Johnston v. Tally Ho, Inc.
| Decision Date | 15 February 1973 |
| Citation | 303 A.2d 677 |
| Parties | Roy A. JOHNSTON, Plaintiff, v. TALLY HO, INC., a Delaware corporation, Defendant and Third-Party Plaintiff, v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE CO., a Pennsylvania corporation, Third-Party Defendant. |
| Court | Delaware Superior Court |
Karl J. Parrish, Wilmington, for plaintiff.
Clement C. Wood, Allmond & Wood, Wilmington, for Tally Ho, Inc.
William J. Taylor, III, of Berg, Taylor & Komissaroff, Wilmington, for Pennsylvania Manufacturers' Association Ins. Co.
Plaintiff was arrested and taken into custody by the Delaware State Police during a raid at the Tally Ho restaurant, owned by defendant, Tally Ho, Inc. Plaintiff claimed that he had innocently wandered into a gambling and girlie party. All criminal charges against him by the State were dropped. Plaintiff's name had appeared in several newspaper stories in connection with the illegal party and police raid. Plaintiff brought suit against Tally Ho for negligence in allowing such a party. He wants damages for lost commissions and injury to his reputation and business standing.
Defendant Tally Ho requested its insurance carrier, Pennsylvania Manufacturers' Association Insurance Company ('PMA'), to defend the suit under the terms of its policy. PMA refused; whereupon, Tally Ho joined PMA as a third-party defendant and asked for attorney's fees to defend Johnston's suit against it. PMA moved for judgment, summary or on the pleadings.
PMA's motion is based on two grounds. First, it argues that the damages complained of in Johnston's suit against Tally Ho do not fall within the coverage provisions of the insurance policy. Therefore, it claims PMA has no obligation to defend the suit or pay Tally Ho's attorney's fees. Second, PMA argues that Tally Ho failed to give PMA timely notice of Johnston's suit.
Generally, an insurer's obligation to defend a suit against an insured does not extend to suits based on claims not covered by the policy. 44 Am.Jur.2d, 'Insurance', § 1535, p. 415; Wilson v. Maryland Casualty Co.,377 Pa. 588, 105 A.2d 304, 50 A.L.R.2d 449. When an insurer bases its refusal to defend on the ground that the action is not covered by the policy, and it appears that the claim for damages against the insured really is outside the policy's coverage, then such refusal is justified. There is no breach of contract, and the insurer incurs no legal liability. 49 A.L.R.2d, 'Liability Insurer--Refusal to Defend', § 4, p. 703; 44 Am.Jur.2d, 'Insurance', § 1545, p. 425.
The controlling question is whether or not the damages claimed by Johnston fall within the coverage provision of the insurance policy. The coverage provision reads as follows:
'The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
Coverage A. Bodily injury or
Coverage B. Property damage to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent . . .'
In his complaint, plaintiff requested money for damage to his reputation and business standing. Is this covered by the 'property damage' clause in the policy?
Property damage is defined in the policy as 'injury to or destruction of tangible property'. Clear and unambiguous words and phrases in insurance policies should be given their ordinary, usual meaning. See Couch On Insurance, § 15.71, p. 671. Webster's Third New International Dictionary defines 'tangible property' as 'property having physical substance apparent to the senses.' Black's Law Dictionary, p. 1627 (Rev.4th Ed.), defines 'tangible...
To continue reading
Request your trial
-
Aerojet-General Corp. v. Superior Court
...law required an " 'ordinary, usual meaning' " interpretation of insurance policies. (Id., at p. 1365, quoting Johnston v. Tally Ho, Inc. (Del.Super.Ct.1973) 303 A.2d 677, 679.) Since the dictionary definition of damages does not distinguish between actions in law and equity, the CERCLA clai......
-
New Castle County v. Hartford Acc. and Indem. Co.
..."[c]lear and unambiguous words and phrases in insurance policies should be given their ordinary, usual meaning," Johnston v. Tally Ho, Inc., 303 A.2d 677, 679 (Del.Super.1973); and (2) insofar as "there is any ambiguity in the policy, that ambiguity must be resolved in favor of the insured ......
-
Triple U Enterprises v. New Hampshire Ins. Co.
...liability policy. Liberty Mut. Ins. Co. v. Consolidated Milk Producers Assn., 354 F.Supp. 879, 884 (D.N.H.1979); Johnson v. Tally Ho, Inc., 303 A.2d 677, 679 (Del.Super.1973); Giddings v. Industrial Indem. Co., 112 Cal.App.3d 213, 217, 219, 169 Cal. Rptr. 278, 281 (Ct.App.1981), and cases c......
-
New Castle County v. Hartford Acc. and Indem. Co.
...Delaware law, language in an insurance policy should be given its "ordinary, usual meaning" when possible. Johnston v. Tally Ho, Inc., 303 A.2d 677, 679 (Del.Super.Ct.1973). As noted above, to the extent that language in a policy is ambiguous, it should be construed strongly against the ins......