Qbe Ins. Corp. v. M & S Landis Corp.

• Decision Date: 10 January 2007
• Citation: 915 A.2d 1222
• Court: Pennsylvania Superior Court
• Parties: QBE INSURANCE CORP., Appellee v. M & S LANDIS CORPORATION t/d/b/a Fat Daddy's, Fat Daddy's Night Club, and Fat Daddy's at the Woods; Matthew Landis, Sean Landis, John McCoy, Anthony Hendrickson, Shawn Rohrbaugh, Adam Miller, Michael Trone, Darin Hosier, Montez Young, as Administrator of the Estate Of David A. Potter, Jr., Deceased, and Melanie Sharp, Appeal of M & S Landis Corporation, et al., Appellants.

915 A.2d 1222

QBE INSURANCE CORP., Appellee v. M & S LANDIS CORPORATION t/d/b/a Fat Daddy's, Fat Daddy's Night Club, and Fat Daddy's at the Woods; Matthew Landis, Sean Landis, John McCoy, Anthony Hendrickson, Shawn Rohrbaugh, Adam Miller, Michael Trone, Darin Hosier, Montez Young, as Administrator of the Estate Of David A. Potter, Jr., Deceased, and Melanie Sharp Appeal of M & S Landis Corporation, et al., Appellants.

Superior Court of Pennsylvania.

Argued October 17, 2006.

Filed January 10, 2007.

Gregory E. Gettle, York, for appellant.

James DeCinti, Harrisburg, for QBE Ins., appellee.

BEFORE: MUSMANNO, TODD, and TAMILIA, JJ.

OPINION BY TODD, J.:

¶ 1 In this declaratory judgment action, M & S Landis Corporation t/d/b/a Fat Daddy's, Fat Daddy's Night Club, Fat Daddy's At The Woods, Matthew Landis, Sean Landis, John McCoy, Anthony Hendrickson, Shawn Rohrbaugh, Adam Miller, Michael Trone, and Darin Hosier appeal the December 13, 2005 order granting summary judgment in favor of QBE Insurance Corp. ("QBE"). We reverse and remand for entry of summary judgment in favor of Appellants.

¶ 2 On May 24, 2004, Montez Young, as administrator of the estate of David A. Potter, Jr., and Melanie Sharp brought a wrongful death and survival action against Appellants alleging that Potter was smothered to death when he was evicted by various Appellants from the Fat Daddy's Nightclub in York, Pennsylvania. Their complaint alleged:

On June 1, 2003, David A. Potter, Jr. was smothered to death as a result of [Appellants'] negligent conduct in forcibly evicting him from Fat Daddy's Nightclub. [Appellant] bouncers wrestled Mr. Potter down the stairs, at times in a choke hold, and then threw him face down on the ground, at the direction of the owners of the nightclub. They then laid on top of him restricting his ability to breath, causing his death.

(Complaint (Exhibit B to Complaint for Declaratory Judgment) (hereinafter "Underlying Complaint"), 5/24/04, at ¶ 1 (R.R. 37a.)) The complaint alleged that Potter's death was the "direct and proximate result of the negligence and carelessness" of Appellants and Appellants' agents, asserting that Appellants, inter alia, improperly restrained Potter, failed to properly train and supervise its staff, failed to adequately staff the nightclub, failed to recognize that Potter posed no risk, and failed to render first aid. (Id. at ¶¶ 52-54 (R.R. 46a-47a).)

¶ 3 As a result of the claims alleged in this suit, Appellants sought defense and indemnification from QBE pursuant to a commercial general liability insurance policy with QBE. QBE denied coverage and, on September 7, 2004, QBE filed this declaratory judgment action seeking a declaration that it had no obligation to defend or indemnify Appellants. QBE asserted that the claims in the underlying complaint did not constitute an "occurrence" under the policy, and that the alleged conduct was excluded from coverage based upon the assault and battery exclusion in the policy.

¶ 4 QBE filed a motion for summary judgment, and Appellants filed a cross-motion for summary judgment. On December 13, 2005, the trial court granted QBE's motion for summary judgment and denied Appellants' motion. This timely appeal followed.

On appeal, Appellants ask:

1. Whether the trial court erred in finding that the allegations in the underlying civil action do not amount to an "occurrence" as defined in the policy of insurance?

2. Whether the trial court erred in finding the allegations in the underlying action are excluded under the "assault and battery" provision, which the court erroneously found to be clear and unambiguous?

3. Whether the trial court erred in failing to recognize the "use of reasonable force" provision rendering defense and indemnification to the policy holders applicable on the reasonable force provision alone and/or due to the reasonable force provisions inconsistent/ambiguous application with the assault and battery exclusion rendering the assault and battery exclusion void in general against public policy and/or nonenforceable?

(Appellants' Brief at 4.)

¶ 5 Our standard of review of an order granting or denying a motion for summary judgment is well established:

We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered. Our scope of review of a trial court's order granting or denying summary judgment is plenary, and our standard of review is clear: the trial court's order will be reversed only where it is established that the court committed an error of law or abused its discretion.

Pappas v. Asbel, 564 Pa. 407, 418, 768 A.2d 1089, 1095 (2001) (citations omitted).

¶ 6 Furthermore, when construing the language of an insurance policy, our goal is to ascertain the intent of the parties as manifested by the language of the written instrument. Madison Constr. Co. v. Harleysville Mut. Ins. Co., 557 Pa. 595, 735 A.2d 100 (1999). If the language is not clear, it is construed in favor of the insured, but where the language of the contract is clear and unambiguous, a court is required to give effect to that language. Id.; Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563 (1983). Contractual terms "are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts." Madison Constr. Co., 557 Pa. at 606, 735 A.2d at 106.

¶ 7 Finally, an insurer's obligation to defend an action against the insured "is fixed solely by the allegations in the underlying complaint. As long as a complaint alleges an injury which may be within the scope of the policy, the insurer must defend its insured until the claim is confined to a recovery the policy does not cover." Erie Ins. Exch. v. Fidler, 808 A.2d 587, 590 (Pa.Super.2002). Moreover, to determine if there is coverage, we must look to the facts alleged in the underlying complaint, not the cause of action pled. Donegal Mut. Ins. Co. v. Baumhammers, 893 A.2d 797, 811 (Pa.Super.2006) (en banc), appeal granted, 908 A.2d 265 (Pa. 2006). Indeed, "to allow the manner in which the complainant frames the request for redress to control in a case such as this one would encourage litigation through the use of artful pleadings designed to avoid exclusions in liability insurance policies." Mutual Ben. Ins. Co. v. Haver, 555 Pa. 534, 539, 725 A.2d 743, 745 (1999).

¶ 8 In their first issue, Appellants assert that the trial court erred in finding that the allegations in the underlying civil action were not an "occurrence" under the policy. The policy provides coverage for "bodily injury" or "property damage" caused by an "occurrence" where "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Policy (Exhibit A to Complaint for Declaratory Judgment), at 14 (R.R. 31a).) While admitting that the complaint describes Potter's altercation with Appellants with such intentional terms as "forcibly," "violently," and "seized, held and detained," Appellants maintain that, at its core, the complaint alleges Appellants' negligence: "[I]t is not alleged that the Fat Daddy Defendants assaulted the decedent as the cause of death, but rather that, after eviction, they negligently restrained [Potter] or improperly restrained him causing his death." (Appellants' Brief at 11.) Thus couched, Appellants contend that the complaint alleges conduct — negligence — which constitutes an occurrence under the policy. For the reasons below, we agree.

¶ 9 We find that this case is controlled by this Court's en banc decision in Donegal Mut. Ins. Co. v. Baumhammers, supra. In that case, parents were sued after their mentally-unstable adult son who resided with them went on a shooting rampage, killing five people and severely injuring another. The wrongful death and survival actions alleged that the parents were negligent, inter alia, in failing to remove the gun used in the rampage from their son's possession, and for failing to alert authorities or mental health care providers about his violent propensities. The parents sought defense and indemnification under their primary and excess homeowners' policies. The primary insurance policy's definition of "occurrence" was the same as in the instant case, and, with respect to that policy, on appeal, we addressed whether the allegations in the underlying complaints fell within that definition of occurrence — that is, whether they were "an accident."

¶ 10 After an extensive analysis of the relevant caselaw, including an explicit disapproval of a previous panel decision of this Court, we rejected the insurer's argument that, simply because the immediate act causing the bodily injury — the shootings — was undeniably intentional, that fact precluded a determination that the parents' negligence, which preceded the intentional shootings, was an accident: "[T]he main thrust of our Pennsylvania caselaw warrants a conclusion, and thus we hold, that negligence leading to intentional acts may nevertheless be considered an `accident,' and thus an `occurrence' where so defined." Id. at 810. Then, analyzing the factual allegations in the underlying complaints, we reasoned that they fell within the policy's definition of occurrence:

Parents were alleged to have acted negligently, and this negligence is supported by numerous, specific, factual allegations, including that Parents should have taken possession of Baumhammers' gun or alerted authorities or mental health care providers about Baumhammers because they knew or should have known of his dangerous propensities and his possession of the gun. For the reasons discussed above, we find that Parents'...