ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before: SEITZ and ADAMS, Circuit Judges and FISHER, District Judge*fn*
This is an appeal by Nationwide Mutual Fire Insurance Co. and Nationwide Mutual Insurance Co. (collectively Nationwide) from the order of the United States District Court for the Eastern District of Pennsylvania granting plaintiff, American Contract Bridge League's (ACBL), motion for summary judgment against defendant Nationwide and denying plaintiff's motion for summary judgment against Aetna Insurance Co. and Aetna Fire Underwriters Insurance Co. (collectively Aetna) and entering judgment in favor of Aetna. Subject matter jurisdiction is founded upon 28 U.S.C. § 1332, based upon the diverse citizenship of the parties. The ACBL filed its motion for summary judgment in the district court seeking a declaration that the defendant insurance companies be required to defend it in another action, Livezey v. American Contract Bridge League, (CA No. 82-3325). The ACBL also sought to have the court compel defendants to pay all costs and expenses incurred in defending itself.
The district court held that Nationwide had a duty to defend its insured, ACBL, against Livezey's action and, therefore, assessed the costs of securing an alternative defense on Nationwide when it refused to defend. Aetna's policy, on the other hand, it was also held, did not oblige it to defend the ACBL in the Livezey action.
The ACBL is a non-profit corporation organized to promote the playing of duplicate bridge. The ACBL is comprised of local units. The Pennsylvania Contract Bridge Association (PCBA) is one such unit. The Conduct and Ethics Committee of each local unit is charged with enforcing the ACBL's Code of Disciplinary Regulations.
John Livezey is a professional contract bridge player. He holds a franchise from the ACBL to operate bridge games in the Philadelphia area. On December 19, 1981, an incident occurred at the Aston Bridge Club involving Livezey. The local Conduct and Ethics Committee held a hearing on the matter in February 1982 and thereafter voted to suspend Livezey from playing bridge under its auspices for six months and placed him on probation for 24 months. Livezey appealed the committee's decision to the Judiciary Committee which affirmed the finding but modified the penalty. In July, 1982 Livezey further appealed to the National Appeals and Charges Committee of the ACBL. That committee affirmed the initial decision and reinstated Livezey's original penalty.
On July 31, 1982, Livezey instituted a suit in the district court against the ACBL, the members of the local Conduct and Ethics Committee, and four other individuals. The complaint contended that the discipline imposed by the ACBL was unlawful. Livezey complained of abuse of monopoly power and unfair competition by the ACBL, as well as defamation by the named defendants in their individual and official capacities.
Nationwide issued a special multi-peril insurance policy to the ACBL on January 1, 1981. This policy was effective from January 1 to April 1, 1982, and provided, in part, that
the company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business, within the policy territory, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.
Nationwide policy No. 63SM106-473-0001, Endorsement 1-113, II-A (emphasis added). Personal injury is defined by the policy to include:
"a publication or utterance . . . of a libel or slander or other defamatory or ...