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filed: June 3, 1983.


No. 1137 PITTSBURGH, 1981, Appeal from the Judgment entered on November 10, 1981, in the Court of Common Pleas, Civil Division, of Allegheny County, No. GD79-30375.


Mark A. Rosenblum, Pittsburgh, for appellant.

Robert B. Brown, Jr., Pittsburgh, for Aetna, appellee.

Lawrence F. Stengel, Pittsburgh, for Trottnow, appellee.

Hester, McEwen and Johnson, JJ.

Author: Hester

[ 314 Pa. Super. Page 504]

Presently before this Court is appellant Dr. Leo R. Kairys' appeal from the judgment of the lower court entered on November 10, 1981.

The facts may be summarized as follows:

Appellant is a physician specializing in the field of obstetrics and gynecology. In connection with his medical practice, he carried malpractice liability insurance written by Medical Protective in the basic amount of $100,000.00. He also carried an excess liability coverage policy with Chicago Insurance Company which covered any excess over $100,000.00, up to $1,000,000.00. He also carried other insurance including life, general liability, and homeowner's, all of which were handled by various insurance agents.

In January of 1969, appellant was contacted by Arthur D. Tripp, Jr., relative to the possibility of his becoming involved in a Keogh plan. In the course of those discussions, Tripp discussed appellant's entire insurance portfolio with him. Although Tripp did not identify himself as an agent of Aetna Casualty and Surety Company, appellant believed that Tripp wrote insurance for Aetna.

Appellant's dealings with Tripp led to his placing of a number of insurance policies which had previously been serviced by others. During the discussions, Tripp discussed the possibility of writing malpractice liability insurance coverage for appellant. He discussed the matter with his then associate who indicated that he was satisfied with the then existing coverage but that if Tripp could supply an additional $1,000,000 of excess coverage, it should be obtained. There then ensued a series of events which have led to the instant litigation.

[ 314 Pa. Super. Page 505]

Acting on appellant's behalf, Tripp prepared an application for excess coverage of $1,000,000, as well as an application for basic underlying coverage of $250,000. Those applications were signed by appellant, and were forwarded to Trottnow which, in turn, forwarded them to Aetna. Tripp prepared an application for underlying coverage in the amount of $250,000 in the belief that such an application was required in addition to the application for the excess coverage.*fn1 Aetna issued the policies and sent them to Trottnow who, in turn, sent them to Tripp, along with the billing for the premiums. Appellant was not interested and had never been interested in a basic underlying liability policy in the amount of $250,000 and that policy was never delivered to him. Correspondence then ensued between Tripp and Trottnow in which Tripp informed Trottnow that the 6000 policy had been issued in error and that there was never an intention to apply for such a policy. Tripp further informed Trottnow that since the policy had been issued, he would attempt to convince appellant to accept it. His attempts were unsuccessful and the policy was cancelled.

In addition, through the efforts of Tripp, appellant's Chicago Insurance Company excess policy was cancelled and a short rate return premium check was sent to appellant. Since the scope policy issued by Aetna provided excess coverage in excess of basic liability of $250,000 and the Med Pro policy provided basic underlying coverage of only $100,000, a gap existed in appellant's coverage for any liability between $100,000 and $250,000.

In June of 1973, appellant was sued in an action of trespass alleging medical malpractice. He immediately notified Medical Protective and Aetna. He knew nothing more of this lawsuit until 1978 when he was informed by counsel retained by Med Pro to represent him that the case would soon be coming to trial. It was then that the existence of the gap came to light. The lawsuit in which

[ 314 Pa. Super. Page 506]

    appellant was defendant resulted in a verdict against him in the amount of $550,000. As hereinabove indicated, the then state of appellant's malpractice liability insurance coverage was such that he would be personally liable for any verdict between $100,000 and $250,000.

As the result of the aforedescribed verdict, appellant instituted an action for declaratory judgment against appellees, Aetna, Trottnow, and Tripp*fn2 which sought a declaration that the Aetna 6000 policy was in effect and provided a basic underlying coverage up to $250,000.00. He further sought a declaration that each of the appellees breached his or its contractual obligations to appellant and was negligent in effecting the cancellation of the Chicago Insurance Company excess policy and in issuing the Aetna scope policy whose excess constituted an umbrella over $550,000.00 base coverage without determining whether appellant had basic underlying coverage in the amount of $250,000.00, and by attempting to cancel the Aetna 6000 policy.

Trial on this matter commenced on May 8, 1981, non-jury, before the Honorable I. Martin Wekselman. Judge Wekselman, on July 30, 1981, issued an Order whose relevant findings as to this appeal are as follows:

(A) That the Aetna 6000 policy was never in effect and is not now in effect, and that plaintiff is entitled to no coverage thereunder.

(B) That defendant Arthur D. Tripp, Jr., breached his contractual duties to plaintiff and was negligent in failing to exercise the knowledge and skill reasonably expected ...

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