a tainted blood transfusion. Id. at 249, 661 A.2d at 399. In that case, the court held as too indefinite, the testimony of an expert who opined that “in all likelihood [defendant’s negligence] delayed the administration of anti-viral medication which may have hastened the onset of opportunistic disease in [the decedent] and caused her illness to progress sooner than it might have.” Id. at 255,661 A.2d at 402. (emphasis in original) Accordingly, it upheld summary judgment in favor of the doctor who treated the plaintiff after she had been diagnosed as HIV positive. Id. at 256, 661 A.2d at 402.

In the case relied on by Hoffman for the relevant rule, however, the Supreme Court specifically addressed the degree of certainty respecting causation that is necessary to present a prima facie case in a failure-to-diagnose case. Mitzelfelt v. Kamrin, 526 Pa. 54, 584 A.2d 888 (1990). The plaintiff in Mitzelfelt alleged that negligently performed surgeiy left her partially paralyzed, incontinent, and in constant pain. 526 Pa. at 58, 584 A.2d at 890. The plaintiff’s expert testified that error in the operating room allowed her blood pressure to decrease and that the drop in pressure was sufficient to compromise the blood flow to the spinal cord, thereby causing harm to the plaintiff. Id. at 59-60, 584 A.2d at 891. On cross-examination, however, the expert admitted that he could not state to a reasonable degree of medical certainty that the drop in pressure caused the plaintiff’s injuries; instead, he asserted only that “it could have.” Id. at 61, 584 A.2d at 891. The jury awarded plaintiff $3,000,000, but the Superior Court reversed. It held plaintiff had failed to present a prima facie case of malpractice. Id.

Reversing the appellate court, the Supreme Court explained that in cases involving an alleged failure to diagnose which results in an increased risk of harm, a plaintiff need only present “sufficient testimony to establish that (1) the physician failed to exercise reasonable care, that (2) such failure increased the risk of physical harm to the plaintiff, and (3) such harm did in fact occur... Id. at 68, 584 A.2d at 894-95. Once a plaintiff proffers such evidence, “then it is a question properly left to the jury to decide whether the acts or omissions were the proximate cause of the injury.” Id. at 68, 584 A.2d at 895. As the court elaborated, “The jury, not the medical expert, then has the duty to balance probabilities and decide whether defendant’s negligence was a substantial factor in bringing about the harm.” Id. (quoting Hamil v. Bashline, 481 Pa. 256, 273, 392 A.2d 1280, 1288-89 (1978) (case in which plaintiff’s expert opined that proper treatment would have afforded 75 percent chance of survival)); see also, Sutherland v. Monongahela Valley Hospital, 856 A.2d 55, 60-61 (Pa. Super. 2004) (applying Hamil and citing Mitzelfelt with approval in holding “plaintiff must only introduce evidence that a defendant’s negligent act or omission increased the risk of harm, and that the harm was . . . sustained”); cf. Corvado v. Thomas Jefferson University Hospital, 790 A.2d 1022, 1031 (Pa. Super. 2001) (determining testimony to be insufficient when expert opined that defendant “more likely than not” deviated from the requisite standard of care and testified that “more likely than not” decedent would have responded positively to treatment).

Finally, in determining whether it will suffice on the subject of causation, an expert’s testimony must be “taken as a whole.” Mitzelfelt, supra, 526 Pa. at 66,584 A.2d at 894. Experts need not employ “magic words,” and, correspondingly, courts must “look to the substance of their testimony to determine whether it meets the standard required.” Id. at 67, 584 A.2d at 894.

In this case, plaintiff has satisfied the rather lenient standard articulated by our Supreme Court. Specifically, plaintiff alleges that the decedent appeared at defendant Emergicenter complaining of knee and elbow pain, and was treated by defendant Nickischer. He weighed in excess of 300 pounds, reported a history of tobacco and alcohol use, and, according to plaintiff’s expert, had cholesterol levels constituting “major cardiac risk factors.” Plaintiff’s expert observes in his report that when the decedent presented himself in such condition, defendant Nickischer was obliged to request medical history and order testing, including an electrocardiogram and an exercise stress test. He then opines that the failure to undertake that course of treatment and, instead, prescribe only Celebrex amounted to “a deviation from appropriate standards of care.” (7-8) His report then goes on to state:

“To a reasonable degree of medical certainty, had an electrocardiogram been done in the fall of 1999, this would have increased the likelihood that abnormalities would have been found that would have led to further cardiac evaluation. To a reasonable degree of medical certainty, had an exercise stress test been done in the fall of 1999, this would have increased the likelihood that abnormalities would have been detected and appropriate cardiology care would have been implemented. Appropriate cardiology treatment begun in 1999 would have reduced the progression of Mr. Velazquez’s coronary artery disease, and increased the likelihood of preventing his sudden death in July of 2001.
“To a reasonable degree of medical certainty, an electrocardiogram or an exercise stress test done in July 2000 would have increased the likelihood of detecting cardiac abnormalities. This would have led to appropriate cardiology care, which would have reduced the progression of Mr. Velazquez’ coronary artery disease and increased the likelihood of preventing his sudden death.
“To a reasonable degree of medical certainty, had Dr. Nickischer monitored Mr. Velazquez on a regular basis, the likelihood would have increased that Dr. Nickischer would have recognized that Mr. Velazquez was at risk for coronary heart disease. This should have led to evaluating for cardiac problems. Had this been done, Mr. Velazquez’ progressing coronary heart disease would have been recognized and appropriate cardiac care would have been implemented. This would have prevented Mr. Velazquez’ death.
“To a reasonable degree of medical certainty, if Dr. Nickischer had insisted that he see Mr. Velazquez in order to fill out the boy scout camp physical form in July 2001, the examination at that time would have increased the likelihood that Dr. Nickischer would have suspected the presence of unstable coronary heart disease. This would have lead [sic] to an urgent cardiac referral or hospitalization. Mr. Velazquez’ death would have been prevented. An EKG would have been abnormal. An urgent cardiac referral or hospitalization would have followed. Mr. Velazquez’ death would have been prevented or at least the likelihood of his death would have been drastically reduced.
“Mr. Velazquez died because of severe atherosclerosis.
“To a reasonable degree of medical certainty, had medical or surgical intervention effectively prevented his death in July 2001, he would have been expected to live a normal or near normal life span.” (Dr. Podell’s rept. at 8-10.)

Although the report speaks in terms of “likelihood,” pursuant to the decisional law in this Commonwealth noted above, it remains for the finder of fact to “balance the probabilities” and ultimately decide whether any negligence on the part of defendant Nickischer substantially contributed to the harm incurred by Mr. Velazquez. Moreover, the report indicates that the relevant conclusions are “to a reasonable degree of medical certainty.” Because the testimony of plaintiff’s expert will likely prove useful to the panel in its deliberations, the motion in limine to preclude causation testimony will be denied. Pa.R.E. 702.

Medical Records

Defendants also move to preclude so much of Dr. Podell’s report (and related testimony at trial) that alleges defendant Nickischer failed to obtain an adequate medical history from the decedent, including his medical records. Defendants argue that the report fails to establish a causal link between this alleged misconduct and the harm incurred by the decedent. Specifically, defendants point to the following language in Dr. Podell’s re'port:

“When Dr. Nickischer first began to care for Mr. Velazquez he was required to request that Mr. Velazquez obtain prior medical records for review. There is no indication that Dr. Nickischer did this, which was also a deviation. (Certainly, information not contained in his own records about the patient’s past medical history would have been helpful.)” (Defs. mtn. in limine, 3/4/ 04, at 2 (quoting Podell rept. at 7).)

As indicated above, in reviewing an expert’s testimony or, in this case, a report, a court is required to view the same in its entirety and “look to the substance of th[e] testimony to determine whether it meets the standard required.” Mitzelfelt, supra, 526 Pa. at 67, 584 A.2d at 894. In fact, earlier in the report, the connection between the medical history and the failure to diagnose coronary artery disease appears more explicit. There, Dr. Podell stated:

“Dr. Winegard had been Mr. Velazquez’ main physician in 1996 and 1997. His records show that Mr. Velazquez had a family history of heart disease in a grandfather and an uncle, and a history of strokes in a grandfather. Blood pressure on June 27,1997 was 158/ 90 and 150/90. There was a diagnostic impression of high blood pressure. Weight had increased from 304.5 pound to 322 pounds. A lipid panel showed a total cholesterol of 185, and LDL of 127, and a cholesterol ratio of 6.85. There is no indication in the chart that Dr. Nickischer requested that Mr. Velazquez authorize a transfer of his prior medical records for Dr. Nickischer’s review.”

Thus, fairly read in the context of the report as a whole, Dr. Podell’s comments on the lack of adequate medical history appear inextricably related to the general thesis of his report, which plainly appears to be that Dr. Nickischer failed to adequately diagnose decedent’s coronary artery disease, which, in turn, led to an increased risk of harm to the decedent. Thus, he did not, nor does the law require him to, pause after every sentence of his report and explain how each individual misstep directly related to the harm suffered. Rather, the comments relating to the failure to request medical history indicate that this amounted to one facet of defendant Nickischer’s alleged failure to diagnose decedent’s condition. Read in context of the broader document, the allegations concerning the failure to examine medical records, by extension, possess the necessary causal connection to the increased risk decedent is alleged to have faced from an inadequately diagnosed condition of atherosclerosis, an ailment to which he ultimately succumbed. Defendants’ motion to preclude this testimony will, therefore, be denied.

Celebrex Testimony

Defendant also moves in limine to preclude testimony regarding defendant Nickischer’s alleged shortcomings in his administration of Celebrex to decedent. When decedent first presented himself at the Emergicenter, Dr. Nickischer apparently prescribed Celebrex to relieve pain. (PI. exp. rpt. at 2.) Plaintiff’s expert now opines:

“Dr. Nickischer also deviated in prescribing long-term Celebrex to Mr. Velazquez, given Mr. Velazquez’ risk for developing high blood pressure, as well as his increased risk for gastrointestinal bleeding complications. Dr. Nickischer also deviated by failing to explain these risks to Mr. Nickischer [sic] and also Celebrex’s potential adverse interactions with alcohol.
“Dr. Nickischer also deviated by failing to properly monitor Celebrex. He should have required medical visits to monitor blood pressure and stool testing for occult blood at least every three months. Each prescription plus refills should have been for no more than three months at a time.
“If Dr. Nickischer wished to maintain Mr. Velazquez on Celebrex, he was required to see Mr. Velazquez at least every three months to check for potential side effects in the form of signs and symptoms of high blood pressure, gastritis and internal bleeding. At the very minimum, this would have ensured Mr. Velazquez’ regular return to the office.” (PI. exp. rpt. at 7-8.)

Defendant argues that by the expert’s own admission, the side effects of Celebrex consist of high blood pressure, gastritis and internal bleeding and do not include atherosclerosis. Plence, they object on the ground that no causal relationship exists between any negligence regarding Celebrex and the harm decedent actually suffered.

Plaintiff counters that testimony regarding the failure to monitor Celebrex will be relevant at trial. She claims that, in deposition testimony, Dr. Nickischer stated that he did not perform cardiac evaluations on the decedent because the latter refused to come to the office. She thus claims that the failure to require follow-up visits evidences Dr. Nickischer’s lack of effort to have the decedent return for cardiovascular evaluation.

It plainly appears that the atherosclerosis from which Mr. Valazquez suffered is not a result within the risk of Celebrex, as its side effects have been described by plaintiff’s own expert. Thus, it is incumbent upon plaintiff to demonstrate relevance of this evidence on some other basis. And the argument that this testimony will prove probative of Dr. Nickischer’s efforts at proper follow-up care on the issue of coronary artery disease proves unavailing.

According to plaintiff, Dr. Nickischer claims that the decedent refused to undergo an EKG or otherwise report to his office for further cardiovascular evaluation. (PI. brf., 3/16/04, at 3-4.) If that, forsooth, is Dr. Nickischer’s defense, the pertinent issue becomes Dr. Nickischer’s credibility on this score, not whether he availed himself of all possible artifices to circumvent the decedent’s obstinacy. Unsurprisingly, plaintiff has presented no authority suggesting that a physician owes his patient such a duty.

The only remaining relevance this issue would have is the tendency to demonstrate that, because Dr. Nickischer was negligent in his oversight of Celebrex, he must have been similarly deficient in his care relating to the decedent’s heart condition. This use of evidence, however, is expressly forbidden under the rules. See Pa.R.E. 404(b) (evidence of other acts not permissible to show action in conformity therewith).

Accordingly, defendants’ motion will be granted. Plaintiff’s expert shall be precluded from opining on defendant Nickischer’s alleged deviation from applicable standards in the administration of Celebrex to decedent.

DEFENDANTS’ EXPERTS

Plaintiff moves to preclude testimony of defense experts Steven Meister M.D. and Bruce Silver M.D. Plaintiff argues that both Dr. Meister’s and Dr. Silver’s testimony would be merely cumulative of that offered by defendant Nickischer himself as to the applicable standard of care required of a family physician. Plaintiff also maintains that Dr. Meister, “as an academic cardiologist,” lacks qualification to testify about the standard of care applicable to a family physician.

The first of these arguments may be addressed rather quickly. The Rules of Evidence provide that “[although relevant, evidence may be excluded... by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” Pa.R.E. 403. The rule, of course, has been crafted with the permissive “may” and, accordingly, a court is vested with considerable discretion in determining whether evidence will be kept from the jury under this rationale. Concorde Investments Inc. v. Gallagher, 345 Pa. Super. 49, 56, 497 A.2d 637, 641 (1985).

Plaintiff’s sole contention is that because defendant himself is a practitioner in the field of family practice, he is qualified to opine on the applicable standard of care. Hence, the argument runs, any additional testimony by Drs. Meister and Silver would only be duplicative.

While Dr. Nickischer may indeed be qualified to testify on the subject, it requires little discussion or analysis to realize that it would behoove any litigant to have a third party provide an ostensibly independent perspective on any matter of importance at trial. If for no other reason, that course of action may be prudent in order to forefend or rebut any implied or express attack on a party’s credibility or out of a concern, certainly not unfounded, that any testimony offered by one accused of wrongdoing could be viewed by the fact-finder as self-serving. The motion will thus be denied.

Plaintiff also moves to preclude testimony of Dr. Silver on the standard of care applicable to a family physician. Observing that Dr. Silver is “an academic cardiologist,” plaintiff maintains that he is therefore not qualified in the field of family practice. Defendants counter that the testimony of Dr. Silver as expert in cardiology is necessary to rebut the allegation of plaintiff’s expert that defendant Nickischer failed to pursue adequate treatment of Mr. Velazquez’ heart condition.

The rule in Pennsylvania is clear that “experts in one area of medicine may be found qualified to address other areas of specialization where the specialties overlap in practice or where the specialist has had experience in a related field of medicine.” Corrado, supra, 790 A.2d at 1028. Normally, this issue arises in the context of expert of a more general stripe attempting to opine in a more specialized field. See id. (citing cases). The concern is that the intricacies of the sub-field are not known by the generalist.

Plere, however, the opposite scenario obtains: plaintiff complains that a “super specialized” physician cannot opine on the standards applicable to a more generalized family practice. Were plaintiff in the position of being held to a higher, specialized standard of care because of a “super-specialized” expert’s testimony, the concern would be valid. In view of the manner in which defendants proffer this expert testimony, however, the objection proves unfounded. Defendant Nickischer, of course, is the physician on trial, not plaintiff. Accordingly, he proposes to present the testimony of the specialist who presumably will opine that, even in the opinion of one trained in the specific sub-specialty of cardiac care, defendant did not deviate from the applicable standard. Accordingly, plaintiff’s motion in limine will be denied.

ORDER

And now, December 23, 2004, upon consideration of defendants’ motions in limine, filed on March 4 and 8, 2004, and plaintiff’s responses thereto, filed on March 12, 15, 16, and 19, 2004, and upon plaintiff’s motion in limine, filed on February 26, 2004, and defendants’ response thereto, filed on March 12,2004, and for the reasons set forth in the accompanying opinion:

It is ordered that defendants’ motion to preclude all causation testimony of plaintiff’s expert, Richard N. Podell M.D., is denied;
It is further ordered that defendants’ motion to preclude testimony of Richard N. Podell M.D., regarding an alleged failure to obtain the decedent’s medical records is denied;
It is further ordered that defendants’ motion to preclude testimony of Richard N. Podell M.D., regarding deviation of care relating to the prescription and monitoring of the drug Celebrex is granted;
It is further ordered that plaintiff’s motion to preclude testimony of defendants’ experts, Steven G Meister M.D., and Bruce Silver M.D., is denied.

      . It will be noted, however, that nothing in this opinion suggests that a specialist is entitled to “water down” his standards to reflect what he might believe a generalist would know. Consistent with case law cited above, he may testily only in terms of his direct knowledge derived from his training and experience.


author: KOUDELIS, J,

text:
    Commonwealth v. Sandone
    C.P. of Delaware County,
    no. 40-04.

      Michelle Hutton, for Commonwealth/appellant.

      Jonathan Stanwood, for appellee.
    September 7, 2005
   KOUDELIS, J,

NATURE AND HISTORY OF THE CASE

This is an interlocutory appeal from this court’s granting of defendant’s (appellee’s) motion to suppress. The relevant procedural history of the case is as follows.

Appellee filed a motion to suppress challenging the arrest and sought to suppress any search or evidence seized therefrom. Following the hearing on the motion to suppress, which was held on April 14,2004, this court issued an order on April 15, 2005, granting appellee’s omnibus pre-trial motion to suppress.

Appellant filed an appeal of this court’s order, which suppressed the evidence pursuant to Pa.R. A.R 311 (d) and 42 Pa.C.S. §742 since the order granting suppression will terminate or substantially handicap the prosecution. This court issued an order for appellant to file a concise statement of matters complained of on appeal within 14 days of the order. The sole issue raised on appeal is:

“Whether the trial court erred in granting a motion for suppression where the police officer had probable cause to arrest the defendant for driving under the influence of a controlled substance following an accident, observations by police officers and an admission by the defendant”?

FACTS

On October 13,2003, Officer Michael Ruggieri of the Aston Police Department responded to a call at 103 Greenbriar Place. Officer Ruggieri had received information that there was a disabled vehicle in the middle of the roadway with front-end damage. Upon arriving at the location, Officer Ruggieri found that appellee’s vehicle had struck a UPS truck and was now disabled in the middle of the roadway. The driver of the UPS truck informed the officers that he was parked legally in front of 103 Greenbriar when he was struck from behind by appellee’s vehicle.

Upon arriving on the scene, Officer Ruggieri met with Officer Robert Jones, who had initially responded to the accident call. Officer Jones informed Officer Ruggieri that he had concerns that appellee was intoxicated.

Officer Ruggieri approached appellee to obtain information and ascertain what had occurred. The officer testified that when he arrived, appellee was out of her vehicle and was upset. According to the officer’s testimony, appellee informed him that she had turned around in the cul-de-sac and attempted to drive on Greenbriar when she struck the UPS truck. The officer testified that her speech was slow and slurred, that she did not have good balance and swayed while talking with him. Further, the officer testified that she appeared to be drowsy and her movements were lethargic. Officer Ruggieri also testified that her pupils were constricted. Based on his observations, Officer Ruggieri believed that appellee was intoxicated; however, he did not smell alcohol on her person or on her breath. He asked her if she had taken any medication and appellee informed the officer that she had taken Percocet at 9 a.m. When asked to submit to field sobriety tests, appellee refused.

Officer Ruggieri testified that he then placed her under arrest for driving under the influence of a controlled substance because in his opinion she swerved into the rear of the UPS truck when there was a clear unobstructed pathway. After placing appellee under arrest, Officer Ruggieri transported her to Riddle Hospital to have her blood drawn. While en route to the hospital appellee fell asleep. At the hospital Officer Ruggieri had a discussion with appellee, during which she informed the officer that the only drugs they would find in her system were the ones prescribed by the doctor.

During the suppression hearing, Officer Ruggieri testified that he was on scene for approximately 10 to 15 minutes and of those 10 to 15 minutes he testified he observed appellee’s pupils for approximately five minutes. While Officer Ruggieri testified appellee’s pupils did not constrict during his observations, he also testified that he did not perform any specific tests to see whether or not they would adjust to changes in the light. Further, Officer Ruggieri testified that, while he had arrested 75 people who were under the influence of alcohol or a controlled substance, he also testified that he could not specifically recall the number of persons he had arrested or observed under the influence of oxycodone, orPercocet. (N.T. pp. 91-92.)

Based upon the testimony of Officer Ruggieri, the suppression court determined that the evidence presented was equally consistent with other aspects of the case. The suppression court determined that appellee’s actions could be related to having just been involved in an accident, having a child in the car and that swaying, in and of itself, was not indicative of anything. Therefore, the court found that the evidence presented was not sufficient to rise to the level of probable cause.

DISCUSSION

Appellant’s only issue on appeal is whether the trial court erred in granting a motion for suppression where the police officer had probable cause to arrest the defendant for driving under the influence of a controlled substance following an accident, observations by police officers and an admission by the defendant?

When the Commonwealth appeals from a suppression order, the apellate court follows a clearly defined standard of review and considers only the evidence from the defendant’s witnesses together with the evidence of the prosecution that, when read in the context of the entire record, remains uncontradicted. Commonwealth v. Chernosky, 2005 Pa. Super. (Pa. Super, filed April 27, 2005) (en banc). The suppression court’s findings of fact bind the Superior Court if the record supports those findings. Id. The suppression court’s conclusions of law, however, are not binding on the court, whose duty is to determine if the suppression court properly applied the law to the facts. Id.

A defendant seeking suppression of seized evidence has the initial burden of establishing standing and a legitimate expectation of privacy in the area searched or the items seized. Commonwealth v. Hawkins, 553 Pa. 76, 80-81, 718 A.2d 265, 267 (1998); Commonwealth v. Black, 758 A.2d 1253, 1257 (Pa. Super. 2000). An accused may demonstrate standing by presenting evidence of any one of the following four elements: (1) his presence on the premises at the time of the search and seizure; (2) a possessory interest in the evidence seized; (3) that the offense charged includes possession as an essential element; or (4) a proprietary or possessory interest in the searched premises. Id. It is also incumbent upon the defendant to demonstrate a subjective expectation of privacy in the premises on the date of the search. Commonwealth v. Torres, 564 Pa. 86, 105-106, 764 A.2d 532, 543 (2001); Commonwealth v. Perea, 791 A.2d 427, 429 (Pa. Super. 2002).

Appellee was arrested and charged with driving while under the influence of a controlled substance, namely Percocet, to a degree that rendered her incapable of safe driving. 75 Pa.C.S. §3731(a)(2). To prove a violation of this section, the Commonwealth must show: (1) that appellee drove, operated or was in actual physical control of the movement of her motor vehicle, (2) while she was under the influence of a controlled substance to such a degree as to render her incapable of safe driving. Commonwealth v. Dunne, 456 Pa. Super. 523, 532, 690 A.2d 1233, 1237 (1997). For the second element to be established, it must be shown that the controlled substance has substantially impaired the normal mental and physical faculties required to safely operate a vehicle. Commonwealth v. Palmer, 751 A.2d 223, 228 (Pa. Super. 2000). In this context, substantial impairment means “a diminution or enfeeblement in the ability to exercise judgment, to deliberate or to react prudently to changing circumstances and conditions” and does not refer merely to extreme conditions of disability. Commonwealth v. Montini, 712 A.2d 761, 768 (Pa. Super. 1998).

Under the Pennsylvania Rules of Evidence 701, a police officer may give his/her opinion as to a suspect’s alcohol-induced intoxication and the suspect’s ability to drive safely when the officer has observed the suspect’s appearance and acts. Opinion testimony of drug-induced intoxication will not be distinguished from opinion testimony of alcohol-induced intoxication where the witness is personally familiar with the effects of narcotics. Commonwealth v. Davies, 811 A.2d 600, 603 (Pa. Super. 2002).

Upon arriving at the scene, Officer Ruggieri testified that appellee was visibly upset. He also testified that her speech was slow and slurred, she did not have good balance and swayed while talking with him, and she appeared drowsy and her movements were lethargic. Officer Ruggieri also testified that appellee’s pupils were constricted. Based on his observations, Officer Ruggieri believed that appellee was intoxicated; however, he did not smell alcohol on her person or on her breath. He asked her if she had taken any medication and appellee informed the officer that she had taken a Percocet at 9 a.m., as prescribed by her physician. When asked to submit to field sobriety tests, appellee refused.

Although Officer Ruggieri testified that appellee’s pupils were constricted for the brief five-minute period he observed them, he failed to perform any specific tests to see whether or not they would adjust to changes in the light. By failing to perform such tests on a bright sunny day such as the day in question, the conclusion that Officer Ruggieri came to, that her eyes were constricted due to her being under the influence, was unfounded. Ruggieri’s experience with making drug-induced arrests was, by his own testimony, very limited and in regards to Percocet arrests, the officer could not recollect ever making one. Therefore appellant did not and could not have laid the proper foundation for Officer Ruggieri’s opinion to have merit. Without further testing, Ruggieri had no basis for such opinion and conclusion.

The other factors upon which Officer Ruggieri based his opinion and arrest of appellee are equally consistent with that of a person who had just been involved in an accident, especially one where an infant child is in the back seat. Being that appellee was extremely upset, her actions could easily be seen as consistent with her state of mind. Furthermore, swaying in and of itself is not indicative of anything.

Because of Officer Ruggieri’s inexperience in making drug-induced arrests, he should have performed further testing to corroborate his opinion that appellee was under the influence of a controlled substance before arresting her. Where a case is as questionable as this, Officer Ruggieri should have, at the very least, conducted some elementary testing on appellee’s eyes and engaged in further conversation with appellee before concluding she was under the influence and ultimately arresting her.

Therefore, the court found that evidence presented was not sufficient to rise to the level of probable cause. Because the evidence does not amount to probable cause, any and all evidence seized after the arrest must be suppressed as fruits.

CONCLUSION

For all of the foregoing reasons, this court did not err in granting the motion to suppress and therefore the suppression court should be affirmed.