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Solid Waste Services, Inc. v. New York Marine & General Insurance Co.

United States District Court, Third Circuit

December 10, 2013

SOLID WASTE SERVICES, INC., Plaintiff,
v.
NEW YORK MARINE & GENERAL INSURANCE CO., Defendant.

MEMORANDUM

GENE E.K. PRATTER United States District Judge

Cross-Motions for Judgment on the Pleadings filed by Plaintiff Solid Waste Services, Inc., d/b/a J.P. Mascaro & Sons (“Mascaro”) and Defendant New York Marine & General Insurance Company (“NY Marine”) present insurance policy contract interpretation issues for resolution. For the following reasons, NY Marine’s Motion is granted in part and denied in part, and Mascaro’s Motion is denied.

I. FACTUAL BACKGROUND

The parties have a dispute concerning the interpretation of an insurance policy. During the relevant period Mascaro, an employer in the solid waste industry, was approved for self-insurance for up to $1 million per claim under the Pennsylvania Workers’ Compensation Act, 77 P.S. 1, et seq. NY Marine issued a Specific Excess & Aggregate Excess Workers Compensation and Employers Liability Indemnity Policy, policy number MW100048 (“the Policy”), to Mascaro for the period from April 30, 2008, to April 30, 2009. The Policy provided up to $25 million in excess coverage above the $1 million per claim self-insured retention amount. The Policy also provided NY Marine with certain subrogation rights in the event there was a successful recovery of damages from any third party.

Specifically, the relevant section of the insurance contract states:

L. Recovery from Others The Company [NY Marine] has the Insured’s [Mascaro’s] rights, and the rights of persons entitled to compensation benefits from the Insured, to recover the Company’s indemnity from anyone liable for the bodily injury covered by this Policy. The Insured will do everything necessary to protect those rights for the Company and to help the Company enforce them. The recovered amounts remaining, after deducting the Company’s recovery expenses, will first be used to reduce the Company’s loss. Then the Company will pay the balance, if any, to the Insured.
(Compl., Ex. A at 8) (emphasis added.) Section B of the Policy is also relevant to the issue before the Court, and it states “The Insured must retain loss [of $1, 000, 000].”[1] (Id. at 6.)

In September 2008, Mascaro’s employee Keenan Chisolm suffered a catastrophic work-related injury, which was covered under the PWCA. By January 2009, Mascaro had paid out $1 million in benefits to Mr. Chisolm, and began to submit all remaining pay-outs for reimbursement to NY Marine. Over the course of four years, NY Marine has reimbursed Mascaro more than $2 million for the Chisolm benefits.[2]

Mascaro also assisted Mr. Chisolm in pursuing claims against several third parties, including Conshohocken Steel. In January 2013, Mr. Chisolm settled his claim against Conshohocken Steel for approximately $6, 550, 000. Under the PWCA, a portion of Mr. Chisolm’s recovery is subject to a lien based on the amount of workers’ compensation benefits he already received, less a proportional share of the costs and expenses incurred by Mr. Chisolm in obtaining the recovery. See 77 P.S. § 671. After Mr. Chisolm settled with Conshohocken Steel, counsel for Mr. Chisolm notified counsel for Mascaro that he was depositing the worker’s compensation lien in the amount of $1, 560, 701.38 in escrow.[3] (See Compl., Ex. C.; Counterclaims ¶ 27.)

Following Mr. Chisolm’s settlement with Conshohocken Steel, on January 17, 2013, counsel for Mascaro sent a letter to NY Marine and to counsel for Mr. Chisolm, asserting that Mascaro was entitled to a portion of the $1, 560, 701.38 workers’ compensation lien.[4] (Countercl. at Ex. B.) On February 18, 2013, NY Marine sent a letter to Mascaro asserting that Mascaro has no right under the Policy to any portion of the $1, 560, 701.38 workers’ compensation lien. Subsequently, Mascaro filed the Complaint in this action with the Court of Common Pleas of Montgomery County asserting one count of breach of contract and requesting declaratory relief to the effect that Mascaro is entitled to $634, 482 of the workers’ compensation lien. (Compl. ¶44.) On March 22, 2013, NY Marine removed Mascaro’s Complaint to this Court, and on March 27, 2013, NY Marine filed Counterclaims. Count I of NY Marine’s Counterclaims seeks a declaration that it is entitled to the full amount of the escrowed $1, 560, 701.38 workers’ compensation lien. Count II of NY Marine’s Counterclaims requests that the Court order Mascaro to reimburse NY Marine for all amounts that NY Marine paid under the Policy if Mascaro receives any amount of the $1, 560, 701.38 workers’ compensation lien. Finally, in Count III, NY Marine asserts a claim for contractual bad faith.

Both NY Marine and Mascaro move for judgment on the pleadings and, naturally, they oppose each other’s motions. To reiterate, NY Marine claims it is entitled to the entire $1, 560, 701.38 workers’ compensation lien while Mascaro requests this Court declare that under the Policy and the PWCA it is entitled to $634, 482 of the workers’ compensation lien without any obligation to pay any portion of it to the insurer.

II. LEGAL STANDARD

Rule 12(c) of the Federal Rules of Civil Procedure allows a party to move for judgment on the pleadings “[a]fter the pleadings are closed but within such time as not to delay trial. . . .” Under Rule 12(c), “judgment will not be granted unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.” See Jablonski v. Pan American World Airways, Inc., 863 F.2d 289, 290 (3d Cir.1988) (citation omitted). As with a motion to dismiss under Rule 12(b)(6), the “Court ‘view[s] the facts alleged in the pleadings and the inferences to be drawn from those facts in the light most ...


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