Penn-America Insurance v. Peccadillos, Inc.
27 A.3d 259
| Pa. Super. Ct. | 2011Background
- Penn-America insured Peccadillos under a Commercial General Liability policy with a liquor liability exclusion.
- Plaintiffs in the underlying tort action allege Latta and Maisner, intoxicated patrons, were served by Peccadillos and then Latta, extremely intoxicated, caused a fatal crash after being ejected.
- Plaintiffs claim Peccadillos’ conduct—continued service to intoxicated patrons and ejection without police involvement—contributed to the injuries and deaths off Peccadillos’ premises.
- Peccadillos tendered defense to Penn-America; Penn-America denied coverage citing the liquor liability exclusion.
- The trial court granted Peccadillos' and Freeman's summary judgment; Penn-America appealed seeking reversal.
- The appellate court held some Paragraph 47 allegations could fall within coverage despite the liquor liability exclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend under policy | Penn-America: exclusion defeats any duty to defend. | Peccadillos: some allegations are potentially covered, so defense duty applies. | There is a potential covered claim and Penn-America must defend. |
| Liquor liability exclusion scope | Exclusion bars any liquor-related liability, including paragraph 47 claims. | Exclusion does not bar non-liquor-control duties alleged in Paragraph 47. | Exclusion does not clearly defeat all asserted claims; defense duty remains. |
| Paragraph 47 interpretation | Paragraph 47, read in isolation, showsLatta’s intoxication caused by Peccadillos’ service and ejection. | Read in context, Paragraph 47 supports claims of contributing to intoxication and is excluded. | Paragraph 47, read as a whole, supports a duty to defend not barred by the exclusion. |
| Restatement § 319 applicability | Restatement § 319 imposes duty to control third persons; supports indemnity questions. | Issue not properly argued for defense; moot for summary judgment on defense duty. | Question waived/without merit for the defense ruling. |
| Indemnity vs. defense distinction | If duty to defend exists, there is conditional indemnity obligation. | Indemnity issues not properly before court on this appeal. | Defense duty affirmed; indemnity remains contingent and not decided here. |
Key Cases Cited
- American & Foreign Ins. Co. v. Jerry's Sport Center (Jerry's Sport Center II), 606 Pa. 584, 2 A.3d 526 (Pa. 2010) (duty to defend broader than indemnity; coverage determined by complaint and policy)
- Jerry's Sport Center I, 948 A.2d 834 (Pa. Super. 2008) (duty to defend extends to potentially covered claims even if groundless)
- Baumhammers, 938 A.2d 286 (Pa. 2007) (language of policy and allegations of complaint construed together)
- Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (duty to defend resolved by comparing policy with complaint; ambiguity favors insured)
- Biborosch v. Transamerica Ins. Co., 603 A.2d 1050 (Pa. Super. 1992) (insurer must defend if any claim could be within policy coverage)
- Sclabassi v. Nationwide Mut. Fire Ins. Co., 789 A.2d 699 (Pa. Super. Ct. 2001) (duty to defend extends beyond meritorious claims)
- Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999) (liberal construction of injury claims in defense determinations)
- Mutual Benefit Ins. Co. v. Haver, 555 Pa. 534, 725 A.2d 743 (Pa. 1999) (avoid artful pleading to circumvent exclusions)