Third Circuit Court of Appeals Affirms District Court’s Finding (PA)
In Republic Franklin Square Insurance Company v. Bethren Mutual Insurance Company, Republic Franklin brought a declaratory judgment and equitable subrogation action in the Eastern District of Pennsylvania against Brethren Mutual seeking reimbursement of $175,000 it paid on behalf of its insured Paul Lamb to settle a personal injury action. In the underlying case, the plaintiff brought suit against against the property owner Lamb after slipping and falling in a commercial lot owned by Lam and leased to Shree Ram Enterprises (SRE).
Republic Franklin filed a declaratory judgment action arguing that it was entitled to additional insured coverage from Brethren Mutual, the insurer for the lessee. The Brethren Mutual policy included an endorsement listing Lamb as an additional insured “only with respect to liability arising out of the ownership, maintenance or use of that party of the premises leased to [SRE]”. The Court concluded that but for SRE’s “maintenance or use”, the underlying plaintiff would not have fallen and sustained injuries. As such, the Court granted Republic Franklin’s Motion for summary judgment.
Thereafter, Brethren Mutual appealed the District Court’s Order, contending that the slip-and-fall did not “arise out of” the “use” of the leased premises. The Third Circuit noted the well-established Pennsylvania law that “arising out of” does not mean “proximately caused by”, but rather “causally connected”. The Third Circuit found that it was established that the use of the property “depended on customers’ ability to ingress and egress through the attached parking lot.” The Third Circuit held that the underlying plaintiff would not have been injured in the parking lot but for her patronage of the store. Accordingly, on October 6, 2020, the Third Circuit affirmed the Eastern District’s ruling, finding that the additional insured endorsement afforded coverage.
This case demonstrates how courts applying Pennsylvania law broadly interpret additional insured endorsement language when determining coverage.
Thanks to Rachel Thompson for her contribution to this post. Please contact Heather Aquino with any questions.