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Wiseman Oil Co., Inc., Estate of Joseph Wiseman, Estate of Ruth N. v. Tig Insurance Co. F/K/A Transamerica Insurance Co.


May 22, 2012


The opinion of the court was delivered by: Chief Magistrate Judge Lisa Pupo Lenihan

ECF No. 36



The claims presently before this Court are for (1) declaratory judgment as to Defendant TIG Insurance Company's (hereafter "Defendant" or "TIG") duty to defend; (2) breach of contract concerning Defendant's duty to defend and covenant of good faith and fair dealing; and (3) breach of TIG's statutory duty of good faith under 42 Pa. Cons. Stat. Section 8371.

Plaintiffs Wiseman Oil Co., Inc., Estate of Joseph Wiseman, Estate of Ruth N. Wiseman and Eileen Fanburg as Executrix (hereafter collectively "Plaintiffs" or "Wiseman") assert that they were entitled to a defense by their insurer, TIG, against claims brought in 1997 by the United States under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") (the "Underlying Litigation").

In July, 2004, Plaintiffs corresponded with TIG, enclosing a certificate of insurance for policy number 12513225 and requesting a defense.*fn1 In April, 2005, Defendant advised that it had "conducted a diligent search" and was "at this time . . . unable to provide any coverage determination" and requested Wiseman to provide "a copy of the alleged policy . . . [or] additional secondary evidence". The Underlying Litigation was administratively closed until December, 2009 and in February, 2010, Plaintiffs provided TIG: (1) a second certificate of insurance discovered in the files of a customer and indicating the existence of policy 12513225; and (2) certificates of insurance for three additional insurance policies numbered 12069979, 18438624, and 11324471.*fn2 Defendant responded that it would "continue to keep [Plaintiffs] updated as to the status of our investigation." By correspondence of June 22, 2010, TIG indicated that it had "conducted a diligent and comprehensive search of [its] records" and that in the absence of copies of the alleged policies, it was "without foundation to further proceed in the handling of this matter" and that if it did not receive the additional information requested within thirty (30) days it would "take no further action."

The deposition testimony of TIG's Rule 30(b)(6) representative in this litigation is that "over its operating life TIG's document policy was to stick stuff in boxes. It had no central database, no standard way of identifying things, and boxes of documents could be sent to Iron Mountain for storage but with no rhyme or reason." See January 31, 2012 Deposition at 192 (Ex. A to Plaintiffs' Opposition to TIG Insurance Company's Motion for Judgment on the Pleadings") (hereafter "Plaintiff's Opposition to Judgment"). See also id. at 193, 198 (testifying that there are presently still 160,000 unopened boxes and "no way to figure out if Wiseman Oil is in any of those boxes").

A Consent Decree was entered in the Underlying Litigation on April 20, 2011. Plaintiffs' Complaint in this action was filed on August 4, 2011.

Presently pending is Defendant's Motion for Judgment on the Pleadings on statute of limitations grounds which, for reasons set forth below, will be denied.


A Motion for Judgment on the Pleadings under Fed. R. Civ. Proc. 12(c) may be granted when "the movant clearly establishes that no material issue of fact remains to be resolved" and that it is "entitled to judgment as a matter of law." Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008); see also Sheridan v. NGK Metals Corp., 609 F.3d 239, 259 n. 25 (3d Cir. 2010). The Court construes the facts presented in the pleadings and the inferences drawn therefrom in the light most favorable to the non-moving party. Id.; see also Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir. 2005) (citing Soc'y Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1054 (3d Cir. 1980)).*fn3 And it may consider undisputedly authentic documents attached to or submitted with the Complaint, as well as evidence outside the complaint/other items of record. See, e.g., Pryor v. Nat'l Collegiate Athletic Ass'n., 228 F.3d 548, 560 (3d Cir. 2002); Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 2 (3d Cir. 1994).


In Pennsylvania, claims for breach of duty pursuant to an express written contract (and related claims for declaratory judgment) are subject to the four (4) year statute of limitations provided by 42 Pa. Cons. Stat. Section 5525(a)(8), which begins to run when the cause of action accrues.

The Court is in accord with Plaintiffs' observations regarding applicability of the majority rule to this case. Our sister Court for the Middle District of Pennsylvania concluded, almost fifty (50) years ago, that under Pennsylvania law the statute of limitations on an action for breach of an insurer's duty to defend would not begin to run until termination/judgment against the insured in the underlying litigation, rather than "on the date of the disclaimer" by the insurer. See Moffat v. Metro. Cas. Ins. Co. of N.Y., 238 F.Supp. 165, 175 (M.D. Pa. 1964) (concluding that an interpretation by which "an insured could find that the statute had run long before he had incurred his trial and appellate expenses" would be "absurd" and that "the Legislature is presumed not to intend unreasonable or absurd results") (emphasis added);*fn4 id. (concluding that "statute of limitations does not begin to run until the right of action is complete", i.e., in Moffat, when the Supreme Court denied petition for reargument, and that until that time insurer "had the right at any time to revoke its disclaimer" and assume its duty to defend).*fn5 The District Court's interpretation has not been controverted by the Pennsylvania Court*fn6 and its reasoning that "the right of action is complete" only after there is a final judgment against the insured has become the clear majority rule. See, e.g., Dutton-Lainson Co. v. Cont'l Ins. Co., 716 N.W.2d 87, 101-02 (Neb. 2006) (referring to "clear majority view"); Vigilant Ins. Co. v. Luppino, 723 A.2d 14, 18-19 (Ct. App. Md. 1999) (collecting cases); Kielb v. Couch, 374 A.2d 79, 81-83 (N.J. Super. 1977)(also citing cases in other jurisdictions and noting that "[a]s the full amount of his claim for reimbursement was not ascertainable until the termination of the [underlying action], it was not until then that plaintiff was in a position to assert his complete claim"). See also UTI Corp. v. Fireman's Fund Ins. Co., 896 F.Supp. 362, 368 (D.N.J. 1995) (applying Moffat and observing that "under Pennsylvania law, the statute of limitations does not begin to run against insurer [as to breach of contract] until the conclusion of the litigation against the insured by the injured party"); id. (further noting that it would be "inefficient for plaintiff to" sue for coverage "prior to that time", when "the defense and indemnity expenses incurred . . . are not determined"); Cluett, Peabody & Co. v. Campbell, Rea, Hayes & Large, 492 F.Supp. 67, 77 n. 13 (M.D. Pa. 1980).

Defendant now predicates its assertion that the statute began to run several years prior - when Plaintiffs tendered notice of the Underlying Litigation on July 1, 2004 -- significantly on the decision of the Third Circuit Court of Appeals in Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 224 (3d Cir. 2005).*fn7 But Sikirica concerned an insurer's breach of its statutory duty of good faith, and the Circuit distinguished it from Moffat on those grounds. See Sikirica, 416 F.3d at 224 ("The plaintiff in Moffat alleged breach of contract, not bad faith."); id. at 223-225 (holding that under Pennsylvania law, as predicted by Third Circuit, statutory bad faith claim (a) was subject to two-year tort statute of limitations period and (b) began to run with letter "unambiguously inform[ing insured] of its refusal to defend") (citing Adamski, infra); cf. id. (also concluding that breach of contract claims were unmaintainable where underlying litigation was clearly outside policy coverage).*fn8 See also Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1042 n. 8 (Pa. Super. 1999) (noting that Moffat rule "applied only to the breach of contract action" as opposed to bad faith claims under Section 8371, which accrue when insurer first provides definite notice of refusal to indemnify or defend); discussion infra at Section IV.

Pennsylvania cases cited by Defendant and stating the general rule that, e.g., a statute of limitations period begins to run when "all of the elements of the claim exist" (Myers v. USAA Cas. Ins. Co., 444 A.2d 1217, 1221 (Pa. Super. 1982)) or when "the right to institute suit arises" (Adamski, 738 A.2d at 1042; Crouse v. Cyclops Indus., 560 Pa. 394, 403 (2000)) are also entirely consistent with the Moffat Court's recognition that an insurer's duty to defend is a continuing contractual obligation which may yet be performed so long as the underlying action continues and, accordingly, the cause of action is not complete until the underlying action is over. Cf. Centre Concrete Co. v. AGI, Inc., 559 A.2d 516, 518 (Pa. 1989) (noting "general rule" that "the statute of limitations begins to run at the time when a complete cause or right of action accrues or arises" and explaining extension appropriate to case in reversing lower court's grant of judgment on the pleadings).*fn9

Finally, the Court (1) finds Defendant's discussion of Gedeon v. State Farm Mutual Auto Ins. Co., 261 F.Supp. 122, 123 (W.D. Pa. 1966), modif'd sub. nom., Panizzi v. State Farm Mutual Auto Ins. Co., 386 F.2d 600 (3d Cir. 1967), inapposite and unpersuasive;*fn10 and (2) observes that even if statute of limitations period had otherwise run -- which the Court expressly concludes, in accordance with Moffat, it had not -- the case would present a significant question as to whether Defendant should be estopped from raising a statute of limitations defense.*fn11

As Plaintiffs' cause of action for breach of the duty to defend accrued -- i.e., its right of action was complete -- when the Underlying Litigation was terminated and the defense costs were fixed, this claim and Plaintiffs' corresponding declaratory judgment claim*fn12 are within the applicable statute of limitations.


Claims for a bad faith denial of coverage by an insurer, in violation of 42 Pa. Cons. Stat. Section 8371, are subject to a two (2) year limitations period under 42 Pa. Cons. Stat. Ann. Section 5524. See Ash v. Continental Ins. Co., 593 Pa. 523, 535 (Pa. 2007); Haugh v. Allstate Ins. Co., 322 F.3d 227, 236 (3d Cir. 2003). It begins to run when "an insurer clearly and unequivocally puts an insured on notice that he or she will not be covered under a particular policy for a particular occurrence." CRS Auto Parts Inc. v. Nat'l Grange Mut. Ins. Co., 645 F.Supp.2d 354, 365 (E.D. Pa. 2009) (citing Adamski, 738 A.2d at 1042-43); see also Sikirica, 416 F.3d at 224-25 (holding that statute began to run when insurer "unambiguously . . . . provided clear notice of its denial of coverage and refusal to defend" the class action allegations). Language which has been held to trigger the running of the statute includes, e.g., CRS Auto Parts, 645 F.Supp.2d at 367 ("We hereby rescind any insurance coverage . . . . You should be aware that there is no insurance coverage for you, or anyone else, . . . . Please accept this as full and final declination of coverage."); Adamski, 738 A.2d at 1038 ("[Insurer] hereby disclaims and denies any and all liability or obligation to you . . . . [Insurer] will take no further action with respect to any claim . . . and hereby withdraws from the matter entirely."); Sikirica, 426 F.3d at 218 ("Please be advised that [insurer] is denying coverage . . . . The class allegations cited would not fall within the insuring agreement . . . .").

Here again, the Court is in accord with Plaintiffs' legal analysis. TIG's April, 2005 correspondence provides, in marked contrast, no such notice but advises that it is "unable to locate evidence sufficient to establish the terms, conditions and/or provisions of the policy. As such [sic], at this time we are unable to provide any coverage determination . . . ." It goes on to "reserve all of [insurer's] rights and defenses in every respect under the terms, conditions and provisions of any alleged policy or policies you may identify." Defendant's correspondence thus (certainly when viewed in the light most favorable to the non-moving party) bears more resemblance to a "reservation of rights" letter and far less resemblance to language found sufficient to constitute a denial of coverage. See Plaintiffs' Opposition to Judgment at 15-17; Simon Wrecking Co., 350 F.Supp.2d at 632-33 (concluding that insurer's correspondence requesting additional information "was not a denial of coverage" but rather "a reservation of rights letter" and "[w]ithout a denial of benefits, there was no act of bad faith at [that] time" and the statute "could not have started to run").

The statute of limitations period for the alleged breach of duty to defend commences upon a clear or unequivocal denial of coverage by the insurer which, in this case, was first afforded by TIG's June 22, 2010 correspondence clearly stating that absent Plaintiffs' provision of the requested support within thirty (30) days, TIG would "take no further action". Plaintiffs' August 4, 2011 claim was therefore within the two year statutory period.*fn13


Accordingly, upon review of the pleadings and briefs of record, as well as the evidence before the Court, it will be ordered that Defendant's Motion for Judgment on the Pleadings be denied.

Lisa Pupo Lenihan United States Chief Magistrate Judge

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