Transportation Ins. Co. v. Spring-Del Associates

159 F.Supp.2d 836

TRANSPORTATION INSURANCE COMPANY, Plaintiff, v. SPRING-DEL ASSOCIATES, Defendant, Third Party Plaintiff, v. Kat-Man-Du Corporation, Third Party Defendant.

No. CIV. A. 99-CV-1865.

United States District Court, E.D. Pennsylvania.

April 3, 2001.

MEMORANDUM

ROBERT F. KELLY, District Judge.

This Motion for partial reconsideration, filed by Plaintiff, Transportation Insurance Company ("Transportation"), arises from this Court's Order dated November 28, 2000, granting summary judgment in favor of Spring-Del Associates ("Spring-Del") with regard to the claims asserted by Transportation as subrogee of Waterfront Renaissance Associates ("WRA"), which included claims for contractual and common law indemnity. The summary judgment Order and the underlying action arose out of the settlement of a lawsuit filed by Stephen Middleton ("Mr. Middleton") after he was struck by a drunk driver while walking along Delaware Avenue in Philadelphia, Pennsylvania. For the reasons that follow, Transportation's Motion for partial reconsideration is denied.

I. BACKGROUND.

Transportation issued a commercial general liability insurance policy naming WRA and other parties as insureds. WRA owned property covered by the insurance policy on Delaware Avenue in Philadelphia, Pennsylvania which was leased in part to Spring-Del. On April 4, 1994, while Mr. Middleton walked along Delaware Avenue at 1:30 a.m. near the leased property, he was hit by a speeding drunk driver and was seriously injured. He and his wife filed a negligence suit (the "Middleton suit") against Transportation's insureds and Spring-Del.

On May 2, 1995, WRA was served with a writ of summons in the Middleton suit. On May 31, 1995, WRA and Spring-Del entered into a release which stated:

Know all men by these presents that Waterfront Renaissance Associates, L.P. c/o Carl Marks & Co., Inc. 135 East 57th St., New York N.Y. 10022 for and in consideration of Two thousand seven hundred seventy-six dollars and sixty one cents ($2,766.61) do hereby remise, release, and forever discharge Spring-Del Associates a Pennsylvania General Partnership, its partners, and its agent U.S. Realty Associates, Inc., their heirs, executors and administrators (or its successors and assigns), of and from any and all manner of actions and causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments, claims and demands whatsoever in law or equity, especially any and all claims arising, concerning, or with regard to those two certain Lease Agreements between Waterfront Renaissance Associates, L.P. as Lessor and Spring-Del Associates as Lessee dated November 1, 1989 and May 1, 1990 respectively for those two certain parking lots at the southwest corner of Delaware Avenue and Noble Street, Philadelphia, Pennsylvania.

Which against the said Spring-Del Associates, its partners, and its agent U.S. Realty Associates, Inc., ever had, now has (or have), or which their heirs, executors, administrators, successors or assigns or any of them, hereafter can, shall or may have, for or by reason of any cause, matter or thing whatsoever, from the beginning of the world to the date of these presents.

Release Agreement, Pl.'s Resp. to Mot. for Summ. J., Ex. J.

Transportation's insureds notified Transportation of the Middleton suit, and Transportation defended its insureds in that action. WRA tendered the defense of the Middleton suit to Spring-Del, but Spring-Del rejected the tender. Various defendants settled out of the Middleton suit and obtained releases from the plaintiffs. Spring-Del was released for $100,000 and Transportation's insureds were released for $1,500,000, of which Transportation funded $1,000,000. Transportation also incurred $200,000 in fees and costs in defending the insureds in the Middleton suit. Transportation made payment to the plaintiffs in the Middleton suit on July 21, 1998.

The rights of the insureds for any defense costs and settlement amounts from Spring-Del were transferred to Transportation pursuant to the insurance policy. Because Spring-Del refused to assume the defense of WRA and refused to indemnify WRA, Transportation, as subrogee of WRA, filed a complaint seeking indemnity from Spring-Del on April 14, 1999 in this Court. On May 11, 2000 Spring-Del filed a Motion for summary judgment regarding the claims asserted by Transportation, as subrogee of WRA, which included claims for contractual and common law indemnity. On November 28, 2000, this Court granted Spring-Del's Motion. On December 4, 2000, Transportation filed the current Motion for partial reconsideration of the November 28, 2000 Order regarding the claims for contractual and common law indemnity.

II. STANDARD OF REVIEW.

A motion for reconsideration is appropriate only where: (1) there has been an intervening change in controlling law; (2) new evidence is available; or (3) there is need to correct a clear error of law or prevent manifest injustice. N. River Ins Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3rd Cir.1995). However, such motions should only be granted sparingly. Armstrong v. Reisman, No. 99-4188, 2000 WL 288243, at *2 (E.D.Pa. Mar.7, 2000).

III. DISCUSSION.

This Court granted summary judgment on November 28, 2000, in favor of Spring-Del on Transportation's claims, as subrogee of WRA, for contractual and common law indemnity against Spring-Del. Transp. Ins. Co. v. Spring-Del Assocs., No. 99-1865, 2000 WL 1751090 (E.D.Pa. Nov.28, 2000). This Court found that the language of the unambiguous release entered into between WRA and Spring-Del on May 31, 1995 was so broad and general that it released Spring-Del from all possible liability arising from the leased premises, including the claims for indemnity by Transportation as subrogee of WRA. Id. at *4. This Court also found that WRA was aware of the Middleton claims against it when it signed the release, since it was served with a writ of summons in the Middleton suit on May 2, 1995 and signed the release approximately four weeks later. Id.

Transportation argues that this decision was in clear error of established Pennsylvania law. In its Motion for Partial Reconsideration, Transportation reasserts an argument first raised in its Response and reply briefs against summary judgment which the Court did not expressly discuss in its November 28, 2000 Opinion. Transportation asks this Court to reconsider its Order based on this argument, or in the alternative, to clarify its Order by specifically addressing the argument. This Court cannot conclude that its earlier reasoning was a clear error of law. Parties to a contract may enter into whatever agreement they desire, no matter how imprudent, and they will be bound by that contract. Mellon Bank, N.A. v. Aetna Bus. Credit, 619 F.2d 1001, 1009 (3d Cir. 1980). Here, Spring-Del and WRA entered into a very broad general release, and they, and Transportation as subrogee, are bound by it. Furthermore, Transportation's current argument is also unpersuasive because it does not adequately address the full reasoning behind the rules of law that it espouses. See sections III.A. and III.B., infra. However, because this Court will not grant reconsideration, this Court will address Transportation's argument.

At first glance, Transportation's current argument is attractive in its simplicity. However, upon closer examination, the argument is flawed. Transportation weaves together two propositions of law, arising from two separate lines of cases, in order to argue that Spring-Del must indemnify it. The first proposition is that claims for indemnification do not accrue until payment is made to an injured third party. Rubin Quinn Moss Heaney & Patterson, P.C. v. Kennel, 832 F.Supp. 922, 931 (E.D.Pa.1993); Rivera v. Phila. Theological Seminary of St. Charles Borromeo, 510 Pa. 1, 507 A.2d 1, 14 (1986); McClure v. Deerland Corp., 401 Pa.Super. 226, 585 A.2d 19, 22 (1991). The second proposition is that general words of release will not bar a claim that has not accrued at the date of the release. Bunnion v. Consolidated Rail Corp., 108 F.Supp.2d 403, 411 (E.D.Pa.1999), affirmed 230 F.3d 1348 (3rd Cir.2000); Youngren v. Presque Isle Orthopedic Group, 876 F.Supp. 76, 79 (W.D.Pa.1995); Restifo v. McDonald, 426 Pa. 5, 230 A.2d 199, 201 (1967); Vaughn v. Didizian, 436 Pa.Super. 436, 648 A.2d 38, 40 (1994). Therefore, Transportation argues that read together, these statements of law stand for the proposition that, regardless of how broadly the release was worded, the release cannot bar the indemnity claims because those claims did not accrue until payment was made on July 28, 1998, three years after the date the release was signed.

A. When Claims for Indemnification Accrue

Under Pennsylvania law, a claim for indemnification does not fully accrue until payment is made to the injured party. Rubin Quinn, 832 F.Supp. at 934-935 (determining that the indemnity claim was not beyond the statute of limitations because the claim had not accrued until it was paid); Rivera, 507 A.2d at 14 (finding that an implied contract to indemnify cannot come into existence until the party seeking indemnity has been found liable to the plaintiff and has discharged the obligation arising from the liability); McClure, 585 A.2d at 22-23 (finding an indemnity claim premature because the underlying actions were not resolved, and therefore, it was impossible to determine the basis of the claims, and whether they were within the scope of the indemnity clause). However, Rubin Quinn, Rivera and McClure, cited by Transportation, do not resemble the current case. In these cases, the courts were only concerned with whether the indemnity claims were fully ripe or enforceable. Here, we are concerned with whether possible indemnity claims arising from a negligence suit, of which the parties were aware, are included in the broad wording of a release entered into between the parties. Therefore the findings in these...