Eastern District of Pennsylvania Finds But-For Causation to be Key in Determining Additional Insured Coverage (PA)
In Republic Franklin Square Insurance Company v. Bethren Mutual Insurance Company, Republic Franklin brought a declaratory judgment and equitable subrogation action against Brethren Mutual seeking reimbursement of $175,000 it paid on behalf of its insured. By way of brief background, Paul Lamb owned a shopping center made up of various business entities. Lamb was insured under a Republic Franklin policy. Lambed leased out part of his property to Shree Ram Enterprises LLC (“SRE”), which operated a gas station at the property. SRE was insured under a Brethren Mutual policy. The underlying plaintiff brought suit against Lamb and SRE after she slipped and fell in the parking lot after leaving SRE’s gas station. The underlying action ended up settling, whereby Republic Franklin payed $175,000 on behalf of its insured and Brethren Mutual paid $35,000 on behalf of its insured. Thereafter, Republic Franklin filed a declaratory judgment action arguing that it was entitled to additional insured coverage from Brethren Mutual. Both parties filed cross-motions for summary judgment.
Both parties agreed that the Brethren Mutual policy provided coverage for “bodily injury” arising out of the “ownership, maintenance or use” of the leased land and that it was primary coverage for the underlying claim. However, the issue before the Court was whether the underlying plaintiff’s fall arose out of “maintenance or use” of the leased property. Brethren Mutual argued that there was no additional insured coverage as the underlying plaintiff fell in the parking lot, which was outside the scope of the lease agreement. Republic Franklin argued that there was additional insured coverage as the underlying plaintiff was injured as a result of patronizing SRE’s gas station.
In determining whether the Brethren Mutual policy afforded additional insured coverage, the Court focused its analysis on “but-for” causation. The Court concluded that but for SRE’s “maintenance or use”, the underlying plaintiff would not have fallen and sustained injuries, given that she was injured as a result of patronizing SRE’s gas station. As such, the Court granted Republic Franklin’s Motion for summary judgment.
This case demonstrates how establishing but-for causation is essential in bringing a subrogation action for additional insured coverage where the policy affords coverage for ownership, maintenance or use of a property.
Thanks to Rachel Thompson for her contribution to this post. Please email Colleen E. Hayes with any questions.