J-A02045-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

CARRIE KELLY, ADMINISTRATRIX OF             :     IN THE SUPERIOR COURT OF
ESTATE OF JUSTIN KELLY, DECEASED,           :          PENNSYLVANIA
AS ASSIGNEE OF DALLAS MATTHIAS,             :
D/B/A DALLAS MATTHIAS TREE                  :
SERVICE                                     :
                                            :
                                            :
                    v.                      :
                                            :
H.C. KERSTETTER CO., CENTRAL                :
INSURERS GROUP, INC. AND THOMAS             :
BERICH                                      :
                                            :     No. 696 MDA 2015


                  Appeal from the Order Entered March 20, 2015
           in the Court of Common Pleas of Berks County Civil Division
                                at No(s): 09-7399

BEFORE: PANELLA, STABILE, and FITZGERALD,* JJ.

MEMORANDUM BY FITZGERALD, J.:                          FILED APRIL 27, 2016

        Appellant, Carrie Kelly, Administratrix of Estate of Justin Kelly,

Deceased, as Assignee of Dallas Matthias,1 d/b/a Dallas Matthias Tree

Service, appeals from the order entered in the Berks County Court of

Common Pleas granting the motion for summary judgment of Appellees,

H.C. Kerstetter Co., Central Insurers Group, Inc., and Thomas Berich.

Appellant contends the trial court erred in finding that the claims against

Appellees were barred by the statute of limitations. We affirm.


*
    Former Justice specially assigned to the Superior Court.
1
 We note that there is a discrepancy in the spelling of Matthias. In certain
documents in the record, Matthias is spelled with one “t”.
J-A02045-16


     The trial court summarized the facts of this case as follows:

           Dallas Mathias (hereinafter, Assignor) started a tree
        service business in 2004. The business was organized as a
        sole proprietorship with no employees.       Justin Kelly
        (hereinafter, Decedent) was one of several independent
        contractors with his business.

           Assignor obtained insurance for his business from
        [Appellees].   [Appellee,] Tom Berich, was Assignor’s
        insurance contact.    Assignor never met [Appellee] or
        anyone else from [Appellees’] companies. All business was
        accomplished through telephone conversations or the
        exchange of documents. Assignor obtained a commercial
        auto insurance policy from United Financial Casualty
        Company and a commercial general liability policy from
        Nautilus   Insurance   Company     through    [Appellees].
        Assignor did not purchase an umbrella policy for his
        business. [Appellees] needed Assignor’s permission to
        change or bind insurance on his behalf.

           Assignor required the independent contractors to
        maintain their own commercial general liability insurance
        which was procured through [Appellees]. Assignor also
        made his workers, including Decedent, sign a document
        entitled “Sub-Contractor Agreement and Insurance Waiver
        Acknowledgment” (Agreement).            The purpose of
        Agreement was to relieve Assignor from liability and to
        make it clear to the workers for which insurance coverage
        they were responsible and which he was. The workers
        were responsible for liability, health, and worker’s
        compensation insurance for their injuries. Assignor was
        responsible for liability insurance for the work that was
        performed on the jobs. Agreement included a provision
        that Assignor would be held harmless if the worker
        suffered bodily injury while performing his duties.
        Assignor knew that the Nautilus policy did not provide
        coverage to him for the workers’ injuries.

           On November 2, 2006, Decedent sustained fatal injuries
        after falling out of a bucket truck while working for
        Assignor.    A co-worker confirmed that Decedent had
        smoked marijuana with him prior to their arrival on the
        jobsite.


                                    -2-
J-A02045-16



              [On March 14, 2007,] Nautilus denied coverage for
           Decedent’s injuries.   [On June 14, 2007,] Decedent’s
           estate sued Assignor.[2] United provided a defense for
           Assignor under a reservation of rights. [Appellant] and
           Assignor entered into a Release and Assignment
           Agreement on April 17, 2008. Pursuant to the settlement,
           United paid $125,000.00 to [Appellant3]. Assignor agreed
           to the entry of a consent judgment against himself[4] and

2
  See Complaint, Carrie Kelly, Administratrix of the Estate of Justin D. Kelly,
Deceased v. Dallas Mathias, Jr., individually and t/a Dallas Mathias Jr. Tree
Service, 6/14/07, at R.R. 188a. For convenience, we refer to the reproduced
record where applicable.
3
    The terms of the release were as follows:

           II. RELEASE      OF    UNITED     FINANCIAL      CASUALTY
           COMPANY

              For and in consideration of its payment of $125,000 on
           behalf of its insured, Dallas Mathias, Jr. t/a Dallas Mathias,
           Jr. Tree Service, Carrie Kelly, as Administratrix of the
           Estate of Justin D. Kelly, Deceased, hereby releases and
           discharges United Financial Casualty Company from any
           and all further claims, rights or causes of action based on
           statutory law, common law or its policy of insurance which
           were alleged or which may have been alleged in the Berks
           County action titled Carrie Kelly, Administratrix of the
           Estate of Justin D. Kelly, Deceased v. Dallas Mathias,
           Jr., Individually and t/a Dallas Mathias, Jr. Tree
           Service.       The United Financial Casualty Company’s
           declaratory judgment action will be marked settled,
           discontinued and ended.

R.R. at 379a.
4
    The agreement provided as follows:

III. JUDGMENT BY CONSENT

              Dallas Mathias, Jr. hereby agrees that a judgment by
           consent against him can be entered by Carrie Kelly as



                                       -3-
J-A02045-16


           assigned to [Appellant] the right to pursue claims for one
           million dollars from Nautilus and [Appellees5].



           Administratrix of the Estate of Justin D. Kelly, Deceased,
           for the total amount of $1,125,000 with an indication that,
           upon payment of the $125,000 on his behalf from United
           Financial Casualty Company, that $125,000 portion of the
           judgment can be marked as satisfied.

Id.
5
    Instantly, the assignment agreement provided as follows:

           IV. ASSIGNMENT AGREEMENT

              [Appellant], Carrie Kelly, as Administratrix of the Estate
           of Justin D. Kelly, Deceased (“Assignee”), agrees and
           covenants     to    postpone      collection,   enforcement,
           garnishment and/or execution proceedings against
           [Appellee] Dallas Mathias, Jr., his heirs, executors,
           administrators, successors and assigns (“Assignor”) for
           Assignor’s $1,000,000 portion of the $1,125,000 judgment
           by consent.

              Assignee’s     agreement     to   postpone     collection,
           enforcement, garnishment and/or execution proceedings
           against Assignor for the amount due and owing, is for, and
           in consideration of Assignor’s assignment of any and all
           rights, interests, claims, causes of action and/or potential
           causes of action including, but not limited to, all
           contractual and extra contractual claims, actions for
           common law and statutory bad faith, actions for
           declaratory judgment, breach of fiduciary duty, negligence,
           breach of contract and misrepresentation and any other
           claims or causes of action of any nature whatsoever, in law
           or in equity, which Assignor has and/or may have against
           H.C. Kerstetter Co. and any insurer other than United
           Financial Casualty Company, as well as any parent
           company or companies, affiliates, subsidiaries, or any
           other entity or insurer other than United Financial Casualty
           Company that may be required to provide coverage to,
           and/or indemnify Assignor with regard to the Berks County



                                       -4-
J-A02045-16


Trial Ct. Op., 6/16/15, at 1-3.

      Appellant filed a writ on June 15, 2009 and subsequently a complaint

on July 17, 2009. R.R. at 1a, 58a. Appellees filed a motion for summary

judgment. The trial court granted the motion. This timely appeal followed.

Appellant filed a court-ordered Pa.R.A.P. 1925(b) statement of errors

complained of on appeal. The trial court filed a responsive opinion.

      Appellant raises the following issues for our review:

         A. Where [Appellees] insurance brokers admit that the
         insured tree trimming business was relying on them to
         advise, procure and maintain proper coverage; where such
         brokers failed to advise the insured that important
         coverage was excluded; and insured’s expert has shown
         that [Appellees] breached their duty of care; did the trial
         court err in granting summary judgment where the record
         raises genuine issues of material fact showing negligence

         action of Carrie Kelly, as Administratrix of the Estate of
         Justin D. Kelly, Deceased v. Dallas Mathias, Jr.

Id. at 380a.

      We note that in Barr v. Gen. Accident Grp. Ins. Co. of N. Am., 520
A.2d 485 (Pa. Super. 1987), this Court held that

         a plaintiff can agree to enter judgment against an insured
         and also agree not to enforce the judgment directly
         against the insured in exchange for the assignment of the
         insured’s rights against his insurance company and their
         agents. . . . [T]he assignee can seek recovery of the
         judgment amount in an action against the insurance
         company and their agents for failure to provide adequate
         coverage and failure to defend.

Id. at 487.




                                     -5-
J-A02045-16


         of [Appellees], insurance brokers, in failing to advise,
         maintain, and procure adequate liability coverage for
         assignor, contractor, Matthias, with respect to the lawsuit
         on behalf of subcontractor, decedent, Justin Kelly?

         B. Did the trial court err in giving effect to certain
         purported exculpatory language in a sub-contractor
         agreement?

         C. Did the trial court erred [sic] in granting summary
         judgment with respect to statute of limitations issues
         where this action against insurance agents or brokers, for
         failure to procure liability insurance coverage was filed
         within two years of its accrual date, namely within two
         years of the date of the filing of the Complaint in the
         underlying action?

Appellant’s Brief at 3-4.

      Appellant contends the trial court erred in granting summary judgment

because there are “material issues of fact that [Appellees] breached duties

of care with respect to advising, maintaining, and procuring adequate

liability coverage for the insured, assignor, Matthias, resulting in his lacking

adequate liability coverage with regard to the subject fatal accident to one of

his subcontractors, Justin Kelly . . . .” Id. at 15. Appellant argues that the

exculpatory language of the subcontractor agreement was unenforceable.

Id.

      Appellant claims the statute of limitations “for a cause of action

against a broker for failure to procure adequate liability insurance is at

earliest the date the Complaint to be covered is filed against the insured.”

Id. at 20. Appellant avers that “[t]he date of the earlier pre-lawsuit denial

letter, relied upon by the lower court, does not change the fact this lawsuit


                                     -6-
J-A02045-16


was timely.”   Id.   Appellant argues that “the underlying Complaint whose

coverage was in issue was filed on June 14, 2007. This action regarding the

brokers’ failure to procure adequate liability insurance to cover that

complaint was timely filed within two years of that date in accord with

applicable procedural rules, on Monday, June 15, 2009.”6           Id. at 20.

Appellant concludes that the action was timely filed. Id.

      We address Appellant’s third issue first because it is dispositive. Our

review is governed by the following principles:

         The standards which govern summary judgment are well
         settled. When a party seeks summary judgment, a court
         shall enter judgment whenever there is no genuine issue of
         any material fact as to a necessary element of the cause of
         action or defense that could be established by additional
         discovery. A motion for summary judgment is based on an
         evidentiary record that entitles the moving party to a
         judgment as a matter of law. In considering the merits of
         a motion for summary judgment, a court views 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.
         Finally, the court may grant summary judgment only when
         the right to such a judgment is clear and free from doubt.
         An appellate court may reverse the granting of a motion
         for summary judgment if there has been an error of law or
         an abuse of discretion. . . .

6
  Appellant cites M & M High, Inc. v. Essex Ins. Co., 2002 WL 31681995
(Pa. Com. Pl. 2002), in support of his argument that the filing of the
complaint triggers the running of the statute of limitations against the
insurer. Appellant’s Brief at 17. However, Court of Common Pleas decisions
“are not binding precedent for this Court.” Discover Bank v. Stucka, 33
A.3d 82, 87–88 (Pa. Super. 2011).




                                     -7-
J-A02045-16



Varner-Mort v. Kapfhammer, 109 A.3d 244, 246-47 (Pa. Super. 2015)

(citation omitted).

        In Adamski v. Allstate Ins. Co., 738 A.2d 1033 (Pa. Super. 1999),

the appellant, David Adamski, was driving a motorcycle and was involved in

an accident with an automobile driven by Ronald Miller, the insured. Id. at

1034.     The appellant brought an action against the appellee, Allstate

Insurance Company, the insured’s assignee, for breach of duty to defend

and indemnify.      Id. at 1035.    The appellee filed a motion for summary

judgment based upon the statute of limitations.         Id.   The court entered

summary judgment in favor of the insurer.

        On appeal in Adamski, this Court addressed the issue of when the

statute of limitations was triggered. The Court opined:

           The . . . action was commenced on November 9, 1993,
           when appellants filed a writ of summons. On January 17,
           1997, appellants filed a complaint alleging that appellee
           committed common law and statutory bad faith[7] by failing
           to defend, indemnify or otherwise protect the interests of
           Ronald Miller. On June 23, 1998, appellee filed a motion
           for summary judgment. In its motion, appellee argued
           that appellants’ claims for bad faith were barred by the
           statute of limitations and should be dismissed for failure to
           state a cause of action.

                                   *    *    *

           Although appellants did not receive an assignment from
           Miller until August 19, 1992, more than two years after the
           effective date of section 8371, they did not acquire greater

7
    42 Pa.C.S. § 8371.



                                       -8-
J-A02045-16


       rights than Miller possessed to pursue a bad faith action.
       See Smith v. Cumberland Group, [ ] 687 A.2d 1167[,
       1172] ([Pa. Super.] 1997) (“Where an assignment is
       effective, the assignee stands in the shoes of the
       assignor[.]”). Since all of the acts alleged by appellants
       “[arose] from the original . . . denial of benefits” and were
       not “independent of [the] initial denial of coverage,” they
       do not constitute separate acts of bad faith. Accordingly,
       since appellants do not allege any separate acts of bad
       faith that occurred on or after the effective date of section
       8731, their statutory bad faith claim is barred.

                               *    *    *

       Initially, as noted, appellants misconstrue appellee’s letter
       of April 2, 1986. It was not merely an initial “refusal to
       pay benefits.” Instead, appellee clearly disclaimed any
       and all obligations and refused all further actions
       with regard to existing or future claims against
       Miller.     Thus, reasonably construed, the letter was a
       refusal to cover, defend, indemnify or otherwise protect
       Miller. Moreover, we reject appellants’ claim that they
       were required to file suit only when “the full extent of
       litigation damages” was known and “the need for
       indemnification” arose. To the contrary, our Court has
       repeatedly held that, for purposes of the statute of
       limitations, a claim accrues when a plaintiff is harmed and
       not when the precise amount or extent of damages is
       determined. Instantly, the alleged harm to Miller (and
       thus appellants as assignees) occurred when
       appellee’s position was made clear by the 1986
       letter and appellee maintained that position by
       subsequently refusing to defend or indemnify Miller.

                               *    *    *

       It is hornbook law that a statute of limitations begins to
       run as soon as the right to institute suit arises.




                                   -9-
J-A02045-16


Id. at 1035, 1039, 1041-42 (some citations and footnotes omitted and

emphases added).8



8
  Appellant’s reliance upon Selective Way Ins. Co. v. Hosp. Grp. Servs.,
Inc., 119 A.3d 1035 (Pa. Super. 2015) (en banc) is unavailing. See
Appellant’s Brief at 18. This Court in Selective addressed the issue of when
a cause of action for a declaratory judgment action filed by an insurance
company accrues, and rejected the denial of coverage as the triggering point
for the statute of limitations.

        A cause of action for a declaratory judgment accrues when
        an actual controversy exists between the parties. Our
        Supreme Court has stated that “[t]he court’s role in the
        declaratory judgment action is to resolve the question of
        coverage to eliminate uncertainty.       If the insurer is
        successful in the declaratory judgment action, it is relieved
        of the continuing obligation to defend.” Thus, according to
        our Supreme Court, if an insurance company is
        uncertain about its duty to defend an insured in a
        third party’s action, it is expected and anticipated
        that the insurance company will bring a declaratory
        judgment action concerning its duty to defend prior
        to denying coverage to an insured. The denial of
        coverage certainly could be when an actual controversy
        arises between an insurance company and an insured,
        warranting the filing of a declaratory judgment action.
        See, e.g., Zourelias [v. Erie Ins. Grp.], 691 A.2d [963,]
        964 [Pa. Super. 1997]; see also 42 Pa.C.S.A. § 7534 (“A
        contract may be construed [under the Declaratory
        Judgments Act] either before or after there has been a
        breach thereof.”). It cannot, however, be the only basis
        for finding an actual controversy exists as Selective
        advocates. Such a holding (that the denial of coverage is
        the point in time when an actual controversy arises) would
        eliminate an insurance company’s ability to bring a
        declaratory judgment action prior to denying or
        terminating the provision of a defense for an insured,
        which is in direct contravention to the above-quoted
        statement by our Supreme Court.




                                   - 10 -
J-A02045-16


     In Rancosky v. Washington Nat. Ins. Co., 130 A.3d 79 (Pa. Super.

2015), citing Adamski, this Court opined:

           Generally, for purposes of applying the statute of
        limitations, a claim accrues when the plaintiff is
        injured. See Adamski v. Allstate Ins. Co., 738 A.2d
        1033, 1042 (Pa. Super. 1999). In the context of an
        insurance claim, a continuing or repeated denial of
        coverage is merely a continuation of the injury caused
        by the initial denial, and does not constitute a new
        injury that triggers the beginning of a new limitations

           Selective’s argument that the statute of limitations for it
        to file a declaratory judgment action regarding its duty to
        indemnify an insured in a third party’s action should not
        commence until it denies coverage fails for the same
        reason.     We agree with Selective that an insurance
        company’s substantive duty to indemnify an insured in a
        third party’s action does not arise until there is a verdict.
        A declaration regarding an insurance company’s duty to
        defend, however, is inextricably intertwined with its duty
        to indemnify because both are based upon a determination
        of whether the insurance policy in question provides
        coverage for the claims made. See Gen. Acc. Ins. Co. of
        Am. [v. Allen], 692 A.2d [1089,] 1095 [Pa. 1997]
        (“Although the duty to defend is separate from and
        broader than the duty to indemnify, both duties flow from
        a determination that the complaint triggers coverage.”);
        Mut. Ben. Ins. Co. v. Haver, [ ] 725 A.2d 743, 747
        ([Pa.] 1999) (“[I]n determining whether a carrier has a
        duty to defend or indemnify an insured we look to the
        complaint filed against the insured.”). If an insurance
        company does not have a duty to defend an insured in a
        third party’s action, it cannot have a duty to indemnify.
        Am. Nat. Prop. & Cas. Companies v. Hearn, 93 A.3d
        880, 884 (Pa. Super. 2014).

Id. at 1048-49 (emphasis in original and some citations omitted and
emphasis added). In the case sub judice, Appellee denied coverage prior to
the filing of the underlying complaint. Appellant, as assignee of the insured,
instituted the action against Appellee. See Barr, 520 A.2d at 487.




                                    - 11 -
J-A02045-16


         period. See id. at 1042 (holding that the insured may not
         separate initial and continuing refusals to provide coverage
         into distinct acts of bad faith).

Id. at 99 (emphases added); see also Jones v. Harleysville Mut. Ins.

Co., 900 A.2d 855, 858 (Pa. Super. 2006) (“trial court correctly recognized

that the applicable limitations period for [the a]ppellants’ bad faith claim is

two years from the date of the first claim denial. See Ash v. Cont'l Ins.

Co., 861 A.2d 979, 984 (Pa. Super. 2004). Adamski v. Allstate Ins. Co.,

738 A.2d 1033, 1040 (Pa. Super. 1999).”

      Instantly, the trial court opined:

            [Appellant] submits that this court erred with respect to
         statute of limitation issues because this case was filed
         within two years of its accrual date, which is within two
         years of the date of the underlying action. This issue is
         without merit.

             The statute of limitations for a claim of professional
         liability is two years. The statute begins to run when the
         professional breaches a duty, and is tolled only when the
         client, despite the exercise of due diligence, does not
         discover the injury or its cause. Assignor knew by letter
         dated March 14, 2007, that [Appellee] Nautilus disclaimed
         coverage.      Assignor assigned his rights for all claims
         against [Appellees] to [Appellant], but the assignment did
         not affect the statute of limitations. [Appellant] did not file
         a writ until June 15, 2009, which was three months after
         the statute of limitations ran on March 14, 2009.[9]


9
   We note that March 14th fell on a Saturday. See 1 Pa.C.S. § 1908
(providing that when last day of any period of time referred to in any statute
falls on Saturday, Sunday, or legal holiday, such day shall be omitted from
computation); In re Nomination Papers of Lahr, 842 A.2d 327, 333 n.6
(Pa. 2004) (“The courts have generally employed section 1908 in
circumstances that require counting forward”)”



                                     - 12 -
J-A02045-16


Trial Ct. Op. at 4-5. We agree no relief is due.

      In the case sub judice, the March 14th denial of coverage letter

provided, inter alia, as follows:

         Re: Company: Nautilus Insurance Company
             Claim Number: 10028900
             Insured: DALLAS MATHIAS JR
             Claimant: Justin Kelly, deceased
             Policy Number: C NC 0000549482
             Date of Loss: 11/02/06
             Policy Period: 05/03/2006 to 05/03/2007

         Dear Mr. Mathias,

         Nautilus Insurance Company is in receipt of the above
         captioned claim . . . on behalf of the estate of Justin Kelly.
         . . . [A]lso included [is] a copy of a draft Complaint that . .
         . may [be] file[d] against you with regards to this incident.
         It is alleged that Justin Kelly, while an employee of Dallas
         Mathias Jr. Tree Service, fell from a bucket truck and
         suffered fatal injuries. This letter will also confirm our
         conversation of March 7, 2007 regarding this incident. For
         reasons listed below, there is no coverage for this
         claim.

                                    *     *      *

         It must be stated immediately that after reviewing the
         policy relative to this loss, it is the position of Nautilus
         Insurance Company that the Commercial General
         Liability policy issued to you does not provide
         coverage for the indemnification or defense of any
         claims being made as a result of this loss. Therefore,
         it is recommended that without delay you notify any and
         all other insurance companies that insure you for the tree
         service.




                                        - 13 -
J-A02045-16


R.R. at 281a.10

      Appellant, as assignee, stands in the shoes of the Assignor.            See

Adamski, 738 A.2d at 1039. Appellee clearly denied coverage for the claim

in its March 14, 2007 letter. Thus, the alleged harm to Assignor and thus

Appellant as assignee occurred when Appellee made its position clear in the

March 14th denial of coverage letter.           See id. at 1041-42; accord

Rancosky, 130 A.3d at 99. The statute of limitations began to run on that

date. See Adamski, 738 A.2d at 1042. Appellant filed the writ on June 15,

2009, more than two years after the denial-of-coverage letter. Therefore,

the claim was barred by the statute of limitations. See id. Accordingly, we

discern no error of law or abuse of discretion by the trial court in finding that

Appellant’s   claim   was   barred   by   the   statute   of   limitations.   See

Kapfhammer, 109 A.3d at 246-47. Accordingly, we affirm the order of the

trial court granting Appellees’ motion for summary judgment.

      Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/27/2016



10
  We note that the denial of coverage letter included a detailed recitation of
the terms of the policy. See R.R. at 281a-87a.



                                     - 14 -
