Allstate Insurance Company v. Kenney

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ALLSTATE INSURANCE COMPANY, Plaintiff v. MAURA J. KENNEY ZACHARY KENNEY, a Minor, by his Parent and Natural Guardian, MAURA J. KENNEY; and CHRISTOPHER DOGGENDORF, a Minor, by and through his Parents and Natural Guardians SUZANNE and DAVID DOGGENDORF, and in their own right, Defendants.

No. 02-CV-02387.

United States District Court for the Eastern District of Pennsylvania.

October 16, 2003.

KATHRYN A. DUX, ESQUIRE

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On behalf of plaintiff

Allstate Insurance Company,

BEBE H. KIVITZ, ESQUIRE and DOLORES M. TROIANI, ESQUIRE On behalf of defendants.

Zachary Kenney, a Minor, by his Parent and Natural Guardian, Maura J. Kenney

JOHN F. McKENNA, ESQUIRE On behalf of defendants

Christopher Doggendorf, a Minor, by and through his Parents and Natural Guardians, Suzanne and David Doggendorf, and in their own right

OPINION

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JAMES KNOLL GARDNER, United States District Judge.

This matter is before the court on the Motion for Summary Judgment of Plaintiff Allstate Insurance Company filed December 11, 2002.(¹) For the reasons expressed below, we conclude that the allegations that Christopher, Suzanne, and David Doggendorf ("Doggendorfs") make against Zachary and Maura Kenney ("Kenneys") in the complaint in the underlying state court action fall outside the range of coverage that Allstate Insurance Company ("Allstate") provided the Kenneys in their insurance contract. Accordingly, we grant summary judgment for plaintiff and declare that Allstate need neither defend nor indemnify the Kenneys in the underlying state court action.

Procedural History

The within civil action is a request for a declaratory judgment pursuant to 28 U.S.C. § 2201. It is before the court on diversity jurisdiction.(²) See 28 U.S.C. § 1332. Venue is appropriate because both the defendants and the underlying state action may be found in Chester County. See 28 U.S.C. §§ 118, 1391.

Allstate Insurance Company's Complaint for Declaratory Judgment was filed on April 23, 2003. In the complaint, plaintiff seeks a declaration from the court that the losses alleged in the underlying state action between the Doggendorfs and the Kenneys are the result of an intentional act by Zachary Kenney. Therefore, plaintiff contends that those losses are not covered by or are excluded from the terms, conditions, and exclusion of the insurance contract between Allstate and the Kenneys.

On October 21, 2002, an entry of default was entered by the Clerk of Court in the United States District Court for the Eastern District of Pennsylvania against the Kenney defendants. However, on June 16, 2003, the Kenney defendants appeared. By agreement of counsel, the entry of default was lifted on August 5, 2003.

Facts

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Based upon the pleadings, exhibits, and record papers the following are the pertinent facts. On February 4, 2002, Christopher Doggendorf, a minor, by and through Suzanne and David Doggendorf, brought suit against Zachary and Maura Kenney in the Court of Common Pleas, Chester County, Pennsylvania.

The allegations in the state court action stem from an incident in which Zachary Kenney allegedly struck Christopher Doggendorf. In the factual allegations, the state court complaint avers that Zachary Kenney "viciously struck Christopher Doggendorf in the face and head, threw him to the floor of the bus and caused him to bleed out of his nose and mouth."(³) Count 1 of that complaint contends that Mr. Kenney "[i]ntentionally and knowingly [struck] the minor plaintiff so as to bring about bodily harm".(⁴) Count 1 also claims that Zachary Kenney "[r]ecklessly and wantonly [struck] the minor plaintiff with such force as to cause bodily harm."(⁵)

The state complaint further contends that Maura J. Kenney was negligent in the supervision of her son, Zachary Kenney. The Doggendorfs aver that it was Maura Kenney's negligent supervision of Zachary Kenney that was a proximate cause of Christopher Doggendorf's injuries.

Maura Kenney informed Allstate of the state court complaint. On March 4, 2003, Allstate informed Ms. Kenney that it was providing her a defense to the suit subject to a reservation of rights. Counsel who Allstate provided to the Kenney's in the state court action agreed to stay the state court action while Allstate sought the within declaratory judgment on October 17, 2002.

Standard for Summary Judgment

Summary judgment is proper when no genuine issue of material fact is in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Federal Home Loan Mortgage Corp. v. Scottsdate Insurance Company, 316 F.3d 431, 443 (3d Cir. 2003). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986); see Federal Home Loan Mortgage Corp., 316 F.3d at 443. Thus, a "material" fact is one that is necessary to establish an element under the substantive law governing a claim. A fact is "genuine" if it is such that a reasonable jury could return a verdict for the non-moving party. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 211.

When considering summary judgment, the court must take the facts in the light most favorable to the non-moving party. While the non-moving party is not burdened to prove his case as he might at trial, "a party opposing a properly supported motion for summary judgment `may not rest upon the mere allegations or denials of his pleadings, but ... must set forth specific facts showing that there is a genuine

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issue for trial.'" Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d at 212 (quoting Fed.R.Civ.P. 56(e)). As a result, plaintiff, as the moving party, must set forth such facts as would permit a reasonable jury to conclude that the plaintiff can establish every element of its case.

Discussion

An insurer's duty to defend and to indemnify its insured under Pennsylvania law is summarized as follows:(⁶)

The duty to defend is a distinct obligation separate and apart from the duty to indemnify. Erie Ins. Exchange v. Transamerica Ins. Co., 516 Pa. 574, 582, 533 A.2d 1363, 1368 (1987). The duty to defend arises whenever claims asserted by the injured party potentially come within the coverage of the policy, Gedeon v. State Farm Mutual Automobile Ins. Co., 410 Pa. 55, 56, 188 A.2d 320, 321 (1963), while the duty to indemnify arises only when the insured is determined to be liable for damages within the coverage of the policy. See, e.g., Employers Reinsurance Corp. v. Sarris, 746 F. Supp. 560, 566-68 (E.D. Pa. 1990). It follows then, that when the claims in the underlying action have not been adjudicated, the court entertaining the declaratory judgment action must focus on whether the underlying claims could potentially come within the coverage of the policy. Air Products and Chemicals, Inc. v. Hartford Accident and Indemnity Co., 25 F.3d 177, 179 (3d Cir. 1994). If there is a possibility that any of the underlying claims could be covered by the policy at issue, the insurer is obliged to provide a defense at least until such time as those facts are determined, and the claim is narrowed to one patently outside of coverage. C. Raymond Davis & Sons, Inc. v. Liberty Mut. Ins. Co., 467 F. Supp. 17, 19 (E.D. Pa. 1979). On the other hand, if there is no possibility that any of the underlying claims could be covered by the policy at issue, judgment in the insurer's favor with regard to the duty to defend and indemnification is appropriate. See, e.g., Germantown Ins. Co. v. Martin, 407 Pa. Super. 326, 595 A.2d 1172 (1992), alloc. denied, 531 Pa. 646, 612 A.2d 985 (1992).

Britamco Underwriters, Inc. v. Stokes, 881 F. Supp. 196, 198 (E.D. Pa. 1995).

An insurer's duty to defend is determined solely from the allegations in the underlying complaint giving rise to the claim against the insured. See General Accident Insurance Company of America v. Allen, 708 A.2d 828, 830 (Pa. Super. 1998); Lebanon Coach Co. v. Carolina Casualty Insurance Co., 450 Pa. Super. 1, 15, 675 A.2d 279, 286 (1996); Stidham v. Millvale Sportsman's Club, 421 Pa. Super. 548, 564, 618 A.2d 945, 953-54 (1992). "[T]he particular cause of action

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that a complainant pleads is not determinative of whether coverage has been triggered. Instead it is necessary to look at the factual allegations contained in the complaint." Mutual Benefit Insurance Co. v. Haver, 555 Pa. 534, 538-539, 725 A.2d 743, 745 (Pa. 1999); see Agora Syndicate, Inc. v. Levin, 977 F.Supp. 713, 715 (E.D. Pa. 1997).

Our determination of the duty to defend under an insurance policy is a question of law requiring only an examination of the language of the policy at issue and the allegations in the underlying complaint. Gene's Restaurant, Inc. v. Nationwide Insurance Co., 519 Pa. 306, 308, 548 A.2d 246, 246-247 (Pa. 1988).

An insurance policy must be read as a whole and be construed according to the plain meaning of its terms. C.H. Heist Caribe Corp. v. American Home Assurance Co., 640 F.2d 479, 481 (3d Cir. 1981); Atlantic Mutual Insurance Co. v. Brotech Corp., 857 F. Supp. 423, 427 (E.D. Pa. 1994), aff'd, 60 F.3d 813 (3d Cir. 1995). "Where the language of the contract is clear, a court is required to give the words their ordinary meaning." Brotech, 857 F.Supp. at 427; see also Gene & Harvey Builders, Inc. v. Pennsylvania Manufactures Association Insurance Co., 512 Pa. 420, 426, 517 A.2d 910, 913 (Pa. 1986).

The burden is on the insured to establish coverage under an insurance policy. Erie Insurance Exchange v. Transamerica Insurance Co., 516 Pa. 574, 580, 533 A.2d 1363, 1366-1367 (Pa. 1987); Benjamin v. Allstate Ins. Co., 354 Pa. Super. 269, 272, 511 A.2d 866, 868 (1986). The burden of establishing the applicability of an exclusion is on the insurer. Allstate Insurance Co. v. Brown, 834...