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IACAPONI v. NEW AMSTERDAM CAS. CO.

September 21, 1966

Dino IACAPONI
v.
NEW AMSTERDAM CASUALTY COMPANY



The opinion of the court was delivered by: WEBER

 This is a diversity suit against an insurance company that alleges that an agent of defendant fraudulently and conspiratorily induced plaintiff to sign a Workmen's Compensation Agreement in order to defeat plaintiff's claim against defendant's insured for serious personal injuries. The injury occurred September 18, 1955, the agreement was signed October 24, 1955, and the plaintiff thereafter received and cashed checks from the present defendant in payment under the Workmen's Compensation Act. The plaintiff now claims that he was not an employee but an independent contractor and the Workmen's Compensation Agreement was fraudulently misrepresented to him by defendant.

 This matter has been extensively litigated in the State Courts of Pennsylvania and has twice been passed upon by the Supreme Court of Pennsylvania. See Iacoponi v. Plisko, 412 Pa. 576, 195 A.2d 362 (1963), and 419 Pa. 398, 214 A.2d 504 (1965). In addition to his allegation of fraud and conspiracy, plaintiff alleges that he has been denied due process of law as guaranteed by the Fourteenth Amendment to the Constitution by the technical procedural rules of the Pennsylvania courts denying him a hearing on the merits of either his fraud claim or his personal injury claim. He also alleges that he has been denied a trial by jury on the merits of his claim. He pleads that he has exhausted his state judicial remedies.

 Defendant has moved to dismiss pleading the Statute of Limitations, res adjudicata, failure to exhaust state remedies, failure to raise the due process issue in the State Courts and the exclusive remedy of the Pennsylvania Workmen's Compensation Act in this case.

 In October 1957, the plaintiff filed a complaint in trespass against Plisko and Grossi, t/a The West Brownsville Iron and Metal Company, in the Court of Common Pleas of Washington County, Pennsylvania. His complaint alleged that he entered into a contract with defendants for dismantling a coal tipple. The defendant there, through its insurance carrier, the present defendant, filed an Answer denying the contract, alleging that the plaintiff was its employee, stating that the plaintiff had entered into a Workmen's Compensation Agreement with its insurance carrier for Workmen's Compensation benefits and that plaintiff had been receiving compensation thereunder. The defendant claimed that plaintiff was thus estopped from initiating a trespass action against them and moved for judgment on the pleadings. No reply to this new matter raised in the answer was made and plaintiff's counsel indicated to the Court at the time for argument that no brief or argument would be offered against this contention. On November 10, 1958, the Court of Common Pleas of Washington County, Pennsylvania, entered judgment for defendant on the pleadings. No appeal was taken.

 On or about February 13, 1962, plaintiff engaged new counsel who presented a petition to the Washington County Court to open the judgment entered November 10, 1958. A Rule was issued on defendants to show cause why the judgment should not be opened. The petition for the Rule recited that plaintiff had received no notice of judgment; that the judgment was based on error since plaintiff was never an employee; and that the Workmen's Compensation Agreement had been obtained by fraud and misrepresentation while plaintiff was hospitalized suffering from shock and under sedation. Defendants filed an Answer to the petition denying its allegations and asking that the Rule be dismissed. No depositions were taken, the defendant opposing their taking. Finally after considerable argument between counsel the Common Pleas Court made the Rule absolute and opened the judgment on January 14, 1963. No explanation for this action was given by the Court. An appeal from this Order was made to the Pennsylvania Supreme Court on March 27, 1963.

 The Pennsylvania Supreme Court remanded the proceedings to the Court below because the state of the record did not permit of a definitive disposition of the matter, no testimony or depositions having been taken in support of the allegations. 412 Pa. 576, 195 A.2d 362 (1963).

 Thereafter the Common Pleas Court of Washington County, Pennsylvania, by an en banc court of three judges, (different from the personnel of the Court that had previously opened the judgment) considered extensive testimony by deposition and heard argument on the question of whether the judgment should be opened and the plaintiff allowed to answer the new matter and go to trial. The Court considered in detail the two contentions of the plaintiff that he was an independent contractor and that the Workmen's Compensation Agreement had been procured by fraud. An examination of the Opinion of that Court by Judge McCune, dated May 5, 1965 (Case No. 85 November Term, 1957), shows that the Court considered these allegations and the evidence in support of them thoroughly and found that there was no clear evidence that plaintiff was an independent contractor and no evidence that he was the victim of fraud. The Court dismissed the Rule and the judgment for defendant remained of record.

 The second appeal to the Pennsylvania Supreme Court resulted in a finding that the Court below had now resolved the disputed facts and taken the action required by the resolved facts. The Court found no abuse of discretion or error of law and affirmed the decision. 419 Pa. 398, 214 A.2d 504 (1965).

 This suit in the United States District Court followed. Plaintiff alleges that he pleads a new cause of action against a different party, and that the defense of res adjudicata is not applicable.

 We do not believe that we have different party defendant before us. The present defendant is the insurer for the defendant in the State Court action, both for liability and for Workmen's Compensation coverage. Its agents secured the execution of the Workmen's Compensation Agreement on behalf of the employer, the defendant in the Court below. Its counsel appeared for the defendants in the trespass action in the State Court. All of these facts are alleged in plaintiff's present complaint.

 An insurance carrier is in privity with its insured. Dally v. Pa. Thres. & F.Mut. Cas. Ins. Co., 374 Pa. 476, 97 A.2d 795 (1953). Particularly, under the Workmen's Compensation Act of Pennsylvania, the term "employer" includes his insurance carrier under the Act. 77 P.S. ยง 701.

 
"In Wallace's Estate, 316 Pa. 148, 153, 174 A. 397, 399, this court stated: 'Broadly stated, the rule of res judicata is, that when a court of competent jurisdiction has determined a litigated cause on its merits, the judgment entered, until reversed, is forever and under all circumstances, final and conclusive as between the parties to the suit and their privies, in respect to every fact which might properly be considered in reaching a judicial determination of the controversy, and in respect to all points of law there adjudged, ...

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