Appeal from the Order entered in the Court of Common Pleas of Delaware County, Civil, Division, No. 84-1645.
Richard A. Stanko, Media, for appellants.
Robert B. Mulhern, Jr. and Michael O. Kassak, Philadelphia, for Boyle, appellee.
Cavanaugh, Olszewski and Tamilia, JJ.
[ 360 Pa. Super. Page 336]
On July 18, 1979, appellant/Barr, while in the course of his employment, severed his hand on a paper cutting machine. A sheet metal guard for the machine had been manufactured and installed by J.C. Ayers and Company in 1973.
At the time of installation, Ayers had liability coverage including "Complete Operation" coverage with Insurance Company of North America. In 1975, Ayers' insurance coverage was transferred by George Cramer, a licensed insurance agent, to General Accident Group.
When appellant instituted an action against Ayers in 1980, the company notified Cramer, who submitted the claim to General Accident Group. The insurance company undertook Ayers' defense subject to a reservation of rights and, in October of 1982, denied coverage on the basis that the policy did not include "Complete Operations" coverage. The insurance company asserted it had never been requested to provide such coverage and had not charged for such.
In May 1983, Barr entered into an agreement with Ayers whereby Barr would hold Ayers free from any liability, for
[ 360 Pa. Super. Page 337]
the settlement amount of $250,000. Ayers did not admit liability or fault and Barr further agreed to seek recovery of the amount from the insurance companies and agents who had policies with Ayers. All of Ayers' rights against the insurance carriers were then assigned to Barr who brought suit individually and, as an assignee of Ayers against General Accident and Cramer, alleging a failure to obtain proper insurance coverage for Ayers.*fn1
On October 21, 1984, before the trial was to begin, appellee/Cramer presented a motion in limine asserting that the court should find the assignment invalid or, if valid, only to the amount of any out-of-pocket defense costs incurred by Ayers. Appellee also sought judgment in his favor or, in the alternative, requested the court order that Barr prove his liability case against Ayers before proceeding against him.
Appellant requested a continuance of the trial date and on November 20, 1985, filed a petition to amend the complaint alleging a reformed settlement agreement. Under the terms of the new agreement, Barr entered judgment against Ayers for the $250,000 on November 14, 1985. He also agreed not to take any action to execute on the judgment but to seek satisfaction solely from any proceeds obtained from the insurance companies. In order for Barr to pursue these claims, Ayers assigned all of their rights to recover against their insurance companies and the insurance brokers, agents or representatives who were contracted to provide coverage.
The court denied the petition to amend, finding the effect of the new agreement was the same as the original in that Ayers was still insulated from liability and thus had no right to seek reimbursement for the judgment amount from the insurance companies. Concluding that the amendment would not advance Barr's position, the motion was denied. This appeal followed.
[ 360 Pa. Super. Page 338]
Appellant makes two arguments on appeal. First, he maintains the Order is final and appealable because it puts him out of court on his claim. Second, he contends the settlement agreement was valid and the assignment by Ayers of its rights against Cramer and General Accident Group does not extinguish the claim against those parties.
Appellee/Cramer asserts the Order is not appealable and that the liability of Ayers to Barr must be proved prior to proceeding to the issues in this case. Appellee/Cramer also argues that the statute of limitations bars the amendment.
The resolution of the issues raised hinge on our determination of whether a plaintiff can agree to enter judgment against an insured and also agree not to enforce the judgment directly against the insured in exchange for the assignment of the insured's rights against his insurance company and their agents. We think such an agreement is valid and the assignee can seek recovery of the judgment amount in an action against the insurance company and their agents for failure to provide adequate coverage and failure to defend.
The lower court held that a contract for insurance is analagous to a contract for indemnification and since an indemnitee is not entitled to recover until he has made payment or suffered actual loss, the agreement in the present case resulted in Ayers, the indemnitee, being insulated from having to pay ...