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RIEDER v. CHEROKEE INS. CO.

May 23, 1986

ROBERT M. RIEDER
v.
CHEROKEE INSURANCE COMPANY and GREAT AMERICAN ASSURANCE COMPANY and the PROVIDENCE WASHINGTON INSURANCE COMPANY and CAMBRIDGE MUTUAL FIRE INSURANCE COMPANY



The opinion of the court was delivered by: BRODERICK

 BRODERICK, J.

 The plaintiff, Robert Rieder, is seeking a declaratory judgment requiring the defendant, Cambridge Mutual Fire Insurance Company ("Cambridge"), to defend and indemnify him in connection with actions in the Superior Court of New Jersey in which he is being sued by tenants and owners of the Twinbridge Apartment Complex in Carneys Point, New Jersey, alleging that he is liable for a fire there on November 23, 1980. Cambridge and Rieder have filed cross-motions for summary judgment.

 The material facts concerning which there are no genuine issues may be summarized as follows: Cambridge issued a Special Multi-Peril insurance policy, No. 2 x 45 88 31, to Rieder, which was in force from May 1, 1979 to May 1, 1982, a period that includes the date of the fire. Rieder purchased the ground upon which the Twinbridge Apartment Complex is located in 1969; the complex was fully constructed by 1972. Rieder operated and managed the complex after its construction until 1976, when he transferred all of his right, title and interest in the property. Rieder retains no possessory interest in the Twinbridge Apartments.

 Rieder has been sued directly and as a third-party defendant by owners and tenants of the Twinbridge Apartment Complex in three separate lawsuits filed in the Superior Court of New Jersey: Weinberg, et al. v. Dinger, et al., C.A. No. L-20663-81 (the " Weinberg " action); Cole, et al. v. Dinger, et al., C.A. No. L-26294-81 (the " Cole " action); and Childress, et al. v. PNB Mortgage and Realty Investors, et al., C.A. No. L-64638-81 (the " Childress " action). The claims against Rieder include the following: negligence in the design, planning, engineering and/or construction of the Twinbridge Apartments; negligence, carelessness and negligent omissions in making construction and design decisions with respect to the Twinbridge Apartments; negligence in construction by creating a defective dwelling; and breach of duty of care to construct and build a safe and habitable dwelling.

 The Cambridge policy consists of (1) a Declarations page setting forth the named insureds, the policy period, the premises insured, the coverage afforded and the amount of coverage, and a list of various endorsements applicable to each coverage; (2) general conditions and definitions applicable to the policy; and (3) the several endorsements setting forth the terms of coverage exclusions, and other matters.

 The named insured on the policy is Robert M. Rieder, dba the Robert Rieder Co. and Willow Brook Apartments, c/o Compass Realty Company, Suite 428, One Bala Cynwyd Plaza, Bala Cynwyd, Pennsylvania, 19004. By an endorsement dated May 1, 1979, Top of the Hill Enterprises and Top of the Hill Developers, Inc., were added as additional named insureds.

 The designated premises are listed in the policy as "N/S Egypt Road, near Trooper Road, W. Norriton Township, Mont. Co., Pennsylvania;" the policy was for a three year term -- May 1, 1979 to May 1, 1982.

 Cambridge contends that it has neither the duty to defend nor indemnify Rieder in connection with the Weinberg, Cole and Childress actions. In support of its contention, Cambridge asserts a number of exclusions which, it claims, relieve it of any duty to defend or indemnify Rieder in connection with all three actions. Both Cambridge and Rieder assert that there are no genuine issues of material fact and each move for summary judgment.

 Summary judgment is granted under Fed.R.Civ.P. 56 whenever the moving party establishes that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469, 472 (3d Cir. 1985). The Court must resolve all doubts as to the existence of any genuine issues in favor of the nonmoving party, and all inferences must be drawn in favor of the nonmoving party. Id. The nonmoving party, however, cannot rely on his pleadings or mere legal conclusions. Sound Ship Building Corp. v. Bethlehem Steel Co., 533 F.2d 96, 100 (3d Cir.), cert. denied, 429 U.S. 860, 50 L. Ed. 2d 137, 97 S. Ct. 161 (1976). Summary judgment shall be granted, however, where there are undisputed facts from which only one conclusion may reasonably be drawn. Gans v. Mundy, 762 F.2d 338, 341 (3d Cir.), cert. denied, 474 U.S. 1010, 106 S. Ct. 537, 88 L. Ed. 2d 467 (1985).

 An insurance company's duty to defend a suit against an insured is determined solely on the basis of the allegations of the complaint in the underlying action. St. Paul Surplus Lines Insurance Co. v. 1401 Dixon's Inc., 582 F. Supp. 865, 867 (E.D. Pa. 1984); Wilson v. Maryland Casualty Co., 377 Pa. 588, 594, 105 A.2d 304, 307 (1954). This duty arises whenever the complaint filed by the injured party may potentially come within the policy's coverage. Pacific Indemnity Co. v. Linn, 766 F.2d 754, 760 (3d Cir. 1985) (citing inter alia Gedeon v. State Farm Mutual Automobile Insurance Co., 410 Pa. 55, 58, 188 A.2d 320, 321-22 (1963); Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 589, 152 A.2d 484, 488 (1959)). "The duty to defend remains with the insurer until the insurer can confine the claim to a recovery that is not within the scope of the policy." Pacific Indemnity, 766 F.2d at 760 (citations omitted); Charter Oak Fire Insurance v. Sumitomo Marine & Fire Insurance Co., Ltd., 750 F.2d 267, 272 (3d Cir. 1984) (citing inter alia Seaboard Industries, Inc. v. Monaco, 258 Pa. Super. 170, 176, 392 A.2d 738, 743 (1978)).

 As heretofore pointed out, Rieder has been sued directly and as a third-party defendant in three separate lawsuits in the Superior Court of New Jersey. In the Weinberg action brought by the owners of the complex at the time of the fire, Associated Developers (of which Rieder was a partner) is named as a defendant and Robert Rieder is named as a third-party defendant. The plaintiffs in the Weinberg action seek damages for "extensive damage and destruction to the Twinbridge Apartments, and . . . loss of rentals during the reconstruction period." The plaintiffs in the Weinberg action allege that "the fire and resulting damages . . . were caused by the negligence, carelessness and negligent omissions of . . . [inter alia] Associated Developers. . . ." The Weinberg plaintiffs further allege that Associated Developers negligently designed, planned and constructed the Twinbridge Apartments; inadequately and improperly inspected the design, plans and construction of the Twinbridge Apartments; and failed to use due and reasonable care under all of the circumstances. The defendants in the Weinberg action seek indemnification and contribution from Robert Rieder as third-party defendant based on his alleged negligence and recklessness.

 In the Cole action, brought by tenants of the Twinbridge Apartment Complex, Associated Developers and Robert Rieder are named as defendants in the amended complaint. In the Cole action, the plaintiffs seek damages for "property damage, inconvenience, anguish and other damages." Plaintiffs in the Cole action allege that Associated Developers negligently constructed the apartment complex and that Robert Rieder negligently designed and/or engineered the apartment complex.

 Finally, in the Childress action, brought by tenants of the complex at the time of the fire, "Associated Developers, a partnership and its partners, Robert Rieder, . . ." are named defendants in the amended complaint. Plaintiffs seek damages for medical attention and treatment required due to injuries to one plaintiff's lungs, nose and throat caused by smoke inhalation, as well as damages for damage to and loss of their property. The plaintiffs in the Childress action allege that Associated Developers and Robert Rieder were negligent and were responsible for the defective condition of the apartment complex.

 Generally, the law requires that whenever words are clear and unambiguous in an insurance policy, the Court must give the words their plain and ordinary meaning. Northbrook Insurance Co. v. Kuljian Corp., 690 F.2d 368, 372 (3d Cir. 1982); Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 304, 469 A.2d 563, 566 (1983). An insurance policy's language should not be tortured to create ambiguities where none exist. St. Paul Fire & Marine Insurance Co. v. United States Fire Insurance Co., 655 F.2d 521, 524 (3d Cir. 1981). If there are no ambiguities in the insurance policy, the interpretation of the policy is a matter of law. Id. Where a policy is ambiguous, the ambiguous provisions are to be construed against the insurer and in ...


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