and obligations under the insuring agreement.
I. SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure establishes
that "if the pleadings, depositions, answers to interrogatories,
and admissions on file, together with affidavits, if any, show
that there is no genuine issue as to any material fact," then the
moving party is entitled to summary judgment. Fed.R.Civ. P.
56(c). The district courts are obligated to determine whether all
the evidence can reasonably support a verdict for the non-moving
party. Allstate Ins. Co. v. Brown, 834 F. Supp. 854, 856
(E.D.Pa. 1993). In making this determination, all of the facts
must be reviewed in the light most favorable to and all
reasonable inferences must be drawn in favor of the non-moving
party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106
S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An issue is genuine if
the fact-finder could reasonably hold in the non-movant's favor
with respect to that issue and that a fact is material if it
influences the outcome under the governing law. Anderson, 477
U.S. at 247-48, 106 S.Ct. 2505. Although the moving party bears
the initial burden of demonstrating the absence of genuine issues
of material fact, the non-movant must established the existence
of each element of its case. Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
II. INSURANCE CONTRACT INTERPRETATION
Inasmuch as this case was commenced pursuant to
28 U.S.C. § 2201 (empowering the federal courts to enter declaratory
judgments) and jurisdiction is premised upon the parties'
diversity of citizenship pursuant to 28 U.S.C. § 1332, we are
required to apply the substantive law of Pennsylvania in this
action. Nationwide Ins. Co. v. Resseguie, 980 F.2d 226, 229 (3d
Cir. 1992), citing Erie Railroad Co. v. Tompkins, 304 U.S. 64,
58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under Pennsylvania insurance
law, the contract language must be construed in accordance with
its plain and ordinary meaning. O'Brien Energy Sys., Inc. v.
American Employers' Ins. Co., 427 Pa. Super. 456, 461,
629 A.2d 957, 960 (1993). Where the policy provision is ambiguous, it is
construed in favor of the insured. Standard Venetian Blind Co.
v. American Empire Ins. Co., 503 Pa. 300, 304, 469 A.2d 563, 566
(1983). Where it is clear and unambiguous, a court is required to
give effect to that language. Standard Venetian Blind, 503 Pa.
at 305, 469 A.2d at 566.
The Court of Appeals for the Third Circuit has elaborated on
these principles by stating that a court should read insurance
provisions to avoid ambiguities. Niagara Fire Ins. Co. v.
Pepicelli, Pepicelli, Watts and Youngs, P.C., 821 F.2d 216, 220
(3d Cir. 1987). An insurance policy provision is ambiguous if a
reasonable person on considering it in the entire context of the
policy would honestly differ as to its meaning. Niagara Fire
Ins., 821 F.2d at 220. Accordingly, when an insurer seeks to
deny coverage based upon an exclusion in a policy, it is the
insurer's burden to demonstrate that the exclusion applies.
Brown, 834 F. Supp. at 857.
III. APPLICABILITY OF EXCLUSION B
Coregis now moves for summary judgment based on the prior
knowledge provision in Exclusion B of the parties' insurance
policy. Exclusion B provides that:
Any CLAIM arising out of any act, error, omission or
PERSONAL INJURY occurring prior to the effective date
of the policy if any INSURED at the effective date
knew or could have reasonably foreseen that such act,
error, omission or PERSONAL INJURY might be expected
to be the basis of a claim.