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KLINE v. KEMPER GROUP

July 6, 1993

CARL KLINE, Plaintiff
v.
THE KEMPER GROUP, et al., Defendants



The opinion of the court was delivered by: JAMES F. MCCLURE, JR.

 July 6, 1993

 BACKGROUND

 Carl Kline filed this declaratory judgment action *fn1" against the Kemper Group (Kemper) and the Chubb Group of Insurance Companies (Chubb), and other related insurance companies, *fn2" seeking a declaration that coverage exists over age-discrimination claims asserted by Kline against his former employer in another action filed before this court, Kline v. Wall to Wall Sound & Video, Civ. No. 3:CV-92-1472 (M.D.Pa.).

 Wall to Wall Sound & Video (Wall to Wall) is currently in Chapter 11 bankruptcy, In re: Wall to Wall Sound & Video, 90-21761 (Bankr. E.D.Pa.). *fn3" On May 21, 1992, Kline and Wall to Wall entered into a stipulation in which Wall to Wall consented to Kline's receiving relief from the automatic stay imposed by its bankruptcy filing, so that Kline could proceed on his age discrimination claim in federal court. *fn4" Wall to Wall assigned to plaintiff "any and all insurance policies or coverage which inured to its benefit or which had an insurable interest in connection with plaintiff's . . . claim". (Plaintiff's complaint, para. 23)

 Kline then initiated this action to obtain a declaration of coverage from Wall to Wall's insurance carriers. The policies under which Kline asserts that coverage exists are comprehensive general liability policies issued by the defendant carriers and which were in effect from July 5, 1989 to July 5, 1990. Plaintiff's employment was terminated by Wall to Wall on March 9, 1990. There were several policies in effect at that time.

 A comprehensive general liability policy (No. 3YE 717 156-01) issued by American (a Kemper-related company) provided primary coverage for bodily injury and property damage claims in the amount of $ 1 million per occurrence and in the aggregate. A second policy issued by American provided first level excess coverage in the amount of $ 5 million per occurrence and $ 5 million in the aggregate for the policy year, subject to a retained limit of $ 10,000.00. Both coverages were stated in a single "combination policy". *fn5"

 The next layer of excess coverage is provided by a commercial excess liability policy (No. (90) 7908-78-69) issued by Federal Insurance and the Chubb Group which provides excess coverage in the amount of $ 10 million per occurrence.

 Plaintiff seeks a declaratory judgment declaring that defendants have a duty to defend Wall to Wall in the underlying action and to pay any judgments entered against Wall to Wall (Count I); a permanent injunction directing the defendant insurers to provide coverage for plaintiff's claims in the underlying ADEA *fn6" action and requiring defendants to pay any judgment rendered against Wall to Wall (Count II); and attorneys' fees based on the defendant carriers' alleged bad faith in refusing to defend Wall to Wall in the underlying action (Count III).

 Before the court are Rule 12(b)(6) motions to dismiss by Kemper (Record Document No. 8) and Chubb (Record Document No. 9). Both groups of defendants seek dismissal on the ground that the plain language of the policies clearly does not afford coverage for the discrimination claims asserted by plaintiff in the underlying action. In support of their motion, defendants American/Kemper attach complete copies of the subject policies which are not attached to plaintiff's complaint. Because reference to the entire policy is necessary to decide defendants' motions, we will decide the motions as motions for summary judgment. *fn7" See Fed. R. Civ. P. 12(b)(6) and 56. We agree with defendants' interpretation of the policies and will enter summary judgment in their favor for the reasons discussed below.

 DISCUSSION

 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).

 
. . . The 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, and 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, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (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.

 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, 693-94 (3d Cir. 1988), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Material facts are those which will affect the outcome of the trial under governing law. Anderson, supra, 477 U.S. at 248. 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).

 Pennsylvania insurance law

 Interpretation of the policy and resolution of the question of defendants' duty to defend and indemnify are governed by Pennsylvania insurance law. *fn8" The presumptions which apply depend upon whether the policy language at issue is ambiguous or unambiguous. In deciding this question, the courts should read the policy with an eye toward avoiding ambiguities and take care not to torture policy language to create uncertainties where none exists. 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. Standard Venetian Blind Company v. American Empire Insurance Company, 503 Pa. 300, 469 A.2d 563, 566 (Pa. 1984) and Harford Mutual Insurance Co. v. Moorhead, 396 Pa. Super. 234, 578 A.2d 492, 495 (Pa. Super. Ct. 1990). *fn9" This rule favoring the insured applies even if the insured is a commercial or business entity and therefore, presumably knowledgeable about contracts and their legal implications. Acands, Inc. v. Aetna Casualty and Surety Co., 764 F.2d 968, 973 (3d Cir. 1985).

 On the other hand, if policy language is found to be unambiguous, these presumptions do not come into play. Imperial Casualty & Indemnity Co. v. High Concrete Structures, Inc., 858 F.2d 128 (3d Cir. 1988) (applying Pennsylvania law). The law gives effect to the plain language of the policy as written, Harford, supra, 578 A.2d at 495. In keeping with that principle, plainly-worded coverage exclusions are given effect so long as they are conspicuously displayed. There is no concomitant requirement that the insured have read or understood such exclusions. Pacific Indemnity v. Linn, 766 F.2d 754, 761 (3d Cir. 1985) and Berne v. Aetna Insurance Co., 604 F. Supp. 958, 960-61 (D.V.I. 1985). Policy language which is otherwise clear is not rendered ambiguous ...


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