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KELLNER v. ROYAL INDEM. CO.

May 14, 1982

Emil KELLNER and Natalie Kellner, his wife, Plaintiffs,
v.
ROYAL INDEMNITY COMPANY, Defendant, v. WHAMB LEASING, INC., t/a Montgomery Sportswear, Inc., et al., Additional Defendants



The opinion of the court was delivered by: CONABOY

 CONABOY, District Judge.

 These actions, filed against Aetna Casualty & Surety Company (hereinafter "Aetna") and against Royal Indemnity Company ("Royal") on July 28, 1980, and on March 4, 1981, respectively, seek recovery of insurance proceeds allegedly due under co-extensive policies. On July 6, 1981, the cases were joined for administrative purposes. Presently before the Court are motions for summary judgment filed by Royal and United States Casualty. For the reasons set forth below, the motions will be granted.

 It is, of course, well settled that for a moving party to prevail on a motion for summary judgment, he must show (a) that there is no genuine issue as to any material fact, and (b) that he is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); See WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL SECTION 2712. Thus the Court cannot try issues of fact on a Rule 56 motion, but only is empowered to determine whether there are issues to be tried. Janek v. Celebrezze, 336 F.2d 828 (3rd Cir.1964). Finally, in determining whether an issue of material fact does exist, all inferences must be drawn against the moving party. See 6 MOORE'S FEDERAL PRACTICE para. 56.04[2]. The following facts are undisputed.

 On January 30, 1979, the Plaintiffs and the Industrial Development Authority of the City of Wilkes-Barre, *fn1" Pennsylvania, were the equitable and legal owners, respectively, of certain improved real estate located in Jersey Shore, Pennsylvania, when Aetna issued a policy of insurance covering the property.

 On August 24, 1979, the Plaintiffs entered into a lease-purchase agreement with a certain George F. Heim, Jr. ("Heim"), for the sale of the property effective August 15, 1979. By virtue of said agreement, the Plaintiffs remained as legal owners of the property and Heim was the equitable owner. In accordance with the agreement, Heim had obtained a binder of insurance issued by Royal on August 24, 1979, which named the Plaintiffs as additional insureds.

 On August 25, 1979, the premises in question -- a brick building housing Heim's clothing manufacturing business -- was damaged and rendered untenantable by a fire subsequently determined to be of incendiary origin. The Plaintiffs promptly submitted to Aetna all notices and proofs of loss required by that policy; and, as additional insureds, submitted all notices and proofs of loss which they anticipated would be required by Royal. *fn2" Aetna paid the Plaintiffs an amount equal to about 31% of their claim; Royal refused to tender any payment. The instant lawsuits were commenced presently.

 It has been Royal's position throughout these proceedings that Heim intentionally concealed the true origin of the fire and submitted statements in proof of loss that were fraudulent. On June 12, 1981, Royal had filed a Third-party Complaint alleging these matters against Heim personally and several business entities owned by him. Additional Third-party Defendants thereunder were United States Casualty, an authorized agent of Royal, and Aetna, allegedly the primary insurer. By agreement of counsel, the trial in the instant matter was deferred pending the outcome of litigation by Heim against Royal in the Court of Common Pleas for Lycoming County, Pennsylvania. On January 12, 1982, a verdict favorable to Royal was returned in that case. The jury answered affirmatively a special interrogatory inquiring whether Heim had conspired with the arsonist to set the fire.

 The thrust of Royal's motion for summary judgment is as follows: Royal first maintains that the instant Plaintiffs are precluded from relitigating issues concerning fraudulent acts by Heim under the doctrine of collateral estoppel. Since under Pennsylvania law the fraudulent act of an insured will prevent recovery of another insured when their interests are joint, the argument continues, the instant Plaintiffs are barred from recovery against Royal based upon principles of res judicata. Accordingly, Royal concludes, it is entitled to judgment as a matter of law. *fn3"

 Pennsylvania law requires that four prerequisites be satisfied in order to invoke collateral estoppel:

 
"1) the issue decided in the prior adjudication was identical with the one presented in the later action,
 
3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication, and
 
4) the party against whom it is asserted has had a full and fair opportunity to litigate the issue in ...

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