Wade Clark Mulcahy LLP

News Plain Meaning of Insurance Contract Prevails in New Jersey December 6, 2012 < Back Share to: In the recent unreported decision of Chery v. New Jersey Indemnity Insurance Company, plaintiff Michelle Chery was injured in a hit-and-run motor vehicle accident, and sought compensation through an uninsured motorist claim against New Jersey Indemnity Insurance Company. Pursuant to the policy, plaintiff was entitled to $15,000 in UM coverage and was expressly contracted to be bound by an arbitration award unless it exceeded $15,000. The parties proceeded to arbitration, where an award of $17,500 was awarded to the plaintiff. Defendant appealed and filed for a trial de novo. Plaintiff filed a complaint to confirm the arbitration award, and a motion for summary judgment. In her motion, plaintiff argued that, because the mandatory minimum liability limit specified by the Financial Responsibility Law of New Jersey, and the actual liability limit of defendant’s policy are the same ($15,000), the contract provision does not permit defendant to appeal the award or demand a trial de novo. The Appellate Court disagreed with plaintiff’s argument, noting that the policy contained no provision, expressed or implied, that the plain language was inapplicable where the UM limit of the policy and the minimum for liability specified by the Financial Responsibility Law were the same. Since the language of the policy was unambiguous, defendant was legally entitled to reject the arbitration award and proceed to trial. Thanks to Heather Aquino for her contribution to this post.   Previous Next Contact

News Insurer Burned by Duty to Defend Following Gasoline Fire (PA) January 10, 2019 < Back Share to: The Pennsylvania Superior Court recently reversed a trial court’s granting of summary judgment in favor of an insurer in a declaratory judgment action and ruled that coverage was owed to an insured following a fire at a vehicle dismantling facility in Harrisburg. In Tuscarora Wayne Ins. Co. v. Hebron, Inc., 2018 PA Super 270; No. 1591 MDA 2017, the court ruled in favor of the insured, Hebron, following Hebron’s appeal of summary judgment. The underlying declaratory judgment action involved Hebron, a named insured on a commercial liability policy issued by TWIC. Hebron dismantles and strips vehicles of their parts at a facility in Harrisburg, PA. In May 2014, a fire broke out at Hebron’s facility when an employee was attempting to add fuel to a company truck that hauled broken down vehicles to Hebron’s plant, causing damage to Hebron’s facility. The TWIC policy included an endorsement that excluded coverage for designated ongoing operations, including “vehicle dismantling.” “Vehicle dismantling” was not defined in the policy. TWIC filed a DJ action seeking a determination that coverage. TWIC moved for summary judgment based on the exclusion, which Hebron opposed and also filed its own motion for summary judgment contenting that the plain language of the exclusion did not relieve TWIC of its coverage obligation. The trial court granted TWIC’s motion for summary judgment and declared that defense and indemnity were not owed based on the “vehicle dismantling” exclusion because the refueling of a truck used to transport vehicles to Hebron’s facility to be dismantled was “incidental to the vehicle dismantling business.” Hebron appealed and argued that the trial court committed errors of law in awarding summary judgment in favor of TWIC. In its opinion regarding Hebron’s appeal, the court noted that, in Pennsylvania, courts will give effect to the plain language of a contract if the policy’s language is clear and unambiguous. If, however, the language of the policy is ambiguous, the provisions must be construed in favor of the insured against the insurer and when an insurer bases a denial of coverage on a policy exclusion, the insurer bears the burden of establishing the exclusion’s application. The Superior Court, viewing the facts in the light most favorable to Hebron (the non-moving party), also opined that the fire was not caused by the vehicle dismantling process itself, but rather it arose as a result of a faulty extension cord connected to a pump that sparked while Hebron’s own vehicle was being refueled. Hebron was not actually dismantling a vehicle at the time of the fire and the dismantling process had already ended for the day, therefore the refueling of the truck was not “incidental to the vehicle dismantling business.” Thus, the Superior Court concluded that the trial court had committed an error of law and reversed the granting of TWIC’s motion for summary judgment. The Superior Court went even further and also concluded that, because fire did not occur in the course of the vehicle dismantling process, the exclusion did not apply, and Hebron was entitled to defense and indemnity under the policy. The court then granted Hebron’s motion for summary judgment declaring that TWIC was required to defend and indemnify Hebron under the policy. This case illustrates the importance of clearly and unambiguously defining operative terms in commercial liability policies in order to avoid potentially adverse interpretations of exclusion language. Moreover, we suspect Hebron retained a solid cause and origin expert to make the cause of the fire clear to the Court, and prompt coverage. Excellent foresight. Thanks to Greg Herrold for his contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact

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