Shoemaker v. Lumbermens Mut. Cas. Co.

• Decision Date: 13 December 2001
• Docket Number: No. 99-574.,99-574.
• Citation: 176 F.Supp.2d 449
• Parties: Joan SHOEMAKER, Plaintiff, v. LUMBERMENS MUTUAL CASUALTY CO., Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

176 F.Supp.2d 449

Joan SHOEMAKER, Plaintiff, v. LUMBERMENS MUTUAL CASUALTY CO., Defendant.

No. 99-574.

United States District Court, W.D. Pennsylvania.

December 13, 2001.

Stanley A. Winikoff, Jones, Gregg, Creehan & Gerace, Pittsburgh, PA, Edward G. Shoemaker, Shoemaker & Associates, Pittsburgh, PA, for Joan Shoemaker.

Stanley A. Winikoff, Jeffrey S. Tarker, DeBella & Geer, Pittsburgh, PA, for Lumbermen's Mut. Cas. Co.

Peter J. Taylor, Murphy Taylor, Pittsburgh, PA, for Elderly Citizens Resource Center, Guardianship Services of Allegheny County, Inc., Richard Levine, Monica Maghrak, movants.

MEMORANDUM OPINION

CAIAZZA¹, United States Magistrate Judge.

Now before the court are the parties' cross-motions for summary judgment. For the reasons stated below, the Defendant's Motion for Summary Judgment (Doc. 43) will be granted, the Plaintiff's "Motion for Summary Judgment on Count I of [the] Complaint [Breach of Contract]" (Doc. 39) will be denied, and this case will be dismissed with prejudice.

BACKGROUND

In this diversity action, the Plaintiff presents breach of contract and bad faith claims arising out of an "Employee Dishonesty" Policy ("the Policy") issued by the Defendant Lumbermens Mutual Casualty Co. ("the Defendant," "Lumbermens" or "the Insurer"). A detailed identification of the parties and the factual background in this case were fully set forth in a previously filed Report and Recommendation, adopted by the District Judge then presiding over the action, denying the Defendant's Motion to Dismiss. See generally Report and Recommendation dated Sept. 24, 1999 (Doc. 8) at 1-5; see also generally Mem. Order dated Nov. 5, 1999 (adopting Report and Recommendation and denying the Defendant's Motion to Dismiss). The court will briefly recapitulate, however, the facts relevant to the instant motions for summary judgment.

This action was brought by Joan Shoemaker ("the Plaintiff"), in her capacity as Administratrix of the Estate of Abbott Ross ("Mr.Ross"), deceased. Before Mr. Ross died, he was adjudicated an incapacitated person, and Patricia Gibbs ("Ms. Gibbs"), an employee of Guardianship Services of Allegheny County, Inc. ("Guardianship Services"), was appointed his "[p]ermanent [g]uardian." See generally Compl. at ¶ 7; Def.'s Answer (Doc. 16) at ¶ 7 (admitting same). Shortly after Mr. Ross' death another alleged employee of Guardianship Services, William E. Moore ("Mr.Moore"),² applied for and was granted "Letters of Administration" by the Register of Wills for Allegheny County, Pennsylvania regarding Mr. Ross' estate ("the Estate" or "the Ross Estate"). See generally Compl. at ¶ 9.

The Plaintiff alleges that, after Mr. Moore was appointed administrator of the Ross Estate, Ms. Gibbs paid him approximately $93,639.22 from Mr. Ross' guardianship estate, which he then deposited in a "PNC Bank Account" in the name of "Estate of Abbott Ross, Deceased, William E. Moore Administrator." See Compl. at ¶ 10. The Plaintiff also alleges that, in the months of March and April 1994, Mr. Moore "illegally wrote approximately $60,000.00 in checks from the ... Account to himself" or "Moore's Paralegal Services," an entity Mr. Moore established outside the knowledge of Guardianship Services. See id. at ¶¶ 11, 14. In addition, Mr. Moore wrote a check from the account to attorney Richard S. Levine ("Mr.Levine"), the Executive Director of Guardianship Services, indicating that it was payment for counsel fees. See id. at ¶ 14. The Plaintiff asserts that said funds were deposited into Guardianship Services' business bank account, but "there is no evidence that [Mr.] Levine ever personally received or benefitted from" the funds. See id. at ¶ 14(a).

In December 1994 the executrix of the estate of Mr. Ross' sister, his sole intestate heir, filed a petition to compel an inventory and accounting of Mr. Ross' Estate. When "[n]either Guardianship Services, [Mr.] Levine [n]or [Mr.] Moore complied with [a state court] Order" granting said motion, "a protracted Orphans' Court litigation ensued ...." See id. at ¶ 19.

In settlement of that litigation, the Orphans' Court entered a "Consent Decree and Order" on December 9, 1997. See generally Orphans' Court Consent Decree and Order (attached as Ex. A to Compl., hereinafter "the Consent Decree" or "the Consent Decree and Order"). The Consent Decree and Order listed "Stipulated Findings," many of which were materially identical to the allegations in the Plaintiff's pleadings here, as summarized supra. It also stated, among other things:

• [Mr.] Moore has pled guilty to and is serving a prison term arising out of the following charges: theft by deception and theft by failure to make required deposits of funds in the amount of $60,100.00 from the Estate of [Mr.] Ross.

• By Order of [the Orphans'] Court ..., [Mr.] Moore has been removed as Administrator of the Estate of [Mr.] Ross, and Joan Shoemaker, Esq[.,] has been appointed Administratrix.

• The Criminal Division of this Court ... has entered a Restitution Order [against Mr. Moore and] in favor of the Estate of [Mr.] Ross ... in the amount of $60,100.00, and has ordered the reduction of the Restitution to Judgment ....

• As the result of [Mr.] Moore's misconduct, the loss to the estate of [Mr.] Ross totals at least $71,500.00, of which [Mr.] Moore has actually admitted stealing $60,100.00 .... The loss of the estate of $71,500[.00] from August of 1994 to the present, together with interest at the legal rate of — per annum[,] amounts to a total loss of the estate of at least $85,000.00.

See id. at ¶¶ 36-40.

Based on the foregoing, it appears undisputed that Mr. Moore stole at least $60,100.00 from the Ross Estate. The question in this case, however, is whether the Defendant Insurer is obligated to provide coverage for the loss under the "Employee Dishonesty" Policy held by Guardianship Services.³

Regarding employee dishonesty, the Insurer's policy provided as follows:

We will pay for loss of, and loss from damage to, Covered Property resulting directly from .... `Employee Dishonesty.'

. . . . .

`Employee Dishonesty' ... means only dishonest acts committed by an [ ]employee[] ... with the manifest intent to ... [c]ause [the insured] to sustain loss[,] and also [to o]btain financial benefits (other than employee benefits earned in the normal course of employment ...) for [t]he []employee[] or [a]ny person or organization intended by the []employee[] to receive that benefit.

See "Employee Dishonesty Coverage Form A — Blanket" (attached as Ex. A to Doc. 41) at ¶¶ A, D(3)(a)(1)-(a)(2).

In settling the Orphans' Court proceedings, the parties to that litigation agreed upon, and the court approved, Guardianship Services' assignment of "any and all claims [it] ... ha[d] or might have against Lumbermens ... for loss resulting from the acts of [Mr.] Moore ... relating to or arising out of the Estate of [Mr.] Ross ...." See Consent Decree at ¶ 42(b). In exchange for the assignment, along with other consideration,⁴ Guardianship Services was "declared to have satisfied and performed any remaining obligations or duties ... [it] may have had with respect to the Estate of [Mr.] Ross ...." See id. at ¶ 43.

THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT

The Defendant raises numerous and varied legal theories in support of its Motion for Summary Judgment, including assertions that Mr. Moore was not an "employee" of Guardianship Services under the terms of the Policy, that this lawsuit was untimely filed, that the Plaintiff's claims violate the "no-assignment" provisions of the Policy, and that the Policy does not cover the losses effectuated by Mr. Moore's theft of assets from the Ross Estate. See generally Def.'s Br. at 10-34. On the other hand, the Plaintiff's Motion for Summary Judgment essentially seeks to refute the "defenses proffered by [the Defendant] in support of its refusal [to pay claim(s)] under the Policy." See generally Pl.'s Br. in Supp. of Mot. for Summ. J. (Doc. 40, hereinafter cited as "Pl.'s Br.") at 2.

Having reviewed the Defendant's various legal theories, this court concludes that some of them, if accepted, would raise comity concerns in connection with the Orphans' Court's entry of the Consent Decree and Order. Compare discussion supra (noting Defense counsel's arguments that Mr. Moore was not an employee of Guardianship Services and that the Ross Estate cannot pursue claims assigned to it by Guardianship Services) with Consent Decree and Order at ¶ 7 (finding that Moore was an employee of Guardianship Services) and at ¶ 42(b) (approving assignment of Guardianship Services' claims under the Policy to the Ross Estate). In addition, the Defendant's timeliness arguments raise thorny issues that would be difficult to resolve on summary judgment. Cf. generally Report and Recommendation dated Sept. 24, 1999 at 9-12 (recommending denial of motion to dismiss on timeliness-related grounds).

The court does find merit, however, to Defense counsel's argument that the Plaintiff has failed to show Mr. Moore acted with the "manifest intent to ... [c]ause [Guardianship Services] to sustain [a] loss ...." See discussion supra at 5 (emphasis added); see also Def.'s Br. at 14-19. Even assuming the Plaintiff could survive the other aspects of the Defendant's Motion for Summary Judgment, the Plaintiff simply cannot establish that Mr. Moore's conduct met the "manifest intent" language in the Policy. For this reason, the Insurer owed no duty to provide coverage, and the Plaintiff's claims must be dismissed.

ANALYSIS

This case is before the court on the basis of diversity jurisdiction, and the "task here is limited to deciding the meaning of the term `manifest intent' as [the undersigned] believe[s] it would have been decided by" the Supreme Court of Pennsylvania. See generally Resolution Trust Corp. v. Fidelity and Deposit Co. of Maryland, 205 F.3d 615, 643 (3d Cir.2000). Because the Pennsylvania Supreme Court has not spoken on the...