Genaeya Corp. v. HARCO NAT. INS. CO.

991 A.2d 342

GENAEYA CORP. v. HARCO NATIONAL INSURANCE COMPANY, Appellant.

No. 1704 Eastern District Appeal 2008

Superior Court of Pennsylvania.

Argued September 1, 2009.

Filed March 15, 2010.

Myles P. McAliney, Pittston, for appellant.

Ronnie J. Fischer, Honesdale, for appellee.

BEFORE: FORD ELLIOTT, P.J., PANELLA and FREEDBERG, JJ.

OPINION BY FORD ELLIOTT, P.J.:

¶ 1 Harco National Insurance Company ("Harco") appeals from the judgment entered July 7, 2008 in favor of Genaeya Corp. ("Genaeya") in this declaratory judgment action. After careful review, we are compelled to reverse.

¶ 2 The parties submitted this matter to the trial court for resolution based upon the following stipulated facts:

1. At all times relevant herein, Genaeya was a motor carrier authorized to transport property in interstate commerce pursuant to federal docket number MC472320.

2. At all times relevant herein, LAM Truck Brokers, Inc. (LAM) and BAM Transportation, Inc. (BAM) operated as freight brokers (collectively, LAM/BAM).

3. On or about July 22, 2005 Genaeya's driver, Janusz, was returning to Pennsylvania having just delivered a load in California.

4. On or about that same day, July 22, 2005, LAM/BAM contacted Genaeya inquiring about Genaeya transporting a load for LAM/BAM to California.

5. Genaeya advised LAM/BAM that Genaeya's driver had just returned from California and needed the weekend off, since July 22, 2005 was a Friday.

6. Later on that same day, July 22, 2005, LAM/BAM once again contacted Genaeya to inquire about Genaeya delivering said load to a warehouse where LAM/BAM would have the load cross docked for delivery to the California destination.

7. At this time on July 22, 2005, LAM/ BAM retained Genaeya, on behalf of Colgate-Palmolive Company, to transport said shipment of miscellaneous freight (the shipment) to Kearney, New Jersey.

8. Genaeya has alleged in a separate law suit filed in Wayne County, Pennsylvania that on or about July 22, 2005 LAM/BAM instructed Genaeya to transport the shipment from the facilities of Colgate-Palmolive Company in Morristown, New Jersey to World Trade Logistics in Kearney, New Jersey.

9. On or about July 22, 2005, Janusz on behalf of Genaeya transported the trailer said to contain the shipment to World Trade Logistics in Kearney, New Jersey, being directed to do so by LAM/BAM, so that LAM/ BAM can have the load cross docked for delivery to the California destination.

10. On or about July 22, 2005, Janusz, on behalf of Genaeya, delivered the trailer to the location identified by LAM/BAM. When he arrived at the location, it was a partially fenced lot without a gate adjacent to a shipping facility operated by World Trade Logistics.

11. There was no one in charge of the lot area, neither a clerk dispatcher, security guard nor any representative of LAM/BAM. Janusz contacted LAM/BAM through his dispatcher and was advised to park the trailer against the wall of the World Trade Logistics building and leave the bill of lading on the front of the trailer. Janusz then unhooked the trailer from the tractor and left.

12. Genaeya notified LAM/BAM after the trailer was parked that the trailer was at the lot adjacent to the World Trade Logistics facility and that no one from LAM/BAM was there to accept the trailer.

13. LAM/BAM advised Genaeya that Saturday morning, July 23, 2005 said load would be cross docked and that the trailer would be empty for Genaeya to pick up on Monday.

14. On Tuesday morning, July 26, 2005, LAM/BAM contacted Genaeya and advised Genaeya that the cross dock of the load never occurred, and requested Genaeya to deliver the load to its California destination.

15. Genaeya agreed, for consideration, to transport the load from World Trade Logistics to California as directed by LAM/BAM.

16. On or about July 26, 2005, Janusz returned to the facility at World Trade Logistics with a tractor in order to transport the trailer to its final destination in California.

17. When Janusz arrived at the World Trade Logistics facility, the trailer and the shipment were missing.

18. At all times relevant herein, Harco was an insurance carrier duly authorized to issue motor truck cargo liability policies in the Commonwealth of Pennsylvania.

19. Harco issued motor truck cargo liability policy number MC3038106 to Genaeya with effective dates of November 20, 2004 to November 20, 2005. A true and correct copy of the Harco policy is attached hereto and made a part hereof and labeled Exhibit A.

20. The Harco policy was in full force and effect at the date of the loss.

21. On or about July 28, 2005, Harco was advised by or on behalf of Genaeya of a potential claim involving a loss.

22. Thereafter Genaeya commenced an action against LAM/BAM in Wayne County, bearing docket number 590-Civil-2005, seeking to recover freight charges allegedly due Genaeya by reason of the transportation performed with respect to this shipment and other shipments. See copy of Complaint of Genaeya attached hereto and marked Exhibit B.

23. On or about December 14, 2005, LAM/BAM filed a Counterclaim against Genaeya seeking to recover an sic excess of $48,000.00, representing the alleged value of the shipment. See copy of Counterclaim of LAM/BAM attached hereto and marked Exhibit C.

24. On or about March 15, 2006 Genaeya tendered the Cargo Counterclaim to Harco for defense.

25. On or about April 26, 2006 Harco advised Genaeya that it was declining to defend Genaeya on the Cargo Counterclaim or to indemnify Genaeya for its liability, if any, arising out of the loss.

26. On or about February 16, 2007 Genaeya commenced the instant action against Harco seeking a declaration that Harco is obligated to defend Genaeya in the Cargo Counterclaim, and to indemnify Genaeya for its liability, if any, arising out of the loss.

"Stipulated Facts," 2/13/08 at 1-5; Docket No. 14.

¶ 3 On February 25, 2008, the trial court found that Harco is obligated to defend and indemnify Genaeya in the underlying lawsuit up to the limits of the policy. The trial court determined that the language used in the policy regarding Harco's duty to defend was vague and ambiguous and, therefore, must be construed in favor of the insured. (Opinion and order, 2/25/08 at 1.) Post-trial motions were denied on May 7, 2008, and notice of appeal was filed on June 4, 2008.¹ On June 5, 2008, appellant Harco was ordered to file a Pa.R.A.P. 1925(b) statement of errors complained of on appeal within 21 days; Harco timely complied on June 25, 2008. (Docket No. 33.) On August 4, 2008, the trial court filed a Rule 1925(a) statement of reasons, relying on its prior opinion and order of February 25, 2008.

¶ 4 Harco has raised the following issues for this court's review:

I. Is a policy of cargo insurance which contains language which purports to reserve to the insurer an election to defend the insured against suits arising from claims made by owners of property lost vague, giving rise to a duty to defend the insured in a suit brought against it for loss of that property?

II. Does an insurer owe indemnity and insurance to its insured when the facts alleged in the underlying action and the facts stipulated to at trial do not bring the claims within the coverage afforded by the policy of insurance?

Harco's brief at 4.

¶ 5 "The proper construction of a policy of insurance is resolved as a matter of law in a declaratory judgment action." Alexander v. CNA Insurance Co., 441 Pa.Super. 507, 657 A.2d 1282, 1284 (1995), appeal denied, 543 Pa. 689, 670 A.2d 139 (1995) (citation omitted). "The Declaratory Judgments Act may be invoked to interpret the obligations of the parties under an insurance contract, including the question of whether an insurer has a duty to defend and/or a duty to indemnify a party making a claim under the policy." General Accident Ins. Co. of America v. Allen, 547 Pa. 693, 706, 692 A.2d 1089, 1095 (1997) (citations omitted). Both the duty to defend and the duty to indemnify may be resolved in a declaratory judgment action. Id. at 707, 692 A.2d at 1096, citing Harleysville Mutual Ins. Co. v. Madison, 415 Pa.Super. 361, 609 A.2d 564 (1992) (insurer can seek determination of obligations to insured before conclusion of underlying action) (additional citations omitted).

¶ 6 As stated above, the parties submitted this matter to the trial court on stipulated facts and the question of whether or not Harco has a duty to defend and/or indemnify its insured, Genaeya, is a question of law. Accordingly, our standard of review is de novo and our scope of review is plenary. Buffalo Tp. v. Jones, 571 Pa. 637, 648 n. 8, 813 A.2d 659, 666 n. 8 (2002) (citation omitted).

¶ 7 The Harco policy provides that "We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense." (Emphasis added.) Harco contends that this language clearly and unambiguously conveys that it has the right, rather than the duty, to defend Genaeya against such lawsuits. In other words, it is discretionary with the insurer. The trial court disagreed, finding that this terminology, "may elect to defend," is vague and ambiguous, and must be construed against Harco.

`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.' Standard Venetian Blind Co. v. Am. Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (1983). `Where, however, the language of the contract is clear and unambiguous, a court is required to give effect to that language.' Gene & Harvey Builders, Inc. v. Pennsylvania Mfrs. Ass'n Ins. Co., 512 Pa. 420, 517 A.2d 910, 913 (1986).

Prudential Property and Casualty Ins. Co. v. Sartno, 588 Pa. 205, 212, 903 A.2d 1170, 1174 (2006).

Contractual language is ambiguous `if it is reasonably susceptible of different constructions and capable of being understood in more than one sense.' Hutchison v. Sunbeam Coal Co. Corp., 513 Pa. 192, 201, 519 A.2d 385,

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