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Mutual Benefit Insurance Co. v. Politsopoulos

Supreme Court of Pennsylvania

May 26, 2015


Argued: October 7, 2014.

Appeal from the order of the Superior Court dated September 6, 2013, Reconsideration Denied November 6, 2013, at No. 421 MDA 2012 which Reversed/Remanded the order of the Lancaster County Court of Common Pleas, Civil Division, dated February 2, 2012 at No. CI-10-02578. Appeal allowed June 20, 2014 at 943 MAL 2013. Trial Court Judge: Jeffery D. Wright, Judge. Intermediate Court Judges: Mary Jane Bowes, Judith F. Olson, David N. Wecht, JJ.

For Pennsylvania Association for Justice, AMICUS CURIAE: James C. Haggerty, Esq., Haggerty, Goldberg, Schleifer & Kupersmith P.C.

For Koppers Holdings; Matthews Int'l; Mine Safety Appliances; Dravo Corp; EW Bowman Inc.; United Policyholders, AMICUS CURIAE: Michael Hillel Sampson, Esq., George L. Stewart II, Esq., Reed Smith LLP.

For Mutual Benefit Insurance Company, APPELLANT: Robert Witold Jozwik, Esq., Marshall, Dennehey, Warner, Coleman & Goggin, P.C.

For Marina Denovitz, APPELLEE: Neil Ernest Durkin, Esq., Bauer Law Firm, P.C.

For Christos Politsopoulos and Dionysios Mihalopoulos, APPELLEE: Christina Lee Hausner, Esq., Russell, Krafft & Gruber, L.L.P.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, MCCAFFERY, STEVENS, JJ. Mr. Justice Baer, Madame Justice Todd and Mr. Justice Stevens join the opinion. Mr. Justice Eakin files a concurring opinion.


Page 845


This appeal concerns the scope of an employer's liability exclusion in an umbrella commercial liability insurance policy.

Leola Restaurant maintained an umbrella commercial liability insurance policy with Appellant, Mutual Benefit Insurance Company, which contained an employer's liability exclusion. This exclusion prescribed, inter alia, that the policy did not provide coverage pertaining to liability for injury to " [a]n 'employee' of the insured arising out of and in the course of . . . [e]mployment by the insured[.]" Complaint, Ex. C, Employer's Liability Exclusion. In addition, the policy contained a clause captioned " Separation of Insureds," which provided, subject to exceptions not relevant here, that " this insurance applies . . . [s]eparately to each insured against

Page 846

whom claim is made or suit is brought." Id. at Ex. C, § V ¶ 14(b) (emphasis in original).

Leola Restaurant conducted its business on a property leased from Appellees Christos Politsopoulos and Dionysios Mihalopoulos (the " Property Owners" ). The lease required the Property Owners to be " named as . . . additional insured parties" on the liability policy. Id. at Ex. E, ¶ 1(d). While the Property Owners were not specifically designated on the declarations page of the umbrella policy, the instrument was designed to extend coverage to unidentified persons doing business with Leola Restaurant for whom the latter had agreed in writing to provide insurance. See id. at Ex. C, § III ¶ 2(f).

In December 2007, during the policy period, Appellee Marina Denovitz, an employee of Leola Restaurant, fell from an outside set of stairs and suffered injuries. She commenced a negligence action against the Property Owners in the common pleas court, asserting that they were negligent in maintaining the stairs in an unsafe and dangerous condition.

The Property Owners sought defense and indemnification from Appellant, per the umbrella policy.[1] Appellant acknowledged that the Property Owners were insureds under the umbrella policy but nevertheless disclaimed coverage, invoking the employer's liability exclusion. Based on the policy's broad definition of " insured" to encompass named insureds to include Leola Restaurant, Complaint, Ex. C, § III ¶ 1, it was Appellant's central position that Ms. Denovitz was an employee of " the insured," for purposes of the exclusion (albeit she was not an employee of the Property Owners, i.e., the insureds against whom a claim had been asserted). The Property Owners, on the other hand, took the position that the exclusion was unclear, and coverage should be deemed to be negated only upon injury to an employee of the specific insured seeking coverage. In particular, the Property Owners pointed to the separation-of-insureds clause providing that coverage extends separately to each insured against whom claims are asserted.

Appellant commenced a declaratory judgment action in an effort to vindicate its position that the exclusion pertained. Summary judgment was awarded in Appellant's favor, with the common pleas court -- per the Honorable Jeffrey D. Wright -- explaining that it was bound by precedent with which it did not agree, in particular, Pennsylvania Manufacturers' Association Insurance Co. v. AETNA Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) [hereinafter, " PMA" ]. The common pleas court explained that PMA's holding reflected that the term " the insured," as it appears in an employer's exclusion appearing in a liability policy,[2] encompasses the named insured, regardless of whether coverage was sought by a different insured. Thus, the court reasoned, the exclusion prevented coverage from extending to redress harm to Ms. Denovitz, since she was an employee of the named insured (Leola Restaurant), and her injuries were occasioned in the course of such employment, even though suit was brought against additional insureds, i.e., the Property Owners.

The common pleas court also observed that the PMA Court rejected the argument that a ...

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