First Liberty Ins. Corp. v. Anderson

• Decision Date: 23 May 2016
• Docket Number: CIVIL ACTION NO. 14-2966
• Parties: THE FIRST LIBERTY INSURANCE CORPORATION, Plaintiff, v. JOHN A. ANDERSON, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

THE FIRST LIBERTY INSURANCE CORPORATION, Plaintiff, v. JOHN A. ANDERSON, Defendant.

CIVIL ACTION NO. 14-2966

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

May 23, 2016

PAPPERT, J.

MEMORANDUM

The First Liberty Insurance Corporation ("First Liberty") brings this declaratory judgment action asking the Court to hold that First Liberty has no obligation to defend or indemnify John A. Anderson ("Anderson") under a series of insurance policies. The parties have filed cross-motions for summary judgment. The Court grants First Liberty's motion, denies Anderson's motion and enters judgment in favor of First Liberty.

I.

On October 1, 2013, Lawrence Krieger and Helen Anderson, as parents/guardians of D.A.K., a minor, filed a personal injury lawsuit against Anderson in the Philadelphia County Court of Common Pleas, I.D. No. 130903784 (the "Underlying Action"). The action arose from allegations that Anderson sexually abused D.A.K. Specifically, the complaint in that case alleges that:

On multiple occasions between the years of 2007-2010, when the Minor Plaintiff, was ages nine through twelve, the Defendant sexually abused, molested, and indecently assaulted the Minor Plaintiff and grabbed Minor Plaintiff's genital area and holding said area for several seconds at a time before releasing, all of which constitutes forcible compulsion under Pennsylvania law. (Pl.'s Mot. Summ. J., Ex. A ("Underlying Compl."), ¶ 7.)

On or about March 11, 2013, before the Honorable Robert P. Coleman, Defendant, John A. Anderson, entered a pleas of guilty to the Corruption of Minors - 18 § 6301 §§ A1. (Id. ¶ 10.)

As a result of Defendant, John A. Anderson's conduct and actions, Minor Plaintiff, was forced to endure, and sustained damages . . . (Id. ¶ 12.)

Defendant's actions and conduct, including but not limited to, sexual molestation, indecent assault, and sexual assault of Minor Plaintiff, was committed with the full intent and capability to cause great bodily, emotional, and mental harm to Minor Plaintiff, D.A.K., and was committed through the use of forcible compulsion on and/or upon Minor Plaintiff. (Id. ¶ 17.)

Defendant, John A. Anderson's conduct constituted intentional physical battery upon Minor Plaintiff, and was undertaken deliberately and with actual malice. (Id. ¶ 23.)

The occurrence was directly and proximately caused by the reckless and wanton conduct of Defendant, John A. Anderson, in his role as a close family member, and as an adult in loco parentis to Minor Plaintiff, owed a duty of care to protect and care for Minor Plaintiff, which he breached, causing harm to Minor Plaintiff, and consisted of, among other things, the following: . . . (b) knowingly and intentionally engaging in sexual molestation of Defendant's great-nephew; (c) knowingly and intentionally forcing Minor Plaintiff to engage in lewd sexual acts . . . (Id. ¶ 26.)

Based on these allegations, the complaint ("Underlying Complaint") claimed damages for assault, battery, negligence/recklessness, and negligent and intentional infliction of emotional distress. (Id. ¶¶ 15-35.)

In connection with the Underlying Action, Anderson sought both defense and indemnification from First Liberty based on four homeowners insurance policies First Liberty issued to Anderson between 2007 and 2010. The four policies (collectively, the "Policy")contain numerous identical provisions. First, the Policy defines the scope of coverage as follows:

SECTION II - LIABILITY COVERAGES

COVERAGE E - Personal Liability

If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which the "insured" is legally liable. Damages include prejudgment interest awarded against the "insured";

2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from the "occurrence" equals our limit of liability.

(Pl.'s Mot. Summ. J., Ex. A, Insurance Policy ("Policy"), at 11.) "Occurrence," as used in that provision, is defined as follows:

"Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:

a. "Bodily injury"; or

b. "Property damage."

(Policy at 1.)

The Policy sets forth two relevant exclusions:

SECTION II - EXCLUSIONS

Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to "bodily injury" or "property damage":

a. Which is expected or intended by the "insured"

(Policy at 11.) That provision is amended by way of an attached "Amendatory Endorsement."

SECTION II - EXCLUSIONS

Item 1.a under Coverage E - Personal Liability and Coverage F - Medical Payments to Others is amended is follows:

Which is expected or intended by the "insured", even if the resulting "bodily injury"or "property damage"

(1) is of a different kind, quality, or degree than initially expected or intended; or

(2) is sustained by a different person, entity, real or personal property, than initially expected or intended.

However, this exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.¹

(Policy, at Amendatory Endorsement form FMHO 2493, p. 2.) The second relevant exclusion states:

Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to "bodily injury" or "property damage": . . .

k. Arising out of sexual molestation, corporal punishment or physical or mental abuse;

(Id. at 11-12.)

First Liberty provided a defense to Anderson in the Underlying Action subject to a reservation of rights. On May 27, 2015, First Liberty sought a declaratory judgment that it has neither a duty to defend nor indemnify Anderson under the Policy. The Underlying Action ultimately settled, and First Liberty and Anderson reserved their respective rights to litigate coverage. First Liberty filed its motion for summary judgment on February 16, 2016, Anderson responded and filed a cross-motion for summary judgment on March 15, 2016 and First Liberty responded to the cross-motion on March 31, 2016.

II.

Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477U.S. 242, 248 (1986). For an issue to be "genuine," a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermkts., Inc. v. Darling-Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993)). Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence presented by the parties, the court must accept as true the allegations of the non-moving party. Anderson, 477 U.S. at 255.

Although the moving party must establish an absence of a genuine issue of material fact, it need not "support its motion with affidavits or other similar materials negating the opponent's claim." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by "pointing out . . . that there is an absence of evidence to support the nonmoving party's claims." Id. at 325. If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial," summary judgment is appropriate. Celotex, 477 U.S. at 322. The mere existence of some evidence in support of the non-movant will not be adequate to support a denial of a motion forsummary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson, 477 U.S. at 249-50.

These summary judgment rules do not apply any differently where there are cross-motions pending. Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). "'Cross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist.'" Id. (quoting Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968)).

III.

A. Duty to Defend

"An insurance company's duty to defend a suit against an insured is determined solely on the basis of the allegations of the complaint in the underlying action."² Nat'l Fire Ins. Co. of Hartford v. Robinson Fans Holdings, Inc., No. Civ.A.10-1054, 2011 WL 1327435, at *1 (W.D. Pa. Apr. 7, 2011); see also Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 896 (Pa. 2006). In other words, the duty to defend an insured in a suit brought by a third party...