Liberty Mut. Ins. Co. v. Penn Nat'l Mut. Cas. Ins. Co.

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff, v. PENN NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Defendant.

Civil Action No. 16-1613

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

August 15, 2018

OPINION

Mark R. Hornak, United States District Judge

Liberty Mutual Insurance Company ("Liberty Mutual") brings this declaratory judgment action seeking a determination that Defendant Penn National Mutual Casualty Insurance Company ("Penn National") had a duty to defend Liberty Mutual's insured, Cost Company, in an underlying wrongful death action in which a construction worker was killed by a large concrete panel manufactured by Penn National's insured, Pittsburgh Flexicore Co. Inc. ("Flexicore"). In this action, Liberty Mutual seeks reimbursement from Penn National for the costs expended to defend Cost Company and the amount paid to settle the litigation, plus prejudgment interest on both amounts. Presently before the Court are the parties' cross-motions for summary judgment limited to a determination of whether Penn National had a duty to defend Cost Company. ECF Nos. 31 & 35. The Court heard oral argument on the Motion on February 12, 2018. ECF No. 47. After careful consideration of the parties' positions, and for the following reasons, Penn National's motion for summary judgment will be denied, and Liberty Mutual's motion for summary judgment will be granted.

I. FACTUAL BACKGROUND

The underlying incident giving rise to the present action occurred on October 22, 2009, during a construction project for a Senior Care home located at the Grandview Building in New Kensington, Pennsylvania. On that date, a laborer working on the project, Yamil Alexander Gonzalez, was killed when a Flexicore concrete panel collapsed on top of him. Liberty Mutual's insured, Cost Company was a subcontractor on the project, who further subcontracted with Flexicore, Penn National's insured. The present action is based on Penn National's declining to defend and indemnify Cost Company in the underlying state court action as an "additional insured" pursuant to a Subcontract Agreement entered into between Cost Company and Flexicore. Flexicore was to add Cost Company as an Additional Insured on its' policies issued by Penn National. The relevant facts as to the underlying action, the Subcontract Agreement, the Penn National insurance policies, and the tender of the defense to Penn National are as follows.

A. Underlying Wrongful Death Action

On October 13, 2010, Karina Ramirez, Mr. Gonzalez's widow, individually and as administrator of Mr. Gonzalez's estate, along with Maria Gonzalez, Mr. Gonzalez's mother, filed a wrongful death action (the "Underlying Action") in the Court of Common Pleas of Allegheny County against several parties involved in the Grandview Building construction project, including Cost Company and Flexicore. An Amended Complaint was filed on December 13, 2010, in the Court of Common Pleas in Allegheny County at GD No. 10-19146 (the "Underlying Complaint"). Ramirez v. v. Longwood at Oakmont, Inc., Court of Common Pleas of Allegheny County, GD. No. 10-19146, Amended Complaint, Dec. 13, 2010 (Ex. A to Pl.'s Complaint (ECF No. 1-2)). As set forth in the Underlying Complaint, on October 22, 2009, Mr. Gonzalez was working as a laboreron the project when a large concrete panel manufactured by Flexicore collapsed from the ceiling above where he was working and killed him. Underlying Compl. ¶¶ 17-18, 16. Also sued in the Underlying Action were the owners and managers of the Grandview Building construction project, Longwood at Oakmont, Inc., Presbyterian SeniorCare, the general contractor, Mistick Corporation, and the drywall subcontractor, V+I Drywall, Inc.

The Underlying Complaint sets forth a Wrongful Death claim against Cost Company in Count V, in which it is alleged that Cost Company "caused the large section of concrete floor decking to collapse and ultimately kill" Mr. Gonzalez. Id. ¶ 61. Count VI sets forth a Survival Action claim against Cost Company, in which it is alleged in part that Cost Company failed to implement and maintain adequate safety measures and intentionally manipulated or modified designs and materials exposing workers to substantial risks. Id. ¶¶ 71-72.

The Underlying Complaint sets forth claims of "Wrongful Death (Products Liability)" (Count IX) and "Survival Action (Products Liability)" (Count X) against Flexicore. Id. ¶¶ 92-113. Flexicore "designed and/or manufactured the concrete panels" for the construction project. Id. ¶ 16. At the time of the accident, "the concrete panel was being used for its intended use and the decedent was unaware of any defect in the concrete panel or of any danger as a result of standing beneath it." Id. ¶ 95. The "concrete panel was in the same condition as it was when the defendant, Pittsburgh Flexicore Co., Inc., sold and delivered it to the construction project," and the "condition of the product remained unchanged from the time the concrete panels were delivered to the construction project, to the time the concrete panel collapsed and killed." Id. ¶ 96. Count IX further alleges the following particulars:

97. When the decedent sustained the injuries alleged above, the concrete panel was in a defective condition, unreasonably dangerous to a user or consumer, in that theconcrete panel failed to conform to the manufacturing specifications, failed to have proper warnings or instructions concerning its use, and was an unsafe design. These conditions were not observable by the decedent, who relied on the duty of the defendant, Pittsburgh Flexicore Co., Inc., to manufacture and deliver the concrete panel in a condition fit for use for the purpose intended.

The defendant, Pittsburgh Flexicore Co., Inc. is strictly liable for its conduct;

98. When the decedent sustained the injuries alleged above, the concrete panel was in a defective condition, unreasonably dangerous to a user or consumer, in that the defendant negligently failed to insure that the concrete panel conformed to the manufacturing specifications, negligently failed to have proper warnings or instructions concerning its use, and was negligently designed. These conditions were not observable by the decedent, who relied on the duty of the defendant, Pittsburgh Flexicore Co., Inc., to manufacture and deliver the concrete panel in a condition fit for use for the purpose intended;

99. The defective condition of the concrete panel manufactured by the defendant, Pittsburgh Flexicore Co., Inc., was a proximate cause of the injuries sustained by decedent, Yamil Alexander Gonzalez. These injuries eventually resulted in his death. . . .

Id. ¶¶ 97-99. In Count X, it is alleged that Flexicore "intentionally manipulated and/or modified designs and/or materials knowing that such manipulation and/or modifications would expose workers to substantial risks." Id. ¶ 110.

B. Subcontract Agreement between Cost Company and Flexicore

Cost Company and Flexicore entered into a subcontract in which Cost Company was identified as the Contractor and Flexicore as the Subcontractor ("Subcontract Agreement"). Compl. ¶ 13 (Subcontract Agr., Aug. 5, 2008, Ex. B to Comp. (ECF No. 1-3)). The Subcontract Agreement provides that Flexicore

agrees to furnish all necessary labor, material, services, equipment machinery, tools, and any other items proper or necessary in the doing of the work herein undertaken by the Subcontract to fully perform and in every respect complete the following items of work:

Manufacture, furnish, deliver to the project site, and install all required precast hollowcore plank and solid balcony slabs required at the Grandview Apartments . . . .

Id. Art. First (bold in original). Following this Article, the parties inserted a handwritten provision, initialed by representatives from both sides, stating "Pittsburgh Flexicore Co. Inc. quotation 4380 dated July 10, 2008 will become part of this Subcontract Agreement." Id. Quotation 4380 excludes "Installation" of the concrete planks by Flexicore. Id. Quotation 4380 (ECF No. 1-3, at 19).

Article Twenty-Fourth is titled "Safety" and provides in part that Flexicore "is solely responsible for the health and safety of its employees, agents, Subcontractors, and other persons on and adjacent to the Work Site. The Subcontractor, however, shall take all necessary and prudent safety precautions with respect to its work and shall comply, at Subcontractor's expense, . . . . with all applicable laws, . . . for the safety of persons or property, . . . ." Id. Art. Twenty-Fourth.

Article Twenty-Fifth is titled "Insurance" and requires, in part, that Flexicore is responsible for providing General Liability insurance and Umbrella Liability insurance covering Cost Company as an Additional Insured. Id. Art. Twenty-Fifth ("Subcontractor . . . will provide General Liability, Umbrella Liability, . . . insurance covering the . . . Contractor . . . (the "Additional Insured[]))." Article Twenty-Fifth further explains the insurance requirements imposed on Flexicore as follows:

The obligation of [Flexicore] is to provide such adequate insurance to protect [Cost Company] and the Additional Insureds from all risks and/or occurrence that may arise or result, directly or indirectly from [Flexicore's] work or presence on the jobsite and all risks of injury to [Flexicore's] employees, sub-Subcontractors' employees, and other agents. . . . This obligation shall not be avoided by allegations of contributory or sole acts, failure to act, omissions, negligence or fault of the Additional Insureds. Each policy of insurance shall waive subrogation against the Additional Insureds. As such, each policy of insurance provided for herein, exceptWorker's Compensation, shall name [Cost Company] . . . as an additional insured under the policy, and each policy of insurance provided for herein shall be primary with no right of contribution against [Cost Company] . . . or their insurers.

Id. (emphasis in original).

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