McMillan v. State Mut. Life Assur. Co. of America

Decision Date28 December 1990
Docket NumberNos. 90-1462,90-1463,s. 90-1462
PartiesDawn McMILLAN and Devin McMillan, a minor by his legal guardians, Barbara S. Ford and Edward Ford, Jr. v. STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA. Appeal of TRANS WORLD AIRLINES, INC.
CourtU.S. Court of Appeals — Third Circuit

Harvey Bartle, III (argued), Jeffrey M. Jacobson, Dechert Price & Rhoads, Philadelphia, Pa., for appellants.

Michael-John Goodnow (argued), Sidney H. Black, Ltd., Philadelphia, Pa., for appellees.

Before STAPLETON, HUTCHINSON, and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal raises the subtle and novel question whether the phrase "on authorized business" in an insurance policy can be interpreted reasonably to apply to an employee who has completed her work shift but not yet left the employer's premises. Plaintiffs are the children of Alma McMillan (McMillan), who was murdered by her estranged husband as she was leaving the business premises of her employer, defendant Trans World Airlines, Inc. (TWA). They filed their diversity action in the United States District Court for the Eastern District of Pennsylvania to collect a $100,000 benefit under an insurance policy issued by the defendant State Mutual Life Assurance Company (State Mutual) to the employer in favor of its employees. Following cross motions for summary judgment, the district court granted the plaintiffs' motion. The defendants appealed. We affirm.

I.

The straightforward facts underlying plaintiffs' insurance claim are undisputed. At the time of her death, McMillan served as a sales and reservations supervisor for TWA at their offices located in the Rohm & Haas Building, Sixth and Market streets, Philadelphia. At 10:00 p.m. on November 25, 1987, McMillan concluded her work shift. She left her office on the third floor several minutes later, descended to the first floor, and exited the lobby onto a covered walkway connected to the office building. According to police reports, at about 10:15 p.m., McMillan's estranged husband fatally stabbed her while she stood on this walkway. Approximately one hour later, her body was discovered lying at the top of the steps leading from the walkway to the public sidewalk. The police subsequently apprehended McMillan's husband who, after giving the police a full confession, was convicted of her murder.

As a TWA employee, McMillan received a group life insurance policy issued by State Mutual which, under the provision marked "Hazard F," provides for a payment of $100,000 to the insured's beneficiaries in the event of death resulting from "a felonious assault while on authorized business of [TWA]." The policy defines the terms "felonious assault" to include, inter alia, robbery, assault and battery, kidnapping, bombing, terrorism, and murder. Regrettably, however, the policy is silent as to the definition or meaning of the critical phrase, "on authorized business."

The district court held that McMillan was on authorized business of TWA at the time of her fatal assault.

II.

Disposition of an insurance action on summary judgment is appropriate, when, as here, there are no material underlying facts in dispute. Little v. MGIC Indemnity Corporation, 836 F.2d 789, 792 (3rd Cir.1987). The only contested issue involves the interpretation of the scope of coverage of an insurance contract, a question of law over which our review is plenary. Id.; Pacific Indemnity Company v. Linn, 766 F.2d 754, 760 (3rd Cir.1985). Under Pennsylvania's choice of law principles, we look to the law of Pennsylvania, the state where the policy of insurance was contracted and delivered, for guidance in construing State Mutual's policy. Faron v. Penn Mutual Life Ins. Co., 176 F.2d 290, 292 (3rd Cir.1949).

We first consider defendants' contention that the district court, in holding that McMillan was "on authorized business" of TWA when she was assaulted, failed to give effect to that phrase's plain, unambiguous meaning. Under Pennsylvania law, where the language of an insurance policy is unambiguous, a court must enforce the clear meaning of that language. Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 305, 469 A.2d 563, 566 (1983). In addition, a court must refrain from torturing the language of a policy to create ambiguities where none exist. Houghton v. American Guaranty Life Ins. Co., 692 F.2d 289, 291 (3rd Cir.1982).

However, if the policy provision is reasonably susceptible to more than one interpretation, it is ambiguous. Little, 836 F.2d at 793; see also Celley v. Mutual Benefit Health & Accident Association, 229 Pa.Super. 475, 481-82, 324 A.2d 430, 434 (1974) (holding that a "provision of an insurance policy is ambiguous if reasonably intelligent men ... would honestly differ as to its meaning"). Ambiguous provisions in an insurance policy must be construed against the insurer and in favor of the insured; any reasonable interpretation offered by the insured, therefore, must control. See, e.g., Little, 836 F.2d at 793; Standard Venetian Blind, 469 A.2d at 566; Mohn v. American Casualty Co., 458 Pa. 576, 586, 326 A.2d 346, 351 (1974). Courts in Pennsylvania have applied this rule liberally. 1

Courts have offered two pragmatic justifications for this rule of interpretation. One is that insurance policies are not ordinary contracts but are contracts of adhesion between two parties not equally situated and thus equity requires their interpretation in favor of the weaker party. The insurer is an expert in its field "and its varied and complex instruments are prepared by it unilaterally whereas the assured ... is a layperson unversed in insurance provisions and practices." See, e.g., Allen v. Metropolitan Life Ins. Co., 44 N.J. 294, 208 A.2d 638, 644 (1965). The second is an application of the familiar contract rule interpreting ambiguity against the scrivener, recalling the hoary maxim ambigua responsio contra proferentem est accipienda. 2 The Pennsylvania Supreme Court justified adopting this rule when, upon considering an insurance provision in which ambiguity was dispersed "like ink poured into a fish bowl, clouding the identity of its swimming occupants," the court reasoned that:

The person who writes with ink which spreads and simultaneously produces two conflicting versions of the same proposition cannot complain if the person affected by both propositions chooses to accept that which is more helpful to him and which is against the interests of the contract writer.

Sykes v. Nationwide Mutual Insurance Co., 413 Pa. 640, 643, 198 A.2d 844, 845 (1964). See also 6B Appleman, Ins. L. & P. Sec. 4254 (1979).

State Mutual appears to have drafted the term "on authorized business" with spreading ink. Significantly, it defined the term "felonious assault" but the related and operative phrase, "on authorized business" is nowhere defined in the policy. Absent specific definition, the common meaning of the words themselves are open-ended. Considered individually, the word "business" is certainly not self-clarifying: its meaning can be either broad or narrow. Indeed, it is hard to imagine a word with more varied uses in our society. For example, one's "business" can refer commonly to the totality of one's regular, directed behavior (as in the clause "he makes it his business to read the sports page first every morning") or can be used to identify only those tasks which generate pecuniary gain, which occupy the time, attention, or labor of men and women for livelihood or profit. See Fine v. Barry and Enright Productions, 731 F.2d 1394, 1397 (9th Cir.), cert. denied, 469 U.S. 881, 105 S.Ct. 248, 83 L.Ed.2d 186 (1984). Webster's Dictionary contains no less than ten definitions of the word "business" ranging from the very inclusive "purposeful activity" to the more restrictive "a commercial or industrial enterprise." Webster's Third New International Dictionary 302 (1966). Similarly, in common usage, the meaning of "authorized" can be construed narrowly to identify only those actions taken pursuant to some formal imprimatur or broadly to include any activity which is not specifically prohibited.

A moment's consideration of the varying breadth of meanings reasonably attributable to "authorized business" in the context of an employer's enterprise demonstrates the variety of activities which this phrase's freely flowing ink touches. On the one hand, it can be understood to embrace only those assigned tasks being pursued by employees during specified work hours. On the other hand, it can extend to all activities engaged in by employees during regular work hours regardless of their relation to the employer's enterprise, as, for example, a lunch period or a physical exercise program provided by the employer. Yet again, in a broad sense, the phrase can be construed reasonably to encompass any and all actions taken by employees which benefit an employer's enterprise and are not prohibited, whether or not they occur during work hours or at the work place.

Thus, one is left to speculate whether "on authorized business" may encompass employees who take five minutes out of their regular shift to work on a crossword puzzle or attend to some personal matter; workers who have completed their shift but who run an errand for their supervisor on their way home; or employees who take training courses during their personal time to better equip themselves to serve their employer's operations. Law students in a first year torts class no doubt could generate endless variations on this theme, but taken together the resulting refrain resounds clearly with a unified voice: the meaning of "on authorized business" is not self-evident.

Moreover, State Mutual's insurance contract as a whole does not provide the court with any additional tools to tease out the cited phrase's alleged plain meaning. Neither the context of the rest of the policy nor any other evidence...

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