The Subrogation Strategist

In Mutual Benefit Ins. Co. a/s/o Michael Sacks v. Koser, No. 1340 MDA 2023, 2023 Pa. Super. LEXIS 574, 2023 PA Super 252 (Mutual Benefit), the Superior Court of Pennsylvania discussed whether a landlord’s property insurer could file a subrogation action against tenants that had negligently damaged the landlord’s property. Despite there being more than one clause in the lease holding the tenants liable for the damages, the court held that because there was a provision requiring the landlord, not the tenants, to insure the leased building, the insurer could not subrogate against the tenants.

In Pennsylvania, a tenant’s liability for damage to a leased premises in a subrogation action brought by a landlord’s insurer is determined by the reasonable expectation of the parties to the lease agreement. Under this approach, to determine if subrogation is permitted, the court considers the circumstances of the case and examines the terms of the lease agreement.

In Sullivan v. Werner Co., No. 18 EAP 2022, 2023 Pa. LEXIS 1715 (Dec. 22, 2023), the Supreme Court of Pennsylvania (Supreme Court) clarified that in light of its decision in Tincher v. Omega Flex, Inc., 628 Pa. 296 (2014), evidence that a product complied with industry standards is inadmissible in an action involving strict product liability.

In Tincher, the Supreme Court overruled prior case law and reaffirmed that Pennsylvania is a Second Restatement Jurisdiction. As stated in Sullivan, discussing Tincher, under the Restatement (Second) of Torts § 402A, a “seller of a product has a duty to provide a product that is free from ‘a defective condition unreasonably dangerous to the consumer or [the consumer’s] property.’ To prove breach of this duty, a ‘plaintiff must prove that a seller (manufacturer or distributor) placed on the market a product in a “defective condition.””Continue Reading

In Westminster Am. Ins. Co. a/s/o Androulla M. Toffalli v. Bond, No. 538 EDA 2023, 2023 Pa. Super. LEXIS 626, 2023 PA Super 272, the Superior Court of Pennsylvania (Appellate Court) recently discussed the impact of silence on the Sutton Rule with respect to the landlord, Androulla M. Toffalli (Landlord), securing insurance. After holding that the tenant, Amy S. Bond (Bond) t/a Blondie’s Salon – who leased both commercial and residential space in the building pursuant to written leases – was not an implied “co-insured” on Landlord’s insurance policy, the Appellate Court reversed the decision of the trial court.

In this case, Bond rented the ground floor of a property located in Monroe County pursuant to a written commercial lease (Commercial Lease) and operated Blondie’s salon out of the leased location. In addition, Bond rented and lived in a second-floor apartment pursuant to a residential lease (Residential Lease). Both leases required the tenants (Tenants) to obtain insurance for personal items. The leases, however, did not require Landlord to obtain fire insurance for the property.Continue Reading

In Brown v. City of Oil City, No. 6 WAP 2022, 2023 Pa. LEXIS 681 (2023), the Supreme Court of Pennsylvania (Supreme Court) recently held that a contractor can be liable for dangerous conditions it creates even if the hazard is obvious or known by the property owner. In City of Oil City, the City of Oil City (Oil City) contracted with Harold Best and Struxures, LLC and Fred Burns, Inc. (collectively Contractors) to reconstruct the concrete stairs to the city library. Contractors completed their work at the end of 2011. In early 2012, Oil City received reports of issues with the stairs. Oil City notified Contractors that it considered the stairs dangerous and that Contractors’ defective workmanship created the condition. Neither Oil City or Contractors took any action to fix the stairs or warn of the danger and the stairs’ condition worsened with time.

In Venema v. Moser Builders, Inc., 2022 PA Super. 171, 2022 Pa. Super. LEXIS 414, the Superior Court of Pennsylvania (Superior Court) upheld an award of judgment on the pleadings from the Court of Common Pleas of Chester County (Trial Court). The Superior Court found that Pennsylvania’s 12-year Statute of Repose for improvements to real property (Statute of Repose) began to run upon the issuance of the certificate of occupancy following original construction of the home in 2003—not from the completion of repairs to the home that continued through 2008.Continue Reading

In Smith v. Spectrum Brands, Inc., 2022 U.S. Dist. LEXIS 142262, the United States District Court for the Eastern District of Pennsylvania (District Court) considered whether the plaintiffs’ liability expert met the requirements of Rule 702 of the Federal Rules of Evidence and could testify that a filter pump for an aquarium tank was defectively designed and caused a fire at the plaintiffs’ home. The defendant filed a motion to exclude the plaintiffs’ liability expert on grounds that the expert’s opinion did not satisfy the reliability element of Rule 702 because the expert never conducted physical testing on the filter pump. The court found that the cognitive testing employed by the expert through various methods, including visual inspections of the evidence, a review of photographs of the scene and literature from the manufacturer, and research on similar products, was sufficiently reliable to admit his opinion.Continue Reading

In Allstate Ins. Co. v. LG Elecs. USA, Inc., No. 19-3529, 2021 U.S. Dist. LEXIS 127014, the United States District Court for the Eastern District of Pennsylvania considered whether plaintiff’s expert engineer’s opinion that there were two possible causes of a fire—both related to alleged product defects within a refrigerator manufactured by the defendant—was sufficient to support the malfunction theory of products liability. The court found that because both potential causes imposed liability on the product manufacturer and the expert ruled out misuse of the product, as well as all external causes of the fire, it was not necessary for the engineer to identify a specific cause under the malfunction theory. The court also found that the expert’s investigation and opinions met the criteria set forth in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) and the Federal Rules of Evidence and, thus, were admissible.Continue Reading

Pennsylvania recognizes the malfunction theory in product liability cases. This theory allows a plaintiff to circumstantially prove that a product is defective by showing evidence of a malfunction and eliminating abnormal use or reasonable, secondary causes for the malfunction. The malfunction theory is available to plaintiffs as an alternative to proving a traditional strict product liability case in those circumstances where direct evidence of a product defect is not found. In Pa. Nat’l Mut. Cas. Ins. Co. v. Sam’s East, Inc., 727 MDA 2020, 2021 Pa. Super. Unpub. LEXIS 752, the Superior Court of Pennsylvania (Superior Court) considered whether the plaintiffs could avail themselves to the malfunction theory if the plaintiffs’ expert was able to examine the product.Continue Reading

Strict products liability cases have been the subject of much fluctuation in the Pennsylvania courts over the last few years. Utilizing hope created by the courts in recent strict liability cases, defendants have tried to revive defenses based on meeting industry standards and the plaintiff’s contributory negligence. Recently, the Superior Court of Pennsylvania tempered that hope with limitations of how far strict liability defenses can extend.Continue Reading

In Earl v. NVR, Inc., No. 20-2109, 2021 U.S. App. LEXIS 6451, the U.S. Court of Appeals for the Third Circuit (Third Circuit) considered whether, under Pennsylvania law, the plaintiff’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) claims against the builder of her home were barred by the economic loss doctrine. The UTPCPL is a Pennsylvania statute that prohibits “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” 73 Pa. Stat. Ann. § 201-3. The Third Circuit previously addressed the impact of the economic loss doctrine on UTPCPL claims in Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002). In Werwinski, the court held that the plaintiff’s UTPCPL claim was barred by the economic loss doctrine. The Court of Appeals overturned its decision in Werwinski and held that the economic loss doctrine does not bar UTPCPL claims since such claims are statutory, and not based in tort.Continue Reading

In Kenney v. Watts Regulator Co, No. 20-2995, 2021 U.S. Dist. LEXIS 4539 (E.D. Pa. Jan. 11, 2021), the United States District Court for the Eastern District of Pennsylvania considered whether to exclude the plaintiff’s liability expert’s testimony regarding the sufficiency of the defendant’s product maintenance instructions. The plaintiff offered the testimony in support of his failure-to-warn product defect claim. The District Court excluded the testimony because the facts of the case did not support the plaintiff’s failure-to-warn claim, which rendered the testimony irrelevant. This case establishes that expert testimony can be excluded if there is an improper fit between the testimony and the underlying claim.Continue Reading

Courts are faced with the difficult task of drawing a line to determine when the failure to preserve evidence becomes culpable enough to permit a judicial remedy. In State Farm Fire & Cas. Co. v. Cohen, No. 19-1947, 2020 U.S. Dist. LEXIS 163681, the United States District Court for the Eastern District of Pennsylvania (District Court) made clear that a party is not entitled to a spoliation sanction without proof that the alleged spoliation was beyond accident or mere negligence. The District Court emphasized that when evidence goes missing or is destroyed, the party seeking a spoliation sanction must show that the alleged spoliation was intentional and that the alleged spoliator acted in “bad faith” before adverse inferences will be provided.Continue Reading

In Joella v. Cole, 2019 PA Super. 313, the Superior Court of Pennsylvania recently considered whether a tenant, alleged by the landlord’s property insurance carrier to have carelessly caused a fire, was an implied co-insured on the landlord’s policy. The court found that the tenant was an implied co-insured because the lease stated that the landlord would procure insurance for the building, which created a reasonable expectation that the tenant would be a co-insured under the policy. Since the tenant was an implied co-insured on the policy, the insurance carrier could not maintain a subrogation action against the tenant. This case confirms that Pennsylvania follows a case-by-case approach when determining whether a tenant was an implied co-insured on a landlord’s insurance policy.Continue Reading

Since the Supreme Court of Pennsylvania decided Tincher v. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014), parties proceeding in product liability cases in Pennsylvania often disagree about jury instructions. In Davis v. Volkswagen Grp. of Am., No. 1405 EDA 2018, 2019 Pa. Super. Unpub. LEXIS 2763, the Superior Court of Pennsylvania, in an unpublished opinion,[1] recently addressed whether the trial court gave proper jury instructions in a products liability case against Volkswagen entities, including Volkswagen Aktiengeselleschaft (Volkswagen). The court held that, despite a statement in Tincher that the plaintiff is the “master of the claim,” the trial court properly instructed the jury on both the consumer expectation test and the risk-utility test for establishing that the product at issue, a Volkswagen Passat, was in a defective condition.Continue Reading

In Morse v. Fisher Asset Management, LLC, 2019 Pa. Super. 78, the Superior Court of Pennsylvania considered whether the plaintiff’s action was stayed when the trial court dismissed the plaintiff’s complaint after sustaining the defendants’ preliminary objections seeking enforcement of an arbitration clause in the contract at issue. The Superior Court—distinguishing between a defendant who files a motion to compel arbitration and a defendant who files preliminary objections based on an arbitration clause—held that, in the latter scenario, if the defendant’s preliminary objections are sustained, the statute of limitations is not tolled. This case establishes that, in Pennsylvania, plaintiffs seeking to defeat a challenge to a lawsuit based on a purported agreement to arbitrate need to pay close attention to the type of motion the defendant files to defeat the plaintiff’s lawsuit.Continue Reading

How the Pennsylvania Supreme Court’s Decision in Kamara Changes the Legal Landscape for Workers’ Compensation Subrogation and Successfully Moving Forward

On November 21, 2018, the Pennsylvania Supreme Court, in a 5-4 decision, reversed the Superior Court stating a right of action in Pennsylvania remains with the injured employee. Specifically, the court held that “unless the injured employee assigns her cause of action or voluntarily joins the litigation as a party plaintiff, the insurer may not enforce its statutory right to subrogation by filing an action directly against the tortfeasor.”Continue Reading

On June 19, 2018, the Pennsylvania Supreme Court decided Whitmoyer v. WCAB (Mountain Country Meats), No. 52 MAP 2017, 2018 Pa. Lexis 2995. The decision reversed longstanding Pennsylvania law and the Commonwealth Court’s decision. The net result of this decision: an insurer can no longer assert a future credit on projected medical benefit payments when settling a third-party case. However, insurers may continue to assert a future credit on indemnity payments.Continue Reading

In Adams v. Hellings Builders, Inc., 2016 Pa. Super. 192, 2016 Pa. Super. LEXIS 487, Christopher Adams and his wife, Margaret Adams (Plaintiffs), filed suit against Defendant Hellings Builders, Inc. (Hellings) to recover for moisture-related damage to their home caused by Hellings’ allegedly defective installation of stucco. Hellings filed Preliminary Objections, arguing that Plaintiffs failed to state a claim because they were not in privity with Hellings and they had no direct business dealings with Hellings.Continue Reading

In Brown v. Greyhound Lines, Inc., 142 A.3d 1 (Pa. Super. May 24, 2016), the Superior Court of Pennsylvania addressed attorney-client privilege and work product claims associated with the ordered production of materials from a third-party administrator’s claim file. The court also discussed whether the video recording of a mock deposition of a defendant’s employee was discoverable as a recorded statement. With respect to the first issue, the court rejected the defendants’ wholesale claim of privilege related to any and all original investigation statements in the third-party administrator’s file. With respect to the ordered production of the mock deposition video, the court found that the video was discoverable pursuant to Pa. R.C.P. 4003.4. The Brown case serves as a reminder that a third-party claims administrator’s file materials may be discoverable and recorded statements by party witnesses, even if conducted by counsel in the form of an interview, may be discoverable if they are recorded by a third-party such as a court reporter or videographer.Continue Reading

By: Edward Jaeger and Michael Wolfer

In Gongloff Contracting, L.L.C. v. L. Robert Kimball & Associates, Architects and Engineers, 119 A.3d 1070 (Pa. Super. 2015), the Pennsylvania Superior Court recently held that a negligent misrepresentation claim against an architect does not require a plaintiff to make allegations of an express misrepresentation by the architect in order to survive a motion for judgment on the pleadings based on the economic loss doctrine. The court held that, pursuant to Bilt-Rite Contractors, Inc. v. The Architectural Studio, 581 Pa. 454 (2005), a plaintiff may sufficiently plead a negligent misrepresentation claim by asserting that the architect’s design documents contained false information.Continue Reading

When an insurer, as subrogee of its insured, files suit against a defendant to recover its subrogated payments, the defendant, not infrequently, files a third-party complaint against the insured. Typically, the defendant alleges that, if it is liable, then the insured, based on his or her contributory negligence, is liable to the defendant for contribution. Insureds, however, cannot be liable in tort to themselves.Continue Reading

By: Edward A. Jaeger, Jr. and William L. Doerler

In Tincher v. Omega Flex, Inc., -- A.3d --, 2014 WL 6474923 (Pa. Nov. 19, 2014), the Supreme Court of Pennsylvania discussed the Commonwealth of Pennsylvania’s products liability law and, overturning prior precedent, clarified the law. In particular, the Court, overturned Azzarello v. Black Brothers Company, 480 Pa. 547, 391 A.2d 1020 (1978), clarified the role of the judge and the jury in products liability cases and settled the question of whether Pennsylvania would adopt the Restatement (Third) of Torts: Products Liability §§ ... Continue Reading

By: Edward A. Jaeger, Jr. and William L. Doerler

In Conway v. Cutler Group, Inc., -- A.3d --, 2014 WL 4064261 (Pa.), the Supreme Court of Pennsylvania addressed the question of whether a subsequent home buyer can recover from a home builder pursuant to the builder’s implied warranty of habitability, a warranty that protects those who purchase a newly constructed home from latent defects. Concluding that a builder’s warranty of habitability is grounded in contract, the Court held that a subsequent purchaser of a previously inhabited home cannot recover damages from a ... Continue Reading