Unitrin Direct Ins. Co. v. Esposito
| Decision Date | 05 April 2017 |
| Docket Number | CIVIL ACTION NO. 16–5239 |
| Parties | UNITRIN DIRECT INSURANCE COMPANY v. Michael ESPOSITO |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Andrew J. Gallogly, Margolis Edelstein, Philadelphia, PA, for Unitrin Direct Insurance Company.
Stephen Durham, Durham & James, P.C., Media, PA, for Michael Esposito.
Unitrin Direct Insurance Company brought this action seeking a declaration that it has no duty to defend and indemnify its insured, Michael Esposito, in a pending state court action alleging he assaulted the plaintiff.1 Moving for judgment on the pleadings, Unitrin argues that Esposito is not covered because there was no occurrence, as defined in the policy, causing bodily injury. It also contends that coverage is excluded because the claim in the underlying action is for intentional bodily harm.
Rather than addressing Unitrin's coverage defenses, Esposito argues that there is no federal jurisdiction and that the action should be dismissed for failure to join indispensable parties. His arguments are meritless.2 Nevertheless, we shall deny Unitrin's motion to the extent it seeks a declaration that it need not defend Esposito.
After reviewing the policy, the plaintiff's complaint in the underlying action, and the complaint and the answer in this action, we conclude that Unitrin has failed to meet its burden of demonstrating that the insurance policy excuses it from defending Esposito as a matter of law. Although the injury-producing conduct alleged in the underlying action does not fall within the policy definition of an occurrence triggering coverage, the policy exclusion for intentional conduct expressly provides coverage when the insured acts in self-defense or in the defense of others. Because Esposito claims in the underlying action that he acted in defense of himself and his wife, Unitrin must defend him. If the jury rejects his defense and finds against him in the state court action, Unitrin will have no duty to indemnify him. If it finds for him, the issue of indemnity will be moot.
On August 2, 2014, Esposito physically assaulted Mark Anderson at The Deck at Harbour Pointe, a bar located in Delaware County, Pennsylvania.3 Anderson sued The Deck and Esposito in state court.4 His complaint states causes of action for negligence against Esposito and The Deck, and for assault and battery against Esposito. In the assault count, Anderson alleges that Esposito, "without provocation, punched, kicked and injured [Anderson] causing permanent, significant and disfiguring facial injuries."5 Anderson suffered facial fractures, a concussion, nerve damage and scarring.6 He also alleges that Esposito pleaded guilty to assault.7
At the time of the assault, Esposito was covered by a homeowner's policy issued by Unitrin. Unitrin is defending Esposito in the state court action pursuant to a reservation of rights.8 We must decide whether Unitrin has a duty to defend and indemnify Esposito in the state court action. In other words, we must determine whether any of the claims in the complaint are potentially covered by the policy.
The interpretation of an insurance contract is a question of law. Am. Auto. Ins. Co. v. Murray , 658 F.3d 311, 320 (3d Cir. 2011). Whether a claim is within a policy's coverage or is barred by an exclusion may be determined on a motion for judgment on the pleadings. Allstate Fire & Cas. Ins. Co. v. Hymes , 29 A.3d 1169, 1171 (Pa. Super. 2011).
In deciding a motion for judgment on the pleadings made pursuant to Rule 12(c), the court considers the facts alleged in the pleadings and documents attached as exhibits or incorporated by reference in the pleadings. See Fed. R. Civ. P. 10(c) ; Commercial Money Ctr., Inc. v. Ill. Union Ins. Co. , 508 F.3d 327, 335 (6th Cir. 2007) ; cf. Steinhardt Grp. Inc. v. Citicorp , 126 F.3d 144, 145 & n.1 (3d Cir. 1997) (in Rule 12(b)(6) context). All the well-pleaded factual assertions in the nonmovant's pleadings are accepted as true and all contrary allegations in the movant's pleadings are assumed to be false. 5C Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. § 1368 (3d ed., Apr. 2016) (citing Allah v. Al–Hafeez , 226 F.3d 247, 249–50 (3d Cir. 2000) ).
The movant must establish that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law. Jablonski v. Pan Am. World Airways, Inc. , 863 F.2d 289, 290–91 (3d Cir. 1988) ; Shelly v. Johns–Manville Corp. , 798 F.2d 93, 97 n.4 (3d Cir. 1986). The motion can be granted only if the nonmovant cannot prevail under any set of facts. Green v. Fund Asset Mgmt., L.P. , 245 F.3d 214, 220 (3d Cir. 2001) ; Turbe v. Gov't of V.I. , 938 F.2d 427, 428 (3d Cir. 1991).
Applying these principles, we examine the insurance policy and the allegations in the state court complaint. Because we are deciding a motion for judgment on the pleadings, we also consider Unitrin's complaint and Esposito's answer in this case.
A court must give effect to the plain language of the insurance contract read in its entirety. Am. Auto. Ins. Co. , 658 F.3d at 320. When the language is plain and unambiguous, the court is bound by that language. Pa. Nat'l Mut. Cas. Ins. Co. v. St. John , 630 Pa. 1, 106 A.3d 1, 14 (2014). When the policy language is ambiguous, the provision is construed in favor of the insured. Ramara, Inc. v. Westfield Ins. Co. , 814 F.3d 660, 673–74 (3d Cir. 2016) ; Pa. Nat'l , 106 A.3d at 14. Contract language is ambiguous if it is reasonably capable of more than one meaning. Pa. Nat'l , 106 A.3d at 14. However, policy language may not be stretched beyond its plain meaning to create an ambiguity. Meyer v. CUNA Mut. Ins. Soc. , 648 F.3d 154, 164 (3d Cir. 2011) ; Trizechahn Gateway LLC v. Titus , 601 Pa. 637, 976 A.2d 474, 483 (2009).
Where the insurer relies on a policy exclusion as the basis for denying coverage, it has the burden of proving that the exclusion applies. State Farm Fire & Cas. Co. v. Estate of Mehlman , 589 F.3d 105, 111 (3d Cir. 2009) ; Wolfe v. Ross , 115 A.3d 880, 884 (Pa. Super. 2015). Policy exclusions are strictly construed against the insurer. Nationwide Mut. Ins. Co. v. Cosenza , 258 F.3d 197, 206–07 (3d Cir. 2001) ; Mut. Benefit Ins. Co. v. Politsopoulos , 631 Pa. 628, 115 A.3d 844, 852 n.6 (2015) (citing Madison Constr. Co. v. Harleysville Mut. Ins. Co. , 557 Pa. 595, 735 A.2d 100, 106 (1999) ); Peters v. Nat'l Interstate Ins. Co. , 108 A.3d 38, 43 (Pa. Super. 2014).
An insurance carrier's duty to defend is distinct from its duty to indemnify. It is interpreted more broadly than the duty to indemnify. Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co. , 589 Pa. 317, 908 A.2d 888, 896 n.7 (2006). An insurer may have a duty to defend even though it may have no duty to indemnify. Frog, Switch & Mfg. Co. v. Travelers Ins. Co. , 193 F.3d 742, 746 (3d Cir. 1999). A duty to indemnify does not arise until the insured is found liable for a covered claim. Id.
Because the duty to defend is broader than the duty to indemnify, the complaint in the underlying action must be construed liberally. The factual allegations must be accepted as true, and all doubts as to coverage resolved in favor of the insured. Roman Mosaic & Tile Co. v. Aetna Cas. & Sur. Co. , 704 A.2d 665, 669 (Pa. Super. 1997). To prevent artful pleading designed to avoid policy exclusions, it is necessary to look at the factual allegations in the complaint, not how the plaintiff in the underlying action frames the request for relief. Kvaerner Metals, 908 A.2d at 893 ; Mut. Benefit Ins. Co. v. Haver , 555 Pa. 534, 725 A.2d 743, 745 (1999). In other words, the focus of the coverage inquiry is on the substance, not the form, of the allegations.
An insurer is obligated to defend the insured against any suit arising under the policy "even if the suit is groundless, false, or fraudulent." Britamco Underwriters, Inc. v. Weiner , 431 Pa.Super. 276, 636 A.2d 649, 651 (1994) (quoting Gedeon v. State Farm Mut. Auto. Ins. Co. , 410 Pa. 55, 188 A.2d 320, 321 (1963) ). Consequently, whenever the complaint sets forth facts raising claims that could possibly come within the policy's coverage, the insurer's duty to defend is triggered. Erie Ins. Exch. v. Muff , 851 A.2d 919, 931 (Pa. Super. 2004) ; Belser v. Rockwood Cas. Ins. Co. , 791 A.2d 1216, 1219, 1222 (Pa. Super. 2002). If a single claim in a multiple-claim complaint is potentially covered, the duty to defend attaches until the underlying plaintiff can no longer recover on a covered claim. Frog, Switch & Mfg. Co. , 193 F.3d at 746 ; Am. Contract Bridge League v. Nationwide Mut. Fire Ins. Co., 752 F.2d 71, 75 (3d Cir. 1985).
The policy assures that Unitrin will "[p]ay up to our limit of liability for the damages" resulting from a claim or suit "brought against an ‘insured’ for damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence’ to which this coverage applies."9 The policy defines "occurrence" as an "accident" resulting in bodily injury or property damage.10 "Accident" is not defined in the policy.
Undefined terms of common usage in an insurance policy must be construed according to their plain meaning and a dictionary may inform an understanding of the terms. Ramara, 814 F.3d at 666–67 (quoting Am. Auto. Ins. Co. , 658 F.3d at 320 ); Wall Rose Mut. Ins. Co. v. Manross , 939 A.2d 958, 962 (Pa. Super. 2007) (quoting Am. Auto. Ins. Co. , 658 F.3d at 320 ). The dictionary definition of an "accident" is "an unexpected happening causing loss or injury which is not due to any fault or misconduct on the part of the person injured but for which legal relief may be sought." Webster's Third New International Dictionary, Unabridged (2017).
Unitrin contends it has no obligation to defend and to indemnify Esposito because the bodily injury alleged in the underlying action does...
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