J-S26027-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JOSEPH BOGRAD, INDIVIDUALLY                      IN THE SUPERIOR COURT OF
AND T/A RE/MAX ELITE                                   PENNSYLVANIA

                            Appellant

                       v.

GREENWICH INSURANCE COMPANY
C/O XL SELECT PROFESSIONAL CLAIMS
AND ABRAHAM MICHAEL AND ROSAMMA
MICHAEL AND PECO ENERGY AND
THOMAS ABRAHAM T/A PINE VALLEY
AUTO TAGS

                            Appellees                No. 2594 EDA 2015


                  Appeal from the Order Entered July 31, 2015
                 In the Court of Common Pleas of Bucks County
                        Civil Division at No: 2014-07092


BEFORE: OLSON, STABILE, and STRASSBURGER,* JJ.

MEMORANDUM BY STABILE, J.:                             FILED JUNE 20, 2016

        Joseph Bograd (“Appellant”), individually and t/a RE/MAX Elite,

appeals from the July 31, 2015 order entered in the Court of Common Pleas

of Bucks County denying his motion for summary judgment and granting

summary judgment in favor of Appellee Greenwich Insurance Company

(“Greenwich”) in Appellant’s declaratory judgment action against Greenwich.

Appellant contends the trial court erred in granting summary judgment in

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*
    Retired Senior Judge assigned to the Superior Court.
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favor of Greenwich and argues he is entitled to a trial to determine whether

Greenwich owes him a defense and indemnification for an underlying suit in

which he was named a defendant. We find no error or abuse of discretion in

the trial court’s ruling and, therefore, affirm.

      As the trial court explained, and as our review confirms:

      [Appellant] is a licensed real estate broker who works for the
      RE/MAX Elite real estate agency.        Greenwich and RE/MAX
      entered in a Real Estate Errors and Omissions Policy (hereinafter
      the “Policy”), which was a Claims Made Policy, and which was
      effective during the period from June 1, 2013 through June 1,
      2014. The policy is implicated because on May 28, 2014, a
      lawsuit was filed against [Appellant] and RE/MAX in the Court of
      Common Pleas of Philadelphia County. That litigation prompted
      [Appellant] and RE/MAX, by way of a Petition for Declaratory
      Judgment, to seek defense and indemnification from Greenwich
      under the Policy.

      The underlying Complaint alleged that [Appellant] and RE/MAX
      served as the rental agent for a certain property in
      Southampton, Bucks County, PA. The owners of that property
      alleged that sometime during February 2014, the tenant who
      had been living in the residence moved out and the electric and
      gas services were disconnected.         The homeowners further
      alleged that despite being aware of the tenant leaving and of the
      discontinuance of utility services, it was not until March 7, 2014
      that [Appellant] informed them of this important information.
      On or about March 8, 2014, the homeowners discovered that
      their property had sustained water damage to the walls, floors,
      ceilings, and other parts of the dwelling, caused by a burst pipe.
      Count I of the underlying three (3) count Complaint alleges that
      the damage was caused by Appellant[’s] failure to inform them
      in a timely fashion that the prior tenant had moved. The
      homeowners assert that had they been provided with that
      information, they could have immediately transferred the electric
      and gas services to their name, and restored utility services to
      the property, which would have prevented the water pipe from
      bursting due to freezing conditions inside the home.




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      Greenwich disclaimed any coverage responsibility, asserting that
      the allegations of the underlying litigation involved only damages
      which “occurred by reason of water damage to the property” and
      that such damages are included within the Property Damage
      Exclusion of the Policy.       Dissatisfied with that response,
      Appellant[] initiated this Declaratory Judgment action alleging
      that Greenwich was required to provide them a defense along
      with indemnity.

      The matter was scheduled for trial before this [c]ourt on July 27,
      2015.    Following a comprehensive pre-trial conference, the
      parties sought rulings on their respective Motions for Summary
      Judgment, recognizing that such determinations could eliminate
      the need for a trial. Accordingly, we heard oral argument on the
      record, and entered our Order on July 31, 2015, finding that
      Greenwich did not owe a duty to defend or indemnify.
      Appellant[] filed a timely appeal to the Superior Court on August
      24, 2015.

Trial Court Rule 1925(a) Opinion, 11/6/15, at 1-3.

      Appellant   complied   with   Pa.R.A.P.   1925(b),   alleging   one   error

complained of on appeal that included five subparts, each of which was

addressed by the trial court in its Rule 1925(a) opinion. For purposes of this

appeal, Appellant presents one overall issue for our consideration as follows:

      Whether the lower court’s grant of Summary Judgment in favor
      of [Greenwich] was error and whether [Appellant] is entitled to a
      trial on the facts of the case as to whether or not he is entitled
      to a defense and indemnification for an underlying lawsuit.

Appellant’s Brief at 4.

      When reviewing the trial court’s disposition of a summary judgment

motion, this Court employs the following standard:

      We view the record in the light most favorable to the nonmoving
      party, and all doubts as to the existence of a genuine issue of
      material fact must be resolved against the moving party. Only
      where there is no genuine issue as to any material fact and it is

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      clear that the moving party is entitled to a judgment as a matter
      of law will summary judgment be entered. Our scope of review
      of a trial court’s order granting or denying summary judgment is
      plenary, and our standard of review is clear: the trial court’s
      order will be reversed only where it is established that the court
      committed an error of law or abused its discretion.

Szymanowski v. Brace, 987 A.2d 717, 721–22 (Pa. Super. 2009)

(citations omitted). With regard to declaratory judgment actions, this Court

has explained:

      [T]he Declaratory Judgment Act has been invoked to interpret
      the obligations of the parties under an insurance contract. The
      proper construction of an insurance policy is resolved as a
      matter of law to be decided by the court in a declaratory
      judgment action. Hence, as with all issues of law, our review is
      de novo. Our standard of review in a declaratory judgment
      action is narrow. We review the decision of the trial court as we
      would a decree in equity and set aside factual conclusions only
      where they are not supported by adequate evidence. We give
      plenary review, however, to the trial court's legal conclusions.
      We are limited to determining whether the trial court clearly
      abused its discretion or committed an error of law.

Swarner v. Mutual Ben. Group, 72 A.3d 641, 644 (Pa. Super. 2013),

appeal denied, 85 A.3d 484 (Pa. 2014) (quotations and citations omitted).

Further:

      In actions arising under an insurance policy, our courts have
      established a general rule that it is a necessary prerequisite for
      the insured to establish that his claim falls within the coverage
      provided by the insurance policy. However, when the insurer
      relies on a policy exclusion as the basis for its denial of
      coverage, the insurer has asserted an affirmative defense and
      bears the burden of proving the exclusion.

Erie Inc. Group v. Catania, 95 A.3d 320, 322-23 (Pa. Super. 2014)

(citations omitted).


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      Here, the underlying suit is based on property damage resulting from a

pipe that burst in a home for which Appellant was the rental agent.

Greenwich relies on a policy exclusion that provides, “[Greenwich] will not

defend or pay any claim: . . . B. based on or arising out of property damage

except that this exclusion will not apply to claims arising out of lock-box.”

Greenwich Real Estate Professional Errors and Omissions Policy (the “Policy”)

at 7 (IV. Exclusions) (emphasis added). According to the definitions sections

of the Policy, “Lock-box means a keyless entry system or similar device on

property that the Insured has shown or listed for sale while the property is in

the care, custody or control of the Insured.” Id. at 5 (III. Definitions).   The

Policy also includes a coverage extension for a lock-box, providing in

relevant part, “Subject to all other terms and conditions of this policy, this

policy applies to claims arising out of the use of a lock-box.”    Id. at 2 (I.

Insuring Agreements, D. 2. Coverage Extensions) (emphasis added).

      It is not disputed that there was a lock-box on the premises for which

Appellant was the rental agent and where the property damage occurred.

Further, it is not disputed that the damages in question are property

damages (see Appellant’s Brief at 7) and that the Policy contains an

exclusion for claims “based on or arising out of property damage.” Policy at

7.   The question, ultimately, becomes whether Greenwich has a duty to

defend and/or indemnify Appellant based on the lock-box exception to the

property damage exclusion.


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      In his brief, Appellant recognizes that this Court has described the

court’s required analysis as follows:

      The question of whether a claim against an insured is potentially
      covered is answered by comparing the four corners of the
      insurance contract to the four corners of the complaint. An
      insurer may not justifiably refuse to defend a claim against its
      insured unless it is clear from an examination of the allegations
      in the complaint and the language of the policy that the claim
      does not potentially come within the coverage of the policy.

Appellant’s Brief at 5 (quoting Selective Way Ins. Co. v. Hospitality Grp.

Servs., Inc., 119 A.3d 1035, 1046 (Pa. Super. 2015) (en banc) (citation

omitted)).

      In the underlying complaint, the plaintiffs allege that the tenant

procured by Appellant notified Appellant on or about February 1, 2014, that

a change in his employment necessitated that he leave the rented premises

immediately. Complaint at ¶ 9. The tenant then sent emails to Appellant

informing Appellant that he was disconnecting the electric and gas service.

Id. at ¶ 10. Appellant failed to notify the owners of the home so they could

take steps to transfer the service to their names in order to protect and

safeguard the premises. Id. at ¶ 11. At some time between February 1 and

February 28, 2014, the tenant vacated the premises and, on February 28,

notified Appellant that the gas and electric service had been disconnected.

Id. at ¶ 12.   Appellant did not notify the homeowners that the gas and

electric service had been discontinued. Id. at ¶ 13. On or about March 8,

2014, Appellant discovered that pipes in the premises had burst, flooding


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the premises and causing “catastrophic destruction of the interior of the

premises.” Id. at ¶ 16. The homeowners had not been notified by Appellant

until March 7, 2014 that the electric and gas service had been disconnected.

Id. at ¶ 17.

      In Count I of their complaint, the homeowners alleged that Appellant’s

carelessness and negligence was the direct, factual and proximate cause of

the loss and damage they suffered (a) by failing to notify the homeowners

that service was disconnected; (b) by failing to notify the homeowners that

steps should be taken to restore gas and electric service to the premises; (c)

by failing to notify the homeowners that the tenant had moved out and

disconnected the gas and electric service; and (d) by failing to take

immediate      steps   to   transfer   the   gas   and   electric   service   into   the

homeowners’ names so service could be restored. Id. at ¶ 20(a)-(d). As a

result of Appellant’s negligence, the homeowners allege they suffered

damages in an amount substantially in excess of $50,000. Id. at ¶ 21.

      Counts II and III of the homeowners’ complaint assert causes of action

against the utility company and against their insurance agent. Nowhere in

the complaint is there any mention of a lock-box at the premises and there

is no claim against Appellant for anything other than property damage to the

premises resulting from pipes that burst because gas and electric service

was disconnected. Again, as Appellant acknowledges, “There is no dispute

that the claimed damages are for property damage.” Appellant’s Brief at 7.


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However, Appellant asserts that a lock box was present at the home and

that it is stipulated that “a lock box as defined in the policy was present on

the door of the home.” Id. at 8 (citing Notes of Testimony, 7/27/15, at 7-

8). “So,” Appellant argues, “it is submitted that the contract itself provides

an exclusion [sic] that it will provide a defense provided any one allegation is

covered under the policy.” Id.1

       As the trial court observed:

       [Appellant] would have the [c]ourt find that the mere existence
       of the lock box, despite there existing no reasonable causal
       connection between the lock box and the underlying claim,
       constitutes an exception to the exclusion from coverage of any
       and all property damage claims. Appellant[’s] position defies
       common sense, and we decline to employ such tortured
       reasoning.4
              4
                 We note here that Appellant[] did not raise any
              issues as to the lock box in their Declaratory
              Judgment Complaint. The lock box was first raised
              in Appellant[’s] Motion for Summary Judgment,
              which was filed subsequent to Greenwich’s filing of
              its Summary Judgment Motion.

Trial Court Rule 1925(a) Opinion, 11/6/15, at 8 (footnote in original). As the

trial court further observed:

       The law is well-defined that when an insured who has been sued
       requests coverage under a policy of insurance, the insurer is
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1
  It is important to clarify that coverage under a policy exists unless there is
an applicable exclusion. However, coverage can be restored if the policy
includes an exception to the exclusion. The “lock-box” exception to the
property damage exclusion is what is at issue here.




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J-S26027-16


      required to accept all of the allegations contained in the third
      party’s complaint as true and provide a defense if there is a
      chance that the injury alleged could potentially fall with the
      scope of the policy. While it is undisputed that a lock box was
      maintained on the property, there is no reference to a lock box
      in the homeowner’s Complaint, and there clearly is no causal
      connection between the lock box, utilities being disconnected,
      and the interior pipes subsequently freezing and bursting.5
      Accordingly, Appellant’[s] argument here is meritless.
            5
              The result would be different if negligent use of the
            lock box resulted in entry to the home and vandalism
            or other physical damage to the property. Such a
            factual scenario would implicate insurance coverage
            for physical damage . . . .”

Id. at 8-9 (citation omitted; footnote in original). We find no error or abuse

of discretion in the trial court’s rejection of Appellant’s assertion that the

lock-box exception to the property damage exclusion applies to any

allegation in the homeowner’s complaint.

      Appellant also suggests that the policy language is ambiguous because

it is “capable of being understood in more than one sense.” Appellant’s Brief

at 10 (quoting Kripp v. Kripp, 849 A.2d 1159, 1163 (Pa. 2004). Therefore,

he contends, he “is entitled to at least a defense, if not indemnification, by

reason of the language of the contract.” Id.

      As this Court has stated, “Policy provisions are ambiguous only when

they are reasonably susceptible of different constructions and capable of

being understood in more than one sense. A court cannot torture the policy

language to create ambiguities where none exist.”            Peters v. Nat’l

Interstate Ins. Co., 108 A.3d 38, 43 (Pa. Super. 2014), appeal denied,


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124 A.3d 309 (Pa. 2015) (quoting Swarner, 72 A.2d at 645). We find no

error or abuse of discretion in the trial court’s determination that the

property damage exclusion is clear and unambiguous. “To find that a mere

presence of a lock box required coverage for this property damage claim

would convolute the plain meaning of the language in a tortured effort to

find an ambiguity.” Trial Court Rule 1925(a) Opinion, 11/6/15, at 9 (citation

omitted).

      Finally, Appellant asks us to find that he is entitled to relief because

“contracts of insurance are contracts of adhesion.” Id. at 11. Because this

issue was not raised in Appellant’s declaratory judgment complaint, the

argument is properly considered waived. Pa.R.A.P. 302(a). However, even

if not waived, we find no merit in Appellant’s argument. As the trial court

recognized, “[n]ot every form contract can be termed a contract of

adhesion, and such a determination must be reached on an individual basis,

in light of the particular circumstances and parties involved.”   Trial Court

Rule 1925(a) Opinion, 11/6/15, at 10 (citing Denlinger, Inc. v. Dendler,

608 A.2d 1061, 1066-67 (Pa. Super. 1992)). Here, as the trial court noted,

Appellant—trading as a commercial real estate entity—is not a party lacking

the choice but to accept the terms of the contract without the ability to

negotiate or understand the terms of the contract.         Id. at 11 (citing

Denlinger, 608 A.2d at 1066-67).         We find no error of law or abuse of

discretion in the trial court’s determination.


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     We find no error or abuse of discretion in the trial court’s conclusion

that Greenwich does not owe Appellant a defense or indemnification for the

underlying suit in which Appellant was named a defendant. Because the trial

court properly granted summary judgment in favor of Greenwich, we shall

affirm the July 31, 2015 order.

     Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 6/20/2016




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