Ramara Inc v. Westfield Insurance Co
2016 U.S. App. LEXIS 2656
3rd Cir.2016Background
- Ramara, owner of a Philadelphia parking garage, hired general contractor Sentry; Sentry subcontracted Fortress to install concrete/steel. Fortress obtained a liability policy from Westfield naming Ramara as an additional insured.
- Fortress employee Anthony Axe was injured on the job and sued Ramara and Sentry (not Fortress) in state court; Fortress was not named because of Pennsylvania Workers’ Compensation Act employer immunity.
- Ramara tendered defense to Westfield; Westfield refused, arguing the underlying complaint did not allege that Fortress’s acts “caused, in whole or in part” Axe’s injury as required by the Additional Insured Endorsement, and disputed applicability of an “Other Insurance” (primary/noncontributory/excess) endorsement.
- District Court granted partial summary judgment for Ramara, entered a judgment for past fees/costs, and ordered Westfield prospectively to defend Ramara; Westfield appealed the prospective-defense portion.
- Third Circuit considered (1) whether it had jurisdiction to hear the appeal from the interlocutory prospective-defense order and (2) whether Westfield had a duty to defend Ramara under Pennsylvania law and the policy endorsements, applying the four-corners rule with liberal construction in favor of the insured and accounting for the Workers’ Compensation Act’s effect on pleadings.
Issues
| Issue | Plaintiff's Argument (Ramara) | Defendant's Argument (Westfield) | Held |
|---|---|---|---|
| Does the court have jurisdiction to hear appeal from the District Court’s December 19 order directing prospective defense? | Order is injunctive/equitable (prospective defense), thus appealable under 28 U.S.C. §1292(a)(1). | Order is partial, non-final and not an appealable injunction. | Affirmed jurisdiction: the prospective defense directive is a mandatory injunction appealable under §1292(a)(1). |
| Did Westfield have a duty to defend Ramara under the Additional Insured Endorsement ("caused, in whole or in part")? | The endorsement requires only a but-for (or at least a plausible) causal link; the Axe complaint—liberally construed and viewed in context of the Workers’ Compensation Act—plausibly alleges Fortress’s conduct caused the injury. | The endorsement requires proximate-cause allegations specifically attributing injury to Fortress; the Axe complaint lacks such explicit allegations. | Held for Ramara: complaint potentially alleges that Fortress’s acts were a proximate (and therefore but-for) cause; duty to defend is triggered. |
| Can the Other Insurance Endorsement (primary/noncontributory; excess for sole negligence) be reconciled with Westfield’s proximate-cause reading? | Policy must be read as a whole; Other Insurance endorsement supports a but-for reading and shows ambiguity; ambiguous terms construed for insured. | Discrepancy immaterial because the Other Insurance endorsement does not apply here. | Held for Ramara: endorsements read together support insured’s reasonable interpretation; Westfield’s proximate-only construction would render Other Insurance endorsement incoherent. |
| May the District Court consider the effect of the Pennsylvania Workers’ Compensation Act when applying the four-corners rule to the underlying complaint? | Yes—while adhering to four-corners, courts should interpret the complaint knowing the Act’s practical effect (plaintiff couldn’t sue employer), so the complaint may omit direct allegations against the employer/subcontractor. | No—the four-corners rule forbids reliance on extrinsic context; absence of Fortress allegations defeats coverage. | Held for Ramara: it is proper to interpret the complaint in light of the Act’s realistic effect on pleading; insurer cannot ignore known context that explains why the complaint omits direct allegations against the employer/subcontractor. |
Key Cases Cited
- Aleynikov v. Goldman Sachs Grp., Inc., 765 F.3d 350 (3d Cir. 2014) (interlocutory order requiring prospective payment/advancement of fees can be an appealable injunction under §1292(a)(1)).
- Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999) (insurer’s duty to defend: factual allegations in the underlying complaint are viewed as true and liberally construed for the insured).
- Kvaerner Metals Div. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (Pennsylvania’s four-corners rule: duty to defend determined solely from the complaint and the policy; ambiguous policy terms construed for insured).
- Sikirica v. Nationwide Ins. Co., 416 F.3d 214 (3d Cir. 2005) (distinguishing duty to defend from duty to indemnify; defense duty is broader).
- Erie Ins. Exch. v. Transamerica Ins. Co., 533 A.2d 1363 (Pa. 1987) (if complaint alleges facts that would support recovery under policy, insurer must defend until claim is confined outside coverage).