J-A27010-19

                                  2020 PA Super 103


    SELECTIVE WAY INSURANCE                    :   IN THE SUPERIOR COURT OF
    COMPANY                                    :        PENNSYLVANIA
                                               :
                                               :
                v.                             :
                                               :
                                               :
    MAK SERVICES, INC.;TORNETTA                :
    REALTY CORPORATION, DELVAL                 :
    PROPERTIES ASSOCIATES; THE                 :
    VALLEY FORGE MARKETPLACE                   :
    CONDOMINIUM CORPORATION;                   :
    HENRY DUNN, INC.; OSCAR AND                :
    CHERYL, H/W GORDON                         :
                                               :
                                               :   No. 1289 EDA 2019
    APPEAL OF: MAK SERVICES, INC.              :

                  Appeal from the Order Entered April 16, 2019
      In the Court of Common Pleas of Montgomery County Civil Division at
                            No(s): No. 2014-30190


BEFORE:      BOWES, J., SHOGAN, J., and STRASSBURGER, J.*

OPINION BY BOWES, J.:                                    FILED APRIL 24, 2020

        MAK Services, Inc. (“MAK Services”) appeals from the April 16, 2019

order granting summary judgment to Selective Way Insurance Company

(“Selective Way”). After careful review, we reverse and remand.

        As the trial court adroitly observed, the underlying factual history of this

case is a veritable “comedy of errors” involving insurance coverage issued to

MAK Services by Selective Way. Trial Court Opinion, 5/22/19, at 1. At the

outset, we note that MAK Services is exclusively in the business of snow and


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*   Retired Senior Judge assigned to the Superior Court.
J-A27010-19



ice removal. MAK Services worked with a broker, Henry Dunn, Inc. (“Dunn”),

which obtained liability insurance for its operations. To that end, Selective

Way issued Policy No. S199822500 (the “Policy”) to MAK Services, which was

effective from July 11, 2011, to July 11, 2012.         See Selective Way’s

Complaint, 11/13/14, at Exhibit A.

      The Policy excluded various types of coverage. Among these exclusions

was one titled “Exclusion – Snow and Ice Removal,” which modified the liability

coverage provided by the Policy as follows:

      This insurance does not apply to “bodily injury,” “property
      damage,” or “personal and advertising injury” arising out of snow
      and ice removal activities that are performed for others by the
      insured or by any contractors or subcontractors working on the
      insureds behalf. Snow and Ice Removal includes but is not limited
      to: snow plowing, snow blowing, snow or ice clearing, shoveling
      or salting, by means whether mechanical or by hand.

See Selective Way’s Complaint, 11/13/14, at Exhibit D. It is unclear whether

MAK Services was directly advised of the existence of this exclusion at the

time the Policy was issued, although it appears Dunn was aware of the

exclusion in the policy. See MAK Services’ Motion for Summary Judgment,

10/23/18, at ¶¶ 6-7; Selective Way’s Answer, 11/21/18, at ¶¶ 6-7.

      On or about October 30, 2011, Oscar Gordon slipped and fell on ice while

walking through a parking lot on the premises of the Valley Forge Marketplace

in Norristown, Pennsylvania, which was a client of MAK Services. Mr. Gordon

and his wife (collectively, the “Gordons”) initiated a lawsuit seeking damages

for Mr. Gordon’s resulting injuries and his wife’s loss of consortium, naming


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MAK Services as one of several defendants. See Gordons’ Complaint, 4/9/13,

at ¶¶ 6, 12, 20, 24. In relevant part, the Gordons asserted that MAK Services

had been negligent in removing snow and ice from the subject lot. Selective

Way appointed defense counsel to represent MAK Services regarding the

Gordons’ claims.

       On May 1, 2013, Selective Way contemporaneously sent a reservation

of rights letter1 to MAK Services, which stated the following:

       One of the benefits of your insurance policy from Selection is that
       we will provide you with a legal defense when potentially covered
       claims are made against you. Since this case meets that standard,
       I have referred your file to [a] law firm . . . . They will represent
       you in this case. You should be hearing from that firm shortly.
       Please give them your full cooperation and refrain from discussing
       this loss with anyone other than your attorney or a properly
       identified representative of Selection.

       In addition, please be aware that you always have the right to
       consult an attorney of your choice, at your own expense, to
       discuss this matter or to coordinate your defense with the attorney
       we have retained for you.

       ....

       In the meantime, please be aware that Selective will be handling
       this matter under a reservation of rights. This means that
       Selective reserves all rights reserved to it under applicable law,
       insurance regulations and policy provisions that may become
       relevant as this matter continues to develop. Those rights include,


____________________________________________


1  “A reservation of rights is unilateral, written notice from the insurer to the
policyholder that the insurer may disclaim coverage for one or more claims in
issue based on terms of the insurance policy, legal principles precluding
coverage, violation of policy provisions by the insured, or some combination
of these factors.” American Nat. Property and Cas. Companies v. Hearn,
93 A.3d 880, 887 (Pa.Super. 2014).

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      but are not limited to, the rights to decline coverage for this claim
      and to withdraw assigned defense counsel.

Selective Way’s Motion for Summary Judgment, 11/21/18, at Exhibit C. The

letter did not acknowledge or discuss the snow and ice removal exclusion

contained in the Policy. That same day, defense counsel retained by Selective

Way entered an appearance on behalf of MAK Services. For the next eighteen

months, Selective Way represented MAK Services in all aspects as to its

defense against the Gordons’ civil claims.

      On November 13, 2014, Selective Way filed a complaint seeking a

declaratory judgment against, inter alia, MAK Services.       In pertinent part,

Selective Way averred that MAK Services’ “potential negligence is based solely

upon ice and snow removal activity, and the [Policy] specifically excludes a

defense and indemnity for any damages arising from snow and ice removal

activity . . . .”   Selective Way’s Complaint, 11/13/14, at ¶ 22.       As such,

Selective Way requested a judgment declaring that Selective Way: (1) did not

owe MAK Services a defense in the Gordons’ civil action; (2) did not owe

indemnity to MAK Services for the claims in the Gordons’ civil action; and (3)

may withdraw its defense of MAK Services in the underlying case. Id.

      On June 3, 2015, MAK Services filed an answer with new matter and

counterclaim, that: (1) requested a declaratory judgment that Selective Way

had an ongoing requirement to both defend and indemnify MAK Services with

respect to the Gordons’ civil action; (2) argued that Selective Way should be

estopped from ceasing its representation and indemnification of MAK Services;

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(3) raised a claim against Selective Way sounding in fraud; and (4) asserted

a claim against Selective Way for statutory and common law bad faith. See

MAK Services’ Answers to Complaint with New Matter and Counterclaim,

6/3/15, at ¶¶ 23-169.

      On October 23, 2018, MAK Services filed a motion for summary

judgment, arguing that the language contained in Selective Way’s May 1, 2013

reservation of rights letter was “insufficient to properly preserve the potential

coverage defense of the Snow and Ice Removal exclusion,” and that Selective

Way should be estopped from raising the policy exclusion.         MAK Services’

Motion for Summary Judgment, 10/23/18, at ¶¶ 35-63. On November 21,

2018, Selective Way filed a cross motion for summary judgment, arguing that

the reservation of rights letter was sufficient to preserve the efficacy of the

snow and ice removal exclusion. Selective Way’s Cross Motion for Summary

Judgment, 11/21/18, at ¶¶ 30-55. The trial court held oral argument.

      On April 16, 2019, the trial court entered an order granting Selective

Way’s motion, awarding the declaratory relief requested, and entering

summary judgment in favor of Selective Way. See Order, 4/16/19 (“Selective

Way has no duty to defend or indemnify [MAK Services] for the claims brought

against it by [the Gordons] pursuant to the [Policy] and reservation of rights

letter . . . .”). MAK Services filed a timely notice of appeal. The trial court

ordered MAK Services to file a concise statement of errors pursuant to




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Pa.R.A.P. 1925(b), MAK Services timely complied, and the trial court issued a

Rule 1925(a) opinion.

      MAK Services presents two issues for our consideration:

      1. Did the trial court err as a matter of law in finding that the
      reservation of rights issued by [Selective Way] on May 1, 2013,
      which did not reference the snow and ice removal exclusion in the
      Policy as a potential coverage defense, fully and fairly advised
      [MAK Services] of [Selective Way’s] coverage position?

      2. Did the trial court err as a matter of law in holding that
      [Selective Way] did not waive the coverage defense of the snow
      and ice removal exclusion when it failed to reference that
      exclusion in its May 1, 2013 reservation of rights, raising it only
      for the first time in the November 13, 2014 declaratory judgment
      complaint?

MAK Services’ brief at 2 (excessive capitalization omitted).

      These claims concern the trial court’s grant of summary judgment. “The

question of whether summary judgment is warranted is one of law, and thus

our standard of review is de novo and our scope of review is plenary.” City

of Philadelphia v. Cumberland County Bd. of Assessment Appeals, 81

A.3d 24, 44 (Pa. 2013). We are also mindful of the following principles:

      We may reverse if there has been an error of law or an abuse of
      discretion. . . . We must 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. Furthermore, in evaluating the trial
      court’s decision to enter summary judgment, we focus on the legal
      standard articulated in the summary judgment rule. The rule
      states that where there is no genuine issue of material fact and
      the moving party is entitled to relief as a matter of law, summary
      judgment may be entered. Where the nonmoving party bears the
      burden of proof on an issue, he may not merely rely on his
      pleadings or answers in order to survive summary judgment.
      Failure of a non-moving party to adduce sufficient evidence on an

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J-A27010-19


      issue essential to his case and on which he bears the burden of
      proof establishes the entitlement of the moving party to judgment
      as a matter of law.

Carlino East Brandywine, L.P. v. Brandywine Village Association, 197

A.3d 1189, 1199-1200 (Pa.Super. 2018) (quoting Gubbiotti v. Santey, 52

A.3d 272, 273 (Pa.Super. 2012)).

      Although stated as separate issues, MAK Services is essentially

challenging the sufficiency of Selective Way’s reservation of rights letter, and

thereby its preservation of the snow and ice removal exclusion. As a general

matter, insurers have a broad responsibility to defend and indemnify its

insureds. See Erie Ins. Exchange v. Fidler, 808 A.2d 587, 590 (Pa.Super.

2002) (“As long as a complaint alleges an injury which may be within the

scope of the policy, the insurer must defend its insured until the claim is

confined to a recovery the policy does not cover.”).

      Despite this broad duty, Selective Way argued that it should be

permitted to disclaim coverage based upon the aforecited exclusion and the

language in the reservation of rights letter, and the trial court agreed. See

Trial Court Opinion, 5/22/19, at 7 (“Selective Way should not be estopped

from asserting the snow and ice removal exclusion because it timely and fairly

communicated its coverage position to MAK Services.”).

      In this context, “Pennsylvania counterbalances the insurer’s broad

obligation to defend even claims as to which coverage may not apply by

providing the insurer [with] the option of defending subject to a reservation


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J-A27010-19


of its rights later or simultaneously to contest coverage.” Erie Ins. Exchange

v. Lobenthal, 114 A.3d 832, 836-37 (Pa.Super. 2015). “Where the insurer

assumes the duty to defend, the insurer can simultaneously challenge whether

the claim is covered under the insurance policy, even if the underlying case

settles. An insurer’s defense of the insured, therefore, does not waive the

insurer’s claims that a policy exclusion applies.” Step Plan Services, Inc. v.

Koresko, 12 A.3d 401, 419 (Pa.Super. 2010).

      While an insurer does not automatically waive claims related to policy

exclusions by mounting a defense of an insured, it is still required to provide

timely and sufficient notice of any such reservation of rights to the insured:

      [A] liability insurer will not be estopped [from setting] up the
      defense that the insured’s loss was not covered by the insurance
      policy, notwithstanding the insurer’s participation in the defense
      of an action against the insured, if the insurer gives timely
      notice to the insured that it has not waived the benefit of
      its defense under the policy. However, a reservation of rights
      in this respect, to be effective, must be communicated to the
      insured. It must fairly inform the insured of the insurer’s
      position and must be timely, although delay in giving notice
      will be excused where it is traceable to the insurer’s lack of
      actual or constructive knowledge of the available defense.

Brugnoli v. United Nat. Ins. Co., 426 A.2d 164, 167 (Pa.Super. 1981)

(emphases added). Thus, a reservation must: (1) be submitted in a timely

fashion; and (2) “fairly inform the insured of the insurer’s position” in order

to preserve an insurer’s assertion of policy exclusions once a defense of the

insured has been mounted. Id.




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       We begin by assessing the timeliness of Selective Way’s reservation of

rights letter. Instantly, Selective Way sent the May 1, 2013 reservation letter

to MAK Services within three weeks of the filing of the Gordons’ civil action,

and prior to undertaking any defense of MAK Services in that matter.

       This Court has previously held that a reservation of rights letter is

“timely” when it is sent to an insured within one week of service of a complaint.

See Brugnoli, supra at 168. It is not evident from the record before us when

service of the Gordons’ complaint was actually completed.          However, we

extrapolate from Brugnoli the general principle that a reservation of rights

letter sent close-in-time to the institution of a potentially covered legal action

is “timely” under Pennsylvania law.            But see Lobenthal, supra at 840

(holding that a “reservation of rights letter, sent approximately seven months

after the complaint was filed, was untimely”). With respect to timeliness, the

facts of this case are much more analogous to Brugnoli. As such, it appears

that the reservation of rights letter was timely submitted to MAK Services.2




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2   MAK Services avers that the relevant point of inquiry with respect to
timeliness is when a policy exclusion is actually raised in an attempt to
disclaim coverage. See Appellant’s brief at 31 (“Here, the Snow and Ice
Removal exclusion was not raised until more than eighteen (18) months
after the underlying tort action was commenced.” (emphasis in original)).
However, the holdings in Erie Ins. Exchange v. Lobenthal, 114 A.3d 832,
840 (Pa.Super. 2015), and Brugnoli v. United Nat. Ins. Co., 426 A.2d 164,
167 (Pa.Super. 1981), make clear that this timeliness inquiry focuses upon
when the reservation of rights letter is transmitted to an insured.

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J-A27010-19


      Our analysis does not end there.         In addition to being timely, a

reservation of rights letter must also “fairly inform the insured of the insurer’s

position” to validly preserve defenses to coverage under the policy. Brugnoli,

supra at 168.

      Selective Way’s reservation of rights letter stated that defense against

the Gordons’ civil case constituted a “potentially covered” claim under the

Policy, and informed MAK Services that defense counsel was being appointed.

While the letter stated that MAK Services has a right to obtain private counsel

on its own initiative, it simultaneously instructed MAK Services to refrain from

discussing the case with “anyone other than your attorney or a properly

identified representative of Selective.” Thereafter, the letter indicated that

Selective Way generally reserved all of its rights under “applicable law,

insurance regulations and policy provisions,” including the right to deny

coverage.   However, the letter failed to specifically identify any emergent

coverage issues. Instead, it simply purported to include any and all issues

“that may become relevant as this matter continues to develop.” Selective

Way’s Motion for Summary Judgment, 11/21/18, at Exhibit C.

      Selective Way claims that the language of this letter was sufficient to

reserve its right under Pennsylvania law to disclaim coverage and thereby

preclude estoppel. See Selective Way’s brief at 13-14 (“The straightforward,

unambiguous letter acknowledges [Selective Way’s] duties under the Policy,




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while reserving its right to disclaim coverage pursuant to same.”).             We

disagree.

      Insurance companies have a well-recognized duty to conduct an

appropriately thorough investigation to preserve defenses to coverage:

      When an insurance company or its representatives is notified of
      loss occurring under an indemnity policy, it becomes its duty
      immediately to investigate all the facts in connection with the
      supposed loss as well as any possible defense on the policy. It
      cannot play fast and loose, taking a chance in the hope of winning,
      and, if the results are adverse, take advantage of a defect in the
      policy. The insured loses substantial rights when he surrenders,
      as he must, to the insurance carrier the conduct of the case.

Malley v. American Indemnity Corp., 146 A. 571, 573 (Pa. 1929); see

also Orcutt v. Erie Indemnity Co., 174 A. 625, 627 (Pa.Super. 1934)

(holding an insurance company preserves defenses via a reservation of rights

“[i]f its investigation is conducted with reasonable dispatch and its disclaimer

is made with promptness upon the discovery of the facts”).

      In Malley, our Supreme Court held that an insurance company was

estopped from challenging coverage after it had mounted a full defense of its

insured without undertaking an appropriate investigation beforehand.            Id.

After a final resolution of the underlying civil action took place, the insurance

company attempted to disclaim coverage. Critically, the touchstone in our

High Court’s analysis was whether the insurance company’s belated assertion

of a policy exclusion could disadvantage the insured in the underlying

litigation. Id. (“With a little diligence and within a brief time, the carrier could

have procured the exact knowledge on which it now relies . . . . [B]ut, once

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J-A27010-19


having made its decision, the rights of others in relation thereto cannot be

prejudiced.”).

       In this vein, the line of cases that sprang from Malley focused upon the

prejudice that may result from a delayed investigation and a consequently

tardy assertion of non-coverage. See, e.g., Lewis v. Fidelity & Casualty

Co., 156 A. 73, 74 (Pa. 1931) (holding that an insurance company “cannot

delay its decision and refrain from giving notice to the insured until such time

has elapsed that his rights in relation to the accident are prejudiced or may

become so”). More recently, this Court has distilled Malley and its progeny

for the proposition that “where an insurer fails to clearly communicate a

reservation of rights to an insured, prejudice may be fairly presumed.”

Lobenthal, supra at 839 (emphasis added) (citing Malley, supra at 573).

       While the language in Selective Way’s letter may have sufficiently

apprised MAK Services that future exigencies might affect coverage,3 it

provided no notice whatsoever of the existing coverage issue appearing on

the face of the Policy, i.e., the snow and ice removal exclusion. Any complete

review of the Policy would have immediately revealed the existence of this


____________________________________________


3    This Court has suggested that Malley would be inapplicable to
circumstances where an unforeseen exigency affects coverage. See Basoco
v. Just, 35 A.2d 564, 565 (Pa.Super. 1944) (“The rule would be too harsh if
applied to a case where the facts upon which the disclaimer is properly based
are not, through no fault of the company, discovered until after it is too late
for the company to withdraw without prejudicing the rights of the [insured].”).



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exclusion. Such a revelation which would have vitiated any obligation that

Selective Way had to defend or indemnify MAK Services with equal speed.

Instead, the boilerplate language relied upon by Selective Way obfuscated this

absolute defense to coverage, and caused MAK Services to reach the

reasonable conclusion there was no pressing need to secure back-up counsel.4

Cf. Nichols v. American Cas. Co. of Reading, Pa., 225 A.2d 80, 82 (Pa.

1966) (““[I]f an insurance carrier is contemplating refusing to indemnify it

should advise the insured to secure competent counsel of his choice.”).

       Selective Way correctly observes that Pennsylvania law does not require

an insurance company to list every potential defense to coverage in its

reservation of rights letter.       However, the small body of recent case law

discussing this precise issue suggests that some level of specificity is

necessary. See Lobenthal, supra at 837 (observing a reservation of rights

letter identified a discrete policy exclusion that would preclude coverage);



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4  This Court has held that where an insurance company denies coverage via
a reservation of rights letter sent close-in-time to an allegedly qualifying
incident, it does not waive an applicable policy exclusion that is not included
in the letter. See Nationwide Mut. Ins. Co. v. Nixon, 682 A.2d 1310, 1314
(Pa.Super. 1996) (holding that a reservation of rights letter sent two months
after a potentially qualifying accident adequately reserved the right to raise a
policy exclusion). In relevant part, we concluded that the insured in Nixon
was not prejudiced by the misidentification of the grounds for denial because
it gave adequate notice that coverage was being disclaimed. Id. Nixon is
readily distinguishable from the instant case, as MAK Services never received
adequate notice that its coverage was being denied in the at-issue reservation
of rights letter. To the contrary, that letter stated that Selective Way had
determined that the Policy covered the defense to the Gordons’ civil action.

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Brugnoli, supra at 166 (same).                 Furthermore, the same decisional law

indicates that insurance companies can also choose to send multiple

reservation of rights letters during the evolution of a case as a best practice.

See Lobenthal, supra at 837.             The lack of specificity in Selective Way’s

reservation of rights letter is not determinative, in and of itself. We are not

announcing some new paradigm by which Pennsylvania insurance companies

must prophylactically raise all potential coverage defenses in order to preserve

them. However, the lack of specificity in the letter bespeaks the deficient

investigation carried out by Selective Way.5 Accord Malley, supra at 573.

       As noted above, the snow and ice removal exclusion was evident on the

face of the Policy, and the certified record reveals that Selective Way admitted

____________________________________________


5  The learned Dissent argues that Selective Way “clearly communicated” its
reservation of rights simply by addressing its letter to MAK Services and
referencing MAK Services as the insured party. Dissenting Opinion at 2-3.
We believe that this interpretation of Pennsylvania law takes too narrow of a
view of the responsibilities and obligations owed by insurance companies in
the immediate aftermath of a potentially covered event. Selective Way’s
obligation in this regard extends further than a boilerplate reservation of rights
letter predicated upon a deficient investigation. As discussed above, insurance
companies operating in Pennsylvania have a duty to conduct a reasonable and
timely investigation regarding coverage.           See Malley v. American
Indemnity Corp., 146 A. 571, 573 (Pa. 1929); Orcutt v. Erie Indemnity
Co., 174 A. 625, 627 (Pa.Super. 1934). Moreover, insurance companies also
have to promptly advise their insureds if they are contemplating denying
coverage. See Nichols v. American Cas. Co. of Reading, Pa., 225 A.2d
80, 82 (Pa. 1966). Overall, the Dissent’s interpretation of Lobenthal places
far too little value on the substance of the notice required by Pennsylvania
law. See Brugnoli, supra at 167 (holding a reservation of rights letter must
“fairly inform the insured of the insurer’s position” in order to be effective).




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to having actual knowledge of the exclusion from the outset.6 See Selective

Way’s Answer to MAK Services’ Motion to Summary Judgment, 11/21/18, at

¶ 6 (stating that Selective Way informed Dunn regarding the snow and ice

policy exclusion before the Policy was even issued). Despite such knowledge,

Selective Way waited eighteen months to raise the policy exclusion, and

provided no further intervening notice to MAK Services that it would have to

mount a defense to the Gordons’ civil action on its own.

       With respect to prejudice, our Supreme Court has previously stated that

insurance carriers may be estopped from asserting a policy exclusion where it

has “lulled the insured into a sense of security to his detriment.” Nichols,

supra at 82 (citing New Amsterdam Casualty Co. v. Kelly, 57 F.Supp. 209,

211-12 (E.D.Pa. 1944) (holding that insurance company was “estopped by the

circumstances of the case and its own actions” from raising a policy exclusion

defense after it “accepted its responsibility under the policy” and took

exclusive control of the underlying defense for nine months before asserting

a policy exclusion)). Given Selective Way’s failure to “clearly communicate”

its coverage position and the inherently speculative nature of determining how

the case might have unfolded differently had the insurance company acted



____________________________________________


6 Selective Way characterized the failure to include the snow and ice removal
exclusion in the reservation of rights letter as a “mistake” committed by one
of its adjusters. See N.T. Hearing, 2/25/19, at 4.



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with appropriate diligence, prejudice can be fairly presumed in this instance.7

Accord Lobenthal, supra at 839.

____________________________________________


7  The learned Dissent has asserted that prejudice may not be presumed in
this case. See Dissenting Opinion at 3. Furthermore, the Dissent asserts that
MAK Services cannot establish such prejudice because it cannot identify “lost
evidence or witnesses, or that it would have handled its defense differently.”
Id. From the outset, this inquiry is an “inherently speculative undertaking.”
Lobenthal, supra at 840. However, the Pennsylvania Supreme Court has
clearly stated that “[t]he insured loses substantial rights when he surrenders,
as he must, to the insurance carrier the conduct of the case.” Malley, supra
at 573. As a result of the poor investigation conducted by Selective Way, MAK
Services ceded their defense of the Gordons’ civil action to Selective Way and
declined to obtain separate counsel, or negotiate a settlement with the
Gordons themselves. Had MAK Services been fully and fairly informed, it could
have “[a]t a minimum” declined Selective Way’s empty “offer to defend” and
retained representation to safeguard its own interests. Lobenthal, supra at
839-40 (“Nothing chills one’s zeal for a defense so much as the belief that,
even if her loses, it will cost him nothing . . . with the insurance company
being as much interested in establishing facts which would result in non-
coverage as in establishing facts showing the insured’s non-liability.”). Now,
if Selective Way prevails, MAK Services will be forced into the unenviable
position of having to take on the immediate financial and substantive burdens
of securing counsel for a civil action that is already in medias res. As a result
of the inadequate notice provided by Selective Way, MAK Services was
provided with no reasonable opportunity to prepare for these burdens.

The Dissent’s analysis ignores these foregone opportunities and natural
consequences. See Dissenting Opinion at 3 (“[A]ll the record indicates is that
Selective Way provided free legal representation to MAK Services for 18
months”). Taken to its logical conclusion, the Dissent’s view would heavily
incentivize insurance companies to send such anticipatory reservation of rights
letters to all of its claimants. Our view of this question is less transactional.
In particular, this Court has observed that the “consent of the insured is
necessary if the insurer is to retain control of defense of the action and at the
same time reserve the right to disclaim liability under the policy.” Lobenthal,
supra at 840. (citing Brugnoli v. Untied Nat. Ins. Co., 426 A.2d 164, 168
n.6 (Pa.Super. 1981)). Under the specific circumstances of this case, it is
unclear to us how a party that receives incomplete and misleading information
from the insurance company can be said to have adequately consented to



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       Under the particular facts and circumstances of this case, Selective Way

failed to conduct an adequate investigation following the submission of a claim

by MAK Services. Accord Malley, supra at 573. As a consequence of this

deficient investigation, Selective Way’s reservation of rights letter failed to

“clearly communicate” the extent of the rights being reserved, which resulted

in presumptive prejudice to MAK Services. Accord Lobenthal, supra at 839.

As a result of this prejudice, Selective Way should have been estopped from

asserting this policy exclusion for the first time eighteen months later without

sufficient notice to MAK Services regarding Selective Way’s coverage position.

Accord Malley, supra at 573; see also Nichols, supra at 82; Basoco v.

Just, 35 A.2d 564, 565-66 (Pa.Super. 1944) (holding that an insurance

company was estopped from disclaiming coverage where it learned of facts

supporting the policy exclusion one year prior to asserting it).

       Thus, we hold that the trial court erred as a matter of law in: (1) holding

that Selective Way was not estopped from raising the snow and ice removal

exclusion; and (2) granting summary judgment to Selective Way on the basis

of that policy exclusion. Accordingly, we reverse the order granting summary




____________________________________________


anything. Id. (holding an insured is “entitled to notice” with respect to an
insurance company’s reservation of rights).



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judgment to Selective Way and remand for further proceeding consistent with

this opinion.8

       Order reversed. Case remanded for further proceedings consistent with

this opinion. Jurisdiction relinquished.

       Judge Shogan joins the opinion.

       Judge Strassburger filed a dissenting opinion.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 4/24/20




____________________________________________


8  We make no comment on whether MAK Services will ultimately prevail in its
claims against Selective Way. That question is not before us in this appeal.
However, Selective Way may not disclaim coverage at this late hour in the
litigation under the snow and ice removal exclusion.

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