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                       :
                                         :
APPEAL OF: MAK SERVICES, INC.            :      No. 1289 EDA 2019

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

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

DISSENTING OPINION BY STRASSBURGER, J.:                FILED APRIL 24, 2020

      In reversing the order granting summary judgment, the Majority

concludes that Selective Way should have been estopped from asserting the

snow and ice removal exclusion because failing to communicate clearly

notice of the exclusion in its reservation of rights letter indicated a deficient

investigation on Selective Way’s part, thereby presumptively prejudicing

MAK Services. Because I believe that prejudice must be proven in this case,

I respectfully dissent.

      In finding prejudice presumed, the Majority relies on this Court’s

decision in Erie Ins. Exchange v. Lobenthal, 114 A.3d 832 (Pa. Super.

2015). See Majority at 12-16. In Lobenthal, a complaint was filed in June




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

2011 against Lobenthal.    Erie insured Lobenthal by virtue of her being a

member of her parent’s (the named insured’s) household. Erie had sent a

reservation of rights letter to the named insureds prior to the filing of the

complaint.     In February 2012, over three months after preliminary

objections were ruled upon and the only remaining claim against Lobenthal

was not covered pursuant to a policy exclusion, Erie sent a second

reservation of rights letter to the named insureds, referencing the applicable

exclusion. Neither of Erie’s letters was addressed to Lobenthal or mentioned

Lobenthal in its text.   As such, this Court concluded that Erie had only

reserved rights as to the named insureds because it did not specifically and

directly communicate the reservation of rights to Lobenthal.       While the

February 2012 letter was not sent to Lobenthal, this Court also held that Erie

was estopped from relying on the exclusion because the letter was untimely.

In response to Erie’s argument that Lobenthal had failed to establish

prejudice, this Court noted that “where an insurer fails to clearly

communicate reservation of rights to an insured, prejudice may be fairly

presumed[.]”   114 A.3d at 839.    In other words, prejudice was presumed

because Erie had never communicated its reservation of rights to Lobenthal.

      I find the instant case distinguishable.    The failure to communicate

clearly the reservation of rights in Lobenthal was based on Erie’s failure to

address the reservation of rights letter specifically to Lobenthal or to name

her therein.   That is not the case here.        Selective Way addressed its


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reservation of rights letter to MAK Services and specifically referenced MAK

Services as the insured party therein. Thus, I would conclude that Selective

Way clearly communicated its reservation of rights to MAK Services, and

there is no presumption of prejudice here.

      Accordingly, in order to estop Selective Way from asserting the

exclusion, MAK Services must have proven prejudice.         In an alternative

analysis footnote, the Majority concludes that MAK Services has proven

prejudice because “this Court has identified an insured’s surrender of his

legal defense to an insurance company as a critical prejudicial factor. See []

Lobenthal, 114 A.3d [at] 840 [] (‘Nothing chills one’s zeal for a defense so

much as the belief that, even if he loses, it will cost him nothing.’).”

Majority at 15 n.6.

      In the instant case, MAK Services has not claimed lost evidence or

witnesses, or that it would have handled its defense differently. Rather, all

the record indicates is that Selective Way provided free legal representation

to MAK Services for 18 months. That does not establish prejudice.

      Accordingly, because Selective Way timely and clearly communicated

its reservation of rights to MAK Services, and because MAK Services has

failed to prove prejudice sufficient to estop Selective Way from asserting the

snow and ice removal exclusion, I would affirm the order granting summary

judgment.




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