J-A12013-19

                             2019 PA Super 213



NATIONWIDE MUTUAL INSURANCE                      IN THE SUPERIOR COURT
COMPANY,                                                   OF
                                                      PENNSYLVANIA
                         Appellee

                    v.

AUGUST W. ARNOLD, JON PUSHINSKY,
ESQUIRE, AND CONSTRUCTION
METHODS AND COORDINATION, INC.
D/B/A CMC ENGINEERING, INC.,

                         Appellees                 No. 1207 WDA 2018


                Appeal from the Order Entered August 6, 2018
              In the Court of Common Pleas of Allegheny County
                     Civil Division at No(s): GD-17-2937


NATIONWIDE MUTUAL INSURANCE                      IN THE SUPERIOR COURT
COMPANY,                                                   OF
                                                      PENNSYLVANIA
                         Appellant

                    v.

AUGUST W. ARNOLD, JON PUSHINSKY,
ESQUIRE, AND CONSTRUCTION
METHODS AND COORDINATION, INC.
D/B/A CMC ENGINEERING, INC.,

                         Appellants                No. 1208 WDA 2018


               Appeal from the Order Entered October 11, 2018
              In the Court of Common Pleas of Allegheny County
                     Civil Division at No(s): GD-17-2937


BEFORE: BENDER, P.J.E., DUBOW, J., and FORD ELLIOTT, P.J.E.

OPINION BY BENDER, P.J.E.:                           FILED JULY 11, 2019
J-A12013-19



        Appellant, Nationwide Mutual Insurance Company (“Nationwide”),

appeals from the trial court’s orders denying its motion for summary judgment

in this declaratory judgment action. After careful review, we affirm in part

and reverse in part the October 11, 2018 order underlying the appeal at docket

number 1208 WDA 2018, and quash the appeal at docket number 1207 WDA

2018.

        The trial court summarized the underlying facts of this case as follows:
        Nationwide insured [Appellee, August W. Arnold,] under its
        Personal Umbrella Policy No. 54 73 PU 434125 [(hereinafter
        “Umbrella Policy”),] with an effective date of May 11, 2009.
        Nationwide seeks a determination of its[] obligation to
        defend/indemnify Arnold in a separate lawsuit brought by CMC
        Engineering, Inc. (hereinafter “CMC”) against Arnold, docketed at
        CMC Engineering[,] Inc. v. … Arnold and Jon Pushinsky,
        Esquire, at GD-17-002106 (hereinafter “CMC Action” … )[.]

        The CMC Action [arose] following the unsuccessful prosecution of
        a [q]ui [t]am [a]ction on behalf of the United States by Arnold
        against CMC and others.[1] Arnold acted as the [relator] for the
____________________________________________


1Arnold brought the qui tam action pursuant to the False Claims Act (“FCA”),
31 U.S.C. § 3729 et seq. By way of background, the United States Supreme
Court recently explained:
        [The FCA] imposes civil liability on “any person” who “knowingly
        presents, or causes to be presented, a false or fraudulent claim
        for payment or approval” to the Government or to certain third
        parties acting on the Government’s behalf. 31 U.S.C. §§ 3729(a),
        (b)(2). Section 3730 authorizes two types of actions: First, the
        Attorney General, who “diligently shall investigate a violation
        under section 3729,” may bring a civil action against the alleged
        false claimant. § 3730(a). Second, a private person, known as a
        relator, may bring a qui tam civil action “for the person and for
        the United States Government” against the alleged false claimant,
        “in the name of the Government.” § 3730(b).



                                           -2-
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       [q]ui [t]am [a]ction that concerned the use of federal highway
       funds passing through PennDOT, Arnold’s employer, to companies
       such as CMC.[2] In the CMC [A]ction, CMC filed suit against Arnold
       and … [Jon] Pushinsky, Esquire…[,] for violation of the Dragonetti
       Act,[3] Abuse of Process, and Intentional Interference of
       Contractual Relations. [] Pushinsky represented Arnold in the

____________________________________________


       If a relator initiates the action, he must deliver a copy of the
       complaint and supporting evidence to the Government, which
       then has 60 days to intervene in the action. §§ 3730(b)(2), (4).
       During this time, the complaint remains sealed. § 3730(b)(2). If
       the Government intervenes, it assumes primary responsibility for
       prosecuting the action, though the relator may continue to
       participate. § 3730(c). Otherwise, the relator has the right to
       pursue the action. §§ 3730(b)(4), (c)(3). Even if it does not
       intervene, the Government is entitled to be served with all
       pleadings upon request and may intervene at any time with good
       cause. § 3730(c)(3). The relator receives a share of any proceeds
       from the action—generally 15 to 25 percent if the Government
       intervenes, and 25 to 30 percent if it does not—plus attorney’s
       fees and costs.

Cochise Consultancy, Inc. v. United States ex rel. Hunt, 139 S.Ct. 1507,
1510 (2019).
2 According to CMC, “[d]uring the times relevant to the [q]ui [t]am [a]ction,
CMC held contracts with [PennDOT] to provide certain services which included
inspection services with regard to highway construction projects.” See CMC’s
Complaint at ¶ 13 (attached as Exhibit B to Nationwide’s Complaint, 6/8/16).
In its complaint, CMC alleged that “[t]he contracts which [it] held with
[PennDOT] included contracts under which … CMC provided services to
[PennDOT] on highway construction projects funded, in whole or in part, by
the Federal Highway Administration.” Id. at ¶ 14.

3 “[A]llegations of malicious prosecution invoke Pennsylvania’s statutory law
in the form of the wrongful use of civil proceedings statute or ‘Dragonetti Act.’
This Court has described wrongful use of civil proceedings as a tort arising
when a person institutes civil proceedings with a malicious motive and lacking
probable cause.” See Freundlich & Littman, LLC v. Feierstein, 157 A.3d
526, 532 (Pa. Super. 2017) (citations, brackets, and some quotation marks
omitted).



                                           -3-
J-A12013-19


        [q]ui [t]am action against CMC … in the United States District
        Court for the Western District of Pennsylvania.

        Nationwide is now defending Arnold in the CMC Action subject to
        a Reservation of Rights letter. It seeks relief from its[] obligation
        to defend and indemnify Arnold in that CMC Action pursuant to
        the “business pursuits” exclusion contained in the policy issued to
        Arnold.

Pa.R.A.P. 1925(a) Opinion (“Rule 1925(a) Op.”), 12/12/2018, at 1-2.

        To obtain such relief, Nationwide filed a declaratory judgment complaint

on June 8, 2016, seeking a declaration that it has no duty to defend and/or

indemnify Arnold in the CMC Action.              Subsequently, on July 14, 2017,

Nationwide filed a motion for summary judgment, asserting that the ‘business

pursuits’ exclusion in Arnold’s Umbrella Policy excludes coverage for the

lawsuit brought against Arnold by CMC.            Arnold and Pushinsky each filed

responses, in which they both requested that Nationwide’s motion be denied.

        On July 23, 2018, the trial court entered a confusing, contradictory

order, in which it granted Nationwide’s motion for summary judgment but

declared that Nationwide has a duty to defend and/or indemnify Arnold based

on the Umbrella Policy.4         In other words, despite stating that it granted

____________________________________________



4   Specifically, the order stated the following, in pertinent part:
        [U]pon consideration of the motion of [Nationwide] for summary
        judgement [sic] and the responses of the parties thereto, having
        found that there remain no genuine issues of material fact with
        respect to the coverage of … Nationwide’s Umbrella Policy issued
        to … Arnold, it is hereby ORDERED that [Nationwide’s] motion is
        GRANTED.



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J-A12013-19



Nationwide’s motion, it actually denied Nationwide the relief it requested. In

an accompanying memorandum, the trial court explained that the ‘business

pursuits’ exclusion did not apply and, as a result, Nationwide continued to

have a duty to defend Arnold in the CMC Action. See Trial Court Memorandum

(“TCM”), 7/23/2018, at 8. Further, it stated that, because Nationwide has a

duty to defend, Nationwide also has a duty to indemnify. Id. Thereafter, on

August 6, 2018, for reasons that are unclear to us, the trial court entered an

order identical to its July 23, 2018 order. See Trial Court Order, 8/6/2018.

       On August 17, 2018, Nationwide filed separate, timely notices of appeal

from both of these orders.5 The trial court directed Nationwide to file a concise

statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b)

on October 2, 2018.           On October 11, 2018, apparently realizing the

contradiction in its earlier orders disposing of Nationwide’s motion for

summary judgment, the trial court entered an amended order. Therein, the

trial court stated that it was amending and correcting its July 23, 2018 order

to reflect that Nationwide’s summary judgment motion was denied, but

____________________________________________


       This court finds that Nationwide … has a duty to defend and/or
       indemnify … Arnold based on … Nationwide’s Umbrella Policy … for
       the claims made in the underlying [CMC Action].
Trial Court Order, 7/23/2018.

5 On September 20, 2018, this Court consolidated these appeals sua sponte.
However, because the August 6, 2018 order is duplicative of the July 23, 2018
order, we quash the appeal taken from the August 6, 2018 order and docketed
at 1207 WDA 2018.



                                           -5-
J-A12013-19



reiterating its determination that Nationwide has a duty to defend and/or

indemnify Arnold in the CMC Action under the Umbrella Policy. See Trial Court

Amended Order, 10/11/2018.6 On October 19, 2018, Nationwide filed its Rule

1925(b) statement. The trial court then issued its Rule 1925(a) opinion.

       Presently, Nationwide raises three issues for our review:
       1. Did the trial court err[] by failing to grant [Nationwide’s] motion
       for summary judgment and by failing to enter an order declaring
       that Nationwide had no duty to further defend and/or indemnify
       [Arnold] pursuant to [the Umbrella Policy]?

       2. Did the trial court err by incorrectly applying the two-prong
       standard for application of the ‘business pursuits’ exclusion as
       enunciated in White v. Keystone [Ins. Co., 775 A.2d 812 (Pa.
       Super. 2001),] by examining those prongs as to … Arnold’s status
       as a [q]ui [t]am litigant, rather than analyzing the prongs of the

____________________________________________


6 We note that “a court has inherent power to amend its records, to correct
mistakes of the clerk or other officer of the court, inadvertencies of counsel,
or supply defects or omissions in the record at any time.” Mfrs. and Traders
Trust Co. v. Greenville Gastroenterology, SC, 108 A.3d 913, 921 (Pa.
Super. 2015) (internal quotation marks and citations omitted). “[A] major
substantive change, such as the total withdrawal of an order relative to a
motion of record[,] does not constitute a corrective order within the inherent
powers of the trial court or the court’s statutory authority. Absent a specific
rule or statute, the only exception is to correct obvious technical mistakes
(e.g., wrong dates) but no substantive changes can be made.” Id. (internal
quotations marks and citations omitted). Here, the trial court’s stating that it
granted Nationwide’s summary judgment motion was an obvious error where
it explicitly provided in the same order that Nationwide has a duty to defend
and/or indemnify Arnold. Further, the trial court’s amended order did not
change the substance of its ruling, i.e., that Nationwide has a duty to defend
and/or indemnify Arnold in the CMC Action. Thus, we conclude that the trial
court had the power to make this correction. Accordingly, given the unique
circumstances of this particular case and in the interest of judicial economy
and a clear record, we will consider the appeal docketed at 1208 WDA 2018
to be from the corrected October 11, 2018 order. See Pa.R.A.P. 105(a)
(“These rules shall be liberally construed to secure the just, speedy and
inexpensive determination of every matter to which they are applicable.”).

                                           -6-
J-A12013-19


       test [as] to … Arnold’s employment at PennDOT, a defined
       ‘business’ pursuant to the terms of the Nationwide policy?

       3. Did the trial court err by ordering that [Nationwide] had the
       duty to indemnify [Arnold] in the underlying lawsuit when ordering
       indemnification is legally premature?

Nationwide’s Brief at 7-8 (unnecessary capitalization omitted).

       At the outset — given that Nationwide appeals from an order denying

its motion for summary judgment and appears to be interlocutory — we

address, briefly, the basis for our jurisdiction.         See Good v. Frankie &

Eddie’s Hanover Inn, LLP, 171 A.3d 792, 794 n.1 (Pa. Super. 2017) (“[A]n

order denying summary judgment is ordinarily a non-appealable interlocutory

order.”) (citation omitted). Our Supreme Court has explained:
       Generally speaking, appellate courts have jurisdiction to entertain
       appeals from final orders entered at the trial court level.
       Ordinarily, a final order disposes of all claims and of all parties.
       Pa.R.A.P. 341(b)(1). However, Pa.R.A.P. 311(a)(8) states that an
       “appeal may be taken as of right and without reference to
       Pa.R.A.P. 341(c)[7] from ... [a]n order that is made final or
       appealable by statute or general rule, even though the order does
       not dispose of all claims and of all parties.” Importantly, Section
       7532 of the [Declaratory Judgment Act] provides that courts of
       record have the power to declare the rights, status, and other
       legal relations and that “such declarations shall have the force and
       effect of a final judgment or decree.” 42 Pa.C.S. § 7532.

Pa. Manufacturers’ Assoc. Ins. Co. v. Johnson Matthey, Inc., 188 A.3d

396, 399 (Pa. 2018) (some internal citations omitted). Within the context of

declaratory     judgment      actions,    the    Court   has   “provided   a   rather
____________________________________________


7 See Pa.R.A.P. 341(c) (providing that a trial court “may enter a final order as
to one or more but fewer than all of the claims and parties only upon an
express determination that an immediate appeal would facilitate resolution of
the entire case,” and that “[s]uch an order becomes appealable when
entered”).

                                           -7-
J-A12013-19



straightforward two-part test for appellate courts to apply when considering

whether an order declaring the rights of parties is final and appealable: (1)

what is the effect of the lower court’s decision on the scope of the litigation;

and (2) what practical effect does the court’s decision have on the ultimate

outcome of the case.” Id. (citation omitted). That is to say, “[i]f the order in

question merely narrows the scope of the litigation and does not resolve the

entirety of the parties’ eligibility for declaratory relief, then the order is

interlocutory and not immediately appealable.” Id. at 400 (citation omitted).

      Here, Nationwide appealed from an order denying, in effect, its claim for

declaratory relief. The trial court’s order resolves the entirety of the parties’

eligibility for declaratory relief, as the trial court determined therein that

Nationwide has a duty to defend and/or indemnify Arnold in the CMC Action.

Thus, the order is appealable at this time. We therefore proceed to the merits.

      Before examining Nationwide’s issues, we acknowledge our standard of

review for an order disposing of a motion for summary judgment:
      Our scope of review … is plenary. [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. 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.

      Motions for summary judgment necessarily and directly implicate
      the plaintiff’s proof of the elements of [its] cause of action.
      Summary judgment is proper “if, after the completion of discovery
      relevant to the motion, including the production of expert reports,
      an adverse party who will bear the burden of proof at trial has

                                      -8-
J-A12013-19


      failed to produce evidence of facts essential to the cause of action
      or defense which in a jury trial would require the issues to be
      submitted to a jury.” Pa.R.C.P. 1035.2. Thus, a record that
      supports summary judgment will either (1) show the material
      facts are undisputed or (2) contain insufficient evidence of facts
      to make out a prima facie cause of action or defense and,
      therefore, there is no issue to be submitted to the jury. Upon
      appellate review, we are not bound by the trial court’s conclusions
      of law, but may reach our own conclusions. The appellate [c]ourt
      may disturb the trial court’s order only upon an error of law or an
      abuse of discretion.

Nat’l Cas. Co. v. Kinney, 90 A.3d 747, 752-53 (Pa. Super. 2014) (some

internal citations, quotation marks, and original brackets omitted).

      We address Nationwide’s first and second issues together. Nationwide

argues that the trial court erred in failing to find that the ‘business pursuits’

exclusion in the Umbrella Policy applied to preclude coverage for Arnold with

respect to the CMC Action.     It advances that “this [e]xclusion is triggered

because the litigation and [Arnold’s] status as [a] [r]elator ‘arises out of’ his

employment with PennDOT, which was his business pursuit.” Nationwide’s

Brief at 48-49. As a result, Nationwide says the trial court should have granted

summary judgment in its favor.

      This Court has previously stated that “the interpretation of an insurance

policy is a matter of law properly resolved in a declaratory judgment action.”

Erie Ins. Exchange v. Muff, 851 A.2d 919, 925 (Pa. Super. 2004). Further,
      [a]n insurer’s duty to defend is a distinct obligation, different from
      and broader than its duty to indemnify. An insured has purchased
      not only the insurer’s duty to indemnify successful claims which
      fall within the policy’s coverage, but also protection against those
      groundless, false, or fraudulent claims regardless of the insurer’s
      ultimate liability to pay. Not all claims asserted against an
      insured, however, activate the insurer’s duty to defend.


                                      -9-
J-A12013-19


      The insurer’s obligation to defend is fixed solely by the allegations
      in the underlying complaint. It is not the actual details of the
      injury, but the nature of the claim which determines whether the
      insurer is required to defend. The duty to defend is limited to only
      those claims covered by the policy. The insurer is obligated to
      defend if the factual allegations of the complaint on its face
      comprehend an injury which is actually or potentially within the
      scope of the policy.

         Thus, the insurer owes a duty to defend if the complaint
         against the insured alleges facts which would bring the claim
         within the policy’s coverage if they were true. It does not
         matter if in reality the facts are completely groundless,
         false, or fraudulent. It is the face of the complaint and not
         the truth of the facts alleged therein which determines
         whether there is a duty to defend.

Id. at 925-26 (emphasis and citations omitted). We also observe:
      An insurer who refuses to defend its insured from the outset does
      so at its peril, because the duty to defend remains with the insurer
      until it is clear the claim has been narrowed to one beyond the
      terms of the policy. An insurer who disclaims its duty to defend
      based on a policy exclusion bears the burden of proving the
      applicability of the exclusion.

Id. at 926 (citations omitted).

      Because Nationwide’s duty to defend is dependent on the allegations set

forth in the underlying complaint, we look to the averments made by CMC in

the CMC Action. In its complaint, CMC asserted that Arnold and Pushinsky

made allegations against CMC in the qui tam action that were false, and that

Arnold and Pushinsky either: (a) knew that these allegations were false, (b)

did not conduct a proper investigation that would allow them to determine

whether the allegations were true before they made them, or (c) possessed

information which was sufficient to allow them to know that such allegations

were not true and were not supported.         See CMC’s Complaint at ¶ 18.


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J-A12013-19



According to CMC, Arnold claimed in the qui tam action that, inter alia, CMC

overcharged PennDOT “for services performed by individuals, on behalf of and

for [CMC], who did not possess the necessary credentials or certificates for

the rates of pay charged by [CMC].” Id. at ¶ 19(d). CMC claimed that Arnold

and Pushinsky “made their assertions of overbilling by CMC based upon …

Arnold’s personal interpretation of contract requirements[,]” but stated that

“Arnold’s position with [PennDOT] did not involve [his] making the

interpretation of the requirements that applied to the positions or billing

classifications or billing rates for which CMC had submitted [certain

individuals] to [PennDOT] for approval.” Id. at ¶¶ 25, 27. Moreover, CMC

said that the PennDOT officials who were actually responsible for these tasks

had given CMC approval. Id. at ¶¶ 31-32. CMC advanced that Arnold filed

and pursued the qui tam action based on a “personal desire” to prove “he was

the only person who had made a proper interpretation of the contract

requirements and to prove that [PennDOT] officials … were incorrect” in their

interpretation, as well as “to secure personal financial gain by receiving a

share o[f] any payment CMC might have been forced to pay to end its

involvement in the [q]ui [t]am [a]ction….” Id. at ¶¶ 75, 76. Despite their

assertions, CMC alleged that Arnold and Pushinsky “lacked information that

CMC made any claim for payment that was false or fraudulent both at the time

[they] made their filings in the [q]ui [t]am [a]ction and when they continued

to pursue the [q]ui [t]am [a]ction against CMC for 11 years.” Id. at ¶ 40.




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J-A12013-19



      With those allegations in mind, we now examine Arnold’s Umbrella

Policy.   The Umbrella Policy contains the following ‘business pursuits’

exclusion:
      Exclusions

      Excess liability and additional coverages do not apply to:

                                      ***

      5. An occurrence arising out of the business pursuits or
      business property of an insured. To the extent a listed
      underlying policy provides coverage, this policy will apply as
      excess insurance….

See Nationwide’s Motion for Summary Judgment, 7/14/2017, at “Exhibit 1A”

(the Umbrella Policy) (emphasis in original). In addition, the Umbrella Policy

provides the following definitions:
      Definitions

      5. Occurrence(s) means an accident including continuous or
      repeated exposure to the same general conditions. It must result
      in bodily injury, property damage, or personal injury caused
      by an insured. The occurrence resulting in bodily injury or
      property damage must be during the policy period.           The
      occurrence resulting in the personal injury must be due to an
      offense committed during the policy period.

                                      ***

      8. Personal injury means:

          a) false arrest, false imprisonment, wrongful conviction,
          wrongful entry;

          b) wrongful detention or malicious prosecution;

          c) libel, slander, defamation of character, or invasion of
          rights of privacy.

      9. Business means a trade, profession, occupation, or
      employment including self-employment, performed on a full-time,
      part-time, or temporary basis.

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J-A12013-19



Id. (emphasis in original).

      Relying on federal case law from the U.S. Court of Appeals for the Third

Circuit as well as the U.S. District Courts of Pennsylvania, this Court has

articulated that “activity encompassed within a ‘business pursuits’ exclusion

in an insurance policy requires two elements: 1) continuity, and 2) a profit

motive.” White, 775 A.2d at 814 (citations omitted). We have discerned that

“[a] profit motive … may be shown by such activity as a means of livelihood,

a means of earning a living, procuring subsistence or profit, commercial

transactions or engagements.”      Id. at 815 (citation and quotation marks

omitted). Additionally, continuity has been described by the Third Circuit as

“customary engagement in the activity.” Sun Alliance Ins. Co. v. Soto, 836

F.2d 834, 836 (3d Cir. 1988).

      To illustrate, in White, this Court considered whether a ‘business

pursuits’ exclusion applied to preclude coverage for an insured that loaned his

handgun to employees of a bar he planned to purchase and, prior to the

completion of the sale, an employee mishandled the gun and fatally shot a

woman. White, 775 A.2d at 812-13. The insured had loaned the handgun

to the employees “[f]or the protection of the bar’s assets and the safety of its

employees….” Id. at 813. The administratrix of the woman’s estate instituted

a declaratory judgment action against the insured’s insurance company to

determine if the company was responsible for coverage under the insured’s

homeowner’s policy, which contained a ‘business pursuits’ exclusion. See id.

at 812-13.    The insurance company argued that the insured’s effort to

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J-A12013-19



purchase the bar was a business activity, and that he had a profit motive in

giving his handgun to the employees. See id. at 814, 815. On appeal, this

Court concluded that the policy’s ‘business pursuits’ exclusion did not apply,

opining that the “the action of [the insured] in giving a handgun to the

employees of the bar, and the subsequent action of [an employee] in

mishandling the gun, was not incident to a business pursuit.” Id. at 815. We

noted that the sale of the bar to the insured was not yet complete, and that

the insured did not have a profit motive at the time of the shooting because

he “was not engaged in the operation of the business and, thus, he did not

secure any profit or earnings by protecting the assets or employees of the

bar.” Id.

      In contrast, in Old Guard Ins. Co. v. Sherman, 866 A.2d 412 (Pa.

Super. 2004), we determined that a ‘business pursuits’ exclusion applied to

preclude coverage for insureds that had a wrongful death and survival action

filed against them after a teenaged worker died on their farm when a tractor

he was operating slid into a manure pit. Id. at 413-14. The insureds had

sold the farm shortly before the accident but they had remained partners in

the farm’s business even after the sale. Id. at 414. We observed:
      The conditions giving rise to the tragic death of [the teenaged
      worker] occurred during the period [that the] insureds [allegedly]
      designed, built, and maintained the manure pit; purchased the
      tractor; allowed the concrete ramp leading to the pit to become
      worn and slippery; failed to replace the worn tires on the tractor;
      and allowed unsupervised minors to operate the tractor in and
      around the unprotected pit, which was designed to hold
      approximately three months of manure for 250 cows, and which
      measured 100 feet long by 30 feet wide by 12 feet deep. All of

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       the misfeasances and nonfeasances … allege[d] clearly have as
       their base the business of farming, not the ownership of a home.
       … The insureds purchased a policy with a business exclusion; the
       trial court properly found the exclusion precluded coverage for
       personal liability arising out of a business. We find no error.

Id. at 419-20.

       Similarly, in Soto, the Third Circuit discerned that a ‘business pursuits’

exclusion precluded coverage for the owner of commercial properties who was

sued by his tenants after the properties caught on fire due to purportedly

negligent construction and maintenance. Soto, 836 F.2d at 834-35.8 The

Third Circuit determined that both prongs of the ‘business pursuits’ exclusion

had been met as the owner had operated the commercial properties since

their construction 20 years earlier, and received a salary and dividends from

that venture. Id. at 836. The Court also noted that “the allegations of the

complaint charge [the owner] with specific actions arising from his business

pursuits and indeed [he] testified in his deposition that he maintained the

buildings in that he hired people to do the maintenance and directed their

work.” Id.

       Finally, both Nationwide and Arnold cite to the non-binding case of

Aetna Cas. and Sur. Co. v. Ericksen, 903. F.Supp. 836 (M.D. Pa. 1995). In

Ericksen, an insurance company filed a declaratory judgment action seeking

a ruling that it was not liable to defend and indemnify its insured — a professor
____________________________________________


8 The White court referenced Soto in its decision. White, 775 A.2d at 814.
However, we acknowledge that “[f]ederal district and appeals court decisions
are not binding precedent on this Court. We may follow their reasoning where
it is persuasive.” Reeser v. NGK North American, Inc., 14 A.3d 896, 899
n.3 (Pa. Super. 2011) (citation omitted).

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J-A12013-19



at a university — after her colleague brought a libel action against her based

on (1) a sexual harassment complaint she had made to her employer about

the colleague, and (2) a discussion she had with a newspaper regarding the

sexual harassment complaint she made. See id. at 837-39. The insurance

company claimed that the ‘business pursuits’ exclusion in the insured’s policy

precluded coverage. The court recognized that the insured’s “activities as a

professor were a business pursuit[,]” and ascertained that the pertinent

question is “whether the statements made by [the insured] which caused the

alleged injury ‘arose out of’ that employment.” Id. at 839. In answering this

question, the court determined that “that an insurer is not liable to defend and

indemnify an action wherein an injury is alleged in a complaint (1) to have

been caused by the insured while the insured was engaged in his or her

business, as that word is defined in the policy, and (2) to have a causal

connection to the business of the insured.” Id. at 840.9 The court then found

that the complaint the insured made to her employer, which instituted

confidential proceedings against the colleague in accordance with the

university’s sexual harassment policy and procedure, was made “in the course

of [the insured’s] employment, and any injuries resulting therefrom ‘arose out

of’ her employment.” Id.
____________________________________________


9 Neither party in Ericksen had cited a case “which purports to define ‘arising
out of’ for purposes of a business pursuits exclusion in a homeowner’s
insurance policy.” Ericksen, 903 F.Supp. at 839. Given this lack of authority,
the court opined that “the most analogous law appears to be that of workers’
compensation, which provides for the compensation of employees for injuries
‘arising out of and in the course of employment.’” Id. (citation omitted).

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      However, the Ericksen court reached a different result with respect to

the insured’s statements to the newspaper about her complaint. It concluded

that the ‘business pursuits’ exclusion did not apply to those statements

because the insured “is nowhere said to have public relations responsibilities

for the [u]niversity, save recruitment of potential students to the department.

Nor did the publication of the allegedly libelous statement arise in the context

of a class taught by [the insured].” Id. at 841. The court acknowledged that

the insurance company pointed to “factors such as the interview taking place

in [the insured’s] office at the [u]niversity, and the fact that the subject matter

of the interview involved what may have occurred at the [u]niversity[,]” but

nonetheless concluded that “there is no causal connection between the

performance of [the insured’s] professional duties and the alleged injury

suffered by [the colleague].”    Id. As a result, the court declared that the

insurance company had a duty to defend the insured. Id.

      In the case sub judice, the trial court conveyed in its Rule 1925(a)

opinion that the ‘business pursuits’ exclusion of Arnold’s Umbrella Policy did

not apply to preclude coverage.      In reaching this conclusion, it considered

whether Arnold’s litigation of the qui tam action was a business pursuit under

the two-prong ‘business pursuits’ exclusion test. It reasoned:
      To satisfy the first prong, continuity, Arnold must have had
      consistent engagement in the activity at issue. Here, the activity
      complained of is the initiation of the [q]ui [t]am lawsuit, not his
      employment at PennDOT. There is nothing in the record to
      support that Arnold was a consistent [relator] in [q]ui [t]am
      actions. There is no evidence in the record to show that Arnold
      was continuously engaged in activity as a litigant. There is also

                                      - 17 -
J-A12013-19


       no evidence to show that Arnold was continuous[ly] looking for
       evidence to force CMC into litigation. Lastly, [n]either Arnold nor
       … Pushinsky are continuously engaged in litigation against CMC or
       in [q]ui [t]am actions. The facts do not support the continuity
       element of the two-pronged test. Without the continuity element,
       the facts do not satisfy the test for [the] business pursuit[s]
       exclusion.

       The second prong is profit motive. To have a profit motive, Arnold
       must have engaged in an activity as “a means of livelihood, a
       means of earning a living, procuring subsistence or profit,
       commercial transactions, or engagements.” The … Umbrella
       Policy describes “business” as[] “trade profession, occupation, or
       employment including self-employment, performed on a full-time,
       part-time or temporary basis.” Neither the underlying CMC
       complaint nor the [q]ui [t]am action “arose out” of Arnold’s
       employment with PennDOT. Arnold’s employment with PennDOT
       is a “means of livelihood” or “earning a living.” Here, serving as
       a relator in the [q]ui [t]am action is neither Arnold’s means of
       livelihood nor the way he earns a living. Arnold fails to meet the
       “profit motive” prong of the test.

Rule 1925(a) Op. at 6-7 (internal citations omitted).10

       Nationwide argues that the trial court incorrectly applied the two-prong

‘business pursuits’ exclusion test to Arnold’s status as a litigant in the qui tam

action. See Nationwide’s Brief at 46. Nationwide contends that the litigation

activity “only has to arise from the business pursuit, not actually be a business

pursuit.” Id. at 48. It states that “[t]he [q]ui [t]am action is not [Arnold’s]
____________________________________________


10 We recognize that this analysis directly contradicts the reasoning provided
by the trial court in its earlier July 23, 2018 memorandum. There, the trial
court found that the qui tam action did arise out of Arnold’s employment with
PennDOT and determined that the profit motive prong of the ‘business
pursuits’ exclusion test was satisfied. TCM at 5, 6. Problematically, the trial
court did not explain why its analysis changed between this memorandum and
its subsequent Rule 1925(a) opinion. In any event, though, the trial court
concluded in its July 23, 2018 memorandum that the ‘business pursuits’
exclusion did not apply to preclude coverage for Arnold, as the continuity
prong was nevertheless not met by Nationwide. Id. at 7.

                                          - 18 -
J-A12013-19



‘business pursuit[,’] but rather it is an activity undertaken which arose out of

the course of [Arnold’s] employment with PennDOT.” Id. at 47 (emphasis in

original).   To support that the qui tam litigation arose from Arnold’s

employment with PennDOT, Nationwide points to case law where courts —

including the Supreme Court of Pennsylvania — have said that the language

“‘arising out of’ in an insurance provision means causally connected with, not

proximately caused by[,]” and that “‘but for’ causation satisfies the ‘arising

out of’ language in an insurance policy.” Id. at 56 (citing Allstate Prop. and

Cas. Ins. Co. v. Squires, 667 F.3d 388, 391-92 (3d Cir. 2012) (quoting Mfrs.

Cas. Ins. Co. v. Goodville Mut. Cas. Co., 170 A.2d 571, 573 (Pa. 1961)).

According to Nationwide, “Arnold used his access through his employment to

gather the evidence of alleged fraud involving federally funded projects

implemented through PennDOT, and used that information he accumulated

over time as the support for his [c]omplaint against CMC serving as the

[r]elator in the [q]ui [t]am [a]ction.”   Id. at 48. It asserts that “‘but for’

[Arnold’s] occupation and employment at PennDOT, he would not have had

access to the necessary information contained within PennDOT’s private

business records, [and] would not have had the opportunity to pursue a [q]ui

[t]am [c]omplaint and report the allegedly unsupported allegations of fraud

against … CMC.” Id. at 59-60. Thus, Nationwide advances that the ‘business

pursuits’ exclusion of the Umbrella Policy “is triggered because the litigation

and [Arnold’s] status as [a] [r]elator ‘arises out of’ his employment with

PennDOT, which was his business pursuit.” Id. at 48-49.

                                     - 19 -
J-A12013-19



       In response, Arnold admits that his “employment with PennDOT is

clearly [his] ‘business pursuit’ under the [Umbrella] [P]olicy[.]” Arnold’s Brief

at 26.11 However, he points out that he “is not being sued for something that

he did pursuant to his employment at PennDOT. He is not being sued because

he engineered a defective bridge at work, or because he complained about

CMC to his employers.” Id. According to Arnold, “what happened was that

[he] acted outside of his employment, he complained about CMC’s billing …

by filing and litigating the [q]ui [t]am [a]ction, neither of which were part of

his employment responsibilities at PennDOT.” Id. at 25 (internal quotation

marks omitted). Further, to counter Nationwide’s ‘but for’ argument, Arnold

maintains that “[e]very incidental factor that arguably contributes to an

accident is not a ‘but for’ cause in the legal sense.” Id. at 22 (citing Squires,

667 F.3d at 394).         He claims that his “employment with PennDOT was

incidental to the alleged injury caused by [his] filing and litigating of the [q]ui

[t]am [a]ction against CMC. The alleged injury to CMC was caused by an

external instrumentality, i.e.[,] the [q]ui [t]am [a]ction, that was totally
____________________________________________


11 While Arnold concedes outright that his employment at PennDOT is his
business pursuit under the Umbrella Policy, Pushinsky does not make a similar
admission in his brief. Nevertheless, Pushinsky still pushes back against
Nationwide’s ‘arising out of’ theory, contending that, “[b]ased on [Arnold’s]
exercise of his rights as a citizen (not as a businessman, not for his trade, not
for his profession), … Arnold is potentially exposed to liability under [the]
Dragonetti [Act and for] abuse of process and tortious interference. This
potential liability does not ‘arise from’ a business pursuit.” Pushinsky’s Brief
at 21; see also id. at 14 (“In filing a lawsuit on behalf of the United States,
… Arnold was not engaged in a trade, profession, occupation or employment.
… CMC does not seek to impose liability on … Arnold arising from his
employment at PennDOT.”).

                                          - 20 -
J-A12013-19



separate from Arnold’s employment with PennDOT.” Id. at 23. Consequently,

he asserts that the ‘business pursuits’ exclusion does not apply.

      We agree with Nationwide and Arnold that the trial court incorrectly used

the two-prong ‘business pursuits’ exclusion test to consider whether the qui

tam action was itself a business pursuit. Instead, the trial court should have

employed the two-prong test to determine whether the litigation of the

purportedly baseless qui tam action (the occurrence resulting in personal

injury to CMC) arose out of a business pursuit (Arnold’s employment at

PennDOT). See Nationwide’s Motion for Summary Judgment, 7/14/2017, at

“Exhibit 1A” (the Umbrella Policy) (excluding coverage for “[a]n occurrence

arising out of the business pursuits … of an insured…”) (emphasis in

original).   It is clear that Arnold’s employment at PennDOT constitutes a

business pursuit, as it is an activity done with the requisite continuity and

profit motive. See White, supra. Therefore, the issue boils down to whether

Arnold’s tenacious litigation of an allegedly unsupported qui tam action arose

from his job at PennDOT.

      At the outset, we acknowledge that this is a close question, and reiterate

that Nationwide carries the burden of proving the applicability of the ‘business

pursuits’ exclusion. See Muff, 851 A.2d at 926 (“An insurer who disclaims its

duty to defend based on a policy exclusion bears the burden of proving the

applicability of the exclusion.”) (citation omitted). We also note that we do

not have extensive case law from the courts of this Commonwealth to guide




                                     - 21 -
J-A12013-19



us in our decision-making.12 Notwithstanding, based on the cases we have

discussed applying the ‘business pursuits’ exclusion supra, it stands out to us

that CMC’s complaint does not contest specific actions taken by Arnold while

he was engaged in his work at PennDOT and, in fact, makes explicit that

Arnold’s position there had nothing to do with interpreting contracts or billing.

Unlike the insureds in Sherman, Soto, and Ericksen, CMC is not seeking to

impose liability on Arnold for something he did at, or in the context of, his

employment. See Sherman, supra (applying a ‘business pursuits’ exclusion

where the conditions on the farm, which had been operated as a business by

the insureds, contributed to the death of the worker); Soto, 836 F.2d at 836

(“[T]he allegations of the complaint here charge [the insured] with specific

actions arising from his business pursuits and indeed [the insured] testified in

his deposition that he maintained the buildings in that he hired people to do

the maintenance and directed their work.”); Ericksen, 903 F.Supp. at 840

(reasoning that the ‘business pursuits’ exclusion applied to alleged injuries

stemming from the insured’s first complaint to her employer concerning her

colleague as she included it in a memorandum that “was submitted in order

to begin proceedings against [the colleague] consistent with the [u]niversity’s

sexual harassment policy and procedure”).


____________________________________________


12 Indeed, the White court began its analysis by recognizing “the relatively
limited case law addressing the business pursuits exception in Pennsylvania.”
White, 775 A.2d at 814. Since White, there appears to be few cases from
Pennsylvania state courts applying the exclusion.

                                          - 22 -
J-A12013-19



      Instead, in the case at bar, all of the conduct CMC complains of were

actions taken by Arnold outside of his job. Analogous to the insured’s sharing

allegedly libelous statements with a newspaper in Ericksen, Arnold made the

purportedly false statements regarding CMC in court documents and without

PennDOT’s support. According to CMC, Arnold pursued the qui tam action

because he personally disagreed with how PennDOT officials interpreted the

contracts and wanted to benefit himself financially.    In its complaint, CMC

emphasized that Arnold’s position at PennDOT did not involve him interpreting

contract requirements or approving billing classifications and rates, and it

stressed that he had no authority or responsibility for doing those things.

Nevertheless, CMC said Arnold made assertions against CMC regarding

overbilling based on his personal interpretation of contract requirements.

Further, he purportedly initiated and continued the litigation for 11 years even

though he lacked information that CMC made any claim for payment that was

false or fraudulent. Thus, at its core, CMC’s complaint challenges Arnold’s

personal conduct, not the performance of his professional duties or actions he

took at work. Cf. Sherman, 866 A.2d at 420 (“All of the misfeasances and

nonfeasances … allege[d] clearly have as their base the business of farming,

not the ownership of a home.”).

      While Nationwide argues that Arnold would not have had access to the

information contained within PennDOT’s ‘private business records’ but for his

employment there, see Nationwide’s Brief at 59-60, CMC’s complaint does not

specifically allege where Arnold obtained the information he relied upon, nor

                                     - 23 -
J-A12013-19



does it state that such information was private and only accessible to

PennDOT’s employees. At any rate, though, the crux of CMC’s lawsuit is that

Arnold had no information or proof that CMC made inaccurate factual

representations to PennDOT about its inspectors’ credentials and qualifications

but pursued the qui tam action anyway. Furthermore, that the subject matter

of Arnold’s complaint concerned matters taking place at PennDOT does not

establish a causal connection between how Arnold performed his professional

duties and CMC’s grievances.       Accord Ericksen, 903 F.Supp. at 841

(rejecting the argument that the insured’s interview with the newspaper arose

out of her profession because its subject matter involved what may have

occurred at the university, and determining that “there is no causal connection

between the performance of [the insured’s] professional duties and the alleged

injury suffered by [her colleague]”).

      Based on the foregoing, we conclude that Arnold’s litigation of the

supposedly baseless qui tam action against CMC did not arise out of his

business pursuits. Again, Nationwide had the burden of proof and failed to

demonstrate that the ‘business pursuits’ exclusion applied here. At bottom,

CMC’s allegations challenge Arnold’s personal conduct, not actions he took or

events that transpired in the context of his employment.        We decline to

construe the ‘business pursuits’ exclusion so broadly that coverage is

precluded for allegations with any nexus whatsoever to an insured’s work.

Accordingly, we determine that the ‘business pursuits’ exclusion does not

apply, and Nationwide has a duty to defend Arnold in the CMC Action.

                                    - 24 -
J-A12013-19



        In Nationwide’s third issue, it argues that “[t]he trial court’s order that

[Nationwide] indemnify [Arnold] should be overruled because the court

abused its discretion and committed [an] error of law in ordering

indemnification prematurely[.]”           Nationwide’s Brief at 65 (unnecessary

emphasis and capitalization omitted). Specifically, it says that the trial court’s

order sets forth that “[Nationwide] has a duty to ‘defend and/or indemnify’

[Arnold] based on the [Umbrella Policy].” Id. However, Nationwide contends

that “[t]he duty to indemnify … is not triggered until a determination of liability

is made.      The duty to defend carries with it a conditional obligation to

indemnify in the event the insured is held liable for a claim covered by the

policy.” Id. at 66 (emphasis in original; citations omitted). Consequently,

Nationwide maintains that “a [c]ourt cannot order an insurance carrier to

indemnify its insured until the insured has been held liable for the claim.” Id.

Thus, Nationwide insists that, “while the [t]rial [c]ourt can order no duty to

indemnify if the court determines that there was no duty to defend, … it is

premature for the court to conclude that [a] duty to indemnify exists prior to

[CMC’s] obtaining a judgment … against [Arnold] in the [CMC Action].” Id. at

67 (emphasis in original).

        It appears to us that the trial court and Pushinsky do not disagree with

Nationwide.13 Here, as Nationwide contends, the trial court stated in its order

that Nationwide “has a duty to defend and/or indemnify … Arnold … for the

____________________________________________


13   Arnold does not address this issue in his brief.

                                          - 25 -
J-A12013-19



claims made in the underlying [CMC Action].” See Trial Court Amended Order,

10/11/2018. However, in its Rule 1925(a) opinion, the trial court elaborated:
      Pennsylvania has held that the language of the underlying
      complaint, here the CMC complaint, triggers the duty to
      indemnify. Kvaerner Metals Div. … v. Commercial Union Ins.
      Co., 908 A.2d 888, 896 ([Pa.] 2006). Nationwide will have a duty
      to indemnify “only where the insured is held liable for a claim
      actually covered by the policy.” Gen. Acc. Ins. Co. of Am. v.
      Allen, 692 A.2d 1089, 1095 ([Pa.] 1997). The duty to defend
      also carries with it a conditional obligation to indemnify in the
      event that the insured is held liable for a claim covered by the
      policy. Id. In this case, if the underlying CMC complaint triggers
      a duty to defend, then it also triggers a duty to indemnify.
      Kvaerner Metals Div., 908 A.2d at 900. Here, there is a duty to
      defend as the business pursuit[s] exclusion does not apply.
      Likewise, there is also a duty to indemnify if the insured is found
      to be liable for a covered claim. Id. As Nationwide has a duty to
      defend Arnold in the underlying CMC [A]ction, likewise,
      Nationwide has a duty to indemnify.

Rule 1925(a) Op. at 7-8. In accordance, Pushinsky maintains that “the lower

court did not commit error in deciding [that] ‘there is also a duty to indemnify

if the insured is found to be liable for a covered claim.’” Pushinsky’s Brief at

24 (citation omitted). Thus, it seems like the trial court and the parties all

agree that Nationwide has a duty to indemnify if Arnold is found to be liable

for a covered claim.

      Although the trial court acknowledged in its Rule 1925(a) opinion that

“there is … a duty to indemnify if the insured is found to be liable for a covered

claim[,]” see Rule 1925(a) Op. at 8, we agree with Nationwide that its order

does not clearly reflect that condition and appears to convey that Nationwide

has an absolute duty to indemnify Arnold. Therefore, we reverse that aspect

of the trial court’s order to the extent it imposes an absolute duty on

                                     - 26 -
J-A12013-19



Nationwide to indemnify Arnold, and we clarify that Nationwide has a duty to

indemnify only if Arnold is found to be liable for a covered claim under the

Umbrella Policy.

     Order entered on October 11, 2018 affirmed in part and reversed in

part. Appeal docketed at 1207 WDA 2018 quashed. Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 7/11/2019




                                   - 27 -
