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Green v. Pennsylvania Property And Casualty Insurance Guaranty Association

Superior Court of Pennsylvania

March 21, 2017


         Appeal from the Order Entered July 9, 2015 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD 13-015278.



          OLSON, J.

         Appellant, James Green, appeals from an order entered on July 9, 2015, which granted summary judgment in favor of Appellee, Pennsylvania Property and Casualty Insurance Guaranty Association (PPCIGA).[1] After the careful consideration, we vacate and remand for further proceedings.

         The facts and procedural history in this case are as follows. Appellant sustained injuries on July 4, 1996 when he received a gunshot wound to his leg. At the time, Appellant was a patron at Kong's Night Club, an establishment owned and operated by Uropa, Inc. (Uropa). George Dankovich (Dankovich), the club's manager, had possession of the firearm that discharged and wounded Appellant. During this period, Uropa carried a commercial general liability policy issued by Security Indemnity Insurance Company (Security Indemnity).

         By letter dated September 18, 1996, Appellant's then-counsel notified Security Indemnity that a claim had accrued to Appellant under the Uropa policy. On September 24, 1996, Security Indemnity advised that it would neither defend nor indemnify Uropa with respect to Appellant's claim pursuant to the "assault and battery" and "expected or intended injury" exclusions within the policy. Security Indemnity further advised that Uropa breached its duty to give notice of the claim within a reasonable period of time.

         On December 10, 1996, Appellant filed a complaint against Uropa and Dankovich seeking recovery for bodily injuries arising from the gunshot wound. The complaint alleged three counts of negligence against the defendants. On December 30, 1996, counsel for Dankovich sent a letter to Security Indemnity, together with a copy of the complaint, requesting that the insurer provide a defense against Appellant's claims on grounds that the shooting was accidental and Dankovich was acting in the course and scope of his employment with Uropa when the incident occurred.

         Security Indemnity replied to Dankovich's counsel by letter dated January 7, 1997. The insurer's reply enclosed a copy of its September 24, 1996 coverage denial letter with respect to Uropa and explained that the denial extended to Dankovich.

         Appellant entered a default judgment against Dankovich on February 12, 1997. Thereafter, a judgment in the amount of $1, 000, 000.00 was entered on April 10, 1997. In pursuit of his recovery, Appellant filed a writ of execution against both Dankovich and Security Indemnity, as garnishee. Appellant also served garnishment interrogatories upon Security Indemnity.[2]

         On May 15, 1997, Security Indemnity filed a notice of removal, removing the garnishment action to the United States District Court for the Western District of Pennsylvania. While the action was pending in federal court, Security Indemnity filed a federal declaratory judgment action.

         On July 8, 1997, the federal court remanded the matter back to state court, concluding that the garnishment action necessarily involved an inquiry into the nature of Dankovich's conduct, which lay at the center of the underlying state court litigation. By separate order on March 10, 1998, the federal court dismissed Security Indemnity's declaratory judgment action, noting that the issues in the declaratory judgment action were identical to the claims in the pending garnishment litigation.

         In July 2003, following remand to state court, Appellant's garnishment action, along with all other litigation pending against Security Indemnity, became subject to a stay order entered by the New Jersey Superior Court, which placed the insurer into "rehabilitation" status. On June 30, 2004, Security Indemnity was declared insolvent and all claimants pursuing relief against the insurer were required to file proof of claim forms with a liquidator. At this time, no court had ever reached the merits of Appellant's coverage claims against Security Indemnity.

         Appellant timely filed his proof of claim form with the liquidator for Security Indemnity on or around October 8, 2004. Subsequently, in April 2007, Appellant's former counsel wrote PPCIGA's counsel regarding the status of Appellant's liquidation claim.[3] Counsel for PPCIGA responded that she represented PPCIGA, not Security Indemnity. PPCIGA's counsel further informed counsel for Appellant that PPCIGA did not have a claim established for Appellant and that Appellant should work with the liquidator for Security Indemnity. Following this exchange, Appellant's counsel took no further action in pursuing legal redress against PPCIGA.

         Eventually, on March 11, 2011, Appellant received notice of a final claim determination from Security Indemnity's liquidator. The notice advised Appellant that payment of his claim was "priority 4" and indicated that his claim "is being adjudicated by [PPCIGA] pursuant to statute." Although the notice set forth a mechanism through which to appeal the liquidator's determination, Appellant took no further legal action against the liquidator. On September 26, 2012, PPCIGA denied coverage of Appellant's claim.

         Appellant initiated this declaratory judgment action against PPCIGA by filing a complaint on August 15, 2013. An amended complaint was filed October 25, 2013. Appellant alleged that PPCIGA is obligated to pay him $1, 000, 000.00 based upon the default judgment obtained against Dankovich on April 10, 1997. PPCIGA answered Appellant's complaint on December 23, 2013.

         After the parties had an opportunity to conduct discovery, Appellant moved for summary judgment on March 5, 2015. PPCIGA filed its own motion for summary judgment on May 5, 2015. The trial court convened oral argument on June 16, 2015. Thereafter, the trial court granted summary judgment in favor of PPCIGA on July 9, 2015. The court denied Appellant's motion by separate order entered on the same day.

         The trial court offered three distinct grounds for its rulings on the parties' motions. Relevant to the statute of limitations, the court reasoned that Appellant's cause of action against PPCIGA accrued no earlier than September 24, 1996, the date of Security Indemnity's coverage denial letter with respect to Uropa, and no later than April 25, 2007, the date counsel for PPCIGA sent a letter to Appellant's former counsel advising that the association had not established a claim in this matter. Since Appellant did not file his complaint until August 15, 2013, the trial court concluded that the action is barred by the applicable limitations period. See Trial Court Opinion, 11/13/15, at 6.

         Turning to the Pennsylvania Property and Casualty Insurance Claim Act, 40 P.S. § 991.1801, et seq. (the Act), the trial court also determined that Appellant did not possess a covered claim.[4] Several findings contributed to this conclusion. First, the court found that Appellant was not an insured under the Security Indemnity policy. Additionally, although

         Appellant filed a lawsuit against Dankovich to recover for injuries, the court reasoned that Appellant could not be considered a claimant under the Act because Security Indemnity denied coverage to Dankovich on January 7, 1997. Hence, after noting that "[n]either Dankovich nor [Appellant] pursued any other legal action or claim against Security Indemnity[, ]" the court held that, "at the time of Security Indemnity's insolvency, June 30, 2004, Dankovich was not an insured under the Security Indemnity policy and [Appellant's] unpaid claim [was] not within the coverage of an insolvent insure[r]'s policy." Id. at 4 (internal quotations omitted).

         Separate and apart from the covered claim and statute of limitations issues, the trial court concluded that issues of fact surrounding the circumstances of the shooting and Appellant's acquisition of a default judgment against Dankovich would preclude entry of summary judgment in Appellant's favor. Id. at 4. This timely appeal followed.[5]

         Appellant raises two issues for our consideration in this appeal.

Whether Appellant's declaratory judgment action against PPCIGA [is] barred by the statute of limitations when (a) it was filed within four years of PPCIGA's denial of his claim, (b) it was filed within four years of Appellant's receipt of a notice of final claim determination from the liquidator of the insolvent insurance company [(Security Indemnity)], (c) Appellant was actively litigating a garnishment action against the insurance company[, Security Indemnity, ] when it became insolvent, and (d) [Appellant] timely filed a proof of claim with the liquidator of the insolvent company to preserve this claim?
Whether an individual has a covered claim pursuant to the Pennsylvania Property and Casualty Insurance Guaranty Association Act, 40 P.S. § 1801, et seq.[, ] when he has a valid claim under a Pennsylvania insurance policy, obtained a judgment against an insured and thereafter filed a writ of execution and garnishment action against the ...

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