A dispute between Penn State and its insurance company over who should cover the costs of a civil suit stemming from the Jerry Sandusky sex-abuse scandal is set to be litigated in the First Judicial District, following a Philadelphia judge’s ruling the forum was not inconvenient for the university.
Philadelphia Court of Common Pleas Judge Gary Glazer issued a one-page order last week denying Penn State’s motion to transfer proceedings filed by its insurance company in Philadelphia to Centre County. It appeared to be the final touch on a venue dispute arising out of the coverage litigation.
Earlier this month, another Philadelphia judge granted a motion in which the insurance company, Pennsylvania Manufacturers’ Association Insurance Co., asked the court to bring a separate action filed by Penn State to Philadelphia court.
Glazer’s order last week came only with a footnote in which the judge said Penn State failed to demonstrate Philadelphia was an “oppressive and vexatious” forum to the university and its witnesses. He also cautioned the university against using nonprecedential memorandum opinions in support of its arguments, as it had in a reply, noting the court was hopeful Penn State, in the future, would follow this “most basic legal principle.”
“At best, defendant PSU has merely shown that Philadelphia is an inconvenient forum for some of its witnesses,” Glazer said in the footnote. “Mere inconvenience is insufficient to transfer venue.”
PMA initially sued the university in Philadelphia in January, seeking a declaratory judgment limiting defense costs and indemnity for which the university could claim coverage in a case stemming from the Sandusky scandal.
Penn State followed with its own legal action, alleging PMA breached its contract with the school and acted in bad faith by both initially denying coverage and then following with a lawsuit. It asked for a Centre County jury to decide all matters triable by jury.
PMA had moved in February to coordinate and transfer Penn State’s lawsuit to Philadelphia to eschew the “unavoidable risk” of the courts issuing contradictory decisions in the two cases. In an April 10 order, Judge Arnold New granted that request.
Glazer’s April 20 order disposes of a similar petition from Penn State, in which the university argues under a different rule that litigation should take place in the Centre County Court of Common Pleas.
PMA’s attorney, Steven Engelmyer of Philadelphia firm Kleinbard Bell & Brecker, said the decision brings a welcome conclusion to the venue dispute.
“With this order, it is clear that the court has decided this case will be litigated in the Philadelphia Commerce Court program,” Engelmyer said.
The underlying civil case — Doe A v. Second Mile — was the first lawsuit filed in response to the allegations that Sandusky used his position within the university and his Second Mile charity to sexually assault young boys. The state has charged him with 52 counts of sex-related offenses.
The insurance company had argued that Pennsylvania Rule of Civil Procedure 213.1 allows for the Philadelphia court to move Penn State’s action and coordinate it with the insurer’s case because PMA filed first and because the two cases are “mirror images” of each other.
In its own petition for change of venue of PMA’s lawsuit, Penn State argued last month that transfer of venue was appropriate on forum non conveniens grounds under Pennsylvania Rule of Civil Procedure 1006(d)(1). It also filed a reply in support of PMA’s motion to coordinate and transfer, but argued that proceedings should unfold in Centre County.
In a combined memorandum in support of both its filings, the university argued the majority of potential witnesses resided in Centre County, the underlying insurance policies were executed in Centre County and a majority of the allegations against Sandusky allegedly took place in Centre County.
“As a result, litigation of this action in this [Philadelphia] court will result in clear inconvenience and hardship for the parties and the witnesses and impose an unnecessary burden on this court,” the filing said. “Given the lack of connection between this insurance coverage dispute and Philadelphia, PMA appears to have filed suit in Philadelphia County for the purpose of harassing Penn State by making it exceedingly difficult on Penn State and its witnesses, even at the cost of PMA’s own inconvenience.”
The university also argued, to distinguish its own lawsuit filed in Centre County from the Philadelphia matter, that it sought “different relief and more comprehensive relief” for breach of contract and bad faith.
Penn State also disputed PMA’s position that the “‘first’” lawsuit controls jurisdiction.
Jerold Oshinsky, a California attorney with Jenner & Block, represents Penn State along with Joseph Green of Lee Green & Reiter in State College.
Oshinsky was not immediately available for comment Wednesday on the court’s decision.
In PMA’s initial complaint, filed in late January in Philadelphia, the insurance company pointed to an abuse or molestation exclusion in the second of three consecutive general liability policies, arguing that such would excuse it from paying for the school’s legal costs. There appeared to be a narrow, two-month window in which PMA acknowledged Penn State could be afforded coverage based on its policy.
However, that would come down to facts that have yet to be established in Doe A , namely whether the alleged abuse started before March 1, 1992, when the university’s policy changed to incorporate the abuse and molestation exclusion. That case would likely stall until the prosecution of Sandusky is closed.
The Doe A complaint alleged Sandusky abused the accuser “more than 100 times” between 1992 and 1996.
The school, in its separate action, argued PMA breached its contract with the university by refusing to cover Penn State’s defense costs and for refusing liability coverage for any damages stemming from Doe A . The university also pled an “anticipatory breach of contract” count to spell out that a breach had already taken place before Doe A has proceeded to litigation, and that the breach applies to any such claims against Penn State.