The opinion of the court was delivered by: JAMES KNOLL GARDNER, District Judge Page 2
This matter is before the court on Plaintiff, United States Fidelity
and Guaranty Company's Motion for Summary Judgment filed December 23,
2003 and the Cross-Motion for Summary Judgment of Defendant Lehigh
Valley Ice Arena, Inc. filed January 16, 2004.*fn1 Because we
conclude that the
unambiguous language of the insurance contract governing the
relationship between plaintiff and defendant excludes coverage for the
averments made by the intervenors in the underlying state court action,
we grant plaintiff's motion for summary judgment and deny defendant's
cross-motion for summary judgment.
The within civil action was initiated by a Complaint filed October
14, 2003 on behalf of United States Fidelity and Guaranty Company
("USF & G"). Plaintiff seeks a declaratory judgment pursuant to
28 U.S.C. § 2201. The action is before the court on diversity of
citizenship jurisdiction.*fn2 See
28 U.S.C. § 1332. Venue is appropriate because the defendant may be found in Lehigh
County, Pennsylvania, and the facts and circumstances giving rise to the
cause of action appear to have occurred in Lehigh County.
See 28 U.S.C. § 118, 1391.
Based upon the pleadings and record papers, the following are the
On July 10, 2003, Andrew Koch, Benjamin Westermann, William
Cleary, Brandon Murphy, Brian Wincer, Jennifer Lynn Wincer, Dale Howe,
Daniel Reinert, Domenico Galati, Edward
Keegan, Jeffrey Dahlgren, John Yorks, Matthew C. Smith,
Maximillian Sorensen, Michael MacAulay, Michael Toth, Nathan Beil, Paul
Getz and Philip Wagoner (collectively referred to as the "Koch
intervenors"*fn3) filed a Complaint against Lehigh Valley Ice Arena,
Inc. ("Lehigh Valley") and Resurfix, Inc.*fn4 in the Court of Common
Pleas of Philadelphia County, Pennsylvania. Subsequently, the Koch
intervenors filed a First Amended Complaint in the Court of Common Pleas.
This First Amended Complaint asserts causes of action sounding in
negligence against Lehigh Valley and Resurfix, Inc.
In their First Amended Complaint, the Koch intervenors make a
number of factual averments. They claim that they were all members and
associates of the Millersville
University ice hockey team. They claim that on or about
September 29, 2002, the team traveled to Lehigh Valley's ice arena to
play an intercollegiate game with the Lafayette College ice hockey
When the Koch intervenors arrived at the rink they prepared for
the game in the visiting team's locker room. They claim that this locker
room was located near the storage area in which Lehigh Valley stored its
Zamboni machine. While the team was at the arena, the Koch intervenors
aver that they were exposed to harmful levels of carbon monoxide and
The Koch intervenors specifically aver that the carbon monoxide
and nitrogen dioxide emanated from the Zamboni machine. They further
contend that the gases flowed through, but were not caused by, the
arena's heating and ventilation system. As a result of the exposure to
these gases, the Koch intervenors aver that they were harmed.
On November 10, 2003, John M. Fox, another member of the
Millersville University ice hockey team, filed a Complaint against Lehigh
Valley and Resurfix, Inc. in the Court of Common Pleas of Philadelphia
County, Pennsylvania. Mr. Fox's averments are equivalent to those made by
the Koch intervenors.
Although USF&G expressly reserved its rights under
the insurance contract, USF & G retained counsel on behalf of Lehigh
Valley, and that counsel entered an appearance in the underlying state
court action. On October 14, 2003, USF & G determined that the
conduct averred in the underlying Koch complaint did not fall within the
coverage of its insurance contract with Lehigh Valley. Accordingly, in a
letter sent from USF & G to Lehigh Valley, USF & G disclaimed
coverage and notified Lehigh Valley that it would discontinue its defense
of the state court action. Subsequently, during the course of this
litigation, the Fox complaint was filed. During the Rule 16 conference
held by the undersigned on December 9, 2003, the parties agreed to
incorporate the Fox matter into this action.
Standard for Summary Judgment
Summary judgment is proper when no genuine issue of material fact is in
dispute and the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Federal Home Loan Mortgage Corp.
v. Scottsdate Insurance Company, 316 F.3d 431, 443 (3d Cir. 2003).
"Only disputes over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of
summary judgment." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986);
see Federal Home Loan Mortgage Corp., 316 F.3d at
Thus, a "material" fact is one that is necessary to establish an
element under the substantive law governing a claim. A fact is "genuine"
if it is such that a reasonable factfinder could return a verdict for the
non-moving party. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510,
91 L.Ed.2d 211.
An insurer's duty to defend and to indemnify its insured under
Pennsylvania law is summarized as follows:*fn5
The duty to defend is a distinct obligation
separate and apart from the duty to
indemnify. Erie Ins. Exchange v.
Transamerica Ins. Co., 516 Pa. 574, 582,
533 A.2d 1363, 1368 (1987). The duty to defend
arises whenever claims asserted by the injured
party potentially come within the coverage of the
policy, Gedeon v. State Farm Mutual
Automobile Ins. Co., 410 Pa. 55, 56,
188 A.2d 320, 321 (1963), while the
duty to indemnify arises only when the
insured is determined to be liable for damages
within the coverage of the policy. See,
e.g., Employers Reinsurance Corp. v.
Sarris, 746 F. Supp. 560, 566-68 (E.D.
Pa. 1990). It follows then, that when the claims
in the underlying action have not been
adjudicated, the court entertaining the
declaratory judgment action must focus on whether
the underlying claims could potentially come
within the coverage of the policy. Air
Products and Chemicals, Inc. v. Hartford Accident
and Indemnity Co., 25 F.3d 177, 179 (3d
Cir. 1994). If there is a possibility that any of
the underlying claims could be covered by the
policy at issue, the insurer is obliged to provide
a defense at least until such time as those facts
are determined, and the claim is narrowed to one
patently outside of coverage. C.
Raymond Davis & Sons, Inc. v. Liberty Mut.
Ins. Co., 467 F. Supp. 17, 19 (E.D.
Pa. 1979). On the other hand, ...