2021 WL 5232422
Unpublished Disposition

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
Superior Court of Pennsylvania.
OLD REPUBLIC INSURANCE COMPANY AND RYDER TRUCK RENTAL, INC., Appellants
v.
POCONO MOTOR FREIGHT, INC., MICHAEL J. PARKS, RITA HUGHES, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF BROOKE HUGHES, AND DANILLE TOOMEY, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF CHANIYA MORRISON-TOOMEY
No. 2108 EDA 2020
|
FILED NOVEMBER 10, 2021
Appeal from the Order Entered September 23, 2020
In the Court of Common Pleas of Monroe County Civil Division at No(s): No. 2019-06543
BEFORE: McLAUGHLIN, J., KING, J., and PELLEGRINI, J.*

MEMORANDUM BY McLAUGHLIN, J.:

*1 This is a declaratory judgment action to determine insurance coverage. The trial court concluded that a primary insurance policy and certain excess policies afforded coverage to Pocono Motor Freight, Inc. (“Pocono”). Old Republic Insurance Company (“Old Republic”) and Ryder Truck Rental, Inc. (“Ryder”) have appealed, challenging the applicability of the excess policies. We find merit in their arguments and therefore reverse in part.

After a tragic accident resulting in the deaths of Brooke Hughes and Chaniya Morrison-Toomey, the administratrixes of their estates, Rita Hughes and Danielle Toomey, filed suit against Pocono and its employee who was driving the tractor trailer at issue (collectively “Pocono”). They asserted wrongful death and survival claims (“underlying action”). Old Republic and Ryder filed this suit seeking a declaration that three excess insurance policies do not afford coverage for the claims against Pocono and its employee in the underlying action.

According to the Complaint, Ryder and Pocono were parties to a truck leasing agreement (“Lease Agreement”), under which Pocono leased tractor-trailer vehicles from Ryder. The Lease Agreement – which was attached to the Complaint – required Ryder to maintain automobile liability insurance covering Pocono, with a combined single limit of $1 million per occurrence.
The party designated on Schedule A (the “Insuring Party”) agrees to furnish and maintain, at its sole cost, a policy of automobile liability insurance with limits specified on each Schedule A for death, bodily injury and property damage, covering both you and Ryder as insureds for the ownership, maintenance, use and operation of each Vehicle (“Liability Insurance”). If you are the Insuring Party, the terms of the policy and the insurer must be acceptable to Ryder. The Liability Insurance must provide that its coverage is primary and not additional or excess coverage over insurance otherwise available to either party, must be equal in scope in all respects to the insurance coverage provided to you, and must include any and all statutory requirements of insurance imposed upon you and/or Ryder … The Insuring Party agrees to designate the other party as an additional insured on the Liability Insurance and to provide the other party with insurance certificates evidencing the required coverage. Your certificate of insurance must include by special endorsement or otherwise, Ryder as an additional insured for all vehicles leased, rented, substituted, or supplied to you by Ryder.
Complaint, filed Aug. 19, 2019, at Ex. C, Truck Lease and Service Agreement at ¶ 9(A). Schedule A to the Lease Agreement identifies Ryder as the insuring party and the required policy limit as $1 million. Id. at Schedule A.

Ryder obtained a policy (“primary policy”)1 from Old Republic with a combined single limit of $1 million. The primary policy included an amendment that, by reference to the Lease Contract, had the effect of making lessees such as Pocono insureds.

*2 Who is An Insured is amended to include the following: …
d. Any person or organization for whom the Named Insured is obligated by written agreement to provide liability insurance, but in no event for more or broader insurance than is afforded under this policy and in no event for more or broader insurance than is required by such contract.
Complaint, Ex. D, Amendments to the Business Auto Coverage Forms. Old Republic has been defending Pocono in the underlying suit pursuant to the primary policy.

Ryder also obtained three excess insurance policies through Old Republic. The first two were excess policies for $1 million in excess insurance coverage (“Excess Policy 1” and “Excess Policy 2”).2 The third excess policy provided $7 million in auto liability coverage (“Excess Policy 3”).3

Excess Policy 1 and Excess Policy 2 contain identical provisions that afford their excess coverage to “[a]ny additional insured under any policy of ‘controlling underlying insurance.’ ” Complaint, Exs. E-F, Coverage Form at 2. The “controlling underlying insurance” for Excess Policy 1 is the underlying policy; for Excess Policy 2 it is Excess Policy 1.4 As Pocono is an additional insured under the primary policy, it is thus an additional insured under Excess Policies 1 and 2.

However, both Excess Policies 1 and 2 also have identical provisions, in Section I.1.d., limiting the coverage provided to an additional insured where coverage is required by another contract or agreement, such as here. In those cases, coverage is limited to “the amount of insurance required by the contract, less any amounts payable by any ‘controlling underlying insurance.’ ” Id. Section I.1.d. also states, “Additional Insured coverage provided by this insurance will not be broader than coverage provided by the ‘controlling underlying insurance.” Id.

Excess Policies 1 and 2, as well as the primary policy, all include an endorsement – the so-called “Driverless Autos” endorsement – that limits coverage for “persons or organizations leasing /renting an automobile” to “the terms, including the limit or limits of liability,” set forth “in the lease/rental agreements. …” Complaint, Exs. D-F, Driverless Autos Endorsement.

Excess Policy 3 has a different definition of “insured.” It excludes from “insureds” any “person or organization, for whom the Named Insured has become obligated by a written lease or rental agreement to provide liability insurance under the ‘controlling underlying insurance.’ ” Complaint, Ex. G, Who Is An Insured Amendment.

After the close of pleadings,5 Hughes moved for judgment on the pleadings. She requested a declaration that the primary policy, Excess Policy 1, and Excess Policy 2 “apply to” the underlying accident and “are available sources of covered benefits” in the underlying action. She argued that Excess Policies 1 and 2 were ambiguous. She first noted that the provision of the Lease Agreement requiring insurance did not “exclude” excess insurance. Hughes’ Brief in Support of Motion for Judgment on the Pleadings at 7. She also pointed out that Excess Policy 3 was unique among the three excess policies in explicitly excluding from the definition of an “insured” anyone for whom Ryder was contractually obligated to maintain insurance. She argued that if Ryder and Old Republic had intended to exclude Pocono as an insured under Excess Policies 1 and 2, they could have used such language but failed to do so. Id. at 8.

*3 She also maintained that the language in Section I.1.d. of Excess Policies 1 and 2, regarding the coverage afforded to an additional insured, was contradictory and inconsistent. She pointed to the sentence stating that an additional insured under the policies, such as Pocono, enjoys coverage no “broader than coverage provided by the ‘controlling underlying insurance.’ ” She maintained that that sentence meant that the limit of Pocono’s coverage under Excess Policies 1 and 2 was the same as the underlying coverages, i.e., $1 million. Id.

Hughes argued that this provision conflicted with the preceding sentence. It states that the most Old Republic will pay under the policies is “the amount of insurance required by the contract, less any amounts payable by any ‘controlling underlying insurance.’ ” According to Hughes, this formula rendered excess coverage illusory. Id. She argued that Excess Policies 1 and 2 were thus ambiguous and, construing them against Old Republic as the drafter, covered Pocono. Id. at 9.

Old Republic and Ryder responded to Hughes’ motion and filed a cross-motion for judgment on the pleadings. They conceded that the primary policy “provides ‘primary’ liability coverage on behalf of the defendants named in the underlying lawsuits,” as the Lease Agreement required. Plaintiffs’ Brief in Support of Motion for Judgment on the Pleadings at 4.

However, they disputed the availability of Excess Policies 1 and 2. They stressed the Lease Agreement’s and the policies’ language, which they maintained was clear and unambiguous. They argued that the court could not ignore the Lease Agreement’s explicit provision for $1 million in coverage simply because the Lease Agreement did not also say that the lessee would not be entitled to excess coverage in addition to the $1 million. They also rejected any claim that the unique definition of “insured” in Excess Policy 3 rendered Excess Policies 1 and 2 ambiguous.

Old Republic and Ryder also argued that the formula in Section I.1.d. limiting coverage for additional insureds did not result in illusory coverage. They argued that Ryder’s other customers may pay for, and Ryder may agree in a lease agreement to maintain, more than $1 million in insurance. They contended that in such cases, the formula – insurance promised minus the $1 million primary policy – would provide coverage. They also argued that the formula was not inconsistent with the statement that an additional insured’s coverage under the excess policies “will not be broader” than coverage under the underlying policy.

Old Republic and Ryder emphasized that other policy provisions make clear that Excess Policies 1 and 2 do not afford coverage for the underlying action. They argued that the Driverless Autos endorsement unambiguously makes the excess policies subject to the terms of the Lease Agreement, “including the limit or limits of liability. …” Plaintiffs’ Brief in Support of Motion for Judgment on the Pleadings at 13 (quoting Complaint. Exs. D-F, Driverless Autos Endorsement). Hughes and Toomey opposed the Appellants’ motion.

The trial court concluded Excess Policies 1 and 2 were ambiguous, specifically Section I.1.d. It construed the policies against Old Republic and found that they provided coverage for the underlying action. The trial court thus granted Hughes’ motion with respect to the primary policy and Excess Policies 1 and 2 but denied it as to Excess Policy 3. As for Appellants’ cross-motion, the court granted it as to Excess Policy 3 but denied it with respect to Excess Policies 1 and 2.

*4 Old Republic and Ryder timely appealed and raise the following issues:
1. Did the Trial Court err in failing to consider the lease agreement between Ryder and Pocono … , which made clear that Pocono’s automobile liability coverage was limited to the [Old Republic] $1 million primary policy?
2. Did the Trial Court err by interpreting the first and second layer excess insurance policies in a manner that was inconsistent with the reasonable expectations of the contracting parties, as was manifested in the language of the lease agreement and the [Old Republic] excess policies?
3. Did the Trial Court err in finding that the “additional insured” language contained in the [Old Republic] first and second layer excess insurance policies was ambiguous because it was different from the “additional insured” language contained in the [Old Republic] third layer excess insurance policy?
4. Did the Trial Court err in finding that the “additional insured” language contained in the [Old Republic] first and second layer excess insurance policies was ambiguous and/or in conflict, and therefore resulted in Pocono being an additional insured under both policies?
5. Did the Trial Court err in failing to read the [Old Republic] first and second layer excess insurance policies as a whole, resulting in the Trial Court failing to consider additional language contained in those policies that would have demonstrated there were no ambiguities in the meaning of the “additional insured” policy language and Pocono did not qualify as an additional insured under either policy?
Appellants’ Br. at 4.

In all five issues, Appellants argue that the trial court erroneously interpreted the policies and Lease Agreement and claim Excess Policies 1 and 2 do not provide coverage for the underlying action.6 We will address the issues together.

The parties essentially renew the arguments they made below. Appellants maintain the trial court ignored the Lease Agreement, misread the policy language, and misapplied the law. They argue the court failed to address or consider the Lease Agreement, even though the excess policies incorporate the terms of the Lease Agreement. Further, they contend the court failed to consider that Ryder contracted in the Lease Agreement for $1 million in insurance coverage, which it obtained. They note that Hughes and Toomey were not parties to the insurance contracts.

Appellants also argue the court erred in finding Excess Policies 1 and 2 were ambiguous or in conflict because Excess Policy 3 contained different language. Further, Appellants claim the trial court erred in finding Section I.1.d. of Excess Policies 1 and 2 contradictory. They argue that if the Lease Agreement had provided for more than $1 million in insurance, the policies would have afforded the additional coverage. They further maintain that the statement that any coverage afforded is no “broader” than the underlying policy does not apply to policy limits. They contend the phrase addresses the terms of the coverage, such as the types of claims covered. Appellants also claim the section uses standard language and cites cases from other jurisdictions in support of its interpretation. Appellants add that the court should have considered other terms of the excess policies, such as the Driverless Auto Endorsements.

*5 Hughes and Toomey make similar arguments in response. Toomey responds that Excess Policies 1 and 2 are ambiguous because they include Pocono as an “insured” but also carve out an undefined category of “additional insureds” for whom the policies provide illusory coverage. She argues that the primary policy includes Pocono under the definition of “insured” and the “Driverless Auto Endorsement” amends the excess policies to modify the “Who is an Insured” section to include organizations for whom the Named Insured is obligated to provide insurance. Toomey’s Br. at 23. She therefore contends that, contrary to Appellants’ claim, Section I.1.d. does not apply, as that applies to “additional insureds.” Id. at 24. She notes no policy defined the term “additional insured.” She claims this creates an ambiguity and should be interpreted against Old Republic.

Toomey further claims that, even if Pocono were an “additional insured” such that Section I.1.d. applied, the court correctly found it ambiguous. She maintains the Driverless Auto Endorsement is of no moment because it does not explicitly preclude excess coverage. Toomey adds that Old Republic could have expressly excluded lessees such as Pocono from excess coverage, as it did in Excess Policy 3, but failed to do so. She further claims there is no support in the record for Appellants’ claim that the policies were intended to provide a tiered structure. She also argues that Pocono reasonably expected coverage under the excess policies.7 She maintains that the clear and unambiguous terms of the Lease Agreement do not limit or preclude excess coverage.

Hughes likewise argues Excess Policies 1 and 2 are ambiguous because they include Pocono and Parks as “insureds,” and if they are insureds under the primary policy, they are insureds under the excess policies. She contends that if Old Republic and Ryder intended to exclude Pocono from the definition of Insured, they could have done so, as they did in Excess Policy 3. She agrees with the trial court that Section I.1.d. is contradictory and argues that Appellants’ argument considered the Lease Agreement in a vacuum and ignores the language of the excess policies.

She also maintains the Lease Agreement’s insurance provision does not exclude excess liability coverage, and if Ryder had intended to provide Pocono with only $1 million in coverage it would have excluded excess coverage in the lease. She points out that the Lease Agreement references excess coverage and contains exclusions of various types of coverage but does not exclude excess coverage. Hughes further argues that the parties’ differing interpretations of Section I.1.d. shows it is contradictory and ambiguous. As for the Driverless Auto Endorsement, Hughes notes that it states that the insurance applies to organizations leasing or renting a covered auto and the lease agreement does not exclude coverage. Hughes further states that in its answer to the declaratory judgment complaint, Ryder agreed that the provisions were ambiguous and that it reasonably expected coverage.

“The interpretation of an insurance contract is a question of law, [and] our standard of review is de novo.” Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 290 (Pa. 2007) (citation omitted). “Our purpose in interpreting insurance contracts is to ascertain the intent of the parties as manifested by the terms of the written insurance policy.” Id. “When the language of the policy is clear and unambiguous, we must give effect to that language.” Id. (quoting Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 897 (Pa. 2006)). However, if a policy is ambiguous, we construe it in favor of the insured and against the insurer, as the drafter of the policy. Id.

*6 “It is a general rule of law in the Commonwealth that where a contract refers to and incorporates the provisions of another, both shall be construed together.” Southwestern Energy Production. Co. v. Forest Resources. LLC, 83 A.3d 177, 187 (Pa.Super. 2013) (quoting Trombetta v. Raymond James Financial Services, Inc., 907 A.2d 550, 560 (Pa.Super. 2006)). We similarly do not examine provisions in a single contract in isolation, but rather consider them together. They are not “independent agreements thrown together without consideration of their combined effects.” Id. (quoting Trombetta, 907 A.2d at 560).

Excess Policies 1 and 2 are not ambiguous in any material respect. The formula in Section I.1.d. does not conflict with any policy provision and does not result in “illusory” coverage. The fact that, in this instance, it does not provide excess coverage for Pocono and Parks does not make coverage illusory or the contract ambiguous. The policies are for all of Ryder’s lessees, with the formula providing a means for determining the amount of excess coverage where a lessee contracted in the Lease Agreement for more than $1 million in coverage. Pocono did not do so. If it had, the formula would make available excess coverage, to the extent Pocono had contracted for more than $1 million.

Nor is there any conflict between the formula and the statement that an additional insured’s excess coverage is not “broader” than that of the underlying insurance. Even assuming (without deciding) that the statement restricting the breadth of coverage applies to policy limits, the two statements are utterly compatible, even as applied here. Here, the resultant coverage under the formula – $0 – is not “broader” than the coverage in the underlying policy – $1 million.

We note that other sections of the excess policies also incorporate the lease agreement, which limits the insurance liability amounts to $1 million. Reading the contracts together, see Southwestern Energy Prods., 83 A.3d at 187, Pocono contracted with Ryder for $1 million in liability insurance, which is provided by the primary policy. If Pocono had contracted for a higher liability coverage amount, the excess policies would provide the additional coverage. However, Pocono did not contract for a higher amount, and therefore the excess policies do not apply. That Excess Policies 1 and 2 do not contain the language excluding coverage that is contained in Excess Policy 3 is inapposite. Unlike Policy 3, which would be available only to Ryder, Excess Policies 1 and 2 were available to Ryder’s customers, if they chose to contract for higher insurance coverage amounts.

This case is distinguishable from Ramara, Inc. v. Westfield Ins. Co., 69 F. Supp. 3d 490 (E.D. Pa. 2014), relied on by the trial court, Hughes, and Toomey. There, one policy endorsement included a person as an additional insured only if the injury at issue was caused by an insured’s acts or omissions, and the other allowed excess coverage where the damage was caused by the sole negligence of an additional insured. Id. at 494. The court found that the first endorsement conflicted with the second. Id. at 497. The court stated that the excess coverage could be “impossible to trigger,” asking, “How could a loss caused by [an additional insured’s] sole negligence also be proximately caused by [a named insured’s] acts or omissions?” Id. The court further found that if they were not in conflict, they were “[a]t a minimum” ambiguous. Id.

*7 Here, unlike the provisions at issue in Ramara, the policy provisions do not conflict, and it is not impossible to trigger coverage. As explained above, the statement that excess coverage is no “broader” than that afforded by the underlying policy is utterly compatible with the coverage formula. Nor is it impossible to trigger excess coverage. Rather, coverage would be triggered where a customer contracted in the Lease Agreement for greater than $1 million in coverage.

We disagree with Toomey and Hughes’ attempt to claim Section I.1.d. addressing “additional insured” does not apply to them because they are “insureds” under the policies and the policies do not include a definition of “additional insured.” “Additional insured” has a settled meaning, which we must apply unless the contract or the context dictate otherwise. An “additional insured” is “a person other than the one in whose name a policy is issued but who is also protected by that policy.” Merriam-Webster.com, available at https://www.merriam-webster.com/dictionary/additional%20insured (last accessed Sept. 21, 2021). Here, Pocono was an “additional insured,” as it was a person other than the named insured, Ryder, who could have been afforded protection by the policy. We are also unpersuaded by Toomey and Hughes’ argument that the Lease Agreement provided for $1 million in insurance but did not preclude Ryder from procuring additional insurance for Pocono. Be that as it may, nothing here shows Ryder bought additional insurance for Pocono’s benefit. The argument is contrary to the plain language of the Lease Agreement and the policies. Excess Policies 1 and 2 do not provide coverage for the underlying action.

Order reversed in part. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

All Citations
Slip Copy, 2021 WL 5232422 (Table)

Footnotes

*
Retired Senior Judge assigned to the Superior Court.

1
The primary policy was policy Z-35726-38.

2
The first excess policy was policy MWZX-26664-07, and the second excess policy was policy MWZX-26665-07.

3
Policy ZL-188-26.

4
See Complaint, Ex. E, Declarations at 2; Ex. F, Declarations at 2.

5
Pocono and Parks participated in the proceedings below but have not filed briefs in this appeal.

6
Appellants agree that the primary policy provides coverage. Hughes and Toomey do not contend on appeal that Excess Policy 3 provides coverage.

7
Toomey maintains the trial court did not need to engage in a reasonable expectation analysis, because such an analysis applies only where the policy is unambiguous and the insurer unilaterally reduced or excluded coverage. In its reply brief, Appellants argue they not invoking the “reasonable expectations doctrine,” which they maintain applies where a court is asked to override a policy’s terms. Appellants’ Br. at 26. Rather, they are asking the Court to “ascertain the reasonable expectations of the insured … as manifested by the language of the policy.” Id. (emphasis omitted).

2021 WL 5233327

United States District Court, M.D. Pennsylvania.
ELSIE WILLIAMS, Plaintiff,
v.
MICHAEL A. KORN, et al., Defendants.
Civil No. 1:21-CV-1506
|
11/10/2021

Martin C. Carlson, United States Magistrate Judge

MEMORANDUM OPINION

I. Statement of Facts and of the Case
*1 This case, which has been removed by the defendants to federal court, arises out of an automobile accident that occurred on December 15, 2018. The circumstances surrounding this accident are described in a 10-page, 45-paragraph complaint filed by the plaintiff. (Doc. 1). This complaint alleges that on December 15, 2018, Michael Korn, a professional commercial driver who was employed by USA Truck, Inc., stopped at Love’s Stop #358 on Interstate 81 for vehicle maintenance. (Id., ¶ 13). As part of this maintenance, Love’s performed work on the rear dual wheels of the USA Truck’s trailer. (Id., ¶ 14). Following this maintenance, Korn’s tractor trailer proceeded southbound on I-81. (Id., ¶¶ 14-16).

At approximately 2:43 p.m. on December 15, 2018, as Korn was driving southbound on I-81, the rear dual wheels that had been recently been serviced by Love’s detached from the tractor trailer and began bounding down the highway. (Id., ¶ 18). The plaintiff, Elsie Williams was operating a car that was following behind Korn’s tractor trailer on the Interstate. The detached dual rear wheels violently struck Ms. Williams’ car, causing her to careen into a concreate highway barrier. (Id., ¶¶ 18-20). According to the complaint, Williams suffered significant injuries as a result of this mishap, including a broken pelvis, neck and back injuries, multiple sprains, post-concussion syndrome, cognitive impairment, headache, loss of balance, dizziness, depression and flashbacks. (Id., ¶ 25).

Williams now brings four claims against Korn, USA Truck, Inc., and Love’s. Specifically, Williams’ complaint lodges claims of negligence and recklessness against both Korn and Love’s, as well as asserting claims of negligence and respondeat superior liability against USA Trucks. (Id., Counts I-IV). Williams’ allegations of recklessness against Korn and Love’s, in turn, support claims for punitive damages against these defendants. (Id.) The complaint then contains a specific and detailed description of the ways in which Korn and Love’s acted in what is alleged to have been a negligent and reckless fashion. In particular, the complaint alleges that Korn, as a professional driver, acted recklessly by failing to exercise reasonable care in the operation of the tractor trailer, in neglecting to exercise the high degree of care expected of a professional driver, and in failing to inspect the tractor trailer following the Love’s repair to discover unsafe or dangerous conditions. (Id., ¶ 22). The complaint also describes some 11 different ways in which it is alleged that Love’s repair work was recklessly deficient and caused the injuries to Ms. Williams. (Id., ¶ 40 a-k).

Despite these factual averments of recklessness, defendants Korn and Love’s have each have filed a motion to partially dismiss this complaint. (Docs. 8, 14). These motions seek dismissal of recklessness and punitive damages claims lodged against them, arguing that the complaint fails as a matter of law to state a claim upon which punitive damages may be awarded. Thus, it is against the backdrop of these well-pleaded facts that we are asked to conduct a preliminary assessment of whether the plaintiff has alleged sufficient facts to pursue a Pennsylvania state law claim for punitive damages grounded upon allegations reckless conduct by Korn and Love’s.

*2 At this juncture, where our review is cabined and confined to the well-pleaded facts set forth in the complaint, we conclude that this complaint satisfies federal pleading standards and the plaintiff’s allegations, if proven, could support a claim for punitive damages under Pennsylvania law. Therefore, we will deny these motions to dismiss without prejudice to renewal of these claims, if appropriate, at summary judgment upon a fully developed factual record.

II. Discussion

A. Motion to Dismiss-Standard of Review
A motion to dismiss tests the legal sufficiency of a complaint. It is proper for the court to dismiss a complaint in accordance with Rule 12(b)(6) of the Federal Rules of Civil Procedure only if the complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). With respect to this benchmark standard for the legal sufficiency of a complaint, the United States Court of Appeals for the Third Circuit has aptly noted the evolving standards governing pleading practice in federal court, stating that:
Standards of pleading have been in the forefront of jurisprudence in recent years. Beginning with the Supreme Court’s opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), continuing with our opinion in Phillips [v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008)], and culminating recently with the Supreme Court’s decision in Ashcroft v. Iqbal, -U.S.-, 129 S. Ct. 1937 (2009), pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss.
Fowler v. UPMC Shadyside, 578 F.3d 203, 209-10 (3d Cir. 2009).

In considering whether a complaint fails to state a claim upon which relief may be granted, the court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom are to be construed in the light most favorable to the plaintiff. Jordan v. Fox, Rothschild, O’Brien & Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994). However, a court “need not credit a complaint’s bald assertions or legal conclusions when deciding a motion to dismiss.” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Additionally, a court need not “assume that a…plaintiff can prove facts that the…plaintiff has not alleged.” Associated Gen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in order to state a valid cause of action, a plaintiff must provide some factual grounds for relief which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of actions will not do.” Id., at 555. “Factual allegations must be enough to raise a right to relief above the speculative level.” Id.

In keeping with the principles of Twombly, the Supreme Court has underscored that a trial court must assess whether a complaint states facts upon which relief can be granted when ruling on a motion to dismiss. In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court held that, when considering a motion to dismiss, a court should “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id., at 679. According to the Supreme Court, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id., at 678. Rather, in conducting a review of the adequacy of a complaint, the Supreme Court has advised trial courts that they must:
*3 [B]egin by identifying pleadings that because they are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.
Id., at 679.

Thus, following Twombly and Iqbal, a well-pleaded complaint must contain more than mere legal labels and conclusions; it must recite factual allegations sufficient to raise the plaintiff’s claimed right to relief beyond the level of mere speculation. As the United States Court of Appeals for the Third Circuit has stated:
[A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two-part analysis. First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief.” In other words, a complaint must do more than allege the plaintiff’s entitlement to relief. A complaint has to “show” such an entitlement with its facts.
Fowler, 578 F.3d at 210-11.

As the Court of Appeals has observed:
The Supreme Court in Twombly set forth the “plausibility” standard for overcoming a motion to dismiss and refined this approach in Iqbal. The plausibility standard requires the complaint to allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S. Ct. 1955. A complaint satisfies the plausibility standard when the factual pleadings “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556, 127 S. Ct. 1955). This standard requires showing “more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint which pleads facts “merely consistent with” a defendant’s liability, [ ] “stops short of the line between possibility and plausibility of ‘entitlement of relief.’ ”
Burtch v. Milberg Factors, Inc., 662 F.3d 212, 220-21 (3d Cir. 2011), cert. denied, 132 S. Ct. 1861 (2012).

In practice, consideration of the legal sufficiency of a complaint entails a three-step analysis:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Iqbal, 129 S. Ct. at 1947. Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id., at 1950. Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.”
Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010) (quoting Iqbal, 129 S. Ct. at 1950).

In considering a motion to dismiss, the court generally relies on the complaint, attached exhibits, and matters of public record. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007). The court may also consider “undisputedly authentic document[s] that a defendant attached as an exhibit to a motion to dismiss if the plaintiff’s claims are based on the [attached] documents.” Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). Moreover, “documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered.” Pryor v. Nat’l Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002); see also U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 382, 388 (3d Cir. 2002) (holding that “[a]lthough a district court may not consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss in one for summary judgment”). However, the court may not rely on other parts of the record in determining a motion to dismiss, or when determining whether a proposed amended complaint is futile because it fails to state a claim upon which relief may be granted. Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).

B. Punitive Damages Under Pennsylvania Law
*4 Defendant Korn and Love’s are charged in a multi-count complaint with negligent, careless, and reckless conduct. To the extent that these counts bring claims for punitive damages under state law, Pennsylvania law sets an exacting standard for the award of punitive damages in tort cases:
Pennsylvania has adopted Section 908 of the Restatement (Second) of Torts, which provides that punitive damages may be “awarded to punish a defendant for outrageous conduct, which is defined as an act which, in addition to creating ‘actual damages, also imports insult or outrage, and is committed with a view to oppress or is done in contempt of plaintiffs’ rights.’…Both intent and reckless indifference will constitute a sufficient mental state.” Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 235 (3d Cir. 1997) (quoting Delahanty v. First Pa. Bank, N.A., 318 Pa.Super. 90, 464 A.2d 1243, 1263 (1983)).
W.V. Realty, Inc. v. N. Ins. Co., 334 F.3d 306, 318 (3d Cir. 2003). As the Pennsylvania Supreme Court has observed:
The standard governing the award of punitive damages in Pennsylvania is settled. “Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” Feld v. Merriam, 506 Pa. 383, 485

A.2d 742, 747 (1984) (quoting Restatement (Second) of Torts § 908(2)
(1979)); see also Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355, 358 (1963). As the name suggests, punitive damages are penal in nature and are proper only in cases where the defendant’s actions are so outrageous as to demonstrate willful, wanton or reckless conduct. See SHV Coal, Inc. v. Continental Grain Co., 526 Pa. 489, 587 A.2d 702, 704 (1991); Feld, 485 A.2d at 747-48; Chambers, 192 A.2d at 358. See also Restatement (Second) of Torts § 908, comment b. The purpose of punitive damages is to punish a tortfeasor for outrageous conduct and to deter him or others like him from similar conduct. Kirkbride v. Lisbon Contractors, Inc., 521 Pa. 97, 555 A.2d 800, 803 (1989); Restatement (Second) of Torts § 908 (1) (“Punitive damages are damages, other than compensatory or nominal damages, awarded against a person to punish him for his outrageous conduct and to deter him and others like him from similar conduct in the future.”). Additionally, this Court has stressed that, when assessing the propriety of the imposition of punitive damages, “[t]he state of mind of the actor is vital. The act, or the failure to act, must be intentional, reckless or malicious.” See Feld, 485 A.2d at 748; see also Martin v. Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088, 1097 n. 12 (1985) (plurality opinion).
Hutchison ex rel. Hutchison v. Luddy, 582 Pa. 114, 121-22, 870 A.2d 766, 770-71 (2005).
In Hutchinson the Pennsylvania Supreme Court also:
[S]et forth the standard the courts are to apply when called upon to determine whether the evidence supports a punitive damages award on such a basis. Noting that Comment b to Section 908(2) of the Restatement refers to Section 500 as defining the requisite state of mind for punitive damages based on reckless indifference, this Court turned to Section 500, which states:
§ 500 Reckless Disregard of Safety Defined: The actor’s conduct is in reckless disregard of the safety of another if he does an act or intentionally fails to do an act which it is his duty to the other to do, knowing or having reason to know of facts which would lead a reasonable man to realize, not only that his conduct creates an unreasonable risk of physical harm to another, but also that such risk is substantially greater than that which is necessary to make his conduct negligent. Restatement (Second) of Torts § 500.
*5 Id., at 771. Noting that Section 500 set forth two very different types of state of mind as to reckless indifference, the Pennsylvania Supreme Court adopted the narrower reading of this state of mind requirement when addressing punitive damage claims, concluding that “in Pennsylvania, a punitive damages claim must be supported by evidence sufficient to establish that (1) a defendant had a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.” Id., at 772.

In motor vehicle accident cases where claims for punitive damages are pleaded by plaintiffs, defendants often invite courts to dismiss these punitive damage claims. Yet, such invitations, while frequently made by defendants, are rarely embraced by the courts. Instead, courts routinely deny requests to dismiss punitive damages claims in motor vehicle accident cases at the outset of litigation. See e.g., Kerlin v. Howard, No. 4:18-CV-00481, 2018 WL 4051702, at *1 (M.D. Pa. Aug. 24, 2018); Wydra v. Bah, No. 3:15-CV-1513, 2016 WL 297709, at *2 (M.D. Pa. Jan. 22, 2016); Cobb v. Nye, No. 4:14-CV-0865, 2014 WL 7067578, at *4 (M.D. Pa. Dec. 12, 2014) (citing Young v. Westfall, No. 4:06–CV–2325, 2007 WL 675182, at *2 (M.D.Pa. Mar. 1, 2007) (denying motion to dismiss punitive damages in negligence accident involving a tractor-trailer)); Ferranti v. Martin, No. 3:06-CV-1694, 2007 WL 111272, at *2 (M.D. Pa. Jan. 19, 2007) (Munley, J .) (finding, in a claim relating to a tractor-trailer accident, that the plaintiff had pled sufficient allegations to require discovery).

As a general rule, the courts have deemed such motions to dismiss punitive damages claims to be premature and inappropriate where, as here, the complaint alleges reckless conduct. Moreover, because the question of whether punitive damages are proper often turns on the defendants’ state of mind, this question frequently cannot be resolved on the pleadings alone, but must await the development of a full factual record at trial. See generally, In re Lemington Home for the Aged, 777 F.3d 620, 631 (3d Cir. 2015). Therefore, where a plaintiff’s right to punitive damages may turn on the significance afforded to disputed factual questions, defendants are not entitled to a judgment in their favor on the plaintiff’s punitive damages claims as a matter of law at the outset of the litigation. See Burke v. TransAm Trucking, Inc., 605 F.Supp.2d 647, 649 (M.D. Pa. 2009); Garden State Tire Realty Corp. v. R.K.R. Hess Assocs., Inc., 762 F. Supp. 92, 93 (M.D. Pa. 1990).

These legal benchmarks guide us in consideration of these motions to dismiss Williams’ punitive damages claims.

C. These Motions to Dismiss Should Be Denied.
Defendants Korn and Love’s have moved to dismiss the punitive damages claims set forth in this complaint, alleging that the well-pleaded facts described in this 10-page, 45-paragraph complaint are insufficient to state a claim upon which relief may be granted.

We disagree.

Recognizing that federal pleading requirements set a plausibility standard for civil complaints, we acknowledge that, “[a] complaint satisfies the plausibility standard when the factual pleadings ‘allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556, 127 S. Ct. 1955).” Burch v. Milberg Factors, Inc., 662 F.3d 212, 220-21 (3d Cir. 2011) cert. denied, 132 S. Ct. 1861, 182 L. Ed. 2d 644 (U.S. 2012). In the instant case, fairly construed, this civil complaint meets the pleading requirements prescribed by federal law in that it states a plausible and legally sufficient claim for punitive damages. While we recognize that the plaintiff will ultimately be required to satisfy an exacting burden of proof to sustain these state law punitive damages claims, at this stage of the litigation, where we are considering a motion to dismiss, we find that the plaintiff has alleged sufficient well-pleaded facts to permit this case to proceed forward on these punitive damages claims.

*6 Accepting the well-pleaded facts set forth in the complaint, as we must when examining a motion to dismiss, it describes a singular set of circumstances: A repair performed by Love’s on the rear dual wheels of Korn’s tractor trailer, which was followed by those wheels coming detached from the tractor trailer on the highway and striking another vehicle. These well-pleaded allegations permit an inference that Love’s acted in a reckless fashion in a series of ways that violated the duty of care it owed to others, as well as state traffic laws and federal highway safety regulations, when it performed these truck repairs. Further, given what is described as a catastrophic failure of the dual rear wheels on this tractor trailer shortly after these repairs were performed, the well-pleaded facts would also permit an inference that Korn may have acted recklessly in failing to inspect and ensure the safety of this vehicle before he proceeded onto the highway.

As we have noted, Pennsylvania law sets a high and exacting standard for the award of punitive damages. “[I]n Pennsylvania, a punitive damages claim must be supported by evidence sufficient to establish that (1) a defendant had a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.” Hutchison, 870 A.2d at 772. While this is a precise burden of pleading and proof, the well-pleaded facts set forth in the complaint plausibly state claims for punitive damages under Pennsylvania law since, fairly construed, this complaint alleges that reckless behavior caused this fatal accident. Such averments, as a matter of pleading, are sufficient to state a claim for punitive damages in this factual setting. See e.g., Kerlin, 2018 WL 4051702, at *1; Wydra, 2016 WL 297709, at *2; Cobb, 2014 WL 7067578, at *4 (citing Young, 2007 WL 675182, at *2 (denying motion to dismiss punitive damages in negligence accident involving a tractor-trailer)); Ferranti, 2007 WL 111272, at *2 (finding, in a claim relating to a tractor-trailer accident, that the plaintiff had pled sufficient allegations to require discovery). Therefore, when viewed in the light of these well-pleaded facts set forth in the complaint, a basis lies in this case for a claim of punitive damages against defendants Korn and Love’s. Accordingly, the defendants are not entitled to the dismissal of this punitive damages claim at the outset of this litigation, and this motion to dismiss should be denied. See Burke, 605 F.Supp.2d at 649 (denying summary judgment on punitive damages claim); Garden State Tire Realty Corp., 762 F. Supp. at 93 (denying motion to dismiss punitive damages claim).

Of course, this judgment rests solely upon our assessment of the pleadings. Therefore, should the discovery process reveal undisputed facts which negate any claim of recklessness on the part of Korn or Love’s the defendants should feel free to renew these claims through a properly documented motion for summary judgment. In the meanwhile, however, for the foregoing reasons the Defendants’ Motions to Dismiss, (Docs. 8 and 14) will be DENIED.

An appropriate order follows.
s/ Martin C. Carlson

Martin C. Carlson

United States Magistrate Judge

DATED: November 10, 2021
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

ELSIE WILLIAMS, : Civil No. 1:21-CV-1506
:

:

Plaintiff, :

:

v. :
: (Magistrate Judge Carlson) MICHAEL A. KORN, et al., :

:
Defendants. :

ORDER
AND NOW, this 10th day of November 2021, in accordance with the accompanying Memorandum Opinion, the Defendants’ Motions to Partially Dismiss the Plaintiff’s Complaint, (Docs. 8 and 14) are DENIED without prejudice to renewal of these claims, if appropriate, at summary judgment upon a fully developed factual record.
s/ Martin C. Carlson

Martin C. Carlson

United States Magistrate Judge
All Citations
Slip Copy, 2021 WL 5233327