Windows, H. v. Erie Insurance Exchange
161 A.3d 953
| Pa. Super. Ct. | 2017Background
- Homeowners sued Erie after raw sewage and water infiltrated their basement in May 2012; Erie denied coverage based on the policy's "water-damage" exclusion for "water or sewage which backs up through sewers or drains."
- Erie moved for summary judgment arguing the undisputed facts showed sewage/water "backed up" through sewers/drains and thus the loss was excluded.
- Judge Lutty denied Erie’s summary judgment motion in a one-line order (no opinion explaining the basis).
- A different judge, McCarthy, concluded Lutty’s denial operated as the law of the case that the exclusion did not apply, barred further litigation of coverage, and the case proceeded to a jury verdict for the Homeowners (~$75,074).
- Erie challenged (post-trial/new trial) that it was denied a proper adjudication of its coverage defense; the Superior Court held the exclusion is ambiguous and that McCarthy erred in treating Lutty’s unexplained summary-denial as law of the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the water-damage exclusion unambiguously bars coverage | Homeowners: the exclusion does not clearly bar their loss because "back up" is susceptible to multiple meanings | Erie: any sewage/water entering via sewer/drain is a "back up" and excluded | Court: exclusion is ambiguous; Erie failed to prove exclusion as a matter of law; summary judgment denial was proper |
| Whether Judge Lutty’s unexplained denial of summary judgment established law of the case preventing further litigation of the exclusion | Homeowners: Lutty's denial precluded relitigation; trial court properly followed it | Erie: an unexplained summary-denial does not foreclose a later judge from adjudicating the exclusion; applying law of the case here was error | Court: McCarthy erred; unexplained denial did not mandate law-of-the-case treatment; issue must be litigated further |
| Burden of proof for contractual exclusions | Homeowners: ambiguities construed against insurer; insurer must prove exclusion applies | Erie: exclusion language applies and insurer should prevail | Court: insurer bears burden to establish exclusion; ambiguity resolves against Erie and requires factfinder/parol evidence if needed |
| Proper remedy following erroneous law-of-the-case application | Homeowners: judgment should stand | Erie: new proceedings required to resolve ambiguity and factual question of whether sewage "backed up" within meaning | Court: reversed judgment and remanded for further proceedings to resolve meaning of "backs up" and related factual issues |
Key Cases Cited
- Reinoso v. Heritage Warminster SPE LLC, 108 A.3d 80 (Pa. Super. 2014) (summary-judgment standard and appellate review)
- Trizechahn Gateway LLC v. Titus, 976 A.2d 474 (Pa. 2009) (contract ambiguity principles)
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (reasonable interpretations test for ambiguity)
- Prudential Prop. & Cas. Ins. Co. v. Sartno, 903 A.2d 1170 (Pa. 2006) (ambiguities in insurance policies construed for insured)
- Thompson v. Genis Bldg. Corp., 394 N.E.2d 242 (Ind. Ct. App. 1979) (interpretation of "back up" as "rise and overflow backward")