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CGU v. TRAVELERS PROPERTY & CAS.

November 29, 2000

CGU
V.
TRAVELERS PROPERTY CASUALTY AND BETHLEHEM CARDIOTHORACIC SURGICAL ASSOCIATES, P.C.



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

MEMORANDUM AND ORDER

History of the Case

This case has its origins in another civil action presently pending before this Court, captioned Angelico, M.D. v. Lehigh Valley Hospital, Inc., 984 F. Supp. 308 (1997). In that action, the plaintiff, Dr. Angelico, contends that defendants Lehigh Valley and St. Luke's Hospitals, Panebianco-Yip and Bethlehem Cardiothoracic Surgical Associates conspired to eliminate him as a competitor in the market for coronary artery bypass graft surgeries in the Lehigh Valley area by defaming him, denigrating his surgical skills, and by depriving him of hospital staff privileges such that he could no longer perform surgeries in the Greater Lehigh Valley.

Shortly after receiving the complaint against it, Bethlehem Cardiothoracic Surgical Associates ("BCSA"), notified both CGU and Travelers of Dr. Angelico's lawsuit and requested that both companies provide it with a defense and indemnify it in connection therewith. In so doing, BCSA apparently believed that the predecessors of both companies had provided it with appropriate liability coverage during the time period(s) covered by Dr. Angelico's complaint. Plaintiff CGU, the successor in interest to three Commercial Union Insurance Company Commercial General Liability Policies in effect from March 26, 1990 to March 26, 1997 agreed to provide a defense to BCSA under a reservation of rights. However, Defendant Travelers, the successor in interest to two Aetna Commercial General Liability policies effective from March 26, 1988 to March 26, 1990, denied coverage on the ground that while the allegations of "false and malicious attacking of the reputation and clinical skills of the plaintiff . . . may generate coverage under the definition `personal injury,' . . . the time frame for these allegations . . . is during 1992 and 1993." Thus, Travelers took the position that "[t]here is nothing in the Complaint to indicate that any potential allegation which may be covered under personal injury occurred prior to March 26, 1990, which is when Aetna ceased coverage on this account." (Pl's Amended Complaint, Exhibit "E").

From the inception of the Angelico lawsuit then, Plaintiff has funded BCSA's entire defense on its own which, to date, has cost some $77,000. As a consequence of Travelers' steadfast denial of coverage, Plaintiff instituted this action in December, 1999 seeking reimbursement from it for one-half of the defense costs incurred to date and a declaration that it is obligated to assume a duty to defend BCSA as a co-insurer at the primary level in the suit brought by Dr. Angelico. Count III of the plaintiff's complaint also seeks a declaration that in the event that Travelers is found to not have had a duty to defend BCSA in the Angelico suit under the Pennsylvania Superior Court's decision in Roman Mosaic and Tile Co., et. al. v. Aetna Casualty and Surety Co., et. al., 704 A.2d 665 (Pa.Super. 1997), that Plaintiff too is relieved of its obligation to defend their mutual insured. Plaintiff now moves for summary judgment with respect to Counts I and II of its Complaint.

Standards Applicable to Summary Judgment Motions

The standards to be applied by the district courts in ruling on motions for summary judgment are set forth in Fed. R.Civ.P. 56. Under subsection (c) of that rule, . . . The judgment sought shall be rendered forthwith 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 a judgment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.

Pursuant to this rule, a court is compelled to look beyond the bare allegations of the pleadings to determine if they have sufficient factual support to warrant their consideration at trial. Liberty Lobby, Inc. v. Dow Jones & Co., 838 F.2d 1287 (D.C.Cir. 1988), cert. denied, 488 U.S. 825, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988); Aries Realty, Inc. v. AGS Columbia Associates, 751 F. Supp. 444 (S.D.N.Y. 1990). Generally, the party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In considering a summary judgment motion, the court must view the facts in the light most favorable to the non-moving party and all reasonable inferences from the facts must be drawn in favor of that party as well. Troy Chemical Corp. v. Teamsters Union Local No. 408, 37 F.3d 123, 126 (3rd Cir. 1994); U.S. v. Kensington Hospital, 760 F. Supp. 1120 (E.D.Pa. 1991); Schillachi v. Flying Dutchman Motorcycle Club, 751 F. Supp. 1169 (E.D.Pa. 1990). See Also: Williams v. Borough of West Chester, 891 F.2d 458, 460 (3rd Cir. 1989); Tziatzios v. U.S., 164 F.R.D. 410, 411, 412 (E.D.Pa. 1996). "Material" facts are those facts that might affect the outcome of the suit under the substantive law governing the claims made. An issue of fact is "genuine" only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party" in light of the burdens of proof required by substantive law. The Philadelphia Musical Society, Local 77 v. American Federation of Musicians of the United States and Canada, 812 F. Supp. 509, 514 (E.D.Pa. 1992) citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252, 106 S.Ct. 2505, 2510, 2512, 91 L.Ed.2d 202 (1986).

Discussion

By this motion, Plaintiff argues that summary judgment must be granted in its favor because there are no issues of material fact as to whether Travelers owes a defense to BCSA. In so arguing, Plaintiff relies upon the language*fn1 in the Aetna/Travelers policy which provides, in relevant part:

B. PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. We will pay those sums that the "insured" becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which this insurance applies. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under SECTION III Supplementary Payments-Coverages A ...

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