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ORIEN T. DEVEAUX v. ROBERT R. PALMER (05/08/89)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: May 8, 1989.

ORIEN T. DEVEAUX, A MINOR, BY HER PARENT AND NATURAL GUARDIAN, BELINDA L. DEVEAUX AND BELINDA L. DEVEAUX, IN HER OWN RIGHT, APPELLANTS
v.
ROBERT R. PALMER, COMMONWEALTH OF PENNSYLVANIA MEDICAL PROFESSIONAL LIABILITY CATASTROPHE LOSS FUND, COMMONWEALTH OF PENNSYLVANIA, KATHY MARTER, FEDERAL HOME LIFE INSURANCE COMPANY, APPELLEES. ORIEN T. DEVEAUX, A MINOR, BY HER PARENT AND GUARDIAN, BELINDA L. DEVEAUX, AND BELINDA L. DEVEAUX, IN HER OWN RIGHT, APPELLANTS V. ROBERT R. PALMER ET AL., APPELLEES

Appeals from the Orders of the Court of Common Pleas of Philadelphia County, in the case Orien T. Deveaux, a minor, by her parent and natural guardian, Belinda L. Deveaux and Belinda L. Deveaux, in her own right, 2408 Cardinal Drive, Coatesville, Pa. v. Robert R. Palmer, 230 Midland Road, Springfield, Pennsylvania and Commonwealth of Pennsylvania Medical Professional Liability Catastrophe Loss Fund, Suite 21, 1062 Lancaster Avenue, Rosemont, Pennsylvania, and Commonwealth of Pennsylvania, 15-21 Strawberry Square, Harrisburg, Pa., and Marsh & McLennan, Three Parkway, Philadelphia, Pa. and Kathy Marter, c/o Marsh & McLennan, Three Parkway, Philadelphia, Pa. and Federal Home Life Insurance Company, One Independence Mall, Philadelphia, Pa., No. 1603, July Term 1987, dated October 15, 1987 and November 16, 1987.

COUNSEL

T. J. Scully, with him, Jack E. Feinberg, Of Counsel: Feinberg & Silva, for appellants.

Eric B. Schnurer, Deputy General Counsel, for appellee, Pennsylvania Medical Professional Liability Catastrophe Loss Fund.

Glenn C. Equi, with him, James A. Vinarski, for appellees, Kathy Marter and Marsh & McLennan, Inc.

President Judge Crumlish, Jr., and Judges Craig, Barry, Colins, Palladino, McGinley and Smith. Opinion by President Judge Crumlish, Jr. Judge Colins dissents.

Author: Crumlish

[ 125 Pa. Commw. Page 633]

Orien Deveaux, a minor, and her mother appeal two Philadelphia Common Pleas Court orders*fn1 sustaining the

[ 125 Pa. Commw. Page 634]

    preliminary objections of the Pennsylvania Medical Professional Liability Catastrophe Loss Fund (Fund), Kathy Marter (Marter) and Marsh and McLennan, Inc. We affirm.

Deveaux brought a medical malpractice action against a physician and a hospital (defendants) for injuries sustained during her birth. That matter was settled before trial by agreement under which the defendants would pay Deveaux an initial $800,000. The remaining $1,000,000 was to be set aside in a structured settlement.*fn2 According to Deveaux's complaint, the plaintiff and defendants' counsel were to investigate maximum yield annuity options as a condition of settlement.*fn3 Deveaux's counsel proposed a Federal Home Life Insurance Company (Federal Home Life) annuity conforming to the agreement, with an annual yield of $99,961. The Fund, insurer of the defendants, expressed reservations about the purchase of this annuity, because the Federal Home Life broker was not approved by the Fund.*fn4

Deveaux's complaint states that Fund officials breached the settlement agreement by disclosing the terms of the Federal Home Life annuity option to Marter, an agent for Marsh and McLennan -- a competing provider. The complaint avers that Marter advised Federal Home Life that Deveaux's counsel was not authorized to contact the provider, causing Federal Home Life to withdraw its offer. Deveaux asserts that Marter and the Fund's

[ 125 Pa. Commw. Page 635]

Fund's interference in the Federal Home Life annuity resulted in a $6.85 million loss to her.*fn5

Our scope of review of a common pleas court order sustaining preliminary objections and dismissing a complaint is limited to a determination of whether the trial court erred as a matter of law or committed a manifest abuse of discretion. General Accident Insurance Co. v. City of Philadelphia, 114 Pa. Commonwealth Ct. 528, 539 A.2d 59 (1988).

On appeal, Deveaux initially contends that the common pleas court erroneously relied on the statutory guarantee of sovereign immunity, Section 8521 of the Judicial Code*fn6 to bar her claim against the Fund. She argues that the Fund is not immune because it is an independent insurance carrier undertaking a proprietary function.*fn7 We disagree.

The Fund, an executive agency of the Commonwealth, was established pursuant to the Health Care Services Malpractice Act (Act)*fn8 Judge v. Allentown and Sacred Heart Hospital Center, 506 Pa. 636, 487 A.2d 817 (1985), on remand, 90 Pa. Commonwealth Ct. 520, 496 A.2d 92 (1985), and is a Commonwealth party for purposes of sovereign immunity. Section 8501 of the Judicial Code.*fn9

[ 125 Pa. Commw. Page 636]

Deveaux nonetheless maintains that the legislature intended to isolate monies in the Fund from the Commonwealth's General Fund; therefore, she asserts that the Fund is an independent trust not protected by sovereign immunity.

Section 701(2) and (4) of the Act provides that Fund liability is separable from the Commonwealth's General Fund. 40 P.S. §§ 1301.701(2) and (4). However, similar measures of independence have been granted to the State Workers' Insurance Fund, 77 P.S. § 221, and State Employees' Retirement System Funds, 71 Pa. C.S. § 5901, which are administered by executive agencies and afforded sovereign immunity. Nagle v. Insurance Department, 46 Pa. Commonwealth Ct. 621, 406 A.2d 1229 (1979); United Brokers Mortgage Co. v. Fidelity Philadelphia Trust Co., 26 Pa. Commonwealth Ct. 260, 363 A.2d 817 (1976).

Like these funds, the medical professional liability "CAT" Fund serves the dual governmental function of providing reasonably priced professional malpractice insurance to Commonwealth health care providers and insuring that injured persons will obtain prompt and fair compensation for their claims. Ohio Casualty Group of Insurance Companies v. Argonaut Insurance Co., 514 Pa. 430, 525 A.2d 1195 (1987). Therefore, we hold that as an executive agency, the Fund is protected by sovereign immunity.

Deveaux alternatively maintains that her complaint established liability under the personal property exception to sovereign immunity. Section 8522(b)(3) of the Judicial Code*fn10 imposes liability for damages caused by "the care, custody or control of personal property in the possession or control of Commonwealth parties, including

[ 125 Pa. Commw. Page 637]

Commonwealth-owned personal property and property of persons held by a Commonwealth agency. . . ."

Exceptions to sovereign immunity are to be narrowly construed. Mascaro v. Youth Study Center, 514 Pa. 351, 523 A.2d 1118 (1987). The personal property exception has been held to apply only in cases where it is alleged that the property itself caused injury. Nicholson v. M & S Detective Agency, Inc., 94 Pa. Commonwealth Ct. 521, 503 A.2d 1106 (1986).

While it is true that Fund monies are personal property, Deveaux's assertions of third-party interference with the performance of a contract between Federal Home Life and the parties to the settlement agreement cannot in any way be construed to raise a cognizable claim that the care, custody or control of the property -- that is, the money itself -- caused her injuries. Thus, we hold that the common pleas court correctly concluded that Section 8522(b)(3) of the Judicial Code was inapplicable and dismissed Deveaux's action against the Fund.

As to Deveaux's action against Marter and Marsh and McLennan for tortious contractual interference,*fn11 those

[ 125 Pa. Commw. Page 638]

    defendants filed the following preliminary objections: (1) a motion to strike the complaint for failure to conform with Pennsylvania Rules of Civil Procedure pertaining to pleading specificity;*fn12 (2) a motion for a more specific pleading to remedy the inadequacies averred in the motion to strike; and (3) a demurrer.

The trial court sustained these preliminary objections at motions court; however, it failed to file an opinion detailing reasons for dismissing Deveaux's actions. Although the trial court's failure to file an opinion violated Rule 1925(a) of the Pennsylvania Rules of Appellate Procedure, we are cognizant that we can affirm if the trial court's order can be upheld on any ground. Gilbert v. Korvette's, Inc., 457 Pa. 602, 604, n.5, 327 A.2d 94, 96, n.5 (1974).

Of the defendants' three preliminary objections, we need only address the demurrer because the preliminary objections attacking the sufficiency of the pleadings sought remedial rather than dispositive relief. The demurrer,

[ 125 Pa. Commw. Page 639]

    however, could warrant conclusive termination of the action on the pleadings.

Therefore, we will look to the demurrer to determine if Deveaux's complaint was sufficient to establish a claim, keeping in mind that a preliminary objection in the nature of a demurrer cannot be sustained and the complaint dismissed unless with certainty no recovery is possible. If any theory of law will support the claim, a dismissal is improper. Cianfrani v. State Employees' Retirement Board, 505 Pa. 294, 479 A.2d 468 (1984). A demurrer admits as true all well-pleaded facts, but does not admit conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinion. Department of General Services v. Celli-Flynn, 115 Pa. Commonwealth Ct. 494, 540 A.2d 1365 (1988).

Deveaux's complaint essentially averred that Marter's actions in contacting Federal Home Life constituted tortious interference in the performance of a contract. Paras. 26, 29, 32.

Pennsylvania has adopted the Restatement of Torts definition of tortious interference in the performance of a contract. Consolidation Coal Co. v. District 5, United Mine Workers of America, 336 Pa. Superior Ct. 354, 485 A.2d 1118 (1984). Section 766 of the Restatement (Second) provides:

     one who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.

In order to establish a claim under the above section, Deveaux would have had to plead that she was a party to a valid contract and that Marter and Marsh and McLennan

[ 125 Pa. Commw. Page 640]

    interfered in the performance of that contract. However, a review of the complaint discloses that Deveaux failed to establish the existence of any contract.

As to the existence of a contract embodied in the court-approved settlement agreement among the parties to the original tort action -- Deveaux and the hospital medical staff -- Federal Home Life was not a party in that action, but was merely alleged to be a potential annuity provider.*fn13 Therefore, Marter and Marsh and McLennan's actions could not, as a matter of law, have constituted tortious interference in the performance of the settlement agreement.*fn14 An averment of a contractual relationship is not sufficient to withstand a demurrer if it is apparent that such a relationship did not occur. Lerman v. Rudolph, 413 Pa. 555, 198 A.2d 532 (1964). We conclude from Deveaux's complaint, that any averment of Federal Home Life's participation in the settlement agreement is an inference not justified by the pleadings.

The complaint also states that "the conduct of the defendants . . . was an intentional interference in the performance of said contract . . . in that they did cause . . . Federal Home Life Insurance Company, to withdraw its bid. . . ."*fn15

That allegation, and similar allegations in the complaint, establish only that Federal Home Life submitted a bid to provide an annuity. Thus, Deveaux failed to allege the requisite assent necessary to establish the existence of a contract between her and Federal Home

[ 125 Pa. Commw. Page 641]

Life. Moreover, the complaint established that the CAT Fund was vested with the authority to accept the proposal, which it was unwilling to do at the time of the alleged tortious interference.

As a matter of law, Deveaux's complaint fails to state facts sufficient to establish the requirements of tortious interference in the performance of a contract by Marter or Marsh and McLennan. Therefore, we affirm the common pleas court's dismissal of her complaint.

Order

The orders of the Philadelphia County Common Pleas Court, No. 1603 July Term 1987, dated October 15, 1987, and November 16, 1987, are affirmed.

Judge Colins dissents.

Disposition

Orders affirmed.


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