No. 700 April Term, 1979, Appeal from the Judgment of the Court of Common Pleas of Allegheny County, Civil Division, No. GD 76-01664.
Paul J. Senesky, Philadelphia, for appellant.
J. Kerrington Lewis, Pittsburgh, for appellee.
Cavanaugh, Hoffman and Van der Voort, JJ.
[ 284 Pa. Super. Page 513]
Appellant contends that the lower court erred in holding it liable for appellee's costs in settling a lawsuit against her. We agree and, accordingly, reverse the judgment of the lower court.
In April of 1969, appellee, Gloria Brugnoli, owned and operated Gloria's Lounge, a restaurant and bar which was licensed to sell intoxicating beverages. At that time Gloria's Lounge was insured by a policy issued by appellant, United National Insurance Company (United). The policy provided for indemnification for liability arising from the conduct of the business, with bodily injury limits of $5,000 per person and $10,000 per occurrence. Expressly excluded from coverage was liability for injuries resulting from "the selling, serving or giving of any alcoholic beverage . . . to a person under the influence of alcohol." The policy further provided
[ 284 Pa. Super. Page 514]
that United would investigate and defend any lawsuit arising out of the operation of the business, within policy coverage.
On April 19, 1969, Glen C. Cantrell fatally shot George A. Silvus in Gloria's Lounge.*fn1 One year later, on April 17, 1970, the estate of Silvus instituted suit against Brugnoli in the Court of Common Pleas of Westmoreland County by means of a writ of summons. Brugnoli took the writ to her personal attorney, Thomas R. Ceraso, who entered his appearance and then sent the writ to United. United engaged Robert Hassinger, an independent adjuster, to conduct an investigation into the incident. Sometime in May, 1970, Hassinger contacted Ceraso and requested that Brugnoli execute an agreement providing that United, by its participation in the investigation and defense of the Silvus action, was not waiving its right to later disclaim any obligations for claims not covered by the insurance policy. Ceraso refused to allow Brugnoli to sign such an agreement. Subsequently, in early August, 1970, the Silvus estate filed its complaint against Brugnoli. The complaint alleged liability for Silvus' death on the grounds of service of alcoholic beverages to an intoxicated person (Cantrell) and general negligence. Ceraso again entered his appearance, and he then sent a copy of the complaint to Hassinger, who in turn forwarded it to United along with a letter stating his belief that service of alcoholic beverages to Cantrell was the only possible basis of liability.*fn2 On August 11, 1970, general counsel for United sent a letter to Ceraso, the text of which is as follows:
This is to advise you that we are the general counsel for United National Insurance Company and Mr. Hassinger has forwarded to us the material you sent to him on August 4, 1970. Our examination of the Complaint indicates
[ 284 Pa. Super. Page 515]
the possibility of liability unrelated to the service of intoxicating liquors. Because of this possibility, we are prepared to take over the defense of the matter and our claims ...