The Duty to Defend in Pennsylvania: Considering Information Outside of the Four Corners of the Complaint
In general, Pennsylvania courts are limited to examining the allegations made in an underlying complaint in determining the duty to defend. In Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 589 Pa. 317, 908 A.2d 888 (2006) the Supreme Court reversed the Superior Court when it looked beyond allegations of the complaint and considered expert reports offered by the insured in the underlying action in when determining that an underlying complaint alleged an occurrence. Id. at 330, 908 A.2d at 896. The limits of the “four corners rule” are again considered by the Superior Court in Lexington Ins. Co. v. Charter Oak Fire Ins. Co., 2013 PA Super 286 (Pa. Super. Ct. Nov. 6, 2013).
Lexington involves a dispute among insurers over coverage for a personal injury claim against an insured engineering firm. The complaint named multiple defendants and alleged both general and professional negligence against all defendants without distinction. One of the issues presented was whether the insurance policy’s professional liability exclusion negated the insurer’s duty to defend the complaint.
The Superior Court held that considering the allegations of the complaint alone it was impossible to determine whether the complaint’s allegations fell outside the coverage provided. Therefore the insurer could not rely on the exclusion until it was able to demonstrate that the precise claims against the insured were beyond the scope of coverage. But the Court also observed that it was not limited to the facts of the complaint in determining the duty to defend:
Litigation is not merely a snapshot of a dispute taken once when a complaint is filed. To the contrary, provided a plaintiff does not change a cause of action, she may liberally amend or amplif[y] that which has already been averred. The duty to defend persists until an insurer can limit the claims such that coverage is impossible. Accordingly, there must be some mechanism, such as a declaratory judgment action, by which a court can reexamine the scope of the underlying claims. Thus, in the appropriate context, a court must be permitted to consider evidence that would absolve the insurer of its duty to defend a complaint.
Lexington Ins. Co. v. Charter Oak Fire Ins. Co., 2013 PA Super 286 (Pa. Super. Ct. Nov. 6, 2013)(emphasis added)(citations omitted).
Lexington indicates that a court may consider evidence that amplifies the underlying complaint’s allegations in determining the duty to defend. Lexington presented an “appropriate context” to consider that information since the evidence in question, expert reports produced by the underlying plaintiff, explained the ambiguous allegations of the complaint.