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KEYSTONE AUTOMATED EQUIPMENT CO. v. RELIANCE INSURANCE CO. (01/06/88)

filed: January 6, 1988.

KEYSTONE AUTOMATED EQUIPMENT CO., INC., APPELLANT,
v.
RELIANCE INSURANCE CO.



APPEAL FROM THE ORDER ENTERED JANUARY 30, 1987 IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY, CIVIL NO. 6442 JULY 1985.

COUNSEL

Michael M. Baylson, Philadelphia, for appellant.

K. Charles Gudenas, Philadelphia, for appellee.

Cirillo, President Judge, and Beck and Tamilia, JJ.

Author: Cirillo

[ 369 Pa. Super. Page 474]

In January of 1983, Texaco International Trader, Inc. and Societe de Futs et Emballage (Texaco) sued Keystone Automated Equipment Company (Keystone) alleging that Keystone was negligent in the selling and installation of equipment that was to be used to produce oil drums. That equipment was to be installed in a plant in Abidjan, Ivory Coast, Africa. The contracts in question provided that Keystone would sell, install, test and otherwise provide services for the proper installation, operation and maintenance of that equipment. The complaint alleged that Keystone breached contracts to deliver the equipment and complete the work by June 19, 1981, that the equipment was defective and inoperable, that Keystone failed to repair or replace it, and that Keystone was guilty of negligence in the manufacturing, production, transportation, design, engineering, inspection, and maintenance of the equipment.

Keystone and Texaco settled out of court for the sum of one million dollars. Keystone had notified Reliance, its insurer, of the suit and requested that it defend the suit and provide coverage. Reliance refused claiming that the property damage was not covered because, inter alia, the damage did not occur within the policy territory. Keystone had previously purchased from Reliance Insurance Company a comprehensive insurance policy under which it agreed to indemnify Keystone for all personal injuries, property damage, fire losses, and advertising injuries caused by an occurrence during the policy period and within the policy territory. "Policy territory" is defined by the policy as "the United States of America, its territories or possessions, or Canada." "Occurrence" is defined as "an accident, including continuous or repeated exposure to conditions, which results in personal injury or property damage neither expected nor intended from the standpoint of the insured."

Keystone then brought suit in the Court of Common Pleas of Philadelphia County to recover the amount of the judgment from Reliance, along with the costs of defending the suit. The court granted Reliance's motion for judgment

[ 369 Pa. Super. Page 475]

    on the pleadings and dismissed the complaint. The court found as a matter of law that the actions alleged by Texaco did not occur within the policy territory so that Reliance was under no obligation to either defend or indemnify Keystone. Keystone had filed a motion for summary judgment; the court did not consider that motion.

The appellant argues on appeal that the trial court erred in granting a motion for judgment on the pleadings because: (1) the fact that the coverage claimed by Keystone is barred under a policy exception is disputed in the pleadings, and Reliance has failed to bear the burden of proof on that issue; (2) the coverage exclusion is an affirmative defense upon which Reliance bears the burden of proof; (3) the decision in D'Auria v. Zurich Insurance Company, 352 Pa. Super. 231, 507 A.2d 857 (1986), supports Keystone's contention that the claims against Reliance are potentially within the coverage of the policy; and (4) case law shows that the insurer must provide a defense and indemnify claims brought against Keystone. We disagree with appellant's arguments, and affirm the trial court's order.

In reviewing a trial court's decision to grant judgment on the pleadings, the scope of review of the appellate court is plenary; the reviewing court must determine if the action of the trial court was based on a clear error of law or whether there were facts disclosed by the pleadings which should properly go to the jury. Vogel v. Berkley, 354 Pa. Super. 291, 296, 511 A.2d 878, 880 (1986). The appellate court must confine its consideration to the pleadings and relevant documents, id., accept as true all well pleaded statements of fact by the party against whom judgment is granted, in this case, the insured, and consider against him only those facts that he specifically admits. Jones v. Travelers Insurance Company, 356 Pa. Super. 213, 216, 514 A.2d 576, 578 (1986). Judgment on the pleadings may be granted only where the moving party's right to succeed is certain and the case so free from doubt that a trial would clearly be a fruitless exercise. Id.

[ 369 Pa. Super. Page 476]

In the instant case, Keystone contends that Reliance was bound to defend it under the policy. It is clear that in order to determine whether the insurer is obligated to defend an insured, the reviewing court must decide whether, if the facts alleged in the complaint are proven to be true, the policy would provide coverage. State Auto Insurance Company v. Kufahl, 364 Pa. Super. 230, 232-236, 527 A.2d 1039, 1040-1041 (1987). After review of the complaint in the instant case, we find that even if the facts as alleged by Keystone were true, the policy would not provide coverage. From this, we find that judgment on the pleadings was proper, since insurer Reliance's right to succeed was certain and the case free from doubt.

In the instant case, appellant argues first that the court of common pleas did not accept as true all the facts pleaded by it. Specifically, appellant complains that the court erred by failing to accept as true its answer to Paragraph 33 of Reliance's New Matter. Paragraph 33 of Reliance's New Matter states:

33. Claims asserted by Texaco against Plaintiff in the Underlying Action were not within the terms and conditions of the Policy and they were specifically excluded from coverage by pertinent exclusions and limitations set forth in the Policy.

Keystone attempted to deny these allegations in its Answer to New Matter of Defendant:

33. Denied. Claims asserted by Texaco against plaintiff in the underlying action required defendant to defend plaintiff and were not specifically excluded from coverage by pertinent exclusions and limitations set forth in the insurance policy issued by defendant to plaintiff.

Keystone argues that the court should have accepted its denial as true under the rules for granting judgment on the pleadings, and therefore judgment should have been denied. Reliance contends that the court was entitled to accept as true all facts and reasonable inferences ...


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