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04/23/97 GENERAL ACCIDENT INSURANCE COMPANY AMERICA

April 23, 1997

GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, APPELLANT
v.
EUGENE R. ALLEN, ELIZABETH ANN ALLEN, TAMMY ALLEN, INDIVIDUALLY, BREANNE ALLEN, HEATH ALLEN, MINORS BY THEIR GUARDIAN, MERLE S. KRAMER, AND DEBBIE ALLEN, APPELLEES



Appeal from the Order of the Superior Court Entered June 6, 1995, at No. 1538 Pittsburgh 1994, Quashing the Appeal from the Order of the Court of Common Pleas of Allegheny County, Civil Division, Entered August 15, 1994, at No. G.D. 90-14002. JUDGES BELOW: Hon. David S. Cercone (C.C.P.). PER CURIAM (Super.).

Composition OF The Court: Flaherty, Zappala, Cappy, Castille, Nigro, Newman, JJ. Opinion BY Mr. Justice Zappala. Former Chief Justice Nix did not participate in the consideration or decision of this case. Mr. Justice Nigro concurs in the result.

The opinion of the court was delivered by: Zappala

JUSTICE ZAPPALA

DECIDED: APRIL 23, 1997

This is an appeal by General Accident Insurance Company of America from the per curiam order of the Superior Court quashing its appeal from an order of the Allegheny County Court of Common Pleas. For the following reasons, we reverse and remand the matter to the Superior Court for Disposition of the merits of the appeal. *fn1

General Accident (Appellant) issued homeowner's insurance policies covering three consecutive years beginning on December 3, 1985 to Eugene R. Allen and his wife, Elizabeth A. Allen. Each policy provided personal liability coverage in the amount of $15,000 per occurrence. The policies contained language specifically excluding claims for bodily injury which was expected or intended by the insured.

In August 1989, a civil action was filed in the Allegheny County Court of Common Pleas against the Allens by three grandchildren for injuries suffered as a result of sexual abuse inflicted upon them by Eugene Allen. The complaint alleged that Eugene Allen had engaged in sexual acts with the grandchildren between 1986 and July 24, 1988. As to Elizabeth Allen, the complaint alleged that she was aware or should have been aware of her husband's conduct and that she failed to protect the grandchildren. *fn2

General Accident undertook the legal defense of the civil action subject to a reservation of rights. In a letter dated July 26, 1990, the Allens were apprised by a claims manager for General Accident of its position that the homeowner's insurance policies might not provide coverage for the claims asserted in the civil action. The letter informed them that General Accident intended to file a declaratory judgment action for the purpose of determining the coverage under the policies with respect to the civil action.

General Accident filed this action for declaratory relief pursuant to the Declaratory Judgments Act, 42 Pa.C.S. §§ 7531-7541 on August 15, 1990, seeking a determination of its duties under the policies. As required under 42 Pa.C.S. § 7540, General Accident named the Allens, the children, and the children's mother as their natural guardian as parties whose interests would be affected by the declaratory judgment action. *fn3 General Accident sought a declaration that it had no duty to defend or indemnify the Allens with respect to the civil action filed by the children. General Accident requested alternatively that if a determination was made that the policies afforded coverage for the claims against the Allens, the obligation to indemnify was limited to the sum of $25,000 per claimant per policy regardless of the number of insureds or claims made.

The underlying civil action proceeded to trial before a jury prior to Disposition of the declaratory judgment action. The civil action was tried in September 1992, resulting in a jury verdict in favor of the children against the Allens and the children's mother, who had been joined as an additional defendant. *fn4 Subsequently, General Accident and the children filed cross-motions for summary judgment in the declaratory judgment action.

In its summary judgment motion, General Accident requested the common pleas court to decide as a matter of law that the complaint in the underlying civil action did not give rise to a duty to defend under the homeowner's insurance policies. General Accident asserted that the policies contained an intentional act exclusion which precluded personal liability coverage for any bodily injury expected or intended by the insured, and that the exclusion applied to injuries caused by sexual abuse.

In the event that the common pleas court interpreted the policy as providing coverage for claims of sexual abuse, General Accident requested that the court enter an order declaring that the injuries resulted from a single occurrence. General Accident contended that a limitation of liability clause contained in the policies necessitated a determination that one occurrence per child existed under the policies regardless of the number of incidents of sexual abuse. *fn5 Finally, General Accident requested a determination that the punitive damage claim of the children was not within the coverage of the policies.

The summary judgment motion filed on behalf of the children asserted that special interrogatories presented to the jury in the civil action indicated that the jury had determined that Eugene Allen was liable for negligent infliction of emotional distress and that Elizabeth Allen was liable for negligent conduct found to be a substantial factor in bringing about the harm done to the children. The motion stated that as a result of the jury's determination, the insurance policies afforded coverage to the Allens. It was further asserted that the conduct of Eugene Allen amounted to multiple occurrences as it occurred over a three year period and constituted separate and distinct events.

On August 15, 1994, the common pleas court granted General Accident's motion for summary judgment in part with respect to the punitive damages claim in the children's civil action and the allegations of intentional acts performed by Eugene Allen, but denied summary judgment as to the allegations of negligent acts performed by the Allens. The court also granted the children's summary judgment motion, finding that General Accident had a duty to defend with respect to the negligence allegations made against the Allens. In addition, the court concluded that the incidents of sexual abuse constituted multiple occurrences thereby triggering coverage under all three policies.

The accompanying memorandum filed by the court addressed General Accident's argument that all claims against Eugene Allen necessarily arose from his intentional sexual molestation of the children. The court rejected this argument based upon the jury's finding in the civil action that Eugene Allen had engaged in negligent conduct that "[could] be said to have transcended the allegations of sexual abuse perpetrated by [him]." As to Elizabeth Allen, the court emphasized the fact that the jury had found her negligent for failing to keep her property safe for the children and for failing to apprise them of the danger her husband posed to them. *fn6 General Accident filed a notice of appeal from the court's order. On March 29, 1995, a motion to quash the appeal was filed on behalf of the children. The motion asserted that the common pleas court's order disposing of the cross-motions for summary judgment was not a final order as defined by Pa.R.A.P. 341. *fn7 It was alleged that the order was interlocutory and that General Accident had not requested permission to appeal. General Accident answered the motion to quash asserting that the order was a final appealable order. Alternatively, General Accident contended that the order was an appealable collateral order as defined by Pa.R.A.P. 313, for which there is no requirement that permission to appeal be granted. *fn8

On June 6, 1995, the Superior Court entered a per curiam order granting the motion to quash the appeal. No opinion was issued by the court. General Accident then filed a petition for allowance of appeal. On November 8, 1995, we granted allocatur limited to the question of "whether a trial court's determination of an insurer's duty to defend is appealable, particularly where the trial court had not yet determined the insurer's duty of indemnification." *fn9 After ...


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