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Penn National Insurance v. HNI Corp.

April 20, 2007

PENN NATIONAL INSURANCE, AS SUBROGREE OF ELAM. G. STOLTZFUS, JR., INC., PLAINTIFF
v.
HNI CORPORATION AND HEARTH & HOME TECHNOLOGIES, INC., T/D/B/A FIRESIDE HEARTH & HOME, DEFENDANTS
HEARTH & HOME TECHNOLOGIES, INC., T/D/B/A FIRESIDE HEARTH & HOME, THIRD-PARTY PLAINTIFF
v.
HOWARD HALDEMAN T/D/B/A HALDEMAN CHIMNEY SWEEP, THIRD-PARTY DEFENDANT
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA A/S/O DONECKERS, INC., PLAINTIFF
v.
HEARTH & HOME TECHNOLOGIES, INC., D/B/A FIRESIDE HEARTH & HOME, AND HOWARD HALDEMAN, D/B/A HALDEMAN CHIMNEY SWEEP, DEFENDANTS
HEARTH & HOME TECHNOLOGIES, INC., T/D/B/A FIRESIDE HEARTH & HOME, THIRD-PARTY PLAINTIFF
v.
PENN NATIONAL INSURANCE, THIRD-PARTY DEFENDANT



The opinion of the court was delivered by: Judge Jones

Magistrate Judge Smyser

MEMORANDUM

THE BACKGROUND OF THIS MEMORANDUM IS AS FOLLOWS

On February 9, 2007, Magistrate Judge Smyser issued a Report and Recommendation (doc. 121) in the above-captioned matter. Objections to the Report and Recommendation were received from all parties. Accordingly, this matter is ripe for our review.

I. PROCEDURAL HISTORY

This consolidated case arises out of a fire that occurred in a model home. In an effort to simplify what has become a decidedly complex matter, we will endeavor to separate its history in the following sections.

A. The Penn National Case

Penn National Insurance ("Penn National") alleges that Elam G. Stoltzfus, Jr., Inc. (Stoltzfus) was the owner of property known and numbered as 1735 Eliza Way in the Pinehurst Hills Development in Mechanicsburg, Pennsylvania. The structure on the property was a two-story, single-family home. Penn National alleges that construction of the home was completed on or about September 15, 2004 and that the home was no occupied or under a sales contract, but was being used as a model home. Stoltzfus was the holder of a policy of insurance, issued by Penn National, which covered the property.

Penn National alleges that the Defendants are in the business of manufacturing and installing indoor gas burning fireplaces and that Stoltzfus entered into a contract with the Defendants for the delivery and installation of two gas fireplace systems.

On October 1, 2004, a fire occurred at the model home which resulted in substantial destruction of the house and its contents. It is out of the asles of that conflagration that this multi-tiered action arose. Penn National alleges that the cause of the fire was the improper installation and assembly of the chimney vent pipe for the fireplace located in the family room of the home.

Penn National's complaint contains two counts: Count I is a negligence claim and Count II is a breach of contract claim. On October 14, 2005, the Defendants removed the case from the Pennsylvania Court of Common Pleas of Cumberland County to this Court. (Rec. Doc. 1). On October 21, 2005, the Defendant HNI Corporation filed an answer to the complaint. (Rec. Doc. 8). Also on October 21, 2005, Defendant Hearth and Home Technologies, Inc. ("Hearth and Home") filed an answer to the complaint and a counterclaim against Penn National. (Rec. Doc. 9).

In its counterclaim against Penn National, Hearth and Home alleges that it subcontracted with Howard Haldeman t/d/b/a Haldeman Chimney Sweep (Haldeman) to install the fireplaces at the Stoltzfus property. Hearth and Home alleges that, as part of an independent contractor agreement, Haldeman was required to indemnify and defend it with respect to any claims arising from Haldeman's work, including the work at the Stoltzfus property. Haldeman was the holder of a Commercial General Liability insurance policy, also issued by Penn National, which was effective at the time of the fire. Hearth and Home contends that as an indemnitee of Haldemen, it is entitled to coverage and a defense by Penn National under the Haldeman policy. Penn National, however, has refused to defend or indemnify Hearth and Home. The counterclaim contains three counts: Count I is a breach of contract claim, Count II is a claim for breach of the covenant of good faith and fair dealing and Count III requests a declaratory judgment declaring that Penn National is under a duty to defend Hearth and Home in the action filed by Penn National as subrogee of Stoltzfus in the action filed by Travelers Insurance as subrogee of Doneckers; that Penn National and Haldeman are required to indemnify Hearth and Home for any and all sums recovered in either the case brought by Penn National or the case brought by Travelers; and that Penn National acted in bad faith in denying Hearth and Home coverage and a defense.

Also on October 21, 2005, Hearth and Home filed a third-party complaint against Haldeman. (Rec. Doc. 10). The third-party complaint contains three counts: Count I is a claim for contribution, Count II is a claim for indemnification and Count III is a claim for breach of contract.

B. The Travelers Case

On April 10, 2006, Travelers Property Casualty Company of America ("Travelers"), as subrogee of Doneckers, Inc., filed a complaint against Hearth and Home and Halderman.*fn1 Travelers alleges that Doneckers was in the furniture business and had furnished the model home. Travelers insured Doneckers and paid Doneckers for damages sustained by Doneckers resulting from the fire. Travelers' complaint contains two counts: Count I is a negligence claim against Hearth and Home and Count II is a negligence claim against Haldeman.

On April 24, 2006, Haldeman filed an answer to Travelers' complaint and a cross-claim against Hearth and Home for contribution and indemnification. On May 3, 2006, Hearth and Home filed an answer to Travelers' complaint and a cross-claim against Haldeman for contribution and indemnification. On May 10, 2006, Hearth and Home filed a third-party complaint against Penn National, which contains the same three counts set forth in its cross-claim against Penn National in the Penn National Case.

C. Consolidation and Pending Motions

By an order dated August 16, 2006, the Travelers case was consolidated with the Penn National case. The case is currently on our September 2007 trial list.

The Magistrate Judge's Report and Recommendation is issued with respect to six pending motions for summary judgment: 1) Travelers' motion for partial summary judgment against Hearth and Home (doc. 67); 2) Penn National's motion for summary judgment against Hearth and Home on its claims as subrogee of Stoltzfus (doc. 62); 3) Haldeman's motion for summary judgment or, in the alternative, partial summary judgment against Hearth and Home (doc. 64); 4) Hearth and Home's motion for summary judgment against Haldeman (doc. 70); 5) Penn National's motion for summary judgment against Hearth and Home on Hearth and Home's counterclaims/third-party claims against Penn National (doc. 76); and 6)

Hearth and Home's motion for summary judgment against Penn National on Hearth and Home's counterclaims/third-party claims against Penn National. (Rec. Doc. 73).

Magistrate Judge Smyser's February 9, 2007 report renders recommendations on the six pending summary judgment motions. In summary, Magistrate Judge Smyser recommends that: 1) Travelers' motion for partial summary judgment against Hearth and Home (doc. 67) be denied; 2) Penn National's motion for summary judgment against Hearth and Home on its claims as subrogee of Stoltzfus (doc. 62) be denied; 3) Haldeman's motion for summary judgment or, in the alternative, partial summary judgment against Hearth and Home (doc. 64) be denied; 4) Hearth and Home's motion for summary judgment against Haldeman (doc. 70) be denied; 5) Penn National's motion for summary judgment against Hearth and Home on Hearth and Home's counterclaims/third-party claims against Penn National (doc. 76) be ...


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