J-A11007-18


                                  2018 PA Super 270

 TUSCARORA WAYNE INSURANCE                            IN THE SUPERIOR COURT
 COMPANY                                                 OF PENNSYLVANIA



                        v.

 HEBRON, INC., UNITED INVESTMENT
 PROPERTIES, VOLUNTEERS OF AMERICA
 PENNSYLVANIA BRANCH, TRES
 HERMANOS MEXICAN RESTAURANT,
 CRAFTY ANTIQUES AND COLLECTIBLES,
 A&E FURNITURE MATTRESS OUTLET,
 SAVANNAH'S ON HANNA, JONAS HAIR,
 PHIL DOBSON, TAHANI S. ALZOGHIER

 APPEAL OF: HEBRON, INC.                                No. 1591 MDA 2017


              Appeal from the Order Entered September 12, 2017
               In the Court of Common Pleas of Dauphin County
                     Civil Division at No: 2014-CV-8632-CV


BEFORE: STABILE, J., NICHOLS, J., and PLATT, J.*

OPINION BY STABILE, J.:                               FILED OCTOBER 03, 2018

       In this declaratory judgment action, Appellant, Hebron, Inc. (“Hebron”),

appeals from the September 12, 2017 order entered in the Court of Common

Pleas of Dauphin County, denying Hebron’s motion for summary judgment

and granting the motion for summary judgment filed by Appellee, Tuscarora

Wayne Insurance Company (“TWIC”).              Hebron contends the trial court



____________________________________________


* Retired Senior Judge assigned to the Superior Court.
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committed error of law and abused its discretion in its summary judgment

rulings. We agree and, therefore, reverse and remand.

       The event giving rise to this litigation was a May 12, 2014 fire at

Hebron’s vehicle dismantling facility on South Cameron Street in Harrisburg.

The fire started when one of Hebron’s truck drivers was attempting to pump

gas into a flatbed truck in the loading dock area outside that facility. The fire

caused damage to Hebron’s facility as well as to neighboring businesses and

vehicles parked in the area.

       At the time of the fire, Hebron was the named insured under a

commercial liability policy issued by TWIC.1          The policy included an

endorsement that excluded “designated ongoing operations.” Endorsement

CG 21 53 01 96 at 1. The endorsement’s Schedule described the designated

ongoing operations as “vehicle dismantling” and provided that “[t]his

insurance does not apply to . . . property damage arising out of [vehicle

dismantling], regardless of whether such operations are conducted by you or

on your behalf or whether the operations are conducted for yourself or for

others.” Id. (quotations omitted). The phrase “vehicle dismantling” is not

defined in the policy.




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1 As will be discussed infra, Hebron’s landlord, Appellee United Investment
Properties (“UIP”), was named an additional insured on the policy. Hebron
secured the liability policy as a condition of its lease with UIP.

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      On September 19, 2014, TWIC filed a declaratory judgment action,

seeking a declaration that it was not obligated to defend or indemnify Hebron

for any property damage claims arising from the May 12, 2014 fire (“the Fire”)

in light of the designated ongoing procedures exclusion (“the Exclusion”).

Included as defendants in the action were Hebron and UIP along with eight

neighboring entities or individuals alleged to have sustained property damage

as a result of the Fire. Hebron and one other defendant filed answers to the

complaint with new matter. Default judgments were entered against the eight

remaining defendants, including UIP, for failure to answer the complaint. The

default judgment against UIP was opened by stipulation of the parties. Upon

UIP’s filing of its answer to the complaint on May 27, 2016, the pleadings were

closed. The parties engaged in discovery, including written interrogatories,

depositions of the truck driver and another Hebron employee, both of whom

were at the scene of the Fire, and the deposition of TWIC’s senior underwriter.

      On July 22, 2016, TWIC filed a motion for summary judgment claiming

it was entitled to judgment based on the Exclusion. Hebron filed a response

and subsequently filed its own summary judgment motion, contending the

plain language of the Exclusion did not relieve TWIC of its obligations under

the policy or, alternatively, the Exclusion is ambiguous and must be construed

in favor of Hebron and against TWIC. Hebron asked the court to grant its

motion, deny TWIC’s motion, and direct TWIC to defend and indemnify Hebron

with respect to the claims related to the Fire. UIP filed a brief in support of


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Hebron’s motion.    By separate motion, Hebron also sought to compel the

deposition of a TWIC corporate designee.

      On December 8, 2016, the trial court denied Hebron’s motion to compel.

Trial Court Order, 12/8/16, at 1-2.     On September 12, 2017, following a

hearing on the summary judgment motions, the trial court entered an order

granting TWIC’s motion and denying Hebron’s motion.         Trial Court Order,

9/12/17, at 1-2. This timely appeal followed. Hebron timely filed a statement

of errors complained of pursuant to Pa.R.A.P. 1925(b). The trial court filed a

Statement in Lieu of Memorandum Opinion in accordance with Pa.R.A.P.

1925(a), indicating that the reasons for its rulings were set forth in the

September 12, 2017 order. The trial court also suggested that the September

12, 2017 order was not a final order disposing of all claims against all parties

because UIP remained an active defendant in the case. Statement in Lieu of

Memorandum Opinion, 11/18/17, at 1-2.

      Appellant presents three issues for our review:

      I.     Whether the present appeal is ripe for consideration?

      II.    Whether the trial court committed errors of law and abuses
             of discretion in awarding summary judgment and
             declaratory judgment in favor of [TWIC] and denying
             Hebron’s motion for summary judgment?

      III.   Whether the trial court erred in denying Hebron’s motion to
             compel the deposition of TWIC’s corporate designee?

Appellant’s Brief at 7-8 (some capitalization omitted).




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      Appellant first asks us to find that the appeal is ripe for consideration,

contrary to the trial court’s statement that the September 12, 2017 order was

not a final order. Statement in Lieu of Memorandum Opinion, 11/18/17, at 1-

2. As noted above, the trial court considered UIP to be an active defendant

in the case, preventing the order from being final under Pa.R.A.P. 341(b)(1)

(“A final order is any order that [] disposes of all claims and of all parties[.]”).

We reject the trial court’s determination.

      In its declaratory judgment action, TWIC listed UIP among the

“potentially interested parties” whose property was damaged in the Fire.

TWIC asked the trial court to declare that TWIC did not have a duty to defend

or indemnify Hebron in relation to claims of UIP and the other parties. By

granting summary judgment on the declaratory judgment action in favor of

TWIC, the court disposed of all claim of all parties, including UIP who was

identified as an additional insured on the policy but had no separate insurable

interest under the policy. If the grant of summary judgment absolves TWIC

from any duty to defend or indemnify Hebron, no possible claim by UIP against

TWIC survives.

      Moreover, in accordance with 42 Pa.C.S.A. § 7532, an order in a

declaratory judgment action has “the force and effect of a final judgment or

decree.”   See also National Cas. Co. v. Kinney, 90 A.3d 747, 754 (Pa.

Super. 2014). The trial court’s order granted summary judgment to TWIC in




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its declaratory judgment action. As such, the order constitutes a final order

and the appeal from that order is properly before this Court.

      In its second issue, Hebron argues the trial court committed error of law

and abused its discretion in granting summary judgment in favor of TWIC in

its declaratory judgment action while denying Hebron’s summary judgment

motion. As this Court reiterated in Kinney,

      “Our scope of review of an order granting summary judgment is
      plenary.” Harber Philadelphia Center City Office Ltd. v. LPCI
      Ltd. Partnership, 764 A.2d 1100, 1103 (Pa. Super. 2000),
      appeal denied, 566 Pa. 664, 782 A.2d 546 (2001). “[W]e apply
      the same standard as the trial court, reviewing all the evidence of
      record to determine whether there exists a genuine issue of
      material fact.” Id. “We view the record in the light most favorable
      to the non-moving 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 clear that the moving party is entitled to a
      judgment as a matter of law will summary judgment be entered.”
      Caro v. Glah, 867 A.2d 531, 533 (Pa. Super. 2004)[.]

Id. 90 A.3d at 752 (additional citations omitted).

      This Court “may disturb the trial court’s order only upon an error of law

or an abuse of discretion.” Id. at 753 (citation omitted). “Judicial discretion

requires action in conformity with law on facts and circumstances before the

trial court after hearing and consideration. Consequently, the court abuses

its discretion if, in resolving the issue for decision, it misapplies the law or

exercises its discretion in a manner lacking reason.” Id. (quoting Miller v.

Sacred Heart Hosp., 753 A.2d 829, 832 (Pa. Super. 2000) (internal citations

omitted)).


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      An abuse of discretion is not merely an error of judgment, but if
      in reaching a conclusion the law is overridden or misapplied, or
      the judgment exercised is manifestly unreasonable, or the result
      of partiality, prejudice, bias or ill will, as shown by the evidence
      or the record, discretion is abused.

Id. (quoting Lineberger v. Wyeth, 894 A.2d 141, 146 (Pa. Super. 2006)

(additional citations omitted)). Further:

      Our standard of review in a declaratory judgment action is limited
      to determining whether the trial court clearly abused its discretion
      or committed an error of law. We may not substitute our
      judgment for that of the trial court if the court’s determination is
      supported by the evidence.

      Additionally, we will review the decision of the trial court as we
      would a decree in equity and set aside the factual conclusions of
      that court only where they are not supported by adequate
      evidence. The application of the law, however, is always subject
      to our review.

Id. (quoting Erie Ins. Exchange v. Muff, 851 A.2d 919, 925 (Pa. Super.

2004) (internal citations and brackets omitted)).

      Here, the trial court determined:

      Hebron Inc. is a vehicle dismantling business . . . insured by
      [TWIC]. On May 12, 2014, a Hebron employee was experiencing
      difficulty refueling a company owned truck. Another employee
      attempted to help, and while moving an electrical cord connected
      to the pump, a spark ignited a fire which damaged Hebron’s
      property, neighboring property, and vehicles parked in the area.
      The effective insurance policy excluded damages that occurred as
      a result of the ongoing business operations, namely “vehicle
      dismantling.”

      Here, . . . fueling a Hebron-owned truck used to retrieve vehicles
      for dismantling is incidental to the vehicle dismantling business,
      and as such, the policy excludes coverage for the resulting
      damages.




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Order, 9/12/17, at 2-3. Consequently, the court granted TWIC’s summary

judgment motion, denied Hebron’s motion, and declared that TWIC was not

required to defend and indemnify Hebron with regard to claims arising from

the Fire. Id. at 3-4.

      In its brief, Hebron discusses some basic principles of law regarding

insurance law and interpretation of insurance contracts. For instance, when

policy language is clear and unambiguous, the courts give effect to the

language of the contract. Hebron’s Brief at 25 (citing Paylor v. Hartford

Ins. Co., 640 A.2d 1234, 1235 (Pa. 1994)). However, if the provisions are

ambiguous, the provisions are to be construed in favor of the insured and

against the insurer. Id. (citing Swarner v. Mutual Ben. Group, 72 A.3d

641, 645 (Pa. Super. 2013)).    Further, when an insurer bases a denial of

coverage on a policy exclusion, “the burden is on the insurer to establish its

application.”   Id. at 26 (quoting Swarner, 72 A.3d at 645).         Further,

“[e]xclusionary clauses generally are strictly construed against the insurer

and in favor of the insured[.]” Id. (quoting Swarner, 72 A.3d at 645)

(emphasis in original).

      Here, the trial court concluded that refueling a truck used to transport

vehicles to Hebron’s facility to be dismantled was “incidental to the vehicle

dismantling business.” Order, 9/12/17, at 2. Therefore, claims arising from




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refueling the truck were subject to the exclusion for “ongoing business

operations, namely ‘vehicle dismantling.’” Id. at 1.2

       As noted above, this Court will not disturb the trial court’s ruling absent

abuse of discretion or error of law. Again, “[j]udicial discretion requires action

in conformity with law on facts and circumstances before the trial court after

hearing and consideration. Consequently, the court abuses its discretion if, in

resolving the issue for decision, it misapplies the law or exercises its discretion

in a manner lacking reason.”          Kinney, 90 A.3d at 753 (quoting Miller v.

Sacred Heart Hosp., 753 A.2d 829, 832 (Pa. Super. 2000)).

       The Exclusion at issue encompasses ongoing operations described

simply as “vehicle dismantling.” The phrase is not defined in the policy and,

as Hebron argues, should be construed as words of common usage in their

natural, plain, and ordinary sense. Hebron’s Brief at 27.

       When the phrase “vehicle dismantling” is given its ordinary
       meaning, the evidence shows that the fire did not arise from
       vehicle dismantling operations. “Vehicle” is defined as “any device
       on wheels or runners for conveying persons or objects, as a cart,
       sled, automobile, etc.”       Webster’s New Twentieth Century
       Dictionary, [at] 2024 (2 ed. 1964). “Dismantle” is defined as
                                 nd

       “to strip or deprive of accessory or essential parts.” Id. at 526.

Id. at 28.

       Hebron contends:
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2  The only legal authority cited by the trial court is an unreported
memorandum decision of this Court. See Order, 9/12/17, at 1-2. As Hebron
recognizes, the cited case is not only non-precedential and inappropriately
relied upon by the trial court (Superior Court I.O.P. 65.37), but also factually
distinguishable. Hebron’s Brief, at 47-50.

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     Although Hebron strips vehicles of their parts, the fire did not arise
     from such operations. This is not a case where the fire was caused
     by a torch being used to cut through metal or by sparks from a
     cutting wheel used to separate car parts. The fire arose when
     [Hebron’s operations manager] Mr. Zughyar and [truck driver] Mr.
     Ibrahim were attempting to add fuel to a Hebron-owned truck
     driven by Mr. Ibrahim. The fuel was stored in large containers
     outside of the building and away from the location of the vehicle
     dismantling operations. When the pump failed to transfer gas
     from one of the storage containers to the truck, Mr. Zughyar tried
     to determine the cause of the pump failure. When he moved an
     extension cord connected to the pump, the extension cord sparked
     and ignited the fuel and/or fuel vapors. Nothing in this chain of
     events involves stripping vehicles of their parts, as required by the
     plain meaning of the phrase “vehicle dismantling.”

     The cause of the fire in this case was completely unrelated to the
     process of stripping a vehicle of its parts. In fact, as stated by Mr.
     Zughyar, all vehicle dismantling operations had ceased at least a
     half hour prior to the fire starting. Accordingly, contrary to the
     Policy’s exclusion for “Designated Ongoing Operations,” at the
     time of the fire, vehicle dismantling operations had ceased and
     there were no more “ongoing operations.”

     More to the point, the fire arose as a result of a faulty extension
     cord connected to a pump that sparked while a vehicle was being
     refueled on the Insured Property. Contrary to the [t]rial [c]ourt’s
     holding, the facts of this case do not establish a causal connection
     between the fire and vehicle dismantling. Hebron’s fuel storage
     is not a component of vehicle dismantling – vehicle dismantling
     operations can occur with or without Hebron storing fuel on the
     Insured Property.

Id. at 29-31 (references to Zughyar and Ibrahim depositions omitted).

     Viewing the facts of this case in the light most favorable to Hebron as

the non-moving party, we conclude the trial court abused its discretion in

reaching a conclusion that was not in conformity with the facts and

circumstances before the court, and committed error of law in declaring that


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TWIC was not required to defend or indemnify Hebron based on the Exclusion.

The Fire in question started shortly after 5 p.m. in a loading dock area outside

the building that housed vehicle dismantling operations. The facility closed at

5 p.m. but vehicle dismantling operations ceased each day at 4:30 p.m. All

employees involved in dismantling vehicles had already left the premises when

the Fire occurred. The operations manager and a truck driver were fueling a

truck so it would be ready for dispatch the following day.            The only

“connection” the fueling process had with vehicle dismantling operations

arises from the fact the fuel used by Hebron trucks was drained from vehicles

that were dismantled. However, the fuel drained from vehicles during the

dismantling process was deposited in a drum that would later be pumped into

larger holding tanks in the loading dock area outside the facility. The fuel

remained in the holding tanks until pumped into another holding tank or used

to fuel Hebron vehicles.   See Hebron’s Brief at 13 (references to Zughyar

deposition omitted).

      The trial court’s grant of summary judgment based on its conclusion

that fueling a truck used to transport vehicles to be dismantled is “incidental

to the vehicle dismantling business” misconstrues the facts of this case and

runs counter to the obligation to construe policy exclusions in favor of the

insured. Swarner, supra. We find the trial court abused its discretion and

committed error of law by granting summary judgment on the record before




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it. Therefore, we reverse the order granting summary judgment in favor of

TWIC.

      Hebron also complains that the trial court erred or abused its discretion

by denying its summary judgment motion. In its motion, Hebron presents the

same argument in favor of granting summary judgment as it raised in

opposition to TWIC’s motion, contending TWIC is required to defend and

indemnify Hebron for claims arising from the Fire. Hebron claims the Fire did

not occur in the course of conducting vehicle dismantling and, therefore, the

Exclusion does not apply. We have already concluded that the Fire did not

occur in the course of vehicle dismantling so as to be subject to the Exclusion.

Therefore, TWIC is required to defend and indemnify Hebron under the terms

of TWIC’s policy and Hebron is entitled to summary judgment in its favor.

      In its third issue, Hebron argues the trial court erred in denying its

motion to compel the deposition of TWIC’s corporate designee. Because the

purpose of that deposition was to ascertain what information was used in

interpreting phrases in the TWIC policy and its reasons for denying coverage,

the issue is denied as moot.

        For the reasons stated above, the trial court’s September 12, 2017

order granting summary judgment in favor of TWIC and denying summary

judgment in favor of Hebron is reversed.

      Order reversed. Case remanded. Jurisdiction relinquished.




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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 10/03/2018




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