Viola v. Fireman's Fund Ins. Co.

• Decision Date: 03 April 1997
• Docket Number: Civil Action No. 96-7387.
• Parties: Charles VIOLA, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

965 F.Supp. 654

Charles VIOLA, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant.

Civil Action No. 96-7387.

United States District Court, E.D. Pennsylvania.

April 3, 1997.

COPYRIGHT MATERIAL OMITTED

William G. Blasdel, Jr., Philadelphia, PA, for Plaintiff.

Allan C. Molotsky, Christopher P. Seerveld, Post & Schell, P.C., Philadelphia, PA, for Defendant.

MEMORANDUM

YOHN, District Judge.

On March 16, 1990, plaintiff Charles Viola sustained personal injuries when struck at his place of work by fellow employee Albert Francks. In 1992, Viola obtained a default and then a judgment by consent against Francks in the amount of $558,816.00.

On November 1, 1996, Viola filed the instant diversity suit against Fireman's Fund Insurance Company (Fireman's Fund) to recover on the judgment. Francks has assigned his right against Fireman's Fund to Viola and Viola seeks the indemnification that he alleges is due Francks under the contract of insurance provided by Fireman's Fund to Francks' employer. In addition, Viola alleges breach of contract and bad faith claims against Fireman's Fund's for its failure to defend Francks in the underlying action.

Fireman's Fund has moved to dismiss Viola's complaint for failure to state a claim upon which relief can be granted. For the reasons that follow, Fireman's Fund's motion will be granted.

I. BACKGROUND

The following is a summary of the facts as alleged in Viola's complaint, and the procedural history as stated in related court documents and judicial decisions.

In 1990, Viola and Francks were employees at Colonial Village Meat Market (Colonial) on Walnut Street, Philadelphia, Pennsylvania. In the instant complaint, Viola alleges that on March 16, 1990, Francks was on the job working when Viola stopped in the parking lot to talk to another Colonial employee, Dominic Pocoppio. Viola entered Colonial and, before starting work, approached Francks. The two were talking between cash registers when Viola abruptly turned to leave. As he turned, his arm came out from his body. Seeing this, Francks thought that Viola was about to throw a punch at him. Believing he was in physical peril, Francks struck Viola with what he believed was reasonable force. As a result, Viola suffered bodily injury, including a concussion.

On March 13, 1992, Viola filed suit for personal injuries against Francks, Colonial, and Pocoppio in the United States District Court for the Eastern District of Pennsylvania. In that complaint (which Viola attaches to his present complaint), Viola alleged as follows:

Viola was working at the Colonial Village Meat Market when [] Albert Franks [sic] struck him from behind, without warning, crushing most of the bones on the right side of plaintiff face, leaving him momentarily unconscious. Albert Franks then struck plaintiff in the face again, and kicked plaintiff in the stomach and legs while he lay on the floor, all of which caused plaintiff serious permanent bodily injury.

Colonial's various insurance carriers provided Colonial and Pocoppio with counsel to assist in their defense. Francks was unrepresented.

On October 22, 1992, the court entered a default order against Francks in the underlying case for failure to answer the complaint. On November 3, 1992, Francks assigned to Viola all his rights, interests or claims against Colonial's insurers, American Manufactures Mutual Insurance Company (American), Lebanon Mutual (Lebanon), and Fireman's Fund. American provided Colonial with worker's compensation and employer's liability insurance, Lebanon provided primary business insurance, and Fireman's Fund provided excess and umbrella liability insurance.

On November 6, 1992, the court granted Colonial and Pocoppio summary judgment, and approved a stipulation by Viola and Francks entering judgment against Francks for $558,816.00. On November 10, 1992, the court formally entered judgment against Francks.

To collect on judgment, on November 24, 1992, Viola filed a praecipe for writ of execution and interrogatories of attachment against Lebanon and American and on December 3, 1992, Viola filed similar documents against Fireman's Fund. Viola withdrew his interrogatories of attachment filed against Lebanon on December 18, 1992. On February 26, 1993, Fireman's Fund answered the garnishment interrogatory and filed counterclaims and on April 4, 1993, Viola moved to dismiss Fireman's Fund's counterclaim, but later withdrew his motion. On May 27, 1993, Viola filed a praecipe to withdraw his writ of execution directed at Fireman's Fund without prejudice, and proceeded solely against American. Fireman's Fund did not stipulate to Viola's withdrawal of his garnishment writ. On January 3, 1994, the district court ruled that American owed no indemnification to Viola because Francks was not an "insured" under American's policy. Viola v. Franks, No. 92-1513, 1994 WL 3400 (E.D. Pa. Jan 4, 1994).

On November 25, 1992, Lebanon filed a declaratory judgment against all parties in the Delaware County Court of Common Pleas, requesting a ruling that it had no obligation to indemnify or defend Francks for the injuries he caused to Viola. That action is still pending.

On November 1, 1996, Viola, as Francks' assignee, filed the present suit against Fireman's Fund. Viola seeks the indemnification he alleges is due Francks under section I, Coverage B (umbrella policy) of the Fireman's Fund policy. Additionally, Viola alleges claims of breach of contract and bad faith, and seeks punitive damages, relating to Fireman's Fund's refusal to defend Francks in the underlying action.

II. DISCUSSION

Fireman's Fund asserts that Viola's complaint fails to state a claim upon which relief can be granted. Specifically, Fireman's Fund raises the following arguments: Francks' assignment of his rights under the policy to Viola is not binding on Fireman's Fund and has no effect; the court should abstain in light of ongoing proceedings in the Court of Common Pleas for Delaware County; Viola's complaint was already dismissed with prejudice; Viola's injuries are not covered under Fireman's Fund's umbrella policy; there was no breach of contract or bad faith because no coverage exists; and no tort against an insurance company for breach of fiduciary duty exists in Pennsylvania.

A. Standard of Review

When considering a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must accept as true and view in a light most favorable to the plaintiff all allegations made in the complaint. H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 249, 109 S.Ct. 2893, 2905-06, 106 L.Ed.2d 195 (1989); Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989). A motion to dismiss will only be granted if it is clear that relief cannot be granted to the plaintiff under any set of facts that could be proven consistent with the complaint's allegations. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984). "To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record." Pension Ben. Guar. Corp. v. White Consol. Ind., 998 F.2d 1192, 1196 (3d Cir. 1993). Public records include letter decisions of government agencies and published reports of administrative agencies. Id. at 1197. In addition, a court may consider undisputed authentic documents submitted by the defendant if the plaintiff's claims are based on such documents. Id. at 1196.

Therefore, in considering Fireman's Fund's motion, the court will consider Viola's present complaint, Fireman's Fund's insurance policy, Viola's personal injury complaint against Francks, and Magistrate Judge Smith's opinion in the garnishment portion of the underlying action.

B. Francks' Assignment of Rights Against Fireman's Fund to Viola

Fireman's Fund argues that Francks' assignment of his rights to Viola is not binding on Fireman's Fund because the policy states that an assignment is invalid without the insurer's consent. (Defend.Exhib. B at 7 ("Assignment of interests under this policy shall not bind us until our consent is endorsed hereon....").) In response, Viola argues that the non-assignment clause merely prohibits plaintiffs from enforcing the rights of an insured without first obtaining a judgment against the insured.

Under Pennsylvania law, an insurer may not limit an insured's ability to assign his or her rights under a policy after the occurrence of the event which gives rise to the insurer's liability. In National Memorial Services v. Metropolitan Life Insurance Company, 355 Pa. 155, 49 A.2d 382 (1946), the Pennsylvania Supreme Court addressed the issue of whether a non-assignment clause precluded the beneficiaries of a life insurance policy from assigning their proceeds from the policy. The court held that despite the presence of a non-assignment clause in an insurance contract, "[a]n assignment of the policy or rights thereunder after the occurrence of the event, which creates the liability of the insurer, is not [] precluded." Id. 49 A.2d at 383. The court reasoned that

[a]fter a loss has occurred, the right of the insured or his successor in interest to the indemnity provided in the policy becomes a fixed and vested right; it is an obligation or debt due from the insurer to the insured, subject only to such claims, demands, or defenses as the insurer would have been entitled to make against the original insured.

Id. (quoting Couch Encyclopedia of Insurance Laws, Vol. 6, § 1459, at 5275).

Similarly, in Continental Casualty Co. v. Diversified Industries, 884 F.Supp. 937, 946 (E.D.Pa.1995), the court held that "because an insured's right to proceeds vests at the time of the loss giving rise to the insurer's liability, restrictions on an insured's right to assign its proceeds are generally rendered void." In Continental Casualty, the insurer sought a declaratory judgment that it was not obligated...