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AETNA CAS. & SUR. CO. v. DEBRUICKER

November 18, 1993

THE AETNA CASUALTY & SURETY COMPANY, THE AUTOMOBILE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, and THE STANDARD FIRE INSURANCE COMPANY,
v.
F. STEWART DeBRUICKER and LAUREN DeBRUICKER



The opinion of the court was delivered by: ANITA B. BRODY

 ANITA B. BRODY, J.

 In this declaratory judgment action I must decide whether the pivotal term, "resident," in an insurance policy from which coverage is sought for a college student injured in an automobile accident while traveling with her father from the family household in Pennsylvania to her college in California, is ambiguous as applied to her circumstances. I find that the term "resident" was ambiguous as applied to this college student and that the ambiguity must be resolved in favor of the insured.

 I. PROCEDURAL HISTORY

 This declaratory judgment action is the offshoot of Lauren DeBruicker's lawsuit against her father, F.Stewart DeBruicker, for her injuries. Lauren DeBruicker v. F. Stewart DeBruicker, No. 92-CV-4315. That action was settled for $ 500,000, and was followed by this action by the insurer asking for a declaration that they had no further liability under any of the policies sold to Mr. DeBruicker. The plaintiff's summary judgment for a declaration of no further liability is now before me.

 This action arises out of an automobile accident involving both declaratory defendants. Lauren Debruicker was a passenger in a car driven by her father F. Stewart Debruicker. The two were in Colorado, headed towards Palo Alto, California where Lauren DeBruicker was to resume her studies as a sophomore at Stanford University when the car rolled over. As a result of the accident Lauren DeBruicker was severely injured.

 At the time of the accident Mr. Debruicker had purchased, and was among the named insured on, three automobile liability policies with the plaintiffs, Aetna -- a primary liability policy on the Chevrolet Nova, the car in which the accident occurred (Nova Policy); a primary multi-vehicle liability policy for three other cars (Multi-Vehicle Policy); and an excess policy which covered liability beyond that covered by the two primary policies (Excess Policy).

 The chief dispute between the parties is whether the plaintiff is liable to the defendants under the Excess Policy. The Excess Policy covered the insured' liability for personal injury or property damage in excess of that covered by primary policies such as the Nova and Multi-Vehicle policies. Deposition of Lauren DeBruicker, July 22, 1993 (hereinafter L.D. Depos.), Exhibit 6, page 7. The insureds or covered persons are defined as "you (referring to Mr. DeBruicker) or a family member." Id., Ex. 6, p.5. "Family member" is defined, identically to the Nova and Multi-Vehicle policies, as "a person who is a resident of your household who is related to you by blood, marriage or adoption . . . " Id., Ex.6, p.5. The limit of the Excess Policy is $ 1,000,000 per accident. Id., Ex.6, p.1.

 The fifteenth exclusion of the Excess Policy states that the policy does not cover "any personal injury to any person who is related by blood or marriage, or adoption to a covered person and who is a resident of the household of that person . . .". Id., Ex.6, p.11. The plaintiff asserts that this exclusion applies to Lauren DeBruicker because she is a blood relative of the family and a resident of the household of the covered person -- Mr. DeBruicker. The defendants contest the designation of Lauren DeBruicker as a resident, and therefore the application of the exclusion to her.

 III. DISCUSSION

 This case is before me under diversity jurisdiction. Accordingly, I must apply the law of the state in which I sit. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). In Pennsylvania, state courts apply the law of the state in which the insurance policy was delivered. Travelers Indemnification Co. v. Fantozzi By and Through Fantozzi, 825 F. Supp. 80, 84 (E.D. Pa. 1993). In this case the policy was delivered in Pennsylvania so Pennsylvania law applies. In applying Pennsylvania law, my task is to determine what the Pennsylvania Supreme Court has decided or would decide if faced with the same case. Prudential Property & Casualty Ins. Co. v. Pendleton, 858 F.2d 930, 934 (3d Cir. 1988).

 Summary judgment is appropriate if there are no material disputed facts and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). While state substantive law controls the case, the determination of what are legal issues properly decided by the judge and factual issues which to be decided by the jury is controlled by federal law. Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525, 2 L. Ed. 2d 953, 78 S. Ct. 893 (1958). In this circuit, the interpretation of insurance terms where the underlying facts are undisputed is purely a legal matter. New Castle County v. Hartford Accident and Indemnity Co., 970 F.2d 1267, 1270 (3d Cir. 1992), cert. denied, 123 L. Ed. 2d 470, U.S. 113 S. Ct. 1846 (1993). Travelers Indemnification Co., 825 F. Supp. at 84. Accordingly, the issue presented on summary judgment is properly before me.

 In Pennsylvania, as in almost all states, insurance contracts are interpreted so as to effect the intent of the parties. Treasure Craft Jewelers v. Jefferson Insurance Co. of New York, 583 F.2d 650, 652 (3d Cir. 1978). The contract is read as a whole so as to give effect to all its terms. Giancristoforo v. Mission Gas and Oil Products, Inc., 776 F. Supp. 1037, 1041 (E.D.Pa. 1991). Where the contract is clear and unambiguous, the court must not torture the terms to find an ambiguity. Northbrook Insurance Co. v. Kuljian Corp., 690 F.2d 368, 372 (3d Cir. 1982). Clear and unambiguous language will be given effect even where there is no evidence that the insured read or understood the terms. Federal Kemper Insurance Co. v. Jones, 777 F. Supp. 405, 408 (M.D. Pa. 1991). However, when the contract is ambiguous it must be construed in favor of the insured. Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (Pa. 1983).

 In order to support a finding that there is an ambiguity, there must exist at least two reasonable interpretations of the contradicted term or clause. K & Lee Corp. v. Scottsdale Ins. Co., 769 F. Supp. 870 (E.D. Pa. 1991); Allstate Ins. Co. v. Sprout, 782 F. Supp. 999, 1007 (M.D. Pa. 1991); C. Raymond Davis & Sons, Inc. v. Liberty Mutual Ins. Co., 467 F. Supp 17, 20 (D.C.Pa. 1979).

 A. The Excess Policy

 
Was Lauren DeBruicker a "Resident" of Her ...

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