author: FORADORA, P.J,

text:
    National Fuel Gas Supply Corporation v. Kovalchick Corporation

      C.P. of Jefferson County,
    nos. 202-2004 CD, 203-2004 CD, 204-2004 CD, 312-2004.

      J Lanson Cashdollar, for plaintiff.

      Gregg M. Rosen, for defendant.
    September 15, 2005
   FORADORA, P.J,

INTRODUCTION AND PROCEDURAL HISTORY

Before this court is a matter of first impression in Pennsylvania — whether a for-profit corporation operating natural gas lines has the power under 15 Pa.C.S. §1511 to condemn privately owned property for its gathering lines.

National Fuel Gas Supply and Kovalchick Corporation seek a judgment concerning whether National has the power to condemn portions of Kovalchick’s property which support three of National’s pipelines. Originally, National filed three applications for approval of bond under the authority of 15 Pa.C.S. § § 1103 and 1511 to perfect the condemnation of three natural gas pipeline rights-of-way across strips of land owned by Kovalchick. Kovalchick challenged National’s condemnation authority in an equity action. This court consolidated the three applications with the equity action and conducted a nonjuiy trial. Now, after careful consideration of the evidence and the parties’ briefs, the court will enter judgment in favor of National, who possesses and may exercise condemnation powers with regard to the rights-of-way supporting lines G-102, G-110, and FM-100.

FACTUAL FINDINGS

Kovalchick, a private, family-owned business, owns a strip of land formerly owned by the Pittsburgh & Shawmut Railroad Company (P&S Railroad) and located in Warsaw, Pinecreek, and Snyder Townships in Jefferson County, Pennsylvania. P&S Railroad completed the following grants of license and right-of-way agreements: (1) to Jackson Vitrified China Company on August 1, 1929, for constructing, operating, and maintaining a four-inch natural gas pipeline under and through P&S Railroad property in Warsaw Township; (2) to Lee B. Humphrey t/d/a Humphrey Brick & Tile on November 20, 1931, for constructing, operating and maintaining a six-inch natural gas pipeline under and through P&S Railroad property in Pinecreek Township; (3) and to United Natural Gas Company on September 15, 1953, for constructing, operating and maintaining a 12-inch natural gas pipeline under and through P&S Railroad property in Snyder Township. National is the undisputed successor-in-interest to each of those licenses and rights-of-way.

National is a local producer primarily engaged in exploring, drilling and producing local natural gas. The corporation gathers, stores, transmits and transports natural gas through its 2,910 miles of pipeline extending from the Canadian gateway at Niagara, south to the Ellisburg-Leidy hub, and west to the Appalachian Basin. Three of those lines are currently in dispute for purposes of this consolidated action: G-102; G-110; and FM-100. Lines G-102 and G-l 10 are located entirely within the borders of Jefferson County and are used to receive and gather gas from local producers in Jefferson County. National transports the gas from lines G-102 and G-110 on behalf of shippers to delivery points in New York and Pennsylvania and utilizes those lines to deliver gas to local distributor National Fuel Gas Distribution Corporation for sale to retail customers. Through lines G-102 and G-110, National services 123 customers, including the local airport. Whereas G-102 and G-110 function as gathering lines, however, line FM-100 is an interstate transmission line. National also owns or co-owns 32 underground natural storage areas.

National possesses a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC). The FERC regulates National as a public utility involved in the gathering, storage and interstate transportation of natural gas. The FERC regulates the construction, acquisition, operation and abandonment of National’s facilities in the interstate transportation of gas, as well as the provisions, rates, terms and abandonment of National’s interstate transportation services. Gathering lines G-102 and G-110 are exempt from regulation under the Natural Gas Act (NGA), and thus are not subject to the FERC’s requirements concerning the acquisition, construction, operation and abandonment of facilities. Nonetheless, because both lines provide transportation services associated with interstate commerce, all of National’s transportation obligations through them — rates, terms, and conditions of service — are governed by FERC regulations. National must, for instance, provide non-discriminatory access through lines G-102 and G-110 and, absent the consent of affected shippers, receive FERC authorization before removing firm gas receipt and delivery points from its service agreements.

Unlike G-102 and G-110, interstate transmission line FM-100 is encompassed within National’s certificates of public necessity and convenience, is fully regulated by the FERC in all respects, and thus constitutes a “jurisdictional facility” controlled by the FERC under its general jurisdiction.

DISCUSSION

15 Pa.C.S. §1511 reads, in pertinent part, as follows:

“(a) General rule. — A public utility corporation shall, in addition to any other power of eminent domain conferred by any other statute, have the right to take, occupy and condemn property for one or more of the following principle purposes and ancillary purposes reasonably necessary or appropriate for the accomplishment of the principle purposes:...
“(3) the production, generation, manufacture, transmission, storage, distribution or furnishing of natural gas ... to or for the public.” Id.

A public utility corporation is defined by statute as any foreign or domestic corporation for profit that is subject to regulation by either the Pennsylvania Utility Commission or an officer or agency of the United States. Section 1103.

Under Pennsylvania law, courts must read unambiguous statutes “[according to] their plain meaning and common usage,” Nott v. Aetna U.S. Healthcare, 68 D.&C.4th 495, 503 (2004), and give effect to that plain meaning. Erdely v. Hinchcliffe and Keener Inc., 875 A.2d 1078, 1085 (Pa. Super. 2005). Section 1511 is unambiguous; it plainly states that a public utility corporation may condemn property for any or all of the purposes listed in subsection (a)(3). The list appears to be comprehensive, especially when considered with its natural inferences. Though the word “gathering” does not specifically appear, National could neither store nor distribute natural gas without first gathering it. Even absent that inference, however, section 1511 specifies that condemnation is available both for the purposes enumerated in the statute and for ancillary purposes reasonably necessary or appropriate to accomplish the enumerated purposes. Gathering doubtless constitutes such an ancillary purpose and is thus encompassed within the statute.

Equally clear is National’s status as a public utility corporation under section 1103. National operates as a for-profit corporation engaged in the international transportation of natural gas. As such, National is necessarily subject to NGA requirements and consequent regulation by the FERC — an agency of the United States. This includes the regulation of certain aspects of gathering activities relating to the interstate transportation of natural gas. Northern Natural Gas Co. v. FERC, 929 F.2d 1261 (8th Cir. 1991), cert denied, 502 U.S. 856 (1991). The FERC need not regulate every aspect of National’s facilities before it can qualify to condemn property under 15 Pa.C.S. §1511. The statute imposes no such restriction, but only requires regulation of the corporation. Thus, that the FERC regulates only transportation obligations through G-102 and G-110, but not the physical lines, does not affect National’s status as a public utility corporation, as National is regulated as a corporate entity by the FERC.

Nor is it inconsistent to conclude that section 1511 grants National the authority to condemn Kovalchick’s property even though National admittedly could not exercise eminent domain under either PUC or FERC authority for lines G-102 and G-110. Rather, section 1511 specifies that the conferred condemnation power is “in addition to any other power of eminent domain conferred by any other statute.” The plain language of the statute thus encompasses the situation now before this court and authorizes public utility corporations operating “to or for the public” to exercise condemnation powers in certain circumstances when eminent domain is otherwise unavailable.

Because National is considered a public utility by the FERC, its lack of a PUC certificate of public convenience makes no difference. Without exception, federal law supersedes state law when the two conflict. U.S. Constitution Article VI. The FERC, as the regulatory agency enforcing the provisions of the NGA — a law of the United States — operates under the authority of the United States. Notwithstanding a contrary conclusion under the PUC, therefore, the FERC’s conclusion that National constitutes a public utility controls. The United States Supreme Court confirmed in PUC v. National Fuel Gas Co., 317 U.S. 456 (1943), that “Congress by [the National Gas] Act. . . preempted the regulatory powers over [matters related to] the transportation and sale of natural gas in interstate commerce.” Id. at 466. According to the court, that included the sale of natural gas for resale for ultimate public consumption and natural gas companies engaged in those sales. Id. at 466-67. While the court continued to say that local matters would be left to state regulatoiy bodies, id. at 467, all three of the pipelines in question operate to ultimately facilitate interstate transmission. FM-100 is, without more, an interstate transmission line and is, thus, unquestionably outside the scope of local control. Moreover, G-102 and G-l 10 function to gather natural gas for distribution in interstate commerce. Consequently, even considering the disputed pipelines separately, National need not satisfy the PUC’s requirements to be deemed a public utility empowered to exercise eminent domain and/or condemnation powers so long as it constitutes a “public utility corporation” as defined by 15 Pa.C.S. § 1103 and utilized in section 1511.

Kovalchick also cannot avoid recognizing National as a public utility corporation by claiming that National does not supply natural gas “to or for the public,” as National’s regular activities directly refute that contention. Not only does National occasionally supply directly to individual end-users, but it consistently supplies natural gas to other corporations, who then transmit their supply to individual end-users.

As the parties remind this court, a statute must be construed so as to give meaning to every word, and “[t]he legislature is presumed to have intended to avoid mere surplusage in the words, sentences and provisions of its laws.” Habecker v. Nationwide Insurance Co., 299 Pa. Super. 463, 471, 445 A.2d 1222, 1226 (1982). The only reasonable conclusion to reach, therefore, is that the “or” in the disputed phrase “to or for the public” means that “to . . . the public” and “for . . . the public” encompass different actions. According to Webster’s Third New International Dictionary, 2401 (1961), “to” signifies a spatial relationship indicating movement toward, while “for” functions as a preparatory word indicating an intermediate step. Id. at 886.

Applying the “to/for” distinction so as to effectuate every word of the statute, then, reveals that while the “to ... the public” language of section 1103 means that the condemnation power is available for public utility corporations supplying natural gas directly to individual end-users, its “for ... the public” corollary means that the power is also available to corporations like National when they engage in the intermediate step of selling natural gas to other pipelines for resale directly to individual end-users. Through lines G-102, G-110, and FM-100, therefore, National clearly supplies natural gas “to or for the public.”

CONCLUSION

Natural gas is an important commodity without which many industries and homes could not operate in modern society. When a corporation provides the natural gas to operate those facilities, that corporation thereby provides a public utility. As a FERC-regulated corporation providing natural gas “to or for the public” through all of its pipelines, National satisfies the 15 Pa.C.S. §§1103 and 1511 requirements for a public utility corporation. Consequently, National enjoys the power under section 1511 to condemn Kovalchick’s property insofar as it is necessary to accomplish National’s purposes as a public utility. Therefore, Kovalchick’s claim must fail as cutting against the plain meaning and purpose of that statute, and National may condemn the Kovalchick property supporting lines G-102, G-110, and FM-100 in order to better serve the public.

Therefore, this court now decrees the following:

ORDER

And now, September 15,2005, after careful consideration of the above-mentioned facts and law, this court hereby orders and decrees the following:

(1) Kovalchick’s request for injunctive relief is hereby denied.
(2) National’s applications are hereby granted.
(3) National is hereby authorized to condemn the Kovalchick property supporting lines G-102, G-l 10, and FM-100.

      . The FERC has jurisdiction over National under the Natural Gas Act, 15 U.S.C. §§717-717W.

      . 15 U.S.C. §717(b).

      . Northern Natural Gas Co. v. FERC, 929 F.2d 1261 (8th Cir. 1991), cert, denied, 502 U.S. 856 (1991) (articulating that where the gathering activities relate to the transportation and sale of natural gas in interstate commerce, even gathering facilities otherwise unregulated by the FERC are subject to its rate and quality of service jurisdiction).

      . As stated above, the position of this court is that 15 Pa.C.S. § § 1103 and 1511 address public utility corporations as entire entities and ask whether the corporations are regulated by an agency of the United States. Nonetheless, the same result occurs even when reading the statute to require that each facility for which the corporation seeks to exercise condemnation powers must be so regulated, as each of the disputed pipelines — G-102, G-110, and FM-100 — is regulated by the FERC, FM-100 completely and G-102 and G-110 insofar as their purpose is ultimately to facilitate the interstate transmission of natural gas.


source: Caselaw Access Project

author: SHEPPARD JR., J,

license: Public Domain

text:
    Kvaerner U.S. Inc. v. One Beacon Insurance Company

      C.P. of Philadelphia County,
    April Term 2003,
    no. 0940.

      Timothy C. Russell for plaintiffs.

      Ralph J. Luongo, for defendant One Beacon Ins. Co.

      Lawrence A. Serlin, for defendant Century Indemnity Co.
    August 19, 2005
   SHEPPARD JR., J,

Plaintiffs, Kvaerner U.S. Inc. and Kvaerner Holdings Inc., brought suit against their commercial liability insurers, defendants, One Beacon Insurance Company and Century Indemnity Company, seeking defense and indemnity coverage for a large volume of asbestos bodily injury claims filed against Kvaerner in various jurisdictions. Presently before the court are: (1) plaintiffs’ motion for partial summary judgment regarding the duty to defend, (2) defendant One Beacon’s motion for partial summary judgment on the issue of control and scope of defense and (3) defendant Century’s motion for partial summary judgment on the issue of control and coverage under a Century policy issued to D.M. International Inc.

BACKGROUND

In early 2001, Kvaerner began to be subjected to a substantial number of liability claims by persons alleging asbestos-related bodily injury resulting from claimed exposure to asbestos while working at sites where Kvaerner’s predecessors allegedly performed construction or other activities. As of March 1, 2005 approximately 5,993 claims had been filed in nine states, including Pennsylvania, and approximately 3,429 claims remain active and open. New asbestos claims continue to be filed against Kvaerner at a rate of approximately 100 per month.

One Beacon’s predecessor, General Accident Fire & Life Assurance Corporation Ltd. issued Comprehensive General Liability (CGL) insúrance policies to Kvaerner predecessors for the 18-year period from 1964 to 1982. There are six polices in all.

Century’s predecessor, the Insurance Company of North America, issued three general liability policies to Davy Inc. and one general liability policy to an entity known as D.M. International Inc., providing coverage for the four-year period from April 1,1982 through April 1, 1986.

Upon receipt of the bodily injury claims, Kvaerner requested that defendants provide a defense. As of this date, although defendants have paid Kvaerner’s past defense costs incurred with respect to some claims through a certain date in 2004, defendants have not assumed the duty to defend. Presently, Kvaerner is being represented by house counsel and various law firms across the country.

Kvaerner now moves for partial summary judgment in the form of a declaration that, at least with respect to certain categories of asbestos claims, defendant insurers are obligated under their polices to defend it against the claims and/or to pay the defense costs. Defendants do not oppose the essential requests in Kvaerner’s motion; however, defendants submit that additional issues should be determined by the court, specifically the scope and control of the defense. The parties submitted proposed form orders with their respective motions. At oral argument, the parties agreed to certain language which has been incorporated within the order to be issued contemporaneously with this opinion, obviating the need for discussion here. This opinion will discuss the remaining issues: (1) scope of defense, (2) control over the litigation and (3) coverage under the Century policy.

DISCUSSION

A. Standard of Review

Summary judgment may only be granted in cases where it is clear and free from doubt that the moving party is entitled to judgment as a matter of law. Davis v. Resources for Human Development Inc., 770 A.2d 353 (Pa. Super. 2001). If there are no material issues of fact in dispute or if the non-moving party has failed to state a prima facie case, summary judgment may be granted. Dudley v. USX Corp., 414 Pa. Super. 160, 606 A.2d 916 (1992). Thus, a proper grant of summary judgment depends upon an evidentiary record that either (1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action or defense. Rauch v. Mike-Mayer, 783 A.2d 815 (Pa. Super. 2001).

The trial court must confine its inquiry when confronted with a motion for summary judgment to the question whether a material factual dispute exists. Township of Bensalem v. Moore, 152 Pa. Commw. 540, 620 A.2d 76 (1993). For summary judgment purposes, a material fact is one that directly affects the outcome of the case. Kuney v. Benjamin Franklin Clinic, 751 A.2d 662 (Pa. Super. 2000). “Thus, the overall purpose of a motion for summary judgment is to dispose of those cases in which there exists no factual issue to be decided at trial.” Harris by Harris v. Hanberry, 149 Pa. Commw. 300, 302, 613 A.2d 101, 102 (1992).

B. The Scope of Defense

Interpretation of an insurance contract is a matter of law and is the province of the court, not the jury. Madison Construction Co. v. Harleysville Mutual Insurance Co., 557 Pa. 595, 606, 735 A.2d 100, 106 (1999). “In interpreting the language of a policy, the goal is ‘to ascertain the intent of the parties as manifested by the language of the written instrument.’ ” The Municipality of Mt. Lebanon v. Reliance Insurance Co., 778 A.2d 1228, 1231-32 (Pa. Super. 2001) (quoting Madison Construction, supra at 606, 735 A.2d at 106). “Indeed, our Supreme Court has instructed that the ‘polestar of our inquiry ... is the language of the insurance policy.’ ”788 A.2d at 1232 (quoting Madison Construction, supra at 606, 735 A.2d at 106).

“Where ... the language of the [insurance] contract is clear and unambiguous, a court is required to give effect to that language.” Madison Construction, supra at 606, 735 A.2d at 106 (quoting Gene & Harvey Builders Inc. v. Pennsylvania Manufacturers Association Inc. Co., 512 Pa. 420, 426, 517 A.2d 910, 913 (1986)). (other citations omitted) When construing a policy, “[w]ords of common usage . . . are to be construed in their natural, plain and ordinary sense... and we may inform our understanding of these terms by considering their- dictionary definitions.” Id. at 608, 735 A.2d at 108. (citations omitted)

While a court must not “distort the meaning of the language or resort to a strained contrivance in order to find an ambiguity^,]” it must find that “contractual terms are ambiguous if they are subj ect to more than one reasonable interpretation when applied to a particular set of facts.” Id. at 606,735 A.2d at 106. “Where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement.” Id. (quoting Gene & Harvey Builders, supra at 426, 517 A.2d at 913). (other citations omitted)

Finally, “[i]n determining what the parties intended by their contract, the law must look to what they clearly expressed. Courts, in interpreting a contract, do not assume that its language was chosen carelessly.” Steuart v. McChesney, 498 Pa. 45, 51, 444 A.2d 659, 662 (1982) (quoting Moore v. Stevens Coal Co., 315 Pa. 564, 568, 173 A. 661, 662 (1934)). Thus, we will not consider merely individual terms utilized in the insurance contract, but the entire insurance provision to ascertain the intent of the parties.

Here, a dispute centers upon the interpretation of the term “occurrence” found in five of the insurance polices issued by One Beacon covering the period from January 1,1967 to April 1,1992, and the four insurance policies issued by Century covering the period from April 1, 1982 to April 1, 1986. Kvaerner argues that all the asbestos-related personal injury claims embodied in the underlying suits should be identified and corelated by construction sites and that each construction site should constitute an occurrence. One Beacon on the other hand argues that all the asbestos-related personal injury claims alleged by claimants were caused by a single occurrence, the continuous or repeated exposure to the asbestos and, thus, the underlying injuries result from one occurrence.

The policies define “occurrence” as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” Defendants’ appendix III exhibit “F” definition. In addition to the above policy definition, the “Limits of liability” provisions are also instructive. They provide in pertinent part:

“For the purpose of determining the company’s liability, all Bodily Injury and Property Damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one Occurrence.” Defendants’ appendix volume III exhibit F, amendments limits of liability (single limit).

The general rule is that an occurrence is determined by the cause or causes of the resulting injury. See Appalachian Insurance Co. v. Liberty Mutual Insurance Co., 676 F.2d 56 (3d Cir. 1982). Using this analysis, the inquiry is whether “there is but one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage.” Id. Consideration of the policy language and application of the general rule to the facts of this case lead this court to conclude that the construction of furnaces at each construction site constituted a separate occurrence, in that at each construction site there was a new exposure and another occurrence. See Stonewall Insurance Co. v. Asbestos Claims Mgmt Co., 73 F.3d 1178 (2nd Cir. 1995) (Installation of asbestos at each building was a separate occurrence because each installation created exposure to a condition which resulted in property damage neither expected nor intended.); see also, Fina Inc. v. The Travelers Indem. Co., 184 F. Supp.2d 547 (N.D. 2002) (underlying asbestos claims constitute multiple occurrences).

Kvaerner’s activities which triggered the underlying claims did not arise from a single, negligent practice that could be considered one cause, such as distributing a uniformly defective product from a single manufacturer or selling a product containing asbestos from one location. Instead, the exposure to asbestos arose from the construction of furnaces at different sites, at different times and for varying lengths of time. Consequently, the claimants that were exposed to asbestos at the same location and at the same time were exposed to “substantially the same general condition.” Accordingly, the claims for each site should be considered one occurrence.

In urging justification for its position that the exposure to asbestos constitutes a single occurrence, One Beacon relies upon the omission of a sentence set forth in the first policy from subsequently issued insurance policies. That omitted sentence reads: “All such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence.” The court, however, finds that this omission does not demonstrate that the drafters of the insurance policy intended the result urged by One Beacon. Instead, the court accepts Kvaerner’s explanation that the definition of occurrence contained within the five subsequently issued policies is consistent with the industry standard and that no change was intended by the insurer in defining the number of occurrences. See Appleman on Insurance Law and Practice (2nd ed.) §117.1.

Moreover, although the sentence was omitted from one section of the later policies due to a change in the industry standard, new language was added to the limits of liability sections which incorporate the substance of the pertinent sentence. The new paragraph under the section entitled limits of liability states:

“For the purpose of determining the limit of the company’s liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.” See defendant One Beacon’s appendix exhibit B.

This provision supports the conclusion that the asbestos exposure arising at each construction site constituted an occurrence. Accordingly, defendants’ motion for summary judgment as it pertains to the scope of defense is denied.

C. Defendants Should Be Permitted To Control the Defense of Future Claims

Defendants also move for summary judgment on the issue relative to the right to control the defense of the claims. Defendants maintain that they have a right to control the defense consistent with the terms, conditions, exclusions and endorsements of the triggered policies. Conversely, Kvaerner argues that defendants have waived their right to control the defense of pending claims and that the existence of a conflict of interest will vitiate any right the insurers might otherwise have to control the defense of future claims.

This court will grant defendants’ motion as it pertains to future claims, but deny defendants’ motion as it pertains to the pending claims.

The insurance policies issued by defendants provide that they have a duty and a right to defend the claims made against Kvaerner. Specifically, the policies provide:

“Defense, settlement, supplementary payments
“With respect to such insurance as is afforded by this policy, the company shall:
“(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.” One Beacon policy no. **- *****, insuring agreement II.

Additionally, the policy contains a provision entitled “Assistance and cooperation of the insured” condition (no. 10) which states:

“The insured shall cooperate with the company and, upon the company’s request, attend hearings and trials, assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of any legal proceedings in connection with the subject matter of this insurance. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of the accident.”

As to pending claims, Kvaerner argues that, by failing to step forward and honor their defense obligation from the outset, defendants have waived and forfeited any right to control the defense of the pending claims. This court believes that Kvaerner should continue to maintain the right to control the defense of the pending claims subject to defendants’ supervision in order to maintain the consistency of the defense. If Kvaerner were to relinquish control of the defense of the pending claims, the effects of the hard work expended by its defense teams thus far in defending present claims would likely be so attenuated so as to be deemed a real loss. Hence, in the interests of consistency the right to control the pending claims should remain with Kvaerner.

As to future claims, Kvaerner argues that conflict of interests will vitiate any right the insurers might otherwise have had to control the defense of these claims. The court, however, does not find that there now exists a conflict of interest.

“When a liability insurer retains counsel to defend an insured, the insured is considered the client. If a conflict of interest arises between an insurer and its insured, the attorney representing the insured must act exclusively on behalf of, and in the best interests of, the insured.” Rector, Wardens and Vestryman of St. Peter’s Church v. Am. Nat’l Fire Ins. Co., 2002 U.S. Dist. Lexis 625 (E.D. Pa. 2002) (citing Builders Square v. Saraco, 1996 U.S. Dist. Lexis 19444 (E.D. Pa. Dec. 27, 1996)); see also, Point Pleasant Canoe Rental Inc. v. Tinicum Township, 110 F.R.D. 166,170 (E.D. Pa. 1986).

A conflict of interest arises between an insured and insurer when the company’s pursuit of its own best interests in the litigation is incompatible with the best interests of the insured. Rector, Wardens and Vestryman of St. Peter’s Church v. Am. Natl Fire Ins. Co., 2002 U.S. Dist. Lexis 625 (E.D. Pa. 2002) (quoting St. Paul Fire & Marine Ins. Co. v. Roach Bros. Co., 639 F. Supp. 134, 138-39 (E.D. Pa. 1986)). Courts have concluded that one appropriate resolution in this circumstance is for the insurer to obtain separate, independent counsel for its insured, or to pay the costs incurred by an insured in hiring counsel. Id.

In support of its contention that it should be entitled to maintain control of the defense of future claims made against it, Kvaerner stresses the defendants’ past conduct, such as their attempts to avoid or limit their coverage obligations, their assertion of a single occurrence theory and requiring that the complaints in the underlying claims spell out on their face the particular Kvaerner predecessor whose activities give rise to the claim. Kvaerner also argues that, if afforded the opportunity to control the defense, defendants would settle claims at a rate and in amounts that hasten the termination of their defense duties but at the same time raise Kvaerner’s profile and make it a more inviting target for claimants.

Kvaerner’s reasons for maintaining control are based on a theoretical possibility that a conflict will arise. Kvaerner has not directed the court to any fact of record that would establish an actual conflict and suggest that the attorneys retained by defendants will subordinate their ethical obligation to Kvaerner to some sense of duty owing to the insurance carrier. To some extent, Kvaerner seeks to promote a per se rule that counsel provided to an insured by an insurance company is likely to disregard his ethical duty to his client. This court is unwilling to adopt such a rule based solely on Kvaerner’s expectation that a conflict will arise. By so ruling, the court is not suggesting that conflicts do not arise. The court recognizes that situations exist which may warrant retaining independent counsel due to a conflict of interest between an insured and an insurer. The court, however, does not find that such a situation exists at this time. If, at a later time, an actual conflict arises between the insurer and the insured, Kvaerner, may, if it so chooses, move for the appointment of independent counsel. Accordingly, defendants’ motion on the issue of control is granted in part. Defendants may assume control of claims filed after the date of this opinion.

D. Coverage Under the Policy Issued to D.M. International

Century maintains that an error occurred in drafting the “named insured” endorsement to policy no. ************ issued to D.M. International Inc. Century argues that the parties did not intend to provide coverage to Davy Inc. or its subsidiaries under this policy but, rather, intended to provide coverage to D.M. International and its subsidiaries, and that a scrivener’s error occurred. Kvaerner argues that Century has furnished no facts to demonstrate its claim of mutual mistake.

In order to justify reformation of a contract on the basis of “mutual mistake,” evidence of the mistake must be “clear and convincing.” Jones v. Prudential Property and Casualty Insurance Co., 856 A.2d 838, 844 (Pa. Super. 2004). A mutual mistake exists only where “both parties to a contract [are] mistaken as to existing facts at the time of execution.” Smith v. Thomas Jefferson University Hospital, 424 Pa. Super. 41, 45, 621 A.2d 1030, 1032 (1993).

Here, Century fails to point to sufficient evidence to establish a mutual mistake, namely Kvaemer’s awareness of the mistake in the named insured endorsement. Instead, Century relies upon internal inconsistencies within the endorsement, an alleged course of conduct established by the policies issued by Century’s predecessor and an alleged redundancy in coverage if Kvaerner’s position were adopted. Since no discovery has occurred to date, the finds that Century’s partial motion for summary judgment on this issue is premature. Accordingly, Century’s motion is denied without prejudice.

CONCLUSION

For the reasons discussed, the parties’ respective motions for partial summary judgment are granted, in part, as follows:

(1) The court finds that defendants, One Beacon Insurance Company and Century Indemnity Company, are obligated under their respective insurance policies to defend plaintiff Kvaerner U.S. Inc. (KUSI), or to pay 100 percent of the reasonable and necessary defense costs incurred by KUSI after September 6, 2001, or any other date which may be agreed to by the respective parties after the entry of this order, with respect to any asbestos personal injury claim asserted against KUSI and covered under the subject insurance policies, if the complaint in the personal injury case can be read to permit proof, potentially, (a) that the asbestos claimant suffered an asbestos-related injury by reason of exposure to asbestos fibers, and that KUSI and one or more of its covered predecessors are liable therefore, and (b) that any part of the period from the claimant’s first exposure to asbestos, to and including the date of manifestation of the claimant’s asbestos-related injury, occurred during the effective period of one or more of One Beacon’s or Century’s policies.
(2) The court finds further that, in the event that an asbestos claimant’s complaint can be read to permit proof as described in paragraph 1 above, KUSI may select any policy or policies under which a defendant is obligated as provided in paragraph 1 above, and may require that the defense, or the reimbursement of defense costs, be provided pursuant to such policy or policies. KUSI shall not be obligated to pay any portion of any defense costs with respect to any asbestos claim where part of the period from the claimant’s alleged initial exposure to asbestos and including alleged manifestation of asbestos-related injury occurred or may have occurred during the effective period of one or more of One Beacon’s or Century’s insurance policies.
(3) The court.further finds that:
(a) Insofar as a defendant’s defense duty is triggered under any policy or policies, defendants may assume control of all future claims filed after the date of this opinion and consistent with the terms, conditions, exclusions and endorsements of the triggered policy or policies, and may undertake investigation, negotiation and settlement of any claim or suit as it deems expedient. This finding is made with the understanding that all defendants establish a framework that is consistent with the framework used to handle the past and present asbestos claims. (Pending claims shall continue to be handled by plaintiffs in the manner presently extant.)
(b) In accordance with the provisions within the policy, plaintiffs are under a duty, with respect to all underlying claims defended by defendants, of assistance and cooperation with defendants in the defense of the claims;
(c) Defendants’ duty to defend under any particular policy at issue ends once payments equal to the policy’s occurrence limit have been made in reimbursement of asbestos settlements and/or in satisfaction of asbestos verdicts;
(4) All underlying bodily injury claims arising out of each separate construction site or premise shall be deemed to be a separate, single occurrence.
(5) Century Insurance Company’s partial motion for summary judgment is denied without prejudice.

The court will enter a contemporaneous order consistent with this opinion.

ORDER

And now, August 19, 2005, upon consideration of plaintiffs’ motion for partial summary judgment regarding the duty to defend, defendants’ cross motions for partial summary judgment, the respective responses in opposition, the respective memoranda, all matters of record, after oral argument and in accord with the contemporaneous opinion being filed of record, it is ordered as follows:

(1) The court finds that defendants, One Beacon Insurance Company and Century Indemnity Company, are obligated under their respective insurance policies to defend plaintiff Kvaerner U.S. Inc. (KUSI), or to pay 100 percent of the reasonable and necessary defense costs incurred by KUSI after September 6,2001, or any other date which may be agreed to by the respective parties after the entry of this order, with respect to any asbestos personal injury claim asserted against KUSI and covered under the subj ect insurance policies, if the complaint in the personal injury case can be read to permit proof, potentially, (a) that the asbestos claimant suffered an asbestos-related injury by reason of exposure to asbestos fibers and that KU SI and one or more of its covered predecessors are liable therefore, and (b) any part of the period from the claimant’s first exposure to asbestos, to and including the date of manifestation of the claimant’s asbestos-related injury, occurred during the effective period of one or more of One Beacon’s or Century’s policies.
(2) The court finds further that, in the event that an asbestos claimant’s complaint can be read to permit proof as described in paragraph 1 above, KUSI may select any policy or policies under which a defendant is obligated as provided in paragraph 1 above, and may require that the defense, or the reimbursement of defense costs, be provided pursuant to such policy or policies. KUSI shall not be obligated to pay any portion of any defense costs with respect to any asbestos claim where part of the period from the claimant’s alleged initial exposure to asbestos and including alleged manifestation of asbestos-related injury occurred or may have occurred during the effective period of one or more of One Beacon’s or Century’s insurance policies.
(3) The court further finds that:
(a) Insofar as a defendant’s defense duty is triggered under any policy or policies, defendants may assume control of all future claims filed after the date of this opinion and consistent with the terms, conditions, exclusions and endorsements of the triggered policy or policies, and may undertake investigation, negotiation and settlement of any claim or suit as it deems expedient. This finding is made with the understanding that all defendants establish a framework that is consistent with the framework used to handle the past and present asbestos claims. (Pending claims shall continue to be handled by plaintiffs in the manner presently extant.)
(b) In accordance with the provisions within the policy, plaintiffs are under a duty, with respect to all underlying claims defended by defendants, of assistance and cooperation with defendants in the defense of the claims;
(c) Defendants’ duty to defend under any particular policy at issue ends once payments equal to the policy’s occurrence limit have been made in reimbursement of asbestos settlements and/or in satisfaction of asbestos verdicts;
(4) All underlying bodily injury claims arising out of each separate construction site or premise shall be deemed to be a separate, single occurrence.
(5) Century Insurance Company’s partial motion for summary judgment is denied without prejudice.

      . The parties agree that, for purposes of deciding this motion, a choice of law analysis is unnecessary since there appears to be a material agreement between Pennsylvania and Ohio authorities.

      . Defendant Century takes no position on this issue.

      . In the One Beacon policy no. **.***** covering the period from February 14, 1964 to February 15, 1967, the term “occurrence” is defined differently. In this policy, “occurrence” is defined as “an event, or continuous or repeated exposure to conditions which unexpectedly causes injury during the policy period. All such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence.” One Beacon agrees that the second sentence of this endorsement’s definition, found only in the first of the six One Beacon policies, supports plaintiffs’ one occurrence per site argument.

      . With regard to past claims, defendants concede, and the court agrees, that the issue pertaining to the right to control is moot since these claims have been resolved.

      . After considering its options, defendants may opt to retain current counsel for Kvaerner.


author: SOLOMON, J.,

text:
    Lewis v. McClain

      C.P. of Fayette County,
    no. 812 of 2004, G.D.

      P. William Bercik, for plaintiff.

      Rhonda J. Sudina, for defendant.
    July 7, 2005
   SOLOMON, J.,

Before the court is a motion for summary judgment filed by the defendant, William McClain. The motion alleges that there exist no genuine issues of material fact and that, therefore, the defendant is entitled to judgment as a matter of law.

BACKGROUND

The plaintiff’s complaint arises from an incident that occurred on June 5, 2002, in the parking lot of Pechins’ Shopping Village in Fayette County, Pennsylvania. The plaintiff avers that, as she was exiting the parking lot, the defendant negligently backed into the driver’s side door of her car. She asserts that, as a result of the defendant’s negligence, she suffered multiple injuries, including exacerbation of pre-existing back, neck, and foot injuries, injuries to her left hip, knee, and elbow, other injuries to tissues, muscles, ligaments and tendons, and anxiety and emotional disturbance. She further claims that, as a result of those injuries, she has suffered significant economic and noneconomic damages.

DISCUSSION

Motions for summary judgment are governed by Pa.R.C.P. 1035.2, which provides:

“After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law:
“(1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or
“(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.” Pa.R.C.P. 1035.2

The purpose of the summary judgment rule is to eliminate cases prior to trial where a party cannot make out a claim or defense after relevant discovery has been completed. Miller v. Sacred Heart Hospital, 753 A.2d 829 (Pa. Super. 2000). It is not the function of the court ruling on a motion for summary judgment to weigh evidence and to determine the truth of the matter. Keenheel v. Pennsylvania Securities Commission, 134 Pa. Commw. 494, 579 A.2d 1358 (1990). Further, summary judgment may only be granted when “the pleadings, depositions, answers to interrogatories, admissions on file, together with any affidavits . . . demonstrate that there exists no genuine issue of fact” and that the moving party is entitled to judgment as a matter of law. Janson v. Cozen and O’Connor, 450 Pa. Super. 415, 423, 676 A.2d 242, 246 (1996).

Under Rule 1035.2(2), if a defendant is the moving party, he may make the showing necessary to support the entrance of summary judgment by pointing to materials which indicate that the plaintiff is unable to satisfy an element of his cause of action. Ertel v. Patriot-News Co., 544 Pa. 93, 674 A.2d 1038, 1042 (1996), cert, denied, 519 U.S. 1008, 117 S.Ct. 512, 136 L.Ed.2d 401 (1996). The non-moving party must adduce sufficient evidence on an issue essential to its case, and on which it bears the burden of proof such that a jury could return a verdict favorable to the non-moving party, and may not rest upon the averments contained in its pleadings. Amabile v. Auto Kleen Car Wash, 249 Pa. Super. 240, 376 A.2d 247 (1977). The non-moving party must also demonstrate that there is a genuine issue for trial. Id, Pa.R.C.P. 1035.2(2). If the non-moving party fails to satisfy this burden, a genuine issue of material fact does not exist and the moving party is entitled to judgment as a matter of law. Tenos v. State Farm Insurance Co., 716 A.2d 626 (Pa. Super. 1998).

In determining whether summary judgment should be granted, the court must examine the record; any inferences must be viewed in the light most favorable to the non-moving party; and any doubt must be resolved against the moving party. Potter v. Herman, 762 A.2d 1116 (Pa. Super. 2000).

The court must also be aware that oral testimony alone, either through testimonial affidavits or depositions, of the moving party or the moving party’s witnesses, even if uncontradicted, is generally insufficient to establish the absence of a genuine issue of material fact. Nanty-Glo Boro. v. American Surety Co., 309 Pa. 236, 163 A. 523 (1932); Penn Center House Inc. v. Hoffman, 520 Pa. 171, 553 A.2d 900 (1989). If the moving party has supported the motion with oral testimony only, the non-moving party may raise the defense that there is a genuine issue of material fact because the cause of action is dependent upon the credibility and demeanor of the witnesses who will testify at trial. Id.

This long-standing rule, and its modern application, are perhaps best summarized by the Superior Court in Dudley v. USX Corp., 414 Pa. Super. 160, 606 A.2d 916 (1992):

“A review of [the precedents] demonstrates that there is an inherent three-step process involved in determining whether the Nanty-Glo rule applies so as to preclude a grant of summary judgment. Initially, it must be determined whether the plaintiff has alleged facts sufficient to establish a prima facie case. If so, the second step is to determine whether there is any discrepancy as to any facts material to the case. Finally, it must be determined whether, in granting summary judgment, the trial court has usurped improperly the role of the jury by resolving any material issues of fact.
“It is only when the third stage is reached that Nanty-Glo comes into play. Thus, it is true that Nanty-Glo precludes summary judgment where the moving party relies solely upon testimonial affidavits and depositions of his witnesses to resolve material issues of fact. However, if there are no material issues of fact, or if the non-moving party has failed, in the first instance, to allege facts sufficient to make out a prima facie case, then summary judgment may be granted properly, even if the moving party has only set forth the pleadings and depositions of his witnesses in support thereof.... Error only occurs if the moving party, in relying upon the testimonial affidavits of his witnesses, is attempting to resolve a material issue of fact, or more importantly, is attempting to demonstrate the lack of any material issues of fact by asserting that the testimony of his witnesses is uncontradicted.” Id. at 168-69, 606 A.2d at 920. (footnote omitted)

With these principles to guide us, we will now consider the motion of the defendant for summary judgment.

The plaintiff contends that the defendant was negligent in his driving, causing her injuries, and, therefore, he should compensate her for his negligent actions. The defendant argues that the plaintiff has failed to establish an essential element of her negligence claim in that she has produced no evidence of injury and, therefore, is entitled to no recovery. The defendant also argues that, regardless of whether he is ultimately determined to be negligent, the plaintiff is barred from recovering non-economic damages because she chose the limited tort option on her automobile insurance.

In order to prove negligence, a plaintiff must show that the defendant owed her a duty, that the defendant breached that duty, that the plaintiff suffered damages, and that the defendant’s breach of duty was the cause of plaintiff’s damages. Brisbine v. Outside In School of Experiential Education Inc., 799 A.2d 89 (Pa. Super. 2002); Miseo. v. Ross Township Police Dept., 147 Pa. Commw. 263, 607 A.2d 806 (1992).

It is well-settled that drivers owe each other a duty to drive carefully and that any accident suggests a breach of that duty, and we will not belabor this point with a lengthy analysis. In the case at bar, there is no dispute that the plaintiff and the defendant were involved in a motor vehicle accident on June 5, 2002; thus, the plaintiff has sustained her burden, at this point, as to duty and breach. The dispute here is whether the plaintiff suffered any injury that was caused by the defendant, thereby incurring any damages. Hence, the key issue is whether, and to what extent, the plaintiff was injured in the accident.

The normal negligence analysis must be made here hand-in-hand with the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §1701 et seq., (MVFRL), which, among other things, addresses the circumstances under which individuals carrying automobile insurance issued in Pennsylvania may sue for certain damages. There is no dispute that the plaintiff chose the limited tort option on her automobile insurance. Under section 1705 of the MVFRL, “each person who elects the limited tort alternative remains eligible to seek compensation for economic loss sustained in a motor vehicle accident as the consequence of the fault of another person pursuant to applicable law. Unless the injury sustained is a serious injury, each person who is bound by the limited tort election shall be precluded from maintaining an action for any noneconomic loss.” 75 Pa.C.S. §1705.

Hence, given the plaintiff’s choice of the limited tort option, she is precluded from recovering noneconomic damages unless she can show that she suffered a serious injury. “Serious injury” is defined as “a personal injury resulting in death, serious impairment of body function, or permanent serious disfigurement.” 75 Pa.C.S. §1702. Further, our Supreme Court has outlined the test for determining whether an injury resulted in serious impairment.

“The ‘serious impairment of body function’ threshold contains two inquiries: (a) What body function, if any, was impaired because of injuries sustained in a motor vehicle accident? [and] (b) Was the impairment of the body function serious? The focus of these inquiries is not on the injuries themselves, but on how the injuries affected a particular body function.” Washington v. Baxter, 553 Pa. 434, 447, 719 A.2d 733, 740 (1998).

Generally, in order to prove the existence or extent of medical injuries, a plaintiff must submit competent expert medical testimony of the injuries, based on a reasonable degree of medical certainty. Hamil v. Bashline, 481 Pa. 256, 392 A.2d 1280 (1978). This principle is based upon the general acknowledgement that the complexities of the human body place questions as to the cause of pain or injury beyond the knowledge of the average layperson. Id. Furthermore, to prove a “serious injury” under the limited tort option of the MVFRL, expert medical testimony of the requisite serious injury is required. Washington v. Baxter, supra.

“Generally, medical testimony will be needed to establish the existence, extent, and permanency of the impairment. ... In determining whether the impairment was serious, several factors should be considered: the extent of the impairment, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors. An impairment need not be permanent to be serious.” Id. at 447, 719 A.2d at 740.

Subjective allegations presented in the absence of objective medical evidence are not sufficient to find that a plaintiff suffered the requisite “serious injury.” McGee v. Muldowney, 750 A.2d 912 (Pa. Super. 2000). Generally, the determination of whether a plaintiff has suffered a serious injury should be made by the jury in all but the clearest of cases. Washington v. Baxter, supra. However, if reasonable minds cannot differ on the issue of whether a serious injury was sustained, a trial court may make the determination and, thus, grant a motion for summary judgment on that issue. Id.

Here, the plaintiff submitted the report of Dr. Androkites, who opined as to the plaintiff’s injuries with a reasonable degree of medical certainty. Letter from Dr. Androkites to P.W. Bercik & Assoc., 01/31/05 at 4. He summarized his treatment of her and states that, based upon her statements to him, her symptoms are “linked to the motor vehicle accident,” and “it is ... reasonable to conclude there is a causal link to her diagnosis and the motor vehicle accident.” Id. at 3. He gives no opinion as to whether the plaintiff’s injuries rise to the level of “serious injury.”

In response, the defendant submitted the report of Dr. Weiss, who also opined as to the plaintiff’s injuries with a reasonable degree of medical certainty. Letter from Dr. Weiss to R.J. Sudina, 12/30/04 at 22. Dr. Weiss conducted an exhaustive review of the plaintiff’s medical records, both before and after the accident at issue, and performed an independent medical examination of her. He concluded that she suffers from a number of “subjective musculoskeletal complaints” and that, while he is unable to determine the cause of those complaints, he does “not find evidence in the medical records of anything linking her complaints to this accident.” Id. at 21-22. He also does “not believe [the plaintiff] sustained a serious injury at the time of her accident and [feels] she has no serious impairment of body function or permanent disfigurement . . .” or that she “suffers from any ongoing problem in relation to this accident.” Id. at 22.

Even taking the medical reports in the light most favorable to the plaintiff as the non-moving party, it is clear that the plaintiff sustained no serious injury, and that reasonable minds could not differ in that conclusion. Thus, since she chose the limited tort option on her automobile insurance policy, and since she has failed to show that she suffered a serious injury, the plaintiff is barred from recovering noneconomic damages.

The issue of whether any of the plaintiff’s medical issues are related to the accident is, however, a matter of credibility. Under the law governing summary judgment, the court is not permitted to make a credibility determination between conflicting witnesses. Thus, viewing the evidence in the light most favorable to the plaintiff as the non-moving party, we must find that a genuine issue of material fact exists as to whether the plaintiff suffered injuries in the accident.

We note that the defendant argues that we should disregard Dr. Androkites’ report as violative of the Nanty-Glo rule because his statement that the injuries are related to the accident are based on the plaintiff’s statements to him. However, we feel that applying the Nanty-Glo rule under these circumstances leads to an absurd outcome. The doctor’s taking of a patient’s medical history is an integral part of the medical treatment process and the diagnosis and treatment of a patient is typically based, at least partially, on a patient’s statements to her physician. A doctor’s opinion that an injury is related to an accident is based primarily on the statements given to him by the patient. Instantly, since both of the reports submitted were made to a reasonable degree of medical certainty, which is the standard required under our evidence mies, see e.g., Hamil v. Bashline, supra, and Mitzelfelt v. Kamrin, 526 Pa. 54, 584 A.2d 888 (1990), a genuine issue of material fact exists and it must be decided by the fact-finder.

Wherefore, we will enter the following order.

ORDER

And now, July 7, 2005, it is hereby ordered and decreed that the motion for summary judgment of the defendant, William McClain, is granted as to the issue of whether the plaintiff may seek to recover noneconomic damages, and denied as to the issue of negligence.