action against the insured." Allstate Ins. Co. v. Brown,
834 F. Supp. 854, 857 (E.D.Pa. 1993).
In this case, the complaint in the Underlying Action
specifically alleges, inter alia, wrongful eviction. Furthermore,
the factual allegations in the complaint allege that Tyson and
Mirrow wrongfully entered into the leased premises and wrongfully
evicted Plaza. See CGU, 121 F. Supp.2d at 823 (stating that "the
determination of coverage is not based solely on the particular
cause of action pleaded, but instead it is necessary to look at
the factual allegations contained in the complaint.") It is
apparent that the injuries alleged in the complaint arose out of
the acts of entering into the leased premises, taking the
inventory, and changing the locks. Since wrongful entry and
wrongful eviction are specifically enumerated in Coverage B of
the CGL Policy, CGU has a duty to defend Mirrow in the Underlying
CGU states that in Coverage B, there is an exclusion which
states that "[t]his insurance does not apply to  `[p]ersonal
injury . . . [a]rising out of the willful violation of a penal
statute or ordinance committed by or with the consent of the
insured.'" (Pl.'s Ex. B, p. 5 of 13). CGU argues that the above
exclusion applies because the complaint in the Underlying Action
alleges that the Defendants intentionally entered into the leased
premises, took the inventory, and evicted Plaza in violation of
the Federal Constitution and Pennsylvania laws. As stated above,
the insurer has the burden of establishing that policy exclusions
preclude coverage. Sphere Drake, 35 F. Supp.2d at 427 (citing
Miller, 218 A.2d at 277). Furthermore, policy exclusions are
strictly construed against the insurer. Id. at 428 (citing
Selko, 139 F.3d 146 at 152 n. 3 (3d Cir. 1998)). An insurance
contract must be construed according to the plain meaning of its
terms and ambiguous provisions must be construed against the
insurer. Sphere Drake, 35 F. Supp.2d at 427.
Here, the Defendants were never convicted of, nor charged with,
any crimes or violations of any laws. In fact, in the State Court
Actions, the court specifically found that Tyson had "lawfully
sold the furs of the lessee after distraining them" and that
"[n]o conduct was undertaken by Tyson that was violative of Plaza
Furs' rights under the Uniform Commercial Code. Pursuant to the
Uniform Commercial Code, as codified at 13 Pa.C.S.A. Sec. 9503, a
secured party may repossess collateral after default without
judicial process." Plaza Furs, Inc. v. Tyson
Assoc./Grecophilia/The New York Fur Place, Inc. et al. v. Tyson
Assoc., Court of Common Pleas, Philadelphia County, Nos. 3197,
3589, ¶¶ 8, 13. The Defendants have not willfully violated a
penal statute or ordinance, nor have they been found liable for
any torts. After reading the exclusion according to its plain
meaning and strictly construing it against CGU, this Court is
unable to find that the proffered exclusion applies in this
situation. Selko, 139 F.3d 146, 152 n. 3.
Similarly, CGU also argues that public policy precludes
coverage for willful criminal acts or for any intentional torts,
regardless of the language of the policy, and thus, they have no
duty to defend the Defendants. See State Farm Mut. Auto. Ins.
Co. v. Martin, 442 Pa. Super. 442, 660 A.2d 66 (1995);
Germantown Ins. Co. v. Martin, 407 Pa. Super. 326, 595 A.2d 1172
(1991). However, this issue is not appropriately considered
during the duty to defend analysis. Home Ins. Co. v.
Perlberger, 900 F. Supp. 768, 771. Furthermore, as stated above,
the Defendants have not been found guilty of any wrongdoing
either criminally or civilly.
In Nationwide Mutual Insurance Co. v. Sedicum, NO. 93-2996,
1993 WL 544414 (E.D.Pa. Dec 27, 1993), while claiming that
it had no duty to defend, the insurer argued that it was against
public policy to insure against the commission of a crime. The
court noted that whether the insured's conduct was criminal had
not been determined and held that the public policy issue did not
pertain to the obligation to defend, but rather to the obligation
to indemnify. Id. The court further held that the issue was
unripe and granted the insured's motion for a judgment declaring
that the insurer had a duty to defend. Id. at *3.
Likewise, in Home Insurance Co., the court found that the
insurer's public policy argument against insuring intentional
acts was only relevant towards its duty to indemnify and not its
duty to defend. The court further stated that "as to [the
insurer's] assertion that insurance for intentional acts is
contrary to public policy, the court assumes that [the insurer]
does not intend for this argument to apply to [its] duty to
defend its insureds, only to its duty to indemnify them, the
usual context in which such `public policy' arguments are made".
Home Ins. Co., 900 F. Supp. at 771.
Lastly, CGU argues that there is there is an implicit fortuity
requirement read into every liability policy. Compagnie Des
Bauxites De Guinee v. Ins. Co. of N. Am., 554 F. Supp. 1080, 1084
(W.D.Pa. 1983), rev'd on other grounds, 724 F.2d 369, 372 (3rd
Cir. 1983). Therefore, CGU argues that because the complaint in
the Underlying Action alleges that the Defendants' acts and the
results of their acts were intentional and not fortuitous, CGU
does not have a duty to defend Mirrow. The Defendants argue that
their intent is irrelevant in the analysis under Coverage B
because Coverage B does not require that the injury be caused by
an occurrence, which Coverage A does require.*fn3
An occurrence has been described as an accident or a fortuitous
event. See Compagnie des Bauxites de Guinee v. Ins. Co. of N.
Am., 724 F.2d 369, 372 (3rd Cir. 1983). In 2 Insurance Claims
and Disputes 3d, section 11:28, Professor Windt states that:
In the vast majority of policies, coverage for
personal injury (and advertising injury)is not
conditioned on there having been an occurrence. In
those that do attempt so to condition the coverage,
the courts are split as to whether the requirement
for an occurrence, that the injury be expected or
intended by the insured, is inconsistent with the
nature of personal injury/advertising injury
coverage, thereby making the occurrence requirement
A. Windt, 2 Insurance Claims and Disputes 3d § 11:28 (1995).
Professor Windt also states that if the personal injury coverage
does require an occurrence, then "[t]he offenses listed in the
definitions of personal injury/advertising injury cannot be
reconciled with the requirement that there be an accident." Id.
Coverage B is not conditioned on there having been an occurrence.
Therefore, under Professor Windt's analysis, this Court need not
be concerned with whether the injury was expected or intended by
the Defendants. Nor is it necessary for this Court to address
whether the occurrence requirement is inconsistent with Coverage
B, because no such requirement is present.
Coverage B specifically provides coverage for injuries arising
out of "wrongful eviction from, wrongful entry into or invasion
of the right of private occupancy of a room, dwelling or premises
that a person occupies by or on behalf of its owner, landlord or
lessor." (Pl.'s Ex. B, p. 12 of 13). The plain meaning of the
terms guides this Court in finding that CGU has
a duty to defend against suits alleging injuries arising from
these intentional torts; the results of which the plaintiff would
almost always allege were intended by the defendant. St. Paul
Fire and Marine Ins. Co. v. Lewis, 935 F.2d 1428, 1437 (3rd Cir.
1991) (stating that unambiguous terms in an insurance contract
are to be given their "plain and ordinary meaning.") To hold
otherwise would nearly nullify the protection afforded by
Coverage B. The complaint in the Underlying Action alleges
injuries from, inter alia, those torts enumerated in Coverage B.
Therefore, CGU has a duty to defend Mirrow in the Underlying
Action. At the very least, there is an ambiguity within the
policy language which must be interpreted against CGU. St. Paul
Fire and Marine Ins. Co., 935 F.2d at 1437.
B. The State Court Actions
The Defendants also ask this Court to grant them summary
judgment on their Counterclaim against CGU. The Counterclaim
alleges that CGU had a duty to defend the Defendants in the State
Court Actions under the CGL Policy and seeks reimbursement from
CGU for defense costs in those actions. CGU has filed a Cross
Motion for Summary Judgment on this issue. Both Motions for
Summary Judgment on this issue must be denied because genuine
issues of material fact remain regarding whether CGU had a duty
to defend the Defendants in the State Court Actions.
The CGL Policy lists "JERROLD MIRROW" as the named insured and
the form of business as "INDIVIDUAL". (Pl.'s Ex. B, p. 1 of 3).
Under the heading "WHO IS COVERED", the CGL Policy states that if
the named insured is listed as an individual, then "[the named
insured] and the [named insured's] spouse are insureds but only
with respect to the conduct of a business of which [the named
insured is] the sole owner." (Id., p. 7 of 13). Furthermore,
the CGL Policy states that "no person or organization is an
insured with respect to the conduct of any current or past
partnership, joint venture or limited liability company that is
not shown as a Named Insured in the Declarations." (Id., p. 8
of 13). The State Court Actions list only Tyson as a defendant,
and not Mirrow. Therefore, CGU would only be required to defend
Tyson under the CGL policy if Tyson was solely owned by Mirrow.
However, in the Defendants' Answer and Counterclaim, they state:
"[i]t is admitted only that Tyson Associates was a limited
Partnership" (Def.'s Answer, ¶ 4); "[i]t is admitted only that
the defendant Mirrow was a general partner of Tyson Associates"
(Id., ¶ 6); "Tyson Associates, was a limited partnership"
(Def.'s Counterclaim, ¶ 4); and "[a]t all times applicable hereto
Mirrow was a general partner of Tyson Associates" (Id., ¶ 5).
In its Cross-Motion for Summary Judgment, CGU claims that it is
entitled to summary judgment regarding the duty to defend in the
State Court Actions because Tyson is not an insured under the CGL
Policy and Mirrow, the named insured, is not a party in the State
Court Actions. The Defendants, in their Reply, do not explain the
statements made in their Answer and Counterclaim. However, the
Defendants do state in their Reply that "To be clear: Tyson is a
sole proprietorship owned by Mirrow." (Def.'s Reply, at 2). The
Defendants attempt to bolster their argument with Mirrow's
affidavit which states that, "[a]t all times applicable to the
Complaint, I was the owner of Tyson Associates." (Def's Ex. D, ¶
1). The Defendants further state that "[i]n the past, Mirrow had
a partner, and Tyson was a limited partnership. The partnership
ceased to exist, however, several years before the Policy year in
question. At that point, Tyson became a sole proprietorship."
(Def.s' Reply, at 2, n. 1). This
statement is in direct conflict with the Defendants' statement in
their Counterclaim that "[a]t all times applicable hereto Mirrow
was a general partner of Tyson Associates" (Def.s' Counterclaim,
¶ 5). None of the parties provide any other proof regarding the
status of Tyson during the period in question. Because the
Defendants' pleadings are in direct conflict and neither party
has provided proof on this issue, there is a genuine issue of
material fact concerning this issue. Furthermore, there are also
factual issues concerning whether the Defendants' notice to CGU
of the State Court Actions was timely and sufficient. Therefore,
summary judgment on this issue for either party is inappropriate.
After analyzing the scope of Coverage B in the CGL Policy, it
is evident that the factual allegations of the complaint in the
Underlying Action state a claim which could potentially fall
within Coverage B. Therefore, CGU has a duty to continue
defending the Defendants in the Underlying Action and summary
judgment in favor of the Defendants on CGU's Complaint is
appropriate. However, genuine issues of material fact remain
regarding the Defendants' Counterclaim concerning whether CGU
must reimburse Tyson for the expenses it incurred in defending
itself in the State Court Actions. Therefore it is inappropriate
to grant either the Defendants' Motion for Summary Judgment or
CGU's Cross-Motion for Summary Judgment on that issue.
An appropriate Order follows.
AND NOW, this 27th day of April, 2001 upon consideration of the
Motion for Summary Judgment filed by the Defendants, Tyson
Associates and Jerald Mirrow (Dkt. No. 45), and the Cross-Motion
for Summary Judgement filed by Plaintiff, CGU Insurance (Dkt. No.
47), and any Responses and Replies thereto, it is hereby ORDERED
that the Defendants' Motion is GRANTED IN PART and DENIED IN PART
and Plaintiff's Motion is DENIED. It is further ORDERED that on
Plaintiff's Complaint, judgment is entered in favor of the
Defendants and the Plaintiff is required to continue to provide a
defense in Vakkas v. Tyson Associates, No. 98-4981, 2000 WL
325916 (E.D.Pa., Mar.28, 2000).