Titeflex Corporation (Titeflex) manufactured a flexible connector that was installed and used at a Montgomery County, Pennsylvania gas station owned by Thomas F. Wagner and Thomas F. Wagner, Inc. (collectively Wagner).
In the spring of 1998, gasoline from Wagner's property leaked onto neighboring properties. As a result, many neighbors filed lawsuits against Wagner, Titeflex, and other manufacturers and installers of products at Wagner's gas station. Wagner filed cross-claims against Titeflex in these underlying actions.
Titeflex's primary insurer for the August 1, 1997 to August 1, 1998 policy period was Kemper under a commercial general liability policy with a $1 million limit per occurrence and a $2 million aggregate limit. National Union Fire Insurance Company of Pittsburgh PA (National Union) was Titeflex's excess insurance company during the same period under an umbrella policy with a $50 million limit per occurrence and a $100 million aggregate limit.
Kemper initially provided a defense to Titeflex in the underlying actions. Kemper subsequently experienced financial difficulties and Titeflex ultimately assumed and paid for its own defense in the underlying actions. In 2007, as part of a settlement of claims against Titeflex in the underlying actions, Kemper and Titeflex together paid $1 million. In addition, National Union’s umbrella policy paid over $9 million towards the settlement. The Montgomery County court approved those portions of the settlement that involved the claims of minors and the claims of certain estates.
On March 30, 2007, Titeflex filed a complaint seeking a declaratory judgment against National Union, Wagner, and the plaintiffs in the underlying actions, among other things. A second amended complaint asserted claims for declaratory relief against National Union with regard to its duty both to defend and to indemnify Titeflex, as well as claims for breach of contract and bad faith. Titeflex also sought declaratory relief as to Wagner, in that any declaratory relief as to indemnification would also be binding on Wagner. On October 28, 2009, National Union counterclaimed, seeking declaratory relief as to the Kemper policy’s limits being used up and the scope of coverage. National Union also asserted claims for breach of fiduciary duty, restitution, and breach of contract.
On November 16, 2010, Titeflex filed a motion for partial summary judgment on the issue of National Union's duty to defend it in the underlying actions. On December 17, 2010, National Union filed a cross-motion for partial summary judgment against Titeflex with regard to lack of proof that Kemper’s policy’s limits were used up.
In June 2012, the trial court granted Titeflex's motion for partial summary judgment on the duty to defend issue. The court also denied National Union’s motion for partial summary judgment on the issue that Titeflex was unable to demonstrate that the Kemper policy limit was used up. National Union appealed.
On appeal, the Pennsylvania Superior Court agreed with the trial court’s finding that the $1 million limit per-occurrence of Titeflex’s Kemper policy had been used up. The court said: “[t]he 1997–1998 Kemper Policy has an ‘Each Occurrence Limit’ of $1 million. The ‘Each Occurrence Limit’ is the most Kemper will pay for the sum of [damages and medical expenses] because of all ‘bodily injury’ and ‘property damage’ arising out of any one ‘occurrence.’ It does not matter if the spill's effects spanned many years and many policies and generated multiple claims. It is still one occurrence subject to a $1 million limit for all claims arising out of it.”
The court pointed out that National Union’s umbrella policy’s excess coverage was triggered because the primary Kemper policy’s limits were used up.
Titeflex Corporation v. National Union Fire Insurance Company of Pittsburgh PA. Commonwealth of Pennsylvania Court of Common Pleas. March 5, 2014. 2014 WL 868623
