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November 14, 1991


The opinion of the court was delivered by: McCLURE, District Judge.



Federal Kemper Insurance Company ("Federal Kemper") filed this declaratory judgment action*fn1 against Frederick Hanes, individually and t/a Blue Spruce Farms, and Daniel Jones to ascertain its obligations under a comprehensive general liability policy issued to Hanes.*fn2 Jones was injured in a November 25, 1985 farm accident when a modified tractor-trailer dump truck tipped and fell on him during an unloading operation. Jones filed a state court action against Hanes, and others, alleging strict liability, negligence and breach of warranty.*fn3 Jones alleges that Hanes modified the truck in a manner which made it unsafe. As Hanes' insurer, Federal Kemper denies any obligation to defend or indemnify him in the state court action under policy exclusions which negate coverage for injuries arising from completed operations or product hazards or from work performed by independent contractors. Federal Kemper bases its denial of coverage on the following undisputed facts.*fn4

Hanes had the truck modified when he purchased it in 1979. The work, which consisted of lengthening the frame and installing an engine, was performed by the seller, Peffer Trucks, before Hanes took delivery. Hanes gave Peffer specifications, such as the dimensions of the body he intended to place on the frame and the weight of the gross load, but did not oversee the work and was not present when it was done. Immediately after Peffer's work was completed, the truck was inspected and then taken to Hostetler's Body Shop, where a dump-hoisted grain body was installed. Again, Hanes did not oversee the work, but did discuss his requirements, such as the capacity of the hoist, with Hostetler. Following completion of Hostetler's modifications, Hanes did not make any further modifications to the truck and used it on his farm*fn5 for three or four years without incident. When he no longer had use for it, he sold it as used equipment. It was subsequently purchased by Jones' employer, Clark Trucking Company, at an auction in 1983. (Record document no. 22, filed April 1, 1991, paras. 10-24; record document no. 28, filed April 30, 1991; and record document no. 27, filed April 30, 1991, pp. 3-4)

Based on these facts, which are undisputed, and on the provisions of the policy, Federal Kemper has filed a motion (record document no. 22, filed April 1, 1991) for summary judgment. For the reasons which follow, we find that the policy exclusion negating coverage for work performed by independent contractors applies and that Federal Kemper is not obligated to defend or indemnify Hanes in the state court action. Its motion for summary judgment will therefore be granted.


A. Motion for summary judgment standard

  Summary judgment is appropriate if the "pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." Fed.R.Civ.P.
56(c) (Emphasis supplied).

   . . [T]he plain language of Rule 56(c) mandates
  the entry of summary judgment, after adequate time
  for discovery and upon motion, against a party who
  fails to make a showing sufficient to establish
  the existence of an element essential to that
  party's case, an on which that party will bear the
  burden of proof at trial. In such a situation,
  there can be `no genuine issue as to any material
  fact,' since a complete failure of proof
  concerning an essential element of the nonmoving
  party's case necessarily renders all other facts
  immaterial. The moving party is `entitled to
  judgment as a matter of law' because the nonmoving
  party has failed to make a sufficient showing on
  an essential element of her case with respect to
  which she has the burden of proof.

Celotex v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

The moving party bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. He or she can discharge that burden by "showing . . . that there is an absence of evidence to support the nonmoving party's case." Celotex, supra at 323 and 325, 106 S.Ct. at 2552-53 and 2553-54.

Issues of fact are "genuine only if a reasonable jury, considering the evidence presented, could find for the non-moving party." Childers v. Joseph, 842 F.2d 689, 694 (3d Cir. 1988), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). Material facts are those which will affect the outcome of the trial under governing law. Anderson, supra, 477 U.S. at 248, 106 S.Ct. at 2510. In determining whether an issue of material fact exists, the court must consider all evidence in the light most favorable to the non-moving party. White v. Westinghouse Electric Company, 862 F.2d 56, 59 (3d Cir. 1988).

B. Pennsylvania insurance law

Interpretation of the policy and resolution of the question of Federal Kemper's duty to defend and indemnify are governed by Pennsylvania insurance law.*fn6 The presumptions which apply depend upon whether the policy language at issue is ambiguous or unambiguous. In deciding this question, courts should read the policy with an eye toward avoiding ambiguities and take care not to torture policy language to create uncertainties where none exist. Northbrook Insurance Co. v. Kuljian Corp., 690 F.2d 368, 372 (3d Cir. 1982), (applying Pennsylvania law).

Policy language is ambiguous if reasonable persons could honestly differ as to its meaning, i.e. if it is susceptible of more than one meaning. If found to be ambiguous, the ambiguities are to be resolved in favor of the insured and in a manner consistent with his reasonable expectations when he contracted for coverage. This precludes insurers from insulating themselves from their contractual obligations by inserting "overly-subtle or technical interpretations" in an unfair attempt to defeat the reasonable expectations of the insured. Harford Mutual Insurance Co. v. Moorhead, 396 Pa. Super. 234, 578 A.2d 492, 495 (1990),*fn7 alloc. denied, 527 Pa. 617, 590 A.2d 757 (1991). This rule favoring the insured applies even if the insured is a ...

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