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October 6, 1989


The opinion of the court was delivered by: KATZ


 This is an action for declaratory judgment brought by the Philadelphia Electric Company ("PECO") against the Nationwide Mutual Insurance Company ("Nationwide") and The Davey Tree Expert Company ("Davey Tree"). PECO seeks a declaration that Nationwide and Davey Tree are contractually required to defend and indemnify PECO in a personal injury suit. For the reasons set forth below, the court now grants summary judgment in favor of PECO with regard to defendant Nationwide's duty to defend and indemnify PECO in the underlying litigation.


 In order to resolve the issues presented in this case, a brief discussion of the underlying litigation, Moran v. Southeastern Pennsylvania Transportation Authority (C.A. No. 88-9663), is necessary. The complaint in that case (the " Moran Complaint") *fn1" alleges that the plaintiff, Edward R. Moran, was employed as a tree-trimmer by Davey Tree and that on July 8, 1987, while performing his duties as a tree-trimmer, he suffered personal injury when electricity arced off of one or more of the power lines around which he was trimming trees. The Moran complaint further alleges that the accident was caused "solely and exclusively" by the negligence of one or more of the named defendants. In addition to PECO, the other named defendants include: The Southeastern Pennsylvania Transportation Authority, the Consolidated Rail Corporation and Amtrak. PECO has since brought a third-party complaint against Davey Tree alleging, amongst other things, that Davey Tree's negligence caused Moran's injuries.

 At the time of Moran's injury, Davey Tree was performing work for PECO pursuant to a purchase order effective from February 1, 1986 through January 31, 1989 (the "Purchase Order Agreement"). None of parties contests the existence of the Purchase Order Agreement. *fn2" In addition, each party admits that the work Moran was performing for Davey Tree was in apparent compliance the terms of the Purchase Order Agreement. See Plaintiff's Motion at paras. 4-6; Defendants' Response at paras. 1-6. In short, it is not in dispute that PECO hired Davey Tree to trim trees away from power lines and that Moran, while in Davey Tree's employ, was injured while trimming trees.

 By its terms, the Purchase Order Agreement required Davey Tree to maintain certain insurance coverage with respect to liabilities arising out of Davey Tree's performance and to name PECO as an additional insured. See Purchase Order Agreement para. 2.14. In accordance with para. 2.14, Davey Tree obtained a certificate of insurance from Nationwide naming PECO as an additional insured on the comprehensive general liability insurance policy issued by Nationwide to Davey Tree (the "Nationwide Policy"). *fn3" The Purchase Order Agreement also contained an indemnity provision, *fn4" whereby Davey Tree agreed to indemnify and defend PECO from and against liability arising out of the acts of Davey Tree except where PECO is solely negligent.

 The core of this dispute, then, is whether the Nationwide Policy, the Purchase Order Agreement or both entitle PECO to the costs of its legal defense in the Moran litigation along with indemnification with respect to any amount for which it may be found liable.


 A. The Nationwide Policy

 Nationwide argues that its duty to defend and indemnify PECO is not triggered because the facts alleged in the Moran Complaint do not fall within the scope of coverage provided to PECO under the Nationwide Policy. As defendants correctly point out, PECO's coverage under the Nationwide Policy is limited by Endorsement 6, which provides that an additional insured can be added, but only with respect to the interest stated on the certificate of insurance. Here, the Certificate of Insurance states that: "The Philadelphia Electric Company, its officers, agents and employees are added as Additional Insureds for any work performed by The Davey Tree Expert Company on their behalf."

 Under Pennsylvania law, the duty of an insurer to defend its insured is well settled. In American Contract Bridge League v. Nationwide Mutual Fire Insurance Co., 752 F.2d 71 (3d Cir. 1985), the Third Circuit states the rule as follows:

In consideration for premiums paid, the insurer contractually obligates itself to defend its insured. This obligation arises whenever allegations against the insured state a claim to which the policy potentially applies even if the allegations are "groundless, false or fraudulent."

 Id. at 75 (quoting Gedeon v. State Farm Mutual Automobile Ins. Co., 410 Pa. 55, 58, 188 A.2d 320 (1963) (emphasis in original)). At this point, it is unclear who is ultimately responsible for Moran's injuries. In order to determine Nationwide's duty to defend, however, this Court need look only to the allegations in the underlying action. It is uncontroverted that Moran, a Davey Tree employee, was injured while trimming trees for Davey Tree on behalf of PECO. On this record, then, it is apparent that the allegations in the Moran ...

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