State Farm Mut. Auto. Ins. Co. v. Dabbene

511 F.Supp.3d 600

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,

v.Dominic J. DABBENE, John A. Gambone, and Caroline Moore, Defendants.

Civil Action No. 20-1938

United States District Court, E.D. Pennsylvania.

Signed January 5, 2021

Tyson Matthew Mott, Goldberg Miller & Rubin, Eamon C. Merrigan, Goldberg, Miller & Rubin, P.C., Philadelphia, PA, for Plaintiff.

Brian Richard Elias, Wisler Pearlstine, LLP, Blue Bell, PA, for Defendants.

OPINION

WENDY BEETLESTONE, J.

In this insurance coverage dispute, Plaintiff State Farm Mutual Automobile Insurance Company ("State Farm") seeks a declaratory judgment that it has no duty to defend or indemnify Defendants in any actions arising from a March 2019 motor vehicle accident involving Defendant Dominic Dabbene. State Farm is currently defending all Defendants in a state court action premised on the March 2019 accident. Angela Cieri, the plaintiff in the underlying state action, moves to intervene in this litigation, and State Farm moves for summary judgment on its declaratory judgment claim.

I. BACKGROUND

A. The Accident

Defendants Dabbene, Caroline Moore, and John Gambone (collectively, "Defendants") are family members, all of whom reside in the same household in Montgomery County, Pennsylvania. Moore and Gambone are married, and Dabbene is Moore's son. The family insures three vehicles. Two of these vehicles are insured by Moore through the State Farm policy at issue in this case: a 2010 Volkswagen Jetta and a 2014 Toyota Corolla, the latter of which is typically driven by Dabbene. Gambone separately insures his own vehicle, a 2008 Cadillac DTS, through Progressive. Dabbene is expressly listed as an excluded driver under the Cadillac's Progressive policy.

On March 13, 2019, Dabbene—unable to drive the Toyota Corolla, which was in the shop—borrowed Gambone's Cadillac. While driving the Cadillac home from work, Dabbene was involved in an accident with a motorcycle operated by James Gambone (no relation to Defendant Gambone) and occupied by Angela Cieri. As indicated in the police report, James Gambone and Cieri both suffered severe injuries to their left legs. The motorcycle and Cadillac were damaged. Defendants reported the accident to State Farm for liability coverage under Moore's policy.

B. The Policy

Moore's State Farm policy provides liability coverage for damages and defense costs to "insured[s]." For the purposes of liability coverage, and as relevant here, the policy defines "insured" as:

1. you and resident relatives for:

a. the ownership, maintenance, or use of:

(1) your car ;

(2) a newly acquired car ; or

(3) a trailer ; and b. the maintenance or use of

(1) a non-owned car ; or

(2) a temporary substitute car .¹

The policy expressly defines "resident relative," as well as the terms "you" and "your." It defines a "resident relative" as:

a person , other than you , who resides primarily with the first person shown as a named insured on the Declarations Page and who is:

1. related to that named insured or his or her spouse by blood, marriage, or adoption, including an unmarried and unemancipated child of either who is away at school and otherwise maintains his or her primary residence with that named insured; or

2. a ward or a foster child of that named insured, his or her spouse, or a person described in 1. above.

Importantly, the policy defines "you" and "your" as follows:

You or Your means the named insured or named insureds shown on the Declarations Page. If a named insured shown on the Declarations Page is a person , then "you" or "your" includes the spouse of the first person shown as a named insured if the spouse resides primarily with that named insured.

Moore is the only named insured listed on the policy's Declarations Page.

The policy defines "your car" as the vehicles listed on the Declarations Page, in this case, the 2010 Volkswagen Jetta and the 2014 Toyota Corolla. It sets out three circumstances under which State Farm will provide liability coverage for use of a car that is not "your car," namely, when the car is (1) newly-acquired, (2) non-owned, or (3) a temporary substitute. A car ceases to be "newly acquired" on "the effective date and time of a policy ... issued by [State Farm] or any other company that describes such car as an insured vehicle." The policy defines "non-owned car" as follows:

Non-Owned Car means a car that is in the lawful possession of you or any resident relative and that neither:

1. is owned by :

a. you ;

b. any resident relative ;

c. any other person who resides primarily in your household; or

d. an employer of any person described in a., b., or c. above; nor

2. has been operated by, rented by, or in the possession of:

a. you ; or

b. any resident relative during any part of each of the 31 or more consecutive days immediately prior to the date of the accident or loss .

Most critical to the parties’ present dispute is the third circumstance under which an insured will be entitled to liability coverage for a car not listed on the policy's Declarations Page. The policy defines "temporary substitute car" as follows:

Temporary Substitute Car means a car that is in the lawful possession of the person operating it and that:

1. replaces your car for a short time while your car is out of use due to its:

a. breakdown;

b. repair; c. servicing;

d. damage; or

e. theft; and

2. neither you nor the person operating it own or have registered.

The policy provides that State Farm will pay "damages an insured becomes legally liable to pay because of: (1) bodily injury to others; and (2) damage to property caused by an accident that involves a vehicle for which that insured is provided Liability Coverage by this policy." The policy also provides that State Farm will pay for "attorney fees for attorneys chosen by us to defend an insured who is sued for such damages; and court costs charged to an insured and resulting from that part of a lawsuit: (1) that seeks damages payable under this policy's Liability Coverage; and (2) against which we defend an insured with attorneys chosen by us ."

C. The Aftermath

To recap: the Cadillac driven by Dabbene at the time of the March 13 accident was not insured under Moore's State Farm policy but was instead separately insured by Gambone through a Progressive policy, under which Dabbene was an excluded driver. Defendants sought coverage for the accident from State Farm.

On April 3, 2019, State Farm notified Moore by letter that it was disclaiming coverage, given its determination that the Cadillac was not a covered vehicle under Moore's policy. State Farm wrote:

We have completed our investigation as to whether Policy Number 129927938I applies to the incident that occurred on March 13, 2019 and must inform you we disclaim any and all coverage because the vehicle being driven by [Dabbene] was not on the policy. There are a few options for covering vehicles not on our policy—as a Non-Owned Car, a Newly A[c]quired Car, or a Temporary Substitute Car. The 2008 Cadillac DTS is owned by [Gambone], so it is not a Newly A[c]quired Car. Per our policy, Non-Owned Cars and Newly A[c]quired Cars cannot be owned by our policyholder or their spouse in order to qualify for coverage. Since Caroline [Moore] is the name on the policy, [Gambone] would be the spouse of the policyholder, therefore the vehicle does not qualify as either a Non-Owned Car or a Newly A[c]quired Car.

On April 8, Gambone's counsel notified State Farm that Dabbene was an excluded driver under the Progressive policy and requested State Farm open a defense file. State Farm responded on April 15, reiterating to Gambone's counsel that State Farm was "disclaim[ing] any and all coverage because the vehicle that was being driven by [Dabbene] at the time of the loss does not qualify as a covered vehicle under our policy."

Cieri filed suit on July 17, 2019 against all Defendants in the Montgomery County Court of Common Pleas. She alleges that Dabbene's negligent operation of the Cadillac caused her to suffer significant injuries, including multiple fractures of her left leg which required surgery and resulted in severe scarring and cosmetic disfigurement. Cieri further alleges that Dabbene was a permissive user of the Cadillac, and that Gambone and Moore negligently entrusted the vehicle to Dabbene. On August 26, Defendants’ counsel notified State Farm of Cieri's state court action, and "demand[ed] defense and indemnification for [Cieri's] claims." State Farm retained counsel for Defendants in September 2019, but in doing so sent Defendants a letter, dated September 12, 2019, informing them of the following:

We wish to call your attention to the fact that we specifically reserve our right to deny coverage to you and anyone claiming coverage under the policy for the following reason(s):

It is questionable whether the vehicle involved in the accident constitutes either temporary substitute, newly-acquired, or a non-owned automobile or car as covered in the policy.

The defense of this action by the law firm we have selected on your behalf is not to be considered a waiver of such policy defense or any policy defense which may be involved in this case. If we do not hear from you to the contrary, we will assume it is acceptable for us to continue handling the case on these terms.

Defendants proceeded to file their responsive pleadings in the state court action on January 7 and January 14, 2020. Cieri responded to Defendants’ new matter on February 4, 2020. Although James Gambone—the driver of the motorcycle involved in the March 13 accident—has not yet filed suit, the parties anticipate that he too will commence a personal injury action against one or more of the Defendants.

On April 17, 2020, State Farm filed the present action, seeking, under 28 U.S.C. § 2201, a declaratory judgment that State Farm is not obligated to defend or indemnify Defendants for any claims—pending or future—arising from Dabbene's March 13 accident. Defendants filed their Amended Answer on June 16, 2020, asserting estoppel as an...