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Nationwide Mutual Insurance Co. v. Arnold

Superior Court of Pennsylvania

July 11, 2019

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee
v.
AUGUST W. ARNOLD, JON PUSHINSKY, ESQUIRE, AND CONSTRUCTION METHODS AND COORDINATION, INC. D/B/A CMC ENGINEERING, INC., Appellees NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant
v.
AUGUST W. ARNOLD, JON PUSHINSKY, ESQUIRE, AND CONSTRUCTION METHODS AND COORDINATION, INC. D/B/A CMC ENGINEERING, INC., Appellants

          Appeal from the Order Entered August 6, 2018, October 11, 2018 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD-17-2937

          BEFORE: BENDER, P.J.E., DUBOW, J., and FORD ELLIOTT, P.J.E.

          OPINION

          BENDER, P.J.E.

         Appellant, Nationwide Mutual Insurance Company ("Nationwide"), appeals from the trial court's orders denying its motion for summary judgment in this declaratory judgment action. After careful review, we affirm in part and reverse in part the October 11, 2018 order underlying the appeal at docket number 1208 WDA 2018, and quash the appeal at docket number 1207 WDA 2018.

         The trial court summarized the underlying facts of this case as follows:

Nationwide insured [Appellee, August W. Arnold, ] under its Personal Umbrella Policy No. 54 73 PU 434125 [(hereinafter "Umbrella Policy"), ] with an effective date of May 11, 2009. Nationwide seeks a determination of its[] obligation to defend/indemnify Arnold in a separate lawsuit brought by CMC Engineering, Inc. (hereinafter "CMC") against Arnold, docketed at CMC Engineering[, ] Inc. v.Arnold and Jon Pushinsky, Esquire, at GD-17-002106 (hereinafter "CMC Action" …)[.]
The CMC Action [arose] following the unsuccessful prosecution of a [q]ui [t]am [a]ction on behalf of the United States by Arnold against CMC and others.[1] Arnold acted as the [relator] for the [q]ui [t]am [a]ction that concerned the use of federal highway funds passing through PennDOT, Arnold's employer, to companies such as CMC.[2] In the CMC [A]ction, CMC filed suit against Arnold and … [Jon] Pushinsky, Esquire…[, ] for violation of the Dragonetti Act, [3] Abuse of Process, and Intentional Interference of Contractual Relations. [] Pushinsky represented Arnold in the [q]ui [t]am action against CMC … in the United States District Court for the Western District of Pennsylvania.
Nationwide is now defending Arnold in the CMC Action subject to a Reservation of Rights letter. It seeks relief from its[] obligation to defend and indemnify Arnold in that CMC Action pursuant to the "business pursuits" exclusion contained in the policy issued to Arnold.

         Pa.R.A.P. 1925(a) Opinion ("Rule 1925(a) Op."), 12/12/2018, at 1-2.

         To obtain such relief, Nationwide filed a declaratory judgment complaint on June 8, 2016, seeking a declaration that it has no duty to defend and/or indemnify Arnold in the CMC Action. Subsequently, on July 14, 2017, Nationwide filed a motion for summary judgment, asserting that the 'business pursuits' exclusion in Arnold's Umbrella Policy excludes coverage for the lawsuit brought against Arnold by CMC. Arnold and Pushinsky each filed responses, in which they both requested that Nationwide's motion be denied.

         On July 23, 2018, the trial court entered a confusing, contradictory order, in which it granted Nationwide's motion for summary judgment but declared that Nationwide has a duty to defend and/or indemnify Arnold based on the Umbrella Policy.[4] In other words, despite stating that it granted Nationwide's motion, it actually denied Nationwide the relief it requested. In an accompanying memorandum, the trial court explained that the 'business pursuits' exclusion did not apply and, as a result, Nationwide continued to have a duty to defend Arnold in the CMC Action. See Trial Court Memorandum ("TCM"), 7/23/2018, at 8. Further, it stated that, because Nationwide has a duty to defend, Nationwide also has a duty to indemnify. Id. Thereafter, on August 6, 2018, for reasons that are unclear to us, the trial court entered an order identical to its July 23, 2018 order. See Trial Court Order, 8/6/2018.

         On August 17, 2018, Nationwide filed separate, timely notices of appeal from both of these orders.[5] The trial court directed Nationwide to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b) on October 2, 2018. On October 11, 2018, apparently realizing the contradiction in its earlier orders disposing of Nationwide's motion for summary judgment, the trial court entered an amended order. Therein, the trial court stated that it was amending and correcting its July 23, 2018 order to reflect that Nationwide's summary judgment motion was denied, but reiterating its determination that Nationwide has a duty to defend and/or indemnify Arnold in the CMC Action under the Umbrella Policy. See Trial Court Amended Order, 10/11/2018.[6] On October 19, 2018, Nationwide filed its Rule 1925(b) statement. The trial court then issued its Rule 1925(a) opinion.

         Presently, Nationwide raises three issues for our review:

1. Did the trial court err[] by failing to grant [Nationwide's] motion for summary judgment and by failing to enter an order declaring that Nationwide had no duty to further defend and/or indemnify [Arnold] pursuant to [the Umbrella Policy]?
2. Did the trial court err by incorrectly applying the two-prong standard for application of the 'business pursuits' exclusion as enunciated in White v. Keystone [Ins. Co., 775 A.2d 812 (Pa. Super. 2001), ] by examining those prongs as to … Arnold's status as a [q]ui [t]am litigant, rather than analyzing the prongs of the test [as] to … Arnold's employment at PennDOT, a defined 'business' pursuant to the terms of the Nationwide policy?
3. Did the trial court err by ordering that [Nationwide] had the duty to indemnify [Arnold] in the underlying lawsuit when ordering indemnification is legally premature?

         Nationwide's Brief at 7-8 (unnecessary capitalization omitted).

         At the outset - given that Nationwide appeals from an order denying its motion for summary judgment and appears to be interlocutory - we address, briefly, the basis for our jurisdiction. See Good v. Frankie & Eddie's Hanover Inn, LLP, 171 A.3d 792, 794 n.1 (Pa. Super. 2017) ("[A]n order denying summary judgment is ordinarily a non-appealable interlocutory order.") (citation omitted). Our Supreme Court has explained:

Generally speaking, appellate courts have jurisdiction to entertain appeals from final orders entered at the trial court level. Ordinarily, a final order disposes of all claims and of all parties. Pa.R.A.P. 341(b)(1). However, Pa.R.A.P. 311(a)(8) states that an "appeal may be taken as of right and without reference to Pa.R.A.P. 341(c)[7] from ... [a]n order that is made final or appealable by statute or general rule, even though the order does not dispose of all claims and of all parties." Importantly, Section 7532 of the [Declaratory Judgment Act] provides that courts of record have the power to declare the rights, status, and other legal relations and that "such declarations shall have the force and effect of a final judgment or decree." 42 Pa.C.S. § 7532.

Pa. Manufacturers' Assoc. Ins. Co. v. Johnson Matthey, Inc., 188 A.3d 396, 399 (Pa. 2018) (some internal citations omitted). Within the context of declaratory judgment actions, the Court has "provided a rather straightforward two-part test for appellate courts to apply when considering whether an order declaring the rights of parties is final and appealable: (1) what is the effect of the lower court's decision on the scope of the litigation; and (2) what practical effect does the court's decision have on the ultimate outcome of the case." Id. (citation omitted). That is to say, "[i]f the order in question merely narrows the scope of the litigation and does not resolve the entirety of the parties' eligibility for declaratory relief, then the order is interlocutory and not immediately appealable." Id. at 400 (citation omitted).

         Here, Nationwide appealed from an order denying, in effect, its claim for declaratory relief. The trial court's order resolves the entirety of the parties' eligibility for declaratory relief, as the trial court determined therein that Nationwide has a duty to defend and/or indemnify Arnold in the CMC Action. Thus, the order is appealable at this time. We therefore proceed to the merits.

         Before examining Nationwide's issues, we acknowledge our standard of review for an order disposing of a motion for summary judgment:

Our scope of review … is plenary. [W]e apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered.
Motions for summary judgment necessarily and directly implicate the plaintiff's proof of the elements of [its] cause of action. Summary judgment is proper "if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury." Pa.R.C.P. 1035.2. Thus, a record that supports summary judgment will either (1) show the material facts are undisputed or (2) contain insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the jury. Upon appellate review, we are not bound by the trial court's conclusions of law, but may reach our own conclusions. The appellate [c]ourt may disturb the trial court's order only upon an error of law or an abuse of discretion.

Nat'l Cas. Co. v. Kinney, 90 A.3d 747, 752-53 (Pa. Super. 2014) (some internal citations, quotation marks, and original brackets omitted).

         We address Nationwide's first and second issues together. Nationwide argues that the trial court erred in failing to find that the 'business pursuits' exclusion in the Umbrella Policy applied to preclude coverage for Arnold with respect to the CMC Action. It advances that "this [e]xclusion is triggered because the litigation and [Arnold's] status as [a] [r]elator 'arises out of' his employment with PennDOT, which was his business pursuit." Nationwide's Brief at 48-49. As a result, Nationwide says the trial court should have granted summary judgment in its favor.

         This Court has previously stated that "the interpretation of an insurance policy is a matter of law properly resolved in a declaratory judgment action." Erie Ins. Exchange v. Muff, 851 A.2d 919, 925 (Pa. Super. 2004). Further,

[a]n insurer's duty to defend is a distinct obligation, different from and broader than its duty to indemnify. An insured has purchased not only the insurer's duty to indemnify successful claims which fall within the policy's coverage, but also protection against those groundless, false, or fraudulent claims regardless of the insurer's ultimate liability to pay. Not ...

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