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Harleysville Insurance Co. v. Church Insurance Co.11/16/2005
Capital's defense. It was not until September 6, 2001, almost a year and a half after receiving Cathedral's Form 30 interrogatory answers, that Harleysville's defense attorney, in a letter to Church's attorney, informally inquired into potential coverage under Cathedral's policy. He specifically asked whether "Capital Management was a named insured under the policy in effect at the time of the original contract, 1994, and at the time of the accident.." He also asked for a copy of the portions of the policies that identified the "named insureds." More importantly, Harleysville's attorney noted " though Capital.may not be specifically named, it may be named in general, i.e., general manager." The Harleysville attorney's letter to Church's counsel designated for Cathedral clearly shows that he, like Harleysville's litigation specialist, knew that it was possible for Capital to be insured under Cathedral's commercial policy, even though Capital was not specifically named as an additional insured. Church's response to Harleysville's attorney's letter, that Capital was "not named as an additional insured on any policy covering the subject property at the time of Mr. Brown's accident," was, as the trial judge found, "technically correct." The response, as Church's attorney conceded at oral argument, probably did not comport with the spirit of Harleysville's inquiry. Nevertheless, even assuming the trial judge was mistaken in looking only to the "letter" of Church's response instead of its "spirit", Church's response has no bearing on the waiver issue in this case.
The critical time period with respect to the waiver issue is the one beginning after Harleysville received the Form 30 interrogatories and ending before trial. At the hearing on the motion to compel, Brown's attorney corroborated what was already clear from the docket entries of the personal injury litigation: no party filed discovery trying to determine whether Capital was an insured under the Church policy before Brown's personal injury trial. The motion to compel that Harleysville emphasizes so heavily in its brief came only after the jury verdict and as part of the second lawsuit (at issue here) attempting to enforce the judgment in the first lawsuit. The motion to compel, and Church's course of conduct after the verdict, are thus, entirely irrelevant, to the waiver issue. Once a right is waived, it is gone forever. Accordingly, Harleysville's focus in its brief and at oral argument on Church's resistance to discovery after Brown's personal injury trial is a red herring. While Church's conduct was less than ideal insofar as Church failed to correctly determine its legal obligation, failed to determine that Capital was an additional insured, failed to notify Capital, and failed to answer Harleysville's last minute desperate September 6, 2001 letter according to the spirit of its inquiries, Church's conduct does not obligate it to indemnify Harleysville for the costs Harleysville incurred in defending Capital. Harleysville simply failed, for whatever reason, to use the available informal investigative and formal discovery process to resolve the issue of which carrier owed Capital a defense before the discovery period closed, motion practice ended, and trial began. Accordingly, the record supports the trial judge's finding that:
ven though silence by an insured is not a waiver of the right to a defense, by not determining Capital's rights under the Church policy and by conducting the pre-trial defense of Capital, Harleysville waived Capital's right to a defense by Church. Church was arguably entitled to interpret Harleysville's actions as a waiver of the right to a defense.
Conclusion
Based on the foregoing and the
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