Erie Ins. Exchange v. Claypoole
| Decision Date | 12 March 1996 |
| Citation | 673 A.2d 348,449 Pa.Super. 142 |
| Parties | , 108 Ed. Law Rep. 302 ERIE INSURANCE EXCHANGE, Appellant, v. Vernon R. CLAYPOOLE, Vernon R. Claypoole, Inc., Amanda Black, Heather Black, Leonard Black, Wilma Black, Leonard and Wilma Black as the Guardians of Amanda and Heather Black, Erin Davis, Gregory Davis, Gregory Davis as the Guardian of Erin Davis, Darcie Hulings, Stephanie Hulings, Dennis Hulings, Luene Hulings, Dennis and Luene Hulings as the Guardians of Darcie and Stephanie Hulings, Elizabeth Jones, Nancy R. Jones, Indiana Area School District, David Laird, Superintendent of the Indiana Area School District and Clark Lemuel Myers, Jr., Appellees. (Two Cases) |
| Court | Pennsylvania Superior Court |
Richard W. Dibella, Pittsburgh, for appellant.
George P. Faines, Pittsburgh, for Myers, appellee.
Richard B. Tucker, III, Pittsburgh, for Claypoole, appellee.
Before: ROWLEY, President Judge, * WIEAND, KELLY, POPOVICH, HUDOCK, FORD ELLIOTT, SAYLOR, HESTER, and OLSZEWSKI, JJ.
This appeal asks us to determine whether appellant, Erie Insurance Exchange ("Erie"), is legally obligated to defend and indemnify appellees, Vernon R. Claypoole ("Claypoole"), Vernon R. Claypoole, Incorporated ("Claypoole, Inc."), and Clark L. Myers ("Myers") in a civil action instituted against appellees by several minor children and their parents/guardians (the "plaintiffs"). In the civil action, the plaintiffs seek damages from appellees based upon their allegations that Myers, during the course of his employment for Claypoole, Inc. as a school bus driver, sexually molested the minor children on numerous occasions while driving them to and from school. We hold that the issue of Erie's legal obligation to defend and indemnify Claypoole and Claypoole, Inc. is dismissed as moot and we need not determine whether the trial court erred in ordering it to defend and indemnify them. We further hold that Erie possesses no duty to defend or indemnify Myers and the trial court committed an error of law by ordering it to defend him. Accordingly, we dismiss in part and reverse in part.
The relevant facts and procedural history of this case are as follows. Claypoole, Inc. owned several school buses which it leased to the Indiana Area School District ("IASD"), together with drivers, to transport students to and from school. Claypoole was the president of Claypoole, Inc. On June 28, 1990, the plaintiffs filed a complaint in the United States District Court for the Western District of Pennsylvania naming IASD, its superintendent, Myers, and Claypoole as defendants. An amended complaint was filed on February 5, 1991 naming Claypoole, Inc. as an additional defendant. Essentially, these complaints charged IASD, its superintendent, Claypoole, and Claypoole, Inc. with violating the plaintiffs' civil rights; charged Myers with assault and battery by "negligently, intentionally, and unlawfully engag[ing] in offensive and harmful physical conduct in the nature of sexual abuse and offensive touching of" the minor children; and charged Claypoole and Claypoole, Inc. with negligent hiring and entrustment resulting from Claypoole, Inc.'s employment of Myers as a school bus driver. According to the complaint, Myers' sexual molestation of the minor children occurred between September 1, 1984 and June 1, 1985 and between September 1, 1988 and December 16, 1988.
Erie became involved in the plaintiffs' civil action against appellees by virtue of the combination automobile insurance policy ("combination policy") it had entered into with Claypoole, Inc. for the period of August 30, 1984 through August 30, 1985 and the commercial automobile insurance policy ("commercial policy") it had entered into with Claypoole, Inc. for the period of August 30, 1988 through August 30, 1989. In the combination policy, Erie agreed to pay legally obligated damages "arising out of the ownership, maintenance, or use" of Claypoole, Inc.'s automobiles on behalf of Claypoole, Inc. and those persons, such as Myers, whom Claypoole, Inc. permitted to use its automobiles. The combination policy specifically excluded damages for injuries resulting from intentional acts of those insured. Similarly, in the commercial policy, Erie agreed to pay legally obligated damages caused by accidents arising "out of the ownership, maintenance, use, loading or unloading" of Claypoole, Inc.'s automobiles on behalf of Claypoole, Inc. and those persons, such as Myers, whom Claypoole, Inc. permitted to use its automobiles. The commercial policy defined the term accident as "any event or continuous or repeated exposure to the same conditions resulting in bodily injury ... that anyone we protect did not expect or intend to happen."
In light of the combination policy and the commercial policy, on August 31, 1990, Erie and Claypoole, Inc. executed the non-waiver agreement. This agreement acknowledged the lawsuit that the plaintiffs had initiated in the District Court pursuant to their allegations of Myers' sexual molestation of the minor children. It further acknowledged that Erie was willing to investigate the plaintiffs' allegation and provide an initial defense in this lawsuit without prejudicing its right under the combination and commercial policies. Thus, in the non-waiver agreement, it was mutually agreed that:
1. Erie or its attorneys may, without waiving any of its rights under the policies, investigate the alleged incidents or occurrences giving rise to the Lawsuit, provide a defense to Vernon R. Claypoole and/or Claypoole, Inc. in the Lawsuit, and perform any acts which may be considered desirable on behalf of Vernon R. Claypoole and/or Claypoole, Inc. in defending the Lawsuit; and such actions on the part of Erie shall not operate as an admission of liability under the policies or prejudice Erie's rights under the policies.
2. Erie does not hereby waive or release any rights under the policies.
3. Claypoole, Inc., does not hereby waive or release any rights it may have against Erie. The exception being that Claypoole, Inc. waives the right to claim that Erie has waived its rights under the policies by investigating the alleged incidents and occurrences or by providing a defense in the Lawsuit to Vernon R. Claypoole and/or Claypoole, Inc.
No similar agreement was executed between Erie and Myers.
Eventually, summary judgment was granted by the District Court as to each of the plaintiffs' civil rights claims and the Third Circuit affirmed. See Black by Black v. Indiana Area School District, 985 F.2d 707 (3rd Cir.1993). The plaintiffs remaining tort claims were then transferred to the Allegheny County Court of Common Pleas. After this transfer occurred, Erie filed a complaint in declaratory judgment on May 17, 1991. In this complaint, Erie requested the issuance of an order declaring that it had no legal obligation to defend or indemnify Claypoole, Claypoole, Inc. or Myers in the plaintiffs' civil action based upon their remaining tort claims against the trio. With the consent of all parties, by order dated July 15, 1991, venue of this case was transferred to the Indiana County Court of Common Pleas.
Various pleadings were filed by all parties over the course of the next three years pertaining to the declaratory judgment complaint that had been filed by Erie. On July 26, 1994, the plaintiffs filed a motion for summary judgment against Erie as to all issues of insurance coverage. Claypoole and Claypoole, Inc. also filed a motion for summary judgment on July 26, 1994. In this motion, Claypoole and Claypoole, Inc. requested that the trial court order Erie to defend and indemnify them in the plaintiffs' civil action. Erie opposed these summary judgment motions and effectively requested that summary judgment be granted in its favor in a brief filed August 10, 1994. On August 19, 1994, the plaintiffs and Claypoole and Claypoole, Inc. filed reply briefs in support of their summary judgment motions. Myers subsequently moved for summary judgment on August 31, 1994, thereby joining the plaintiffs' summary judgment motion and brief replying to Erie's opposition to that motion.
By decree and amended decree dated September 1, 1994 and September 14, 1994, respectively, the trial court ordered Erie to defend and indemnify Claypoole and Claypoole, Inc. in plaintiffs' civil action pursuant to the combination and commercial policies. The trial court further ordered Erie to defend Myers pursuant to the combination and commercial policies, but found that the issue of Erie's duty to indemnify Myers pursuant to these policies was not yet ripe for judicial review. Thus, the trial court granted the motions for summary judgment filed by the plaintiffs, Claypoole, Claypoole, Inc. and Myers, thereby denying Erie's declaratory judgment complaint. Shortly after these decrees had been issued by the trial court, Erie settled all of the plaintiffs' remaining claims against Claypoole, Claypoole, Inc. and Myers. 1 On September 30, 1994, Erie timely noticed its appeal of the trial court's decree and amended decree. Erie filed an amended notice of appeal on October 7, 1994.
Erie raises the following issues for our review:
I. WHETHER THE CONDUCT FOR WHICH THE MINOR CHILDREN SEEK COMPENSATION IS SEXUAL MOLESTATION BY CLARK LEMUEL MYERS, JR., WHICH CONSTITUTES INTENTIONAL CONDUCT FOR WHICH THE ERIE POLICIES AFFORD NO COVERAGE.
II. WHETHER THE INJURIES OR ACTS OF WHICH THE MINOR PLAINTIFFS COMPLAIN ARISE FROM THE OWNERSHIP, MAINTENANCE, USE, LOADING AND/OR UNLOADING OF A SCHOOL BUS SO THAT THE ERIE POLICIES AFFORD COVERAGE.
III. WHETHER COVERAGE IS AFFORDED UNDER AN AUTOMOBILE LIABILITY INSURANCE POLICY FOR A CAUSE OF ACTION FOR NEGLIGENT HIRING AND ENTRUSTMENT WHERE THE UNDERLYING TORTIOUS CONDUCT IS SEXUAL MOLESTATION.
IV. WHETHER IT WAS IMPROPER FOR THE COURT BELOW TO ENTER JUDGMENT IN FAVOR OF CLARK LEMUEL MYERS, JR., BEFORE ERIE HAD ANY OPPORTUNITY TO RESPOND TO THE MOTION...
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