Appeal from Order of the Court of Common Pleas, Civil Division, of Philadelphia County, No. 524 January, 1976.
Stephen C. Baker, Philadelphia, for appellant.
Paul R. Anapol, Philadelphia, for Alfiero, appellee.
Thomas J. Finarelli, Philadelphia, for International, appellee.
Wieand, Watkins and Geisz,*fn* JJ.
[ 347 Pa. Super. Page 88]
Patrick J. Alfiero sustained a spinal cord injury resulting in complete and permanent paraplegia by virtue of an accident which occurred while he was driving a dump truck leased to his employer, Empire Steel Castings, Inc., by Berks Mutual Leasing Company (hereinafter "Berks"). Alfiero commenced a civil action against Berks and International Harvester Company, Inc., the designer and manufacturer of the truck. An amicable settlement resulted in a judgment in favor of Alfiero and against Berks in the amount of $950,000.00.*fn1 Berks' primary insurance carrier, Liberty Mutual Insurance Co., paid Alfiero the sum of $100,000.00, its policy limit. Excess coverage was allegedly provided by a policy of insurance written by Continental Casualty Company (hereinafter "CNA"). Alfiero issued execution on the unpaid judgment of $850,000.00 and named CNA as garnishee. CNA denied liability, but the trial
[ 347 Pa. Super. Page 89]
court, after full and complete hearing, made extensive findings of fact and concluded that CNA was liable for the unpaid judgment and also for Alfiero's counsel fees. On appeal, CNA contends (1) that the terms of the settlement between Alfiero and Berks were such that Berks, and thus its excess liability carrier as well, was released from all liability in excess of $100,000.00, and (2) that the trial court erred in assessing Alfiero's counsel fees against a garnishee. There is merit only in the second contention.
The trial court made extensive findings of fact which are not challenged on appeal. The truck which Alfiero was driving for his employer at the time of the accident had been leased from Berks pursuant to a lease agreement which required Empire Steel to provide liability insurance coverage. Berks was required to maintain the truck. Berks was insured by Liberty Mutual pursuant to a garage liability policy which had limits of $100,000.00 per person for bodily injury. Empire Steel had purchased from CNA a third party liability policy which, although disputed, was held in a separate declaratory judgment action to provide umbrella or excess coverage to Berks in an amount not to exceed $1,000,000.00.*fn2
Timely notice of Alfiero's civil action was given to CNA together with a request by Berks to defend the action. CNA refused, and Liberty Mutual undertook to defend the action on Berks' behalf. CNA continued its refusal to defend even after the trial court had determined in the separate declaratory judgment proceeding that CNA had a duty to defend. Instead, CNA filed an appeal and, in the meantime, refused to participate in the civil action or in the settlement discussions which were then underway. According to the findings of the attachment court, trial counsel for all parties were unanimous in their opinion that the Alfiero claim had a value in excess of one million dollars. For this reason and also because of a likelihood that Berks would be
[ 347 Pa. Super. Page 90]
found solely liable to Alfiero, CNA was repeatedly urged to take an active part in the settlement negotiations. CNA refused. It continued its refusal even after International Harvester had settled and counsel for Liberty Mutual had advised CNA that attempts were being made to settle for an amount under one million dollars. Ultimately, the claim against Berks was settled for $950,000.00. Liberty Mutual paid $100,000.00, as we have observed, and Berks assigned to Alfiero all its rights against CNA. In return, Alfiero agreed that he would nnot expose Berks' assets to sale to satisfy the ...