J-A26019-17


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

STATE AUTO PROPERTY AND                :   IN THE SUPERIOR COURT OF
CASUALTY INSURANCE COMPANY             :        PENNSYLVANIA
                                       :
                                       :
            v.                         :
                                       :
                                       :
JEFFREY MOSER, KATHY MARIE             :
HUFF, ADMIN. OF THE ESTATE OF          :   No. 589 MDA 2017
MELISSA ANN HUFF, DECEASED,            :
ACUMEN CONTRACTING, INC., PETE         :
VITI                                   :
                                       :
                  Appellants           :
                                       :
TAVERNA, INC., TOM KALATHAS,           :
NICK KALATHAS, LASHAY KALATHAS         :
AND NATHANIEL E. WILT

                Appeal from the Order Entered March 1, 2017
   In the Court of Common Pleas of Adams County Civil Division at No(s):
                                14-SU-1175


BEFORE: BOWES, J., OLSON, J., and RANSOM, J.

MEMORANDUM BY OLSON, J.:                             FILED MAY 07, 2018

     Appellants, Acumen Contracting, Inc. (Acumen) and Pete Viti (Viti),

appeal from the order entered on March 1, 2017 granting summary

judgment in favor of State Auto Property and Casualty Insurance Company

(State Auto) in this declaratory judgment action. We reverse.
J-A26019-17



       The relevant facts and procedural history are as follows.1           On

November 21, 2013, Jeffrey Moser (Moser) was operating a truck owned by

Acumen on Fairfield Road in Carroll Valley Borough, Adams County,

Pennsylvania.     At approximately 7:00 p.m., Moser struck Melissa Ann Huff

(Huff) as she was attempting to load a deer carcass into her vehicle. Huff

died from injuries sustained in the accident.

       Moser worked as an independent contractor of Acumen.2 At the time

of the accident, he had completed work for the day but was driving the truck

on a personal errand without permission from Acumen or Viti. Moser used

the Acumen vehicle to perform his work duties and retained it at his

Pennsylvania residence when it was not in use for business purposes.

Moser, however, did not have permission to drive the vehicle. Acumen hired

Coty Head (Head) to drive Moser from the Pennsylvania home they shared

to Acumen jobsites. Head also assisted Moser in his work for Acumen.

       At the time of the accident, Acumen and the truck were insured by a

business auto policy issued by State Auto. That policy had a liability limit of

$1,000,000.00.        Acumen was also covered by a commercial umbrella

insurance policy issued by State Auto providing an additional $1,000,000.00
____________________________________________


1 The parties are in agreement concerning the factual and procedural
background of this matter.

2 Acumen is a Maryland corporation owned by Viti, a Maryland resident. The
truck operated by Moser is registered in Maryland and Acumen conducts its
business in that state.



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J-A26019-17



of coverage at the time of the accident. Neither policy excluded coverage

for punitive damages.

       Huff’s estate commenced an action in Adams County to recover

damages arising out of the November 21, 2013 motor vehicle accident.

Moser, Acumen, and Viti were defendants in that case. State Auto filed this

related declaratory judgment action seeking, among other things, a

determination that it did not owe coverage to Acumen or Viti for punitive

damage claims asserted by Huff’s estate.

       After the close of discovery, State Auto moved for summary judgment,

which the trial court granted. The court held that Acumen and Viti were not

entitled to coverage under the State Auto policies for any punitive damage

claims asserted by Huff’s estate.

       When the trial court refused to reconsider its summary judgment order

prior to the expiration of the appeal period, Acumen and Viti filed a notice of

appeal challenging the court’s determination that State Auto owed no

coverage for the punitive damages claims made against them. The parties

and the trial court have complied with Pa.R.A.P. 1925.3

       Appellants raise the following claims in their brief.

       In that the [trial c]ourt should have found that Maryland law
       governs the interpretation of and obligations under the subject
____________________________________________


3In its Rule 1925(a) opinion, the trial court agrees with Appellants that its
March 1, 2017 summary judgment order was in error and should be vacated.
See Trial Court Opinion, 5/25/17, at 1-2.



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      insurance policy and that the law of Maryland permits coverage
      for punitive damages, the [c]ourt erred in granting [s]ummary
      [j]udgment to [State Auto], to the extent that the [s]ummary
      [j]udgment determined that [Acumen] and [Viti] are not entitled
      to coverage under the applicable [State Auto] polic[ies] for the
      punitive damages claims made against them in this matter?

      Since insurance coverage for punitive damages claims based
      [on] vicarious liability are not against the public policy of
      Pennsylvania, the [trial c]ourt erred in granting [State Auto’s]
      [m]otion for [s]ummary [j]udgment to the extent that the
      [order] determined that [Acumen] and [Viti] are not entitled to
      coverage under the applicable [State Auto] polic[ies] for the
      punitive damages claims made against them in this matter.

Appellants’ Brief at 5-6.

      Appellants argue in their first claim that the trial court erred in refusing

to apply Maryland law, which permits insurance coverage for punitive

damage claims brought against an insured.         See First National Bank of

St. Mary's v. Fidelity & Deposit Co., 389 A.2d 359, 367 (Md. 1978). In

the alternative, Appellants’ second claim contends that summary judgment

was improper, even if Pennsylvania law applies, since the law of this

Commonwealth allows insurance coverage for punitive damages based upon

vicarious, but not direct, liability.   Butterfield v. Giuntoli, 670 A.2d 646,

655 (Pa. Super. 1996), appeal denied, 683 A.2d 875 (Pa. 1996). As these

claims are interrelated, we address them in a single discussion.

      [O]ur standard of review of an order granting summary
      judgment requires us to determine whether the trial court
      abused its discretion or committed an error of law. Our scope of
      review is plenary. In reviewing a trial court's grant of summary
      judgment, we 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. We view the record in the
      light most favorable to the non-moving party, and all doubts as

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J-A26019-17


     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. All doubts as to the existence of
     a genuine issue of a material fact must be resolved against the
     moving party.
                                   ***
     Upon appellate review, we are not bound by the trial court's
     conclusions of law, but may reach our own conclusions.

Criswell v. Atlantic Richfield Co., 115 A.3d 906, 908-909 (Pa. Super.

2015), quoting, Petrina v. Allied Glove Corp., 46 A.3d 795, 797-798

(2012).

     Initially, Appellants assert that the trial court should have applied

Maryland law in adjudicating the substantive rights of the parties. A dispute

concerning the applicable substantive law requires a choice of law analysis.

Wilson v. Transport Ins. Co., 889 A.2d 563, 571 (Pa. Super. 2005).

     In addressing which substantive law to apply, we employ the
     conflict-of-law principles that our [Supreme] Court framed in
     Griffith v. United Air Lines, Inc., 203 A.2d 796 (Pa. 1964). In
     Griffith, our Supreme Court altered its approach in determining
     which substantive law to apply in tort cases. Prior to that
     decision, Pennsylvania followed the lex loci delicti rule, which
     applied the substantive law of the place where the tort was
     committed.       Id. at 801. However, the [Supreme] Court
     abandoned that mechanical approach in favor of a methodology
     that combined the “government interest” analysis and the
     “significant relationship” approach of sections 145 and 146 of the
     Restatement (Second) of Conflicts[.] Id. at 801–06; Troxel v.
     A.I. duPont Inst., 636 A.2d 1179, 1180–1181 (Pa. Super.
     1994).

                                    ***




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     Section 145(2) of the Restatement (Second) of Conflicts sets
     forth the contacts to be considered in applying the analysis
     required under Griffith. They include:


     (a) the place where the injury occurred;

     (b) the place where the conduct causing the injury occurred;

     (c) the domicile, residence, nationality, place of incorporation
     and place of business of the parties; and

     (d) the place where the relationship, if any, between the parties
     is centered.

     Restatement (Second) of Conflict of Laws § 145 (1983).

     We evaluate these four factors mindful of the overarching
     choice-of-law principles enumerated in § 6 of the Restatement
     (Second). Those considerations include the following:

     (a) the needs of the interstate and international systems;

     (b) the relevant policies of the forum;

     (c) the relevant policies of the other interested states and the
     relevant interests of those states in determination of a particular
     issue;

     (d) the protection of justified expectations;

     (e) the basic policies underlying the particular field of law;

     (f) certainty, predictability and uniformity of result; and

     (g) ease in the determination and application of the law to be
     applied.

     Id. § 6.

     Moreover, [] § 146 of the Restatement (Second) establishes a
     presumption in personal injury cases that favors the application
     of the law of the state where the injury occurred unless another
     state has a more significant relationship to the occurrence and
     the parties. That section provides:

       In an action for a personal injury, the local law of the state
       where the injury occurred determines the rights and

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         liabilities of the parties, unless, with respect to the
         particular issue, some other state has a more significant
         relationship under the principles stated in § 6 to the
         occurrence and the parties, in which event the local law of
         the other state will be applied.

       Id. § 146.

       The first step in our analysis is to decide whether there is a true
       conflict[.] Cipolla v. Shaposka, 267 A.2d 854, 855–856 (Pa.
       1970). A true conflict occurs where an analysis of the policies
       underlying each of the conflicting laws reveals that, in each case,
       application of the respective state's law would further its
       corresponding policy. Id. at 855. If a true conflict exists, we
       then proceed to determine which jurisdiction has the greater
       interests, considering the qualitative contacts of the states, the
       parties and the controversy. Cipolla, supra at 856.

Marks v. Redner’s Warehouse Markets, 136 A.3d 984, 987-988 (Pa.

Super. 2016) (footnotes and parallel citations omitted).

       We first consider whether a true conflict exists between Pennsylvania

and Maryland law.4 Maryland law holds that insurance coverage for punitive

____________________________________________


4 The central question in State Auto’s declaratory judgment action revolves
around the scope of the insurer’s coverage obligation towards its insureds,
Acumen and Viti. This issue implicates a contract law choice of law analysis,
rather than a tort law choice of law analysis.             See McDonald v.
Whitewater Challenges, Inc., 116 A.3d 99, 105-111 (Pa. Super. 2015)
(“in a contract action involving an underlying tort and in which an insurance
policy is at issue, the court will apply a contract law – and not a tort law –
choice of law framework”). For choice of law purposes, however, the
analysis is essentially the same for contract and tort actions and focuses on
the significance of the state contacts and the respective interests of the
competing states. Our prior cases agree that the flexible choice of law
approach adopted in Griffith, which looks at the significance of state
contacts, policies, and interests underlying a particular issue, governs choice
of law determinations in both contract and tort law cases. See Nationwide
Mut. Ins. Co. v Walter, 434 A.2d 164, 136-137 (Pa. Super. 1981) (flexible
(Footnote Continued Next Page)


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J-A26019-17


damage claims, whether arising from direct or vicarious liability, is not a

violation of the public policy of Maryland. See First National Bank of St.,

389 A.2d at 367. Under Pennsylvania law, however, insurance coverage for

punitive damages is limited to claims arising from vicarious liability;

coverage for punitive damage claims arising from direct liability is forbidden

as against public policy. See Butterfield, 670 A.2d at 655.          Huff’s estate

asserted punitive damage claims against Acumen and Viti on the basis of

both direct and vicarious liability.      Therefore, because application of either

Maryland or Pennsylvania law would further the respective states’ divergent

policies, a true conflict exists.

       “Having found a true conflict of law, we next [decide] which state has

the most significant relationship to the parties and the occurrence in order to

determine which jurisdiction's substantive law applies.”      Marks, 136 A.3d at

989.   The relevant inquiry is “the extent to which one state rather than

another has demonstrated, by reason of its policies and their connection and


(Footnote Continued) _______________________

conflicts methodology adopted in Griffith will apply in contract actions)
(quotation omitted); McCabe v. Prudential Prop. And Cas. Ins. Co., 514
A.2d 582, 586 (Pa. Super. 1986) (interest analysis applies in contract action
to determine coverage under automobile insurance policy); McDonald, 116
A.3d at 105-111 (considering which state, New York or Pennsylvania, had
the greatest interest in application of its laws based upon the policies and
interests underlying the particular issue before the court). Thus, whether
one views this matter as a “tort” case or a “contract” case, the choice of
law analysis considers the same factors as the test originally announced in
Griffith.



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relevance to the matter in dispute, a priority of interest in the application of

its rule of law.” Id.

       We briefly review the case law relevant to this question.     Griffith is

the landmark case in which the Pennsylvania Supreme Court abolished the

conflicts rule of lex loci delecti (the location of the accident) and adopted an

interest/contacts analysis. Griffith involved a plane crash that occurred in

Colorado. The Court, in choosing which state law to apply, observed that

the location of the plane crash was a mere fortuity and that the law of the

state with the greatest interest should apply. Hence, the Court adopted the

more flexible approach set forth in the Restatement (Second) of Conflicts

and detailed above.

       Years later, this Court held in Walter that the interest/contacts

analysis formulated in Griffith should apply in contract cases. See Walter,

434 A.2d at 167. Walter involved a New Jersey resident who owned a car

registered in New Jersey and insured under a New Jersey policy to satisfy

New Jersey’s vehicular insurance requirements. After finding no success in

selling the vehicle from his home, the New Jersey resident took the car to a

used    car   lot   in   Pennsylvania   and   entered   a   consignment    sale

arrangement. The New Jersey resident signed his title over in blank and

gave his registration card to the dealer. After several months, a potential

buyer took the car for a test drive and sustained injuries in a collision. At

issue in the case was the enforceability of a policy exclusion for sales


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agencies (i.e. a “garageman” exclusion), which Pennsylvania law allowed but

New Jersey law forbid.

      This Court held that New Jersey law applied because that state had the

most significant contacts with the insurance policy transaction. Id.       We

reasoned that the policy was issued in New Jersey, to a New Jersey resident,

and for the purpose of satisfying New Jersey’s motor vehicle insurance

requirements. Id. at 167-168. We further explained that the New Jersey

resident had the right to expect that his policy would conform to New Jersey

law (which, in fact, it did not since the policy included an exclusion that New

Jersey law did not permit) and that New Jersey law would apply to its

interpretation. Id. at 168 (“No matter where [the New Jersey resident]

drove his car or gave consent to others to operate his vehicle, he had the

right to expect that his policy conformed to New Jersey law and that the

laws of New Jersey would apply in interpreting the policy. Pennsylvania had

no contact with the transaction involving the insurance policy.     It was by

mere happenstance that the automobile was involved in an accident while

located in Pennsylvania.”).    We observed that Pennsylvania had only a

diminished interest in the construction of the policy since it had no contact




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with the policy transaction and the location of the accident was a mere

happenstance.5 Id.

       McCabe is another case that considered issues similar to those

presently before us.        There, a Connecticut resident was operating his

Connecticut-registered and insured car in Pennsylvania when he struck a

pedestrian in Pennsylvania. In the ensuing litigation, a dispute arose as to




____________________________________________


5 We note some reservation about the thoroughness of our decision in
Walter. Our opinion in that case did not consider that the New Jersey
resident relocated his car to Pennsylvania on a relatively permanent basis so
that it could be sold. We also did not consider the transfer of a blank title
and registration card to the Pennsylvania car dealer. Given these factors,
the operation of the vehicle within Pennsylvania was virtually inevitable, so
an accident was readily foreseeable. Walter’s observation that the location
of the accident was a mere fortuity is not entirely supported by the facts.

Here, too, the issue of nearly permanent relocation of a non-Pennsylvania
registered and insured vehicle is present. While the facts show that the
vehicle at issue was registered in Maryland, owned by a Maryland
corporation, and insured by a policy issued in Maryland, the record also
establishes that the vehicle owner permitted essentially permanent storage
in Pennsylvania and regular use by Pennsylvania residents. Under these
circumstances, from which we may infer the inevitability of frequent
Pennsylvania travel and the related possibility of a motor vehicle accident
within Pennsylvania, Maryland would seem to have a diminished interest in
applying its public policy on insurance coverage and Appellants’ reliance on
Maryland insurance law would be subject to question. Nevertheless, we are
bound by Walter’s holding that the state of issuance possesses the most
vital contacts because an insured has the right to expect that the laws of the
issuing state will apply in interpreting the policy See State Farm Fire &
Cas. Co. v. Craley, 844 A.2d 573, 575 (Pa. Super. 2004) (“[W]e are bound
by decisions of other panels of this Court until an en banc panel of this
Court, the legislature, or the Supreme Court decides otherwise.”).



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whether Connecticut or Pennsylvania no fault insurance applied. We held

that, based on the analysis in Walter, Connecticut law should apply.6

       Because Maryland is the state of issuance for the applicable insurance

policies, we hold that Maryland law applies for purposes of ascertaining the

rights of the parties in this declaratory judgment action. See Walter supra

and McCabe supra.           Moreover, since Maryland law holds that insurance

coverage for punitive damages arising from both vicarious and direct liability

does not offend public policy, Appellants were entitled to a declaration that

coverage for punitive damages was available to them in this action. Thus,

the trial court erred in granting summary judgment in favor of State Auto.

       Judgment reversed. Jurisdiction relinquished.




Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 5/7/2018



____________________________________________


6 McCabe, unlike Walter and the present case, did not present issues of
permanent relocation of a vehicle to Pennsylvania.




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