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December 6, 2001


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


This action arises from the provisions of a homeowner's insurance policy issued by Plaintiff State Farm Firm and Casualty Company ("State Farm")*fn1 to Defendants James and Jody Dunlavey ("the Dunlaveys")*fn2. In the early morning hours of May 2, 1995, James Dunlavey and Defendant Katie Maschal ("Maschal")*fn3 had an altercation at T's Route 13 Sports Arena that resulted in injuries to Ms. Maschal's head. On October 15, 1997, Ms. Maschal filed a complaint against 2209 Enterprises, Thomas Sheedy, the owner of the sports bar, and James Dunlavey in the Bucks County Court of Common Pleas ("the Maschal action"). As a result of the claims alleged by Maschal, the Dunlaveys sought a defense and indemnification from State Farm pursuant to their homeowner's policy.*fn4 State Farm retained counsel to defend the Dunlaveys, but made a reservation of rights giving the parties notice that it was State Farm's position that it owes no duty to defend or indemnify the Dunlaveys with respect to the Maschal action.

On September 14, 1998, Plaintiff State Farm filed this declaratory judgment action seeking an order that the Dunlaveys are not entitled to defense or indemnity under their State Farm homeowners policy in the Maschal action.*fn5 The Court conducted a non-jury trial on October 30, 2001 on Plaintiffs declaratory judgment action. It is the declaration of the Court that Plaintiff State Farm owes a duty to defend and indemnify the Dunlavey defendants in the Maschal action. In accordance with Federal Rule of Civil Procedure 52(a), the Court enters the following findings of fact and conclusions of law as a final determination of this case.


In September of 1998, State Farm instituted the instant Declaratory Judgment Action seeking the Court's declaration that it is not required to defend Mr. Dunlavey in the suit brought against him by Katie Maschal. State Farm's Declaratory Judgment Action also prays for the Court's declaration that it has no obligation to indemnify Mr. Dunlavey for any settlement he enters with Katie Maschal or from any judgment entered against him by Katie Maschal in her civil action filed in the Court of Common Pleas of Bucks County. See Exhibit P-7. This issue central to both declaratory judgments is a determination by this Court of whether coverage is precluded under the policy's intended harm exclusionary clause because the underlying assault was an intentional act that does not qualify as an "occurrence." In order to determine whether a claim may potentially come within the coverage of the policy, we must first ascertain the scope of the insurance coverage and then analyze the allegations in the complaint. Britamco Underwriters, Inc. v. Grzeskiewicz, 433 Pa.Super. 55, 59, 639 A.2d 1208 (1994) (citing Biborosch v. Transamerica Ins. Co., 412 Pa.Super. 505, 509, 603 A.2d 1050).

A. Policy Language*fn6

The homeowner insurance policy issued through State Farm, Special Form 3, provides that:

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence, we will: (1) pay up to our limit of liability for the damages for which the insured is legally liable; and (2) provide a defense at our expense by counsel of our choice.*fn7 We will make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit end when the amount we pay for damages, to effect settlement or to satisfy a judgment resulting from the occurrences, equals our limit of liability.

Exhibit P-7. The State Farm policy defines the term "occurrence," in relevant part as "an accident, including exposure to conditions which results in bodily injury . . . during the policy period." Id. The policy also includes an intended harm exclusionary clause that denies coverage for bodily injury which is "either expected or intended by an insured," or "which is the result of willful or malicious acts of an insured."*fn8 Id.

B. State Farm's Duty to Defend or Indemnify

The interpretation of an insurance policy is governed by the following rules of contract interpretation: 1) terms must be given their ordinary meaning; 2) ambiguous terms should be construed against the insurer; 3) "a term is ambiguous only if `reasonably intelligent men on considering it in the context of the entire policy would honestly differ as to its meaning;'" and 4) the parties' "true intent must be determined not only from the language but from all the surrounding circumstances." United Services Auto. Assoc. v. Elitzky, 358 Pa.Super. 362, 369, 517 A.2d 982 (1986) (quoting Erie Ins. Exch. v. Transamerica Ins. Co., 352 Pa.Super. 78, 507 A.2d 389, 392 (1986)); See also Mohn v. American Cas. Co. of Reading 458 Pa. 576, 585, 326 A.2d 346 (1974) (citing Burne v. Franklin Life Insur. Co., 451 Pa. 218, 226, 301 A.2d 799 (1973)) ("Furthermore, where the contract is one of insurance any ambiguity in the language of the document is to be read in a light most strongly supporting the insured.")

The underlying complaint fixes the parameters of an insurer's obligation to defend its insured. Elitzky at 368, 517 A.2d 982. A carrier's duties to defend and indemnify an insured in a suit brought by a third party depend upon a determination of whether the third party's complaint triggers coverage. Mut. Benefit Ins. Co. v. Haver, 555 Pa. 534, 538, 725 A.2d 743. See also General Accident Ins. Co. of America v. Allen, 547 Pa. 693, 706, 692 A.2d 1089 (1997); Wilson v. Maryland Cas. Co., 377 Pa. 588, 595, 105 A.2d 304 (1954). If coverage (indemnification) depends upon the existence or nonexistence of undetermined facts outside of the complaint, until the claim is narrowed to one patently outside the policy coverage, the insurer has a duty to defend claims against its insured. Stidham v. Millvale Sportsmen's Club, 421 Pa.Super. 548, 564, 618 A.2d 945 (1992). State Farm may rely on evidence outside the underlying complaint to prove that it has no duty to indemnify the underlying claim. Am. States Ins. Co. v. State Auto Ins. Co., 721 A.2d 56, 63 (1998) (quoting Pacific Indem. Co. v. Linn, 590 F. Supp. 643 (E.D.Pa. 1984), affd, 766 F.2d 754 (3rd Cir. 1985)). The Court will consider the underlying civil complaint, the prior criminal conviction, and intent testimony submitted in the instant action to determine if the intended harm exclusionary clause precludes indemnification.

1. Nature of the Underlying Complaint

On October 15, 1997, Ms. Maschal filed a Complaint in the Bucks County Court of Common Pleas against Mr. Dunlavey and the T's Route 13 Sports Area seeking compensatory damages for her injuries. The Maschal action alleges that on May 2, 1995, "Dunlavey was visibly intoxicated" and "carelessly, negligently, and recklessly swung a heavy motorcycle helmet in the direction of [her] head, and struck [her] in the head causing severe head injuries." See Exhibit P-2 at 2-3 (Underlying Civil Complaint captioned Katie Maschal vs. James Dunlavey, Jody Dunlavey, Thomas Sheedy, and 2209 Enterprises, Inc.). The plaintiff in the underlying action has stated a claim for negligent or reckless, rather than intentional, infliction of injury, which appeared to qualify as an "occurrence" within the policy's coverage, triggering the insurer's duty to defend. However, State ...

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