Selective Way Ins. Co. v. Hospitality Grp. Servs., Inc.

119 A.3d 1035

2015 PA Super 146

SELECTIVE WAY INSURANCE COMPANY, Appellant

v.HOSPITALITY GROUP SERVICES, INC.; Hospitality Group Services, Inc. t/d/b/a Ramada Inn; Hospitality Group Services, Inc. t/d/b/a Ramada of Ligonier; and Hospitality Group Services, Inc. t/d/b/a Ramada of Historic Ligonier ; Roger N. Alms; Rose M. Alms and Terri Nemcheck, Individually and as Administratrix of the Estate of Sean M. Nemcheck, Deceased, Appellees.

No. 1430 WDA 2013

Superior Court of Pennsylvania.

Argued Dec. 3, 2014.

Filed July 7, 2015.

Jeffrey H. Quinn, Philadelphia, for appellant.

Ronald J. Bergman, Greensburg, for Alms and Hospitality Group, appellees.

Christopher T. Hildebrandt, Pittsburgh, for Estate of Nemcheck and Nemcheck, T., appellees.

BEFORE: GANTMAN, P.J., FORD ELLIOTT, P.J.E., BENDER, P.J.E., PANELLA, DONOHUE, SHOGAN, MUNDY, OLSON and OTT, JJ.

Opinion

OPINION BY DONOHUE, J.:

Selective Way Insurance Company (“Selective”) appeals from the August 8, 2013 order entered by the Westmoreland County Court of Common Pleas granting the motions for summary judgment filed by the appellees in this case. The trial court granted the motions for summary judgment based on its conclusion that the statute of limitations barred Selective's request for a declaratory judgment regarding its duty to defend and indemnify Hospitality Group Services Inc., Hospitality Group Services, Inc. t/d/b/a Ramada Inn, Hospitality Group Services, Inc. t/d/b/a Ramada of Ligonier, Hospitality Group Services, Inc. t/d/b/a Ramada of Historic Ligonier, Roger N. Alms and Rose M. Alms (collectively, “Hospitality Group”) in a lawsuit filed by Terri Nemcheck, individually and as administratrix of the estate of Sean M. Nemcheck, deceased (“the Nemcheck Action”). Specifically, the trial court found that, as a matter of law, the statute of limitations for an insurance carrier to file a declaratory judgment action regarding its duty to defend and indemnify its insured begins to run at the time the insurance company receives the civil complaint in an action against its insured. Following our review of the law in this area, we conclude that this is an incorrect statement. Instead, the statute of limitations for the filing of a declaratory judgment action brought by an insurance company regarding its duty to defend and indemnify begins to run when a cause of action for a declaratory judgment arises. This requires a determination by the trial court of when the insurance company had a sufficient factual basis to support its contentions that it has no duty to defend and/or indemnify the insured.¹

A summary of the relevant facts and procedural history is as follows. On February 19, 2006, the vehicle driven by seventeen-year-old Sean Nemcheck left the road and struck a fence, causing debris to strike him in the head. The vehicle ended up submerged in a six-foot-deep pond. He died as a result of this accident. His blood alcohol level at the time of his death was 0.14 g/ml. The accident occurred after he worked a shift in the kitchen and banquet hall of the Ramada Inn in Ligonier. Sean Nemcheck's shift began at 11:00 a.m. on February 18, 2006 and lasted until 3:06 a.m. on February 19, 2006. Sean Nemcheck consumed alcohol that he allegedly obtained from the Ramada Inn during his sixteen-hour shift.

On August 1, 2007, Terri Nemcheck (“Nemcheck”) filed the complaint to commence the Nemcheck Action, which sounded in negligence per se, negligent supervision/management, and ordinary negligence, and included a claim for punitive damages. Hospitality Group had previously sent a copy of the complaint to Selective, through which Hospitality Group had three policies of insurance at the time of Sean Nemcheck's death—a general liability policy, a liquor liability policy, and a commercial umbrella policy. Selective provided a defense subject to a reservation of rights. In its reservation of rights letter dated July 31, 2007, Selective advised Hospitality Group that it was unsure whether it had a duty to defend and/or indemnify Hospitality Group in the Nemcheck Action and that coverage counsel would review the complaint and pertinent case law.

Selective filed a complaint on June 6, 2012, and an amended complaint on October 29, 2012, seeking a declaration that it had no duty to defend or indemnify Hospitality Group in the Nemcheck Action. Nemcheck and Hospitality Group filed preliminary objections to the amended complaint on November 14 and 15, 2012, respectively, which the trial court overruled on February 14, 2013. Nemcheck and Hospitality Group each filed an answer, new matter and counterclaim² on March 1 and 6, 2013, respectively, asserting therein, in relevant part, that the statute of limitations barred Selective from obtaining the relief it sought. On March 22, 2013, Selective filed replies to the new matters, denying, inter alia, that the applicable statute of limitations barred its declaratory judgment action.

On May 31, 2013 and June 4, 2013, respectively, Hospitality Group and Nemcheck filed motions for summary judgment on several bases, including the running of the four-year statute of limitations applicable in declaratory judgment actions. Selective filed its own motion for summary judgment on June 4, 2013 and filed responses in opposition to the appellees' motions for summary judgment on July 1, 2013. Nemcheck and Hospitality Group filed responses to Selective's motion for summary judgment on July 1 and 3, 2013, respectively.

On August 8, 2013, the trial court filed an opinion and order granting the motions for summary judgment filed by the appellees based upon its finding that the four-year statute of limitations began to run for the filing of a declaratory judgment action regarding Selective's duty to defend and indemnify Hospitality Group in the Nemcheck Action “[a]t the moment Selective became aware of the allegations in the [c]omplaint[.]” Trial Court Opinion and Order, 8/8/13, at 3. It therefore found untimely Selective's complaint seeking a declaratory judgment, as it was filed nearly five years after Selective received the Nemcheck complaint. The trial court further stated that, “based upon this determination, we [sic] need not address whether there is liability coverage for compensatory and punitive damages or an obligation to defend Defendants Hospitality Group under the terms of the insurance policy.”

Id. at 4–5. Nonetheless, in its order granting summary judgment in favor of Nemcheck and Hospitality Group, the trial court stated: “It is further ORDERED that the package of policies at issue in the [c]omplaint for [d]eclaratory [j]udgment provide coverage for the claims made [in the Nemcheck Action.]” Id. at 7 (emphasis in the original).

On September 5, 2013, Selective filed a notice of appeal and timely complied with the trial court's order for the filing of a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). On October 3, 2013, the trial court issued a statement in lieu of a written opinion pursuant to Pa.R.A.P. 1925(a), stating that it adequately addressed in its August 8, 2013 opinion and order all of the issues Selective raised on appeal. On May 9, 2014, this Court sua sponte listed the case to be heard before the Court en banc.

On appeal, Selective presents the following issues for our review:

[1.] Whether Selective Way's complaint for declaratory judgment is timely within the statute of limitations?

[2.] Whether unambiguous policy exclusions relieve Selective Way of its duty to defend and indemnify Hospitality Group against claims made in the Nemcheck Action?

Selective's Brief at 5.

Prior to addressing the merits of the issues raised, we must first determine whether the issues presented in the appeal before us are moot. Following the filing of this appeal, but prior to oral argument before this Court en banc, Selective reached a settlement in the Nemcheck Action, which Nemcheck and Hospitality Group contend renders the issues on appeal before us moot and unreviewable. Nemcheck's Supplemental Brief at 3–11; Hospitality Group's Supplemental Brief (Mootness) at 3–8. Selective concedes that the settlement renders moot the issues raised on appeal. Selective's Supplemental Brief at 14. Selective asserts, however, that its claim regarding the timeliness of its declaratory judgment action qualifies as an exception to the mootness doctrine, permitting this Court to decide the issue on its merits. Id. at 15–16. Selective makes no argument regarding the reviewability of the second issue raised on appeal concerning its duty to defend and indemnify Hospitality Group in the Nemcheck Action.

The mootness doctrine requires that there is an actual case or controversy at all stages of review. Pilchesky v. Lackawanna Cnty., 624 Pa. 633, 88 A.3d 954, 964 (2014). “[A]n issue may become moot during the pendency of an appeal due to an intervening change in the facts of the case [.]”Id. “An issue before a court is moot if in ruling upon the issue the court cannot enter an order that has any legal force or effect.” Johnson v. Martofel, 797 A.2d 943, 946 (Pa.Super.2002). Appellate courts in this Commonwealth have recognized three exceptions, permitting decision on an issue despite its mootness: “1) the case involves a question of great public importance, 2) the question presented is capable of repetition and apt to elude appellate review, or 3) a party to the controversy will suffer some detriment due to the decision of the trial court.” In re D.A., 801 A.2d 614, 616 (Pa.Super.2002) (en banc) (citations omitted).

Selective contends that the question of the running of the applicable statute of limitations in this case satisfies all three of the exceptions, but specifically concentrates on the third exception, maintaining that “Selective will suffer a detriment in a collateral legal proceeding if the order of the trial court remains in effect.” Selective's Supplemental Brief at 15. According to Selective, while this case was pending on appeal, Hospitality Group...