229 A.3d 634
Pa. Super. Ct.2020Background
- BBK Tavern purchased insurance through The Carman Corporation (CC); Ronald and Patrice Kelly later became assignees of BBK after an underlying dram-shop suit.
- In the dram-shop action, a default judgment was entered against BBK and later a $5,000,000 stipulated judgment was entered; BBK’s insurer (SNIC) denied coverage.
- The Kellys (as assignees) sued CC and Sergius Carman for negligence and breach of contract, alleging CC failed to timely notify or otherwise protect BBK’s coverage, leading to the default and loss of insurance defense/indemnity.
- A jury found CC and Carman negligent and found an oral contract and breach by CC; post-trial the court entered JNOV for negligence as time-barred and ordered a new trial limited to damages on the breach-of-contract claim against CC.
- Both sides appealed; the Superior Court affirmed: negligence claims were barred by the two-year statute of limitations, breach-of-contract survived, and damages must be retried because the $5M underlying figure could be challenged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations for negligence accrual | Injury accrued when SNIC disclaimed coverage (Sept 2012), so suit filed within two years | Injury accrued at entry of default judgment (Aug 25, 2010); SOL ran before suit | SOL began at default entry; negligence claims time-barred; JNOV for defendants |
| Whether the $5,000,000 underlying judgment is binding as damages | $5M is the damages established by prior court/judgment and coordinate-jurisdiction rule | Underlying stipulated amount not established by proof and may be contested by CC | Under Brakeman, CC may litigate reasonableness/amount; new trial on damages ordered |
| Breach of contract (existence, breach, damages) | Oral agreement: Carman would be BBK’s claims contact and protect interests; his failure caused default and damages | CC only required to procure policy; no extra duty and plaintiffs offered no damages proof | Sufficient evidence of an oral contract, breach, and inferable damages (default); JNOV denied on breach; damages retrial allowed |
| Standing / Assignment | Kellys are valid assignees and thus may sue on BBK’s rights | No evidence authenticated the assignment at trial | Assignment document authenticated at trial (Exhibit P-21); standing established |
Key Cases Cited
- Brakeman v. Potomac Ins. Co., 344 A.2d 555 (Pa. Super. 1975) (indemnitor/insurer may litigate reasonableness/amount of settlement in a subsequent action)
- Brakeman v. Potomac Ins. Co., 371 A.2d 193 (Pa. 1977) (affirming right to litigate damages in second action)
- Gray v. Nationwide Mut. Ins. Co., 223 A.2d 8 (Pa. 1966) (entry of judgment constitutes real damage to insured)
- Barr v. Gen. Accident Group Ins. Co. of N. Am., 520 A.2d 485 (Pa. Super. 1987) (entry of judgment in underlying case is significant for accrual)
- Meyer v. Law Firm of Malone Middleman, P.C., 137 A.3d 1247 (Pa. 2016) (elements of breach of contract; contract may be oral or inferred)
- Reott v. Asia Trend, Inc., 7 A.3d 830 (Pa. Super. 2010) (standard of review for JNOV/directed verdict)
- ACE Am. Ins. Co. v. Underwriters at Lloyds and Cos., 939 A.2d 935 (Pa. Super. 2007) (standard of review for new trial decisions)
- Cappelli v. York Operating Co., 711 A.2d 481 (Pa. Super. 1998) (accrual and discovery principles)
- Robbins & Seventko Orthopedic Surgeons, Inc. v. Geisenberger, 674 A.2d 244 (Pa. Super. 1996) (statute of limitations not tolled by appeal/post-trial remedies)
- Pocono Int’l Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d 468 (Pa. 1983) (equitable discovery rule and diligence requirement)