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SEPTA v. TRANSIT CAS. CO.

April 27, 1976

SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY
v.
TRANSIT CASUALTY COMPANY



The opinion of the court was delivered by: BRODERICK

 BRODERICK, J.

 Defendant Transit Casualty Company ("Transit") has moved this Court for a new trial or for a judgment n.o.v. After carefully considering all the grounds urged by defendant, this Court has determined that it must deny the motion.

 The parties stipulated the following facts which were read to the jury:

 
On March 1, 1958, the defendant, Transit Casualty Company (hereinafter referred to as "Transit") issued to Philadelphia Transportation Company, (hereinafter referred to as "PTC") an insurance policy in which Transit undertook to insure PTC against losses resulting from PTC's liability for personal injury and property damage in excess of $50,000 per occurrence. This policy renewed for a period of three years, the excess liability insurance coverage which Transit had provided to PTC since March 1, 1955.
 
The policy, on a standard Transit form, provided:
 
SECTION VI
 
"NOTICE OF OCCURRENCE, CLAIM OR SUIT. The Insured shall give to the Company written notice of any occurrence, which in the judgment of the Insured is likely to involve liability of the Company hereunder, within ten (10) days after knowledge thereof, and shall give like notice within ten (10) days of any claim or suit where the amount claimed or sued for is in excess of the underlying loss stated in the schedule."
 
SECTION VII
 
ADMINISTRATION OF CLAIMS. "The Insured, subject to the conditions herein, shall be responsible for the investigation, settlement, or defense of any claim made, or suit brought or proceeding instituted against the Insured, and shall furnish to the Company all copies of summons and pleadings filed in each suit, and a complete investigation report of each claim or suit which is likely to involve liability of the Company hereunder . . ."
 
The policy did not require, and Transit made clear to PTC that it did not want, notice from PTC of all accidents involving PTC vehicles or all of the claims for personal injury and/or property damage made against PTC, but only those with a value greater than $50,000. The interpretation of the contract provisions and their application by the parties is the basis of this lawsuit.
 
On December 27, 1960, one Ruvenest Davis suffered an injury as a result of an accident involving a PTC bus, and on January 24, 1962 she commenced an action in the Court of Common Pleas of Philadelphia County against PTC and another defendant. That lawsuit alleged, inter alia, that the accident was the result of the negligence of one or both of the defendants. In accordance with Philadelphia Court rules, the Complaint filed on her behalf sought damages "in excess of $5,000", but specified no particular amount claimed. No notice was given to Transit at the time of the occurrence or upon the filing of the Complaint.
 
The Davis action came to trial in June of 1968. On June 5, 1968, Mrs. Davis and her counsel purported to be ready to proceed to trial in the absence of a settlement. PTC's co-defendant (and his insurance carrier) refused to contribute anything by way of settlement. PTC notified Transit that day of the plaintiff's settlement demand in the amount of $150,000 and of the position taken by PTC's co-defendant. At the conclusion of the presentation of evidence in the Davis trial nine days later, but prior to submission of the case to the jury, PTC advised Transit that the judge had asked whether PTC would pay $100,000 by way of settlement of the case.
 
The jury returned a verdict against PTC on June 18, 1968, which award was in the amount of $300,000. On June 19, 1968 this verdict was reported to Transit and two days later Transit wrote to PTC advising PTC that Transit was disclaiming liability under its policy because of the date and manner in which notice of the claim was presented to Transit.
 
On September 30, 1968 SEPTA acquired all of the assets of PTC and assumed all of its liabilities. For the purposes of this action, SEPTA is PTC's successor in all respects.
 
SEPTA paid $150,000 in settlement of the case on April 9, 1969 and thereafter commenced this action for the $100,000 it wished Transit to contribute under the insurance policy. Transit refuses payment upon the grounds that the notice of the Davis claim violated the terms of ...

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