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LIBERTY MUTUAL INSURANCE COMPANY v. S. G. S. COMPANY (03/27/73)

decided: March 27, 1973.

LIBERTY MUTUAL INSURANCE COMPANY, APPELLANT,
v.
S. G. S. COMPANY



Appeal from judgment of Court of Common Pleas, Trial Division, of Philadelphia, May T., 1969, No. 5523, in case of Liberty Mutual Insurance Company v. S. G. S. Company, Contract Packaging Co., Perfect Jacket Manufacturing Co., Pioneer Canvas Products, and Ralph B. Englander.

COUNSEL

Jeffery Charles Hayes, with him Edward W. Madeira, Jr., and Pepper, Hamilton & Scheetz, for appellant.

Harry P. Begier, Jr., with him Orlofsky, Cozen and Begier, for appellees.

Wright, P. J., Watkins, Jacobs, Hoffman, Spaulding, Cercone, and Packel, JJ. Opinion by Cercone, J. Concurring Opinion by Spaulding, J.

Author: Cercone

[ 224 Pa. Super. Page 13]

This case comes to us on appeal by plaintiff insurer, Liberty Mutual Insurance Company (Liberty Mutual), from an order of the lower court dismissing its petition for declaratory judgment, which petition was based on plaintiff Liberty Mutual's contention that it had no duty to defend its insured, S. G. S. Company (SGS) against claims in two trespass actions brought by tenants and the owner of the building (Third Parties) arising out of a fire on the SGS premises.

This matter is premised on a comprehensive general liability insurance policy entered into between plaintiff insurer, Liberty Mutual, and its insured, SGS, covering SGS premises. In the policy SGS agreed to notify Liberty Mutual in writing as soon as practicable of every accident (in this case fire) happening on the premises and to immediately forward notice of claims or suits brought against SGS. During the time the policy was in effect, a fire occurred on the SGS premises which resulted in the lawsuits by the Third Parties. Liberty Mutual, the insurer, refused to defend SGS on the ground that SGS failed to give timely notice of the fire and the lawsuits as required by the terms of the policy. On this basis, Liberty Mutual filed its petition for declaratory judgment against SGS and the Third Parties seeking a declaration by the court on that issue.

In its petition for declaratory judgment Liberty Mutual alleged that the fire took place on June 22, 1968, that SGS had knowledge of the fire immediately after it happened, and yet, failed to notify Liberty Mutual until December 30, 1968, more than six months

[ 224 Pa. Super. Page 14]

    later, when it also notified Liberty Mutual of one of the trespass actions brought against it.

The Third Parties filed an answer to Liberty Mutual's petition and upon their motion the lower court entered an order dismissing the petition, and thus, this appeal by plaintiff, Liberty Mutual.

SGS, the insured, having been officially and legally dissolved, went out of business without assets. It filed no answer to Liberty Mutual's petition for declaratory judgment. As the lower court observed: "Obviously if the insured fails to defend the various actions arising out of the fire, plaintiff will be subject to a series of suits for defaulted judgments or for damages for breach of duty to defend."

A determination by the lower court, in a declaratory judgment proceeding, of a disputed issue of fact concerning whether SGS, the insured, gave proper notice of the fire and lawsuits under the terms of the policy, is a comparatively simple matter that can be disposed of in that one proceeding, and would eliminate the necessity of deciding the same question in several garnishment proceedings or third party beneficiary actions against Liberty Mutual available to the Third Parties in this case in light of SGS's bankruptcy and lack of defense. There is no question that a declaratory judgment proceeding would eliminate a multiplicity of suits; resolve in one action, with all the parties present, the disputed issue of fact pertaining to notice; and give plaintiff Liberty Mutual the right to an affirmative action to resolve the matter of its obligation to defend in the trespass actions rather than to be put to costly defensive actions where it must await the choice of time and ...


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