The opinion of the court was delivered by: MENCER
The instant matter is before the Court on plaintiff's motion for summary judgment. In this declaratory judgment action, plaintiffs are demanding that defendants extend insurance coverage for an incident involving plaintiff David J. Early. In resolving this dispute, the one ultimate issue presented is whether the policy issued by defendant Old Republic Insurance Company (hereinafter "Old Republic") contains an "escape" clause which conflicts with an "excess insurance" clause in the policy issued by plaintiff St. Paul Fire and Marine Insurance Company (hereinafter "St. Paul"). Clearly, under Pennsylvania law, where a conflict does exist between an "excess" and an "escape" clause, courts refuse to give effect to the "escape" clause. Here, concluding that an "escape" clause in the Old Republic policy conflicts with an "excess" clause in the St. Paul policy, the Court finds defendants to be primarily liable to plaintiffs and, as such, enters judgment for plaintiffs.
The relevant undisputed facts are: on December 12, 1983, a collision occurred on Interstate Route 80 in Clearfield County, Pennsylvania between a tractor-trailer unit operated by David J. Early, a Massachusetts resident, and a tractor-trailer operated by Charles R. Toney, a Michigan resident. The tractor-trailer driven by Mr. Toney was owned by A-1 Disposal, Inc., a Michigan corporation. The tractor driven by Mr. Early was owned by Ryder Truck Rental, a Florida corporation, and leased to Erving Paper Mills, a Massachusetts corporation. Erving Paper Mills subsequently assigned its rights under this lease agreement to its corporate affiliate, Contrans, Inc., also a Massachusetts corporation. The trailer driven by Mr. Early was owned by Chancellor Fleet Corporation, a Massachusetts corporation, and leased by Chancellor to Erving Paper Mills. Both the Ryder tractor and the Chancellor trailer were being operated by Mr. Early pursuant to an agreement between Driver's Pool, Inc., Early's employer, and Contrans, Inc.
Pursuant to its duties under the terms of the lease agreement with Erving Paper Mills, Ryder obtained insurance coverage from Old Republic, a Pennsylvania Corporation. Additionally, in accord with its obligations under the terms of the agreement with Driver's Pool, Contrans procured risk insurance coverage from St. Paul, a Nebraska corporation, through an independent insurance agency in Massachusetts. Because of an overlap in these policies, the focus of the current dispute is on how liability coverage should be apportioned among these two insurers.
Ryder and Old Republic do not dispute that they owe both coverage and a defense to Mr. Early and Contrans. Defendants admit that under the terms of the Old Republic policy, the primary insurer for the leased tractor is Ryder. However, defendants contend that these same terms direct that primary insurance for the trailer be provided under the St. Paul policy. Accordingly, defendants' position is that each insurer has a concurrent duty to defend and to insure against any liability which may result for the entire tractor-trailer unit in the pending property damage action brought by A-1 Disposal, Inc. A-1 Disposal, Inc. v. David J. Early, Contrans, Inc. and Ryder Truck Rentals, Civil Action 85-303 Erie (pending).
Conversely, St. Paul, Mr. Early, and Contrans maintain that defendants should exclusively assume liability coverage on a primary basis. Classifying the "other insurance" provision of the Old Republic policy as an "escape" clause and the "other insurance" provision of the St. Paul policy as an "excess" clause, plaintiffs argue that under Pennsylvania law, defendants must provide primary insurance for not only the tractor, but also the trailer. Hence, the current controversy.
Initially, as this diversity action was filed in Pennsylvania district court, this Court's choice-of-law decisions must be governed by the choice-of-law rules of Pennsylvania. Klaxon v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). Pennsylvania has chosen to resolve choice-of-law issues through a "policy, interests and contacts test." In Griffith v. United Air Lines, 416 Pa. 1, 203 A.2d 796 (1964), the Pennsylvania Supreme Court announced a choice-of-law rule which permits an "analysis of the policies and interests underlying the particular issue before the court" and a determination of which jurisdiction is most intimately concerned with the outcome of the litigation. Id. at 21, 22, 203 A.2d 796; see also American Contract Bridge League v. Nationwide Mutual Fire Insurance Company, 752 F.2d 71, 74 (3d Cir. 1985). Here, as recognized by the parties, it is Massachusetts law which should apply.
Yet, as also agreed by the parties and as borne out by the independent research of this Court, no Massachusetts court has dispositively ruled on the instant issues.
Under Pennsylvania's conflicts rule that when a sister state's law is unknown or unclear, it is presumed to be the same as Pennsylvania law, see Melville v. American Home Assurance Co., 584 F.2d 1306, 1308 (3d Cir. 1978) citing In re Trust of Pennington, 421 Pa. 334, 219 A.2d 353, 356 (1966), this Court is obligated to apply Pennsylvania law. Accordingly, the Court's analysis will proceed under this premise.
The Court's review logically begins with an examination of the involved clauses. In the coverage afforded by the Old Republic policy, Endorsement #19, as amending Endorsement #7, paragraph 3 of an earlier agreement, provides:
The insurance coverage to such lessee/renter applies only to the maintenance or use of (1) the automobile so leased/rented and (2) trailers owned by the lessee/renter or for which he is legally liable, but only while attached to the leased/rented automobile, however, such insurance shall not apply if there is other coverage applicable to the trailer and available to the lessee/renter.
Defendants assert that this provision, as applied here, does not direct an extension of insurance coverage because there exists "other coverage applicable to the trailer" leased by Contrans. In conflict with the Old Republic endorsement is Part VI.B. of the St. Paul policy. As a condition of insurance, the St. Paul policy mandates:
1. For any covered auto you own this policy provides primary insurance. For any covered auto you don't own, the insurance provided by this policy is excess over any other collectible insurance. However, while a covered auto which is a trailer is connected to another vehicle the liability coverage this policy provides for the trailer.
a. Is excess while it is connected to a motor vehicle ...