Selective Way Insurance v. Hospitality Group Services, Inc.
119 A.3d 1035
| Pa. Super. Ct. | 2015Background
- Selective Way Insurance seeks a declaratory judgment that it has no duty to defend or indemnify Hospitality Group in the Nemcheck Action, under three Hospitality Group policies and a reservation of rights; Nemcheck Action alleged negligence and related claims after Sean Nemcheck’s death; the underlying accident involved Ramada Inn staff and facilities; the complaint was filed August 1, 2007, and discovery and related proceedings followed; the trial court granted summary judgment that the four-year limitations period began when Selective received the Nemcheck complaint, effectively untimely for a later declaratory judgment action; on appeal, Selective conceded mootness due to a settlement, but argued an issue remained about timeliness and coverage; the majority reversed, adopting a accrual-based triggering rule tied to when a sufficient factual basis exists to challenge coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does the statute of limitations for a declaratory judgment action commence? | Selective argues triggering date is when it reviewed the Nemcheck complaint or denial occurs; here, timeliness begins when the insurer has a sufficient factual basis to deny coverage. | Hospitality Group/Nemcheck contend triggering is tied to receipt of the complaint and the underlying controversy; relief would be untimely if based on later dates. | Four-year period begins when a cause of action accrues, i.e., when insurer has a sufficient factual basis to challenge coverage. |
| Are policy exclusions dispositive of the duty to defend/indemnify in this context? | Selective asserts that unambiguous exclusions relieve it of duty to defend/indemnify. | Hospitality Group argues the exclusions are relevant but not determinative before a dispute fully accrues and coverage is narrowed. | Exclusions do not alone determine timeliness; accrual and coverage analysis depend on whether the complaint triggers coverage. |
| Does mootness due to settlement bar appellate review of timeliness and coverage issues? | Selective argues exceptions to mootness permit review due to potential collateral consequences in related bad-faith actions. | Hospitality Group/Nemcheck contend mootness exceptions do not apply here given collateral estoppel concerns and lack of reviewable effect. | Because of settlement, the appeal is technically moot; however, review of timeliness issue is proper as collateral estoppel could affect later actions. |
| Should collateral estoppel bind the trial court in Hospitality Group Action based on the declaratory judgment ruling? | Selective asserts the trial court in the Hospitality Group Action could be bound by the declaratory judgment decision on timeliness. | Hospitality Group argues collateral estoppel does not bind where the declaratory judgment judgment is not essential to the underlying decision. | Collateral estoppel applies to the timing question, supporting review to avoid prejudice in the Hospitality Group Action. |
| Can the court decide coverage duties (defense/indemnity) in a declaratory judgment when the case is moot? | If the law supports resolving the duty to defend/indemnify, it may be decided in declaratory judgment. | Mootness prevents deciding substantive coverage unless exceptions apply. | The case is moot on Settlement, but the court clarifies the triggering event for limitations and that relief on coverage remains a separate question. |
Key Cases Cited
- Wagner v. Apollo Gas Co., 582 A.2d 364 (Pa. Super. 1990) (triggering of declaratory judgment accrual; controversy ripened into action in 1987 (illustrative of timing under contract disputes))
- Zourelias v. Erie Ins. Grp., 691 A.2d 963 (Pa. Super. 1997) (declaratory action accrues when insurer denies coverage; informs triggering rule debate)
- Gen. Acc. Ins. Co. of Am. v. Allen, 692 A.2d 1089 (Pa. 1997) (duty to defend/indemnify flows from coverage determination; declaratory judgment appropriate)
- American & Foreign Ins. Co. v. Hearn, 93 A.3d 880 (Pa. Super. 2014) (duty to defend/indemnify based on complaint and policy; coverage analysis central to declaratory action)
- Bromwell v. Michigan Mut. Ins. Co., 716 A.2d 667 (Pa. Super. 1998) (declaratory judgments are appropriate to illuminate rights but require actual controversy)