Justia Pennsylvania Supreme Court Opinion Summaries

The issue before the Supreme Court was the determination of the proper test for evaluating whether an oil or gas lease has produced "in paying quantities," as first discussed "Young v. Forest Oil Co.," (194 Pa. 243, 45 A. 1 (1899)). Appellant Ann Jedlicka owned a parcel of land consisting of approximately 70 acres. The Jedlicka tract is part of a larger tract of land consisting of approximately 163 acres, which was conveyed to Samuel Findley and David Findley by deed dated 1925. In 1928, the Findleys conveyed to T.W. Phillips Gas and Oil Co. an oil and gas lease covering all 163 acres of the Findley property which included the Jedlicka tract. The lease contained a habendum clause which provided for drilling and operating for oil and gas on the property so long as it was produced in "paying quantities." Notably, the term "in paying quantities" was not defined in the lease. Subsequently, the Findley property was subdivided and sold, including the Jedlicka tract, subject to the Findley lease. A successor to T.W. Philips, PC Exploration made plans to drill more wells on the Jedlicka tract. Jedlicka objected to construction of the new wells, claiming that W.W. Philips failed to maintain production "in paying quantities" under the Findley lease, and as a result, the lease lapsed and terminated. After careful consideration, the Supreme Court held that when production on a well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase "in paying quantities" must be construed with reference to an operator's good faith judgment. Furthermore, the Court found the lower courts considered the operator's good faith judgment in concluding the oil and gas lease at issue in the instant case has produced in paying quantities, the Court affirmed the order of the Superior Court which upheld the trial court's ruling in favor of T.W. Phillips Gas and Oil Co. and PC Exploration, Inc. View "T.W. Phillips Gas and Oil Co. v. Jedlicka" on Justia Law

The issue before the Supreme Court in this case concerned whether Section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), preempted the breach of contract claim asserted by Appellees Lawrence J. Barnett, Christine Cookenback, James M. Defeo, and Madlin Laurent against Appellant SKF USA, Inc. under Pennsylvania law. Appellees were salaried, non-unionized, employees of SKF, working in its Philadelphia plant. The Company also employed hourly unionized employees at the plant. In 1991, SKF announced its decision to shut down the plant and terminate all workers. Over the course of the next year, the effect of the closing on employee retirement rights and benefits became a matter of discussion between Appellees and their supervisors. Appellees' retirement and pension rights were set forth in the an ERISA plan which SKF maintained and administered. Appellees became aware that, as a result of collectively bargaining the effects of plant closing, SKF agreed that any union worker with 20 years of service and 45 years of age, as of March 10, 1993, the date on which the collective bargaining agreement then in effect expired, would be entitled to receive an immediate and full pension (the creep provision). Two years after their employment with SKF was terminated, and prior to the submission of pension applications, Appellees commenced a breach of contract action against SKF alleging that throughout the course of their employment with the Company, they were employed under the same or better terms and conditions, including "pension eligibility," as SKF’s union workers. Upon review of the trial court record, the Supreme Court found that Appellees' claim was preempted, and accordingly reversed the Superior Court's order that affirmed the trial court's denial of summary judgment in favor of SKF. View "Barnett v. SKF USA, Inc." on Justia Law

The Supreme Court granted this appeal to consider whether a trial court could refuse to award contractual interest to the prevailing party in a contract dispute based on a finding of dilatory conduct by the prevailing party. Appellee Morgan's Tool & Supply (MTS) became delinquent on two accounts it had with TruServ, and after the parties were unable to agree on a payment plan to bring the accounts current, TruServ advised MTS by letter that it was terminating its Retail Member Agreement with MTS. TruServ filed a complaint against MTS alleging breach of contract and unjust enrichment. The trial court concluded MTS had breached its agreement with TruServ by failing to pay for the merchandise it had ordered and received. The court awarded TruServ damages plus costs and counsel fees. The court concluded however that "the decision of whether to award prejudgment interest is at the discretion of the court," and declined to award interest on the basis that TruServ was dilatory in prosecuting its claim. Upon review, the Supreme Court held that a trial court may not refuse to award interest to the prevailing party when the right to interest has been expressly reserved under the terms of the contract. Thus, the Court remanded this matter to the trial court for recalculation of its award in favor of TruServ. View "Truserve Corp. v. Morgan's Tool & Supply" on Justia Law

The issue on appeal to the Supreme Court in this case pertained to the extent to which the federal Employee Retirement Income Security Act (ERISA) preempted the Pennsylvania Probate, Estates and Fiduciaries Code, 20 Pa.C.S. 6111.2. The Decedent Paul Sauers, III obtained a $40,000 life insurance policy in 1997 from the Hartford Life Insurance Company pursuant to a employee group benefit plan which was subject to ERISA. At the time of his death, Decedent's beneficiaries were his ex-spouse and his nephew as contingent beneficiary. William F. Sauers, administrator of Decedent’s estate, filed in the Orphans’ Court of York County a petition for rule to show cause why primary beneficiary ex-Spouse should not have surrendered to the Contingent Beneficiary all interest in the proceeds of the insurance policy pursuant to 20 Pa.C.S. 6111.2. The ex-spouse objected and filed a motion to dismiss the petition for rule to show cause, arguing that regardless of any Pennsylvania statute to the contrary, ERISA mandated taht the proceeds of the policy be paid to her as the primary beneficiary of the policy. Upon review, the Supreme Court held that while an estate may properly bring a cause of action on behalf of a contingent beneficiary to a life insurance policy in a county orphans’ court seeking the proper distribution of assets, ultimately, ERISA preempts Section 6111.2 of the Probate Code. To the extent the en banc panel of the Superior Court held otherwise, the Court reversed and remanded this appeal to that court for further proceedings. View "In Re: Estate of Sauers" on Justia Law

At issue before the Supreme Court was whether it was a violation of public policy to exclude from underinsured motorist coverage (UIM) a claim by an individual eligible for workers' compensation benefits. Appellant Frank Heller was severely injured from an automobile accident that happened during the course of his employment as a police officer for Sugarcreek Borough. Workers' Compensation covered his medical expenses and two-thirds of his salary. The Borough paid the remainder of Appellant's salary. Appellant's losses and damages far exceeded the policy limit from the tortfeasor's insurance carrier. Accordingly, Appellant notified his insurer of a potential UIM claim and sought UIM benefits from the Borough pursuant to a policy issued by the Pennsylvania League of Cities and Municipalities. Ultimately, Appellant's claim was denied. Upon review, the Supreme Court concluded that an exclusion in Appellant's workers' compensation policy violated public policy and was therefore unenforceable. The Court reversed the Commonwealth Court which held that the policy considerations favored the insurer: "Invalidating the workers' compensation exclusion would not force [the UIM insurer] to underwrite an unknown risk for which it did not receive compensation. The Borough voluntarily elected to purchase optional UIM coverage. .. [W]e find [Appellant's] assertion that the Borough purchased illusory coverage persuasive… the vast majority of all UIM claims likely will be made by Borough employees who are eligible for workers' compensation. The subject exclusion operates to deny UIM benefits to anyone who is eligible for workers' compensation." View "Heller v. Pa. League of Cities and Municipalities" on Justia Law

Appellant Robert Petty is sole owner of Co-Appellant R.G. Petty Masonry. Appellants contracted with Respondent Blue Cross of Northeastern Pennsylvania (Blue Cross), a nonprofit hospital corporation that provides health insurance coverage for its employees. Appellants are covered under the group policy as subscribers. Appellants filed a four-count class action suit against Blue Cross, alleging that it violated the state Nonprofit Law by accumulating excessive profits and surplus well beyond the "incidental profit" permitted by statute. The second count alleged Blue Cross breached its contract with Appellants by violating the Nonprofit Law. The third count alleged Blue Cross owed appellants a fiduciary duty by virtue of their status as subscribers, and that duty was breached when it accrued the excess surplus. The fourth count requested an inspection of Blue Cross' business records. The trial court found Appellants lacked standing to challenge Blue Cross' alleged violations of the Nonprofit Law and dismissed the suit. The Commonwealth Court affirmed the trial court. Upon careful consideration of the briefs submitted by the parties in addition to the applicable legal authorities, the Supreme Court found that Appellants indeed lacked standing under the Nonprofit Law to challenge Blue Cross by their four-count complaint. Accordingly, the Court affirmed the lower courts' decisions and dismissed Appellants' case. View "Petty v. Hospital Service Assoc. of NE Penna." on Justia Law

Appellant Walnut Street Associates (WSA) provides insurance brokerage services and helps employers obtain health insurance for their employees. Appellee Brokerage Concepts, Inc. (BCI) is a third party administrator of employee benefit plans. Procacci retained BCI as administrator of its insurance plans, and BCI paid commissions to WSA based on premiums paid by Procacci. In 2005, Procacci requested BCI reduce its costs, but BCI would not meet Procacciâs proposal. Procacci then notified BCI that it would take its business elsewhere. BCI asked Procacci to reconsider, and in the process, disclosed to Procacci how much it paid to WSA as its broker. The amount was higher than Procacci believed WSA had been earning, but there was no dispute that BCIâs statements about WSAâs compensation were true. As a result of BCIâs letter, Procacci terminated its contract with WSA. WSA sued BCI alleging that BCI tortiously interfered with the WSA/Procacci contract by disclosing the amount of WSAâs compensation. BCI argued that it could not be liable for tortious interference because what it said was true, or otherwise justified and privileged. At trial, the jury found that BCI did interfere in the WSA/Procacci contract. BCI appealed, and the appellate court reversed the trial courtâs judgment. The appellate court adopted a section of the Restatement of Torts, which said that truth is a defense to a claim of tortious interference. WSA maintained that the Restatement was not applicable according to Pennsylvania law. The Supreme Court reviewed the case and adopted the Restatement defense that truth is a defense to claims of tortious interference with contractual relations. The Court affirmed the decision of the appellate court.