United States District Court, E.D. Pennsylvania
March 9, 2004.
OLD REPUBLIC INSURANCE COMPANY
LUMBERMENS MUTUAL CASUALTY COMPANY; OLD REPUBLIC INSURANCE COMPANY v. THE VENATOR GROUP, INC. and FOOT LOCKER, INC
The opinion of the court was delivered by: CYNTHIA RUFE, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court are the Cross-Motions for Summary Judgment of
Plaintiff Old Republic Insurance Company ("Old Republic"), Defendant
Lumbermens Mutual Casualty Co. ("Lumbermens"), and Defendant The Venator
Group, Inc./Foot Locker, Inc. (collectively referred to as "Foot
Locker").*fn1 Old Republic filed this declaratory judgment action to
determine which party is responsible for costs associated with defending
and indemnifying Foot Locker in Ricchiuti v. The Venator Group, Inc.,
No. 99-CV-1976, a personal injury action that settled in January of
2003.*fn2 The parties dispute whether the incident at issue is covered
by Old Republic Business Auto Policy No. Z35726-10 ("Old Republic Business Auto policy")
or Lumbermens Commercial General Liability Policy No. 5AA 045 319-00
("Lumbermens CGL policy"), or both. The Court has diversity jurisdiction
over this matter pursuant to 28 U.S.C. § 1332(a)(1).
On April 19, 1999, William and Irene Ricchiuti commenced action against
Foot Locker in the United States District Court for the Eastern District
of Pennsylvania, seeking to recover damages resulting from an April 17,
1997 accident in which William Ricchiuti was injured when cargo from the
trailer of a truck fell upon him. Ricchiuti alleged that Foot Locker
employees carelessly and negligently loaded the cargo.
Ricchiuti's employer, Ryder Logistics Integrated ("Ryder"), owned the
truck and was required to transport goods from Woolworth's central
distribution center to various Woolworth store locations pursuant to a
Logistics Master Agreement, which provided that "[a]ll loads tendered to
[Ryder] would be on `shipper load and count' basis. Trailers to be sealed
by Shipper." The Logistics Master Agreement further provided that Ryder
drivers, such as Ricchiuti, were to assist in unloading at delivery
The Logistics Master Agreement contained provisions addressing
B. Insurance of Operations. [Ryder] will obtain and
maintain in effect throughout the Term the following
1. Comprehensive general liability and automobile
liability insurance for bodily injury (including
death) and property damage, each in the minimum
combined single limit per occurrence of
$1,000,000.00 or such greater limit as the U.S. DOT may require for transportation of any
Product listed in the "Hazardous Products" table of
the Schedule. The general liability coverage
includes coverage for contractual liability. [Foot
Locker] will be named an additional insured under
Logistics Master Agreement at 4-5.
Foot Locker initially undertook the defense of the claim. In October of
2001, however, Foot Locker tendered the defense of the claim to Ryder and
its insurer, Old Republic, under the Old Republic Business Auto
By letter dated December 19, 2001, Ryder and Old Republic
agreed to undertake defense of the action, subject to Old Republic's
right to disclaim coverage for Foot Locker's alleged late reporting of
On November 19, 2002, Ryder, on behalf of Old Republic, sent a second
letter to Foot Locker, purporting to reserve its rights based upon two
additional provisions in the policy.*fn4 First, Old Republic asserted
that because loading of the truck was complete when Ricchiuti was
injured, the "Completed Operations" exclusion may be grounds for denying
coverage. Second, Old Republic asserted that coverage may not apply
because Ricchiuti's injuries did not occur during the course of Foot
Locker's allegedly negligent "use" of the Ryder vehicle. The letter
stated that Old Republic would continue to provide a defense, subject to
its right to disclaim coverage based on these grounds.
On January 6, 2003, the underlying Ricchiuti case settled for
$125,000.00. While Old Republic funded the settlement, it did so without
prejudice to its right to seek reimbursement from Lumbermens and/or Foot
Locker for both the $125,000.00 settlement and costs of defense, which
totaled $41,026.41. In the instant declaratory judgment action, Old
Republic reasserts the defenses reserved in its November 19, 2002
letter. It maintains that because Foot Locker was not "using" the Ryder
vehicle when the accident occurred, it is not obligated to provide
coverage under the Old Republic Business Auto policy. Old Republic
further submits that, even if Foot Locker was "using" the vehicle,
defense and indemnity are barred by the "Completed Operations"
exclusion. Old Republic therefore asserts that Lumbermens (or Foot Locker
to the extent it is self-insured)*fn5 is responsible for the costs
associated with the defense and indemnification of Foot Locker under the
Lumbermens CGL policy.
Lumbermens and Foot Locker counter that coverage exists under the Old
Republic Business Auto policy only. They argue that the "Completed
Operations" exclusion in the Old Republic Business Auto policy is
inapplicable because the operations were not completed. Lumbermens and
Foot Locker further argue that there is no coverage under the Lumbermens
CGL policy. Specifically, they assert that the "Aircraft, Auto or
Watercraft" exclusion in the Lumbermens CGL policy bars coverage under
that policy. Moreover, Lumbermens and Foot Locker contend that even if
there were coverage under the Lumbermens CGL policy, Old Republic would
be responsible for primary coverage by operation of the "Other Insurance" clauses in the respective policies.
STANDARD OF REVIEW
Summary judgment is proper when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if
any, show there is no genuine issue as to any material fact, and that the
moving party is entitled to judgment as a matter of law. Fed.R.Civ.P.
56(c). The party moving for summary judgment has the initial burden of
showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). Once the moving party adequately supports its motion, the
burden shifts to the non-moving party to go beyond the mere pleadings and
present evidence that there is a genuine issue of material fact for
trial. See id at 324. Because the Court is confronted with cross-motions
for summary judgment, the Court must consider each party's motion
individually, and each party bears the burden of establishing a lack of
genuine issues of material fact. Reinhert v. Giorgio Foods, Inc.,
15 F. Supp.2d 589, 593-94(E.D. Pa. 1998).
The Declaratory Judgment Act, 28 U.S.C. § 2201, empowers federal courts
to grant declaratory relief. State Auto Ins. Co. v. Summy, 234 F.3d 131,
133 (3d Cir. 2000). A determination of coverage under an insurance policy
is a question of law to be decided by the court. PECO Energy Co. v.
Boden, 64 F.3d 852, 855 (3d Cir. 1995). In interpreting an insurance
contract, the court must attempt to "ascertain the intent of the parties
as manifested by the language of the written instrument." Madison Const.
Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999). DISCUSSION
A. CHOICE OF LAW
The parties dispute whether Florida or New York law governs this case.
Old Republic argues that Florida law should govern in interpreting the
Old Republic Business Auto policy and that New York law should govern
interpreting the Lumbermens CGL policy. Lumbermens and Foot Locker
contend that New York law should apply to both policies.
It is well settled that the Court must apply the procedural law of the
forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941).
The choice of which state's substantive law applies is a procedural issue
and, therefore, is governed by the procedural law of Pennsylvania, the
forum state. See id Under Pennsylvania choice-of-law principles, the
state where the insurance policy was contracted, which is where it is
delivered, governs interpretation of an insurance contract. CAT Internet
Servs., Inc. v. Internet Supply, Inc., 333 F.3d 138, 141 (3d Cir. 2002)
("Pennsylvania conflict of laws principles dictate that an insurance
contract is guided by the law of the state in which it is delivered.");
Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir.
1999) (same).*fn6 Where proof as to place of delivery is lacking, it is
presumed that delivery took place at the insured's residence. See
Carosella & Ferry, P.C. v. TIG Ins. Co., 189 F. Supp.2d 249, 252 (E.D.
Pa. 2001); Fed. Kemper Ins. Co. v. Ward, 679 F. Supp. 489, 491 (E.D. Pa.), aff'd 860 F.2d 1074 (3d Cir. 1988).
Ryder is a Florida corporation with its principal place in Miami,
Florida. Because Old Republic delivered the Old Republic Business Auto
policy to Ryder, the named insured, in Florida, the law of Florida
governs the Old Republic Business Auto policy. On the other hand, Foot
Locker is a New York corporation with its principal place of business in
New York, New York, and its Lumbermens CGL policy was presumably
delivered in New York. Accordingly, the Court will apply New York law in
interpreting the Lumbermens CGL policy insofar as a choice of law
conflict arises with respect to that policy.
B. COVERAGE UNDER THE OLD REPUBLIC BUSINESS AUTO POLICY
On April 17, 1997, Ryder was insured under the Old Republic Business
Auto policy, which provides coverage as follows:
SECTION II LIABILITY COVERAGE
We will pay all sums an "insured" legally must pay
as damages because of bodily injury or "property
damage" to which this insurance applies, caused by
an "accident" and resulting from the ownership,
maintenance or use of a covered "auto."
The term insured is defined in the policy as follows:
1. WHO IS AN INSURED
The following are insured:
a. You for any covered "auto."
b. Anyone else while using within your permission
a covered "auto" you own, hire, or borrow. . . .
By endorsement, effective October 1, 1990, the definition of insured
was modified to provide as follows:
1. It is agreed Who Is An Insured is amended to
include the following:
d. Any person or organization for whom the Named
Insured is obligated by written agreement to provide
liability insurance but in no event for more or
broader insurance than such agreement requires, and
only if such insurance is afforded under the policy
without reference to such agreement.
As noted above, Old Republic asserts that there is no coverage under
the Old Republic Business Auto policy because Foot Locker was not using
the Ryder vehicle at the time of the accident. Rather, it contends the
Ryder truck was merely the situs of the accident. It therefore contends
that Foot Locker cannot be a permissive user of the Ryder vehicle.
Accordingly, the Court must determine whether Foot Locker was "using" the
Ryder vehicle when Ricchiuti was injured.
1. "Use" of an Automobile
An insurance contract is to be construed in accordance with the plain
language of the policy. Siegle v. Progressive Consumers Ins. Co.,
819 So.2d 732 (Fla. 2002). Under Florida law, interpretation of an
insurance contract, including determination and resolution of ambiguity,
is a matter of law. Jones v. Utica Mut. Ins. Co., 463 So.2d 1153 (Fla.
1995). The insurance contract must be viewed "in its entirety with a view
toward giving every provision meaning." Dahl-Eimers v. Mut. of Omaha Life
Ins. Co., 986 F.2d 1379, 1382 (11th Cir. 1993) (citation omitted).
At the time of the accident, Ricchiuti was at the Park City Mall in
Lancaster, Pennsylvania. Ricchiuti had just hauled a trailer from Denver,
Pennsylvania, where Foot Locker employees had loaded the trailer with chairs. Upon arriving at his
destination in Lancaster, Ricchiuti began to unload the chairs but was
injured when the stacked chairs, loaded by Foot Locker at the Denver
location, fell on him. Florida courts apply a three-prong test to
determine whether a particular event arises from the "use" of an
(1) The accident must have arisen out of the inherent
nature of the automobile;
(2) The accident must have occurred within the
territorial limits of the automobile and the actual
use, loading or unloading must not have terminated;
(3) The automobile must not merely contribute to
cause the condition which produces the injury, but
must, itself, produce the injury.
Race v. Nationwide Mut. Fire Ins. Co., 542 So.2d 347
, 349 (Fla. 1989)
(quoting 6 B J. Appelman, Insurance Law and Practice, § 4317 (Buckley
Applying the Race factors to the case at bar, this Court concludes that
Foot Locker was using the Ryder truck when Ricchiuti was injured, so
coverage is due under the Old Republic Business Auto policy. First, the
accident arose out of the inherent nature of a truck, an automobile that
is customarily used for loading, unloading and transporting. See
Pomerantz v. Nationwide Mut. Fire Ins. Co., 575 So.2d 1311, 1313 (Fla.
App. 1991) (finding coverage where person had been injured by a worker
loading cut trees into his uninsured truck because "trucks, by their
inherent nature, are vehicles that must be loaded and unloaded in order
to be used in their customary manner"). Second, the injury was not caused
by a separate or intervening act unrelated to the vehicle, and loading
and unloading are essential to the use of a cargo transport truck. See
Gov't Employees Ins. Co. v. Batchelder, 421 So.2d 59, 61 (Fla. App. 1982) ("inherent use of an automobile includes its use to transport or store
items, either commercial or personal in nature"). Finally, there was a
causal relationship between the insured truck and the accident. There
were no attenuated circumstances in which the loading or unloading of the
truck was distanced from the resulting bodily injury as to make the
unloading significantly peripheral to the actual use of the truck. See
id; see also Quarles v. State Farm Mut. Auto. Ins. Co., 533 So.2d 809,
812 (Fla. App. 1989) (finding sufficient causal relationship where
removing firearm from gun rack installed in pickup truck caused injury).
In arguing against coverage, Old Republic relies heavily upon Florida
Crushed Stone v. Commercial Standard Insurance Company, 432 So.2d 690
(Fla. App. 1983), which held that once the loading of the vehicle is
completed, and the vehicle is in motion, a third party can no longer be
an additional insured due to his permissive use of the vehicle during the
loading process. Id. at 691. The Court finds that case to be
distinguishable because, unlike the loader in Florida Crushed Stone, Foot
Locker was an additional insured, not only by virtue of its permissive
use of the Ryder vehicle when it loaded the truck, but also through
express language in the endorsement that extended the definition of an
insured to include "any person or organization for whom the insured is
obligated to provide liability insurance. . . ." Because Foot Locker was
an additional insured, the Court finds that Old Republic intended to
insure and protect against claims for improper loading. Foot Locker
directed the movement of the cargo, deciding both the destination and the
place of ultimate use of the goods. Thus, there is liability coverage
under the Old Republic Business Auto policy even though Foot Locker did
not have exclusive physical control of the truck at the time of the
injury-causing event. 2. "Completed Operations" Exclusion
Old Republic asserts that, even if the Court concludes that Foot Locker
was using the vehicle at the time of the accident, the "Completed
Operations" exclusion bars coverage since the trailer was loaded in
Denver, Pennsylvania, and the alleged accident occurred in Lancaster,
The Old Republic Business Auto policy contains the following exclusion
for completed operations:
SECTION II LIABILITY COVERAGE
10. Completed Operations
"Bodily injury" or "property damage" arising out
of your work after that work has been completed or
abandoned. In this exclusion, your work means:
a. Work or operations performed by you or on
your behalf. . . .
Your work will be deemed completed at the earliest
of the following times:
(1) When all of the work called for in your
contract has been completed.
(2) When all your work to be done at the site
has been completed if your contract calls for
work at more than one site.
(3) When that part of the work done at a job
site has been put to its intended use by any
person or organization other than another
contractor or subcontractor working on the
Old Republic argues that the exclusion applies because the spotting,
loading and pick-up at one site had been completed, and Ricchiuti was in the process
of unloading at a different location at the time of the accident. Old
Republic asserts that any negligence by Foot Locker employees occurred in
the course of operations that were completed in Denver, Pennsylvania and
therefore its work was completed. Resolution of this issue hinges on the
meaning of the word "your" in the "Completed Operations" exclusion.
Under the "Completed Operations" exclusion in the Old Republic policy,
coverage is excluded for bodily injury "arising out of your work after
that work has been completed" and "when all your work at the site has
been completed" (emphasis added). The first page of the Old Republic
Business Auto policy states that "[t]hroughout the policy the words `you'
and `your' refer to the Named Insured shown in the Declarations." The
declaration pages clearly provide that the Named Insured is "Ryder
System, Inc. and its Associated, Affiliated or Subsidiary Companies as
Have Been, are Now, or may Hereafter be Constituted." Because Ryder is
the only named insured, reading you and your to include Foot Locker would
make surplusage of the phrase "Named Insured shown in the Declarations."
Clearly, all of Ryder's work at the Lancaster site had not been
completed.*fn7 Accordingly, based upon the facts in the case at bar and
the clear language in the policy itself, the Court concludes that the
"Completed Operations" exclusion is not triggered.
Although the Court finds the use of the word to be quite clear, even if
the word your were ambiguous, the "Completed Operations" exclusion would
not apply. Under Florida law, interpretation of an insurance contract,
including the determination of and resolution of an ambiguity, is a matter of law. See Dahl-Eimers, 986 F.2d at 1381.
Ambiguity exists if language "is susceptible to two or more reasonable
interpretations that can fairly be made." Id. Exclusionary provisions
that are ambiguous or otherwise susceptible to dual meaning must be
construed in favor of the insured, since the insurer drafts the policy.
Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So.2d 467, 470 (Fla.
1993). Because "arising out of your work" is a clause that limits
coverage, it must be construed most stringently against the insurer.
Accordingly, insofar as there is ambiguity the Court rules that the words
"your work" means Ryder's work and not the work of additional insureds
such as Foot Locker.
C. PRIMARY COVERAGE
Alternatively, Old Republic argues that there may be dual coverage
under both the Lumbermens CGL policy and the Old Republic Business Auto
policy. The Court disagrees. Although the Lumbermens CGL policy provides
liability coverage for Foot Locker's business operations, it also
contains an exclusion for damages arising out of the use of any "auto":
Coverage A: Bodily Injury and Property Damage
Exclusion g-Aircraft, Auto or Watercraft:
"Bodily injury" or "property damage" arising out of
the ownership, maintenance, use or entrustment to
others of any aircraft, "auto" or watercraft owned
or operated by or rented or loaned to an insured.
Use includes operation and "loading or unloading."
The policy defines "auto" as "a land motor vehicle, trailer or
semitrailer designed for travel on public roads, including any attached
machinery or equipment."
While Lumbermens presents a compelling argument that coverage is
excluded under Exclusion g, it is unnecessary for the Court to reach this
issue. Even if the Court were to accept Old Republic's argument for dual coverage notwithstanding the
"auto" exclusion in the Lumbermens CGL policy that would appear to make
coverage under these two policies mutually exclusive the "Other
Insurance" provisions in the policies would render the Lumbermens CGL
coverage excess. In other words, the coverage afforded to Foot Locker
under the Old Republic Business Auto policy is primary to any insurance
which may be available to Foot Locker under the Lumbermens CGL policy.
Old Republic's "Other Insurance" clause states that it is primary
insurance for any covered vehicle:
a. For any covered "auto" you own, this Coverage
Form provides primary insurance. For any covered
"auto" you don't own, the insurance provided by
this coverage is excess over any other collectible
Conversely, the "Other Insurance" clause in the Lumbermens policy
4. Other Insurance
If other valid and collectible insurance is available
to the insured for a loss we cover under Coverages A
or B of this Coverage Part, our obligations are
limited as follows:
a. Primary Insurance
The insurance is primary except when b. below
applies. If this insurance is primary, our
obligations are not affected unless any of the other
insurance is also primary. Then, we will share with
that other insurance by the method described in c.
b. Excess Insurance
This insurance is excess over any of the other
insurance, whether primary, excess, contingent
or on any other basis: 3) If the loss arises out of maintenance of the
use of aircraft, "autos" or watercraft to the
extent not subject to Exclusion g. of Coverage A
When this insurance is excess, we will have no
duty under Coverage A or B to defend any "suit"
that any other insurer has a duty to defend. If
no other insurer defends, we will undertake to do
so, but we will be entitled to the insured's rights
against all those other insurers.
The "Other Insurance" clauses at issue here do not conflict with each
other. Because Foot Locker did not own the Ryder truck, its
Lumbermens-issued CGL policy, at most, would apply excess coverage. See
Jefferson Ins. Co. of New York v. Travelers Indem. Co., 703 N.E.2d 1221
1126 (N.Y. 1998). Thus, consistent with the terms of both policies, only
Old Republic's Business Auto Policy provides primary coverage under these
For the foregoing reasons, the Court enters judgment in favor of
Defendants Lumbermens Mutual Casualty Company and The Venator Group/Foot
Locker, Inc. and against Plaintiff Old Republic Insurance Company.
An appropriate Order follows.
________ AND NOW, this 9th day of March, 2004, in accordance with the
foregoing Memorandum Opinion, it is hereby ORDERED and DECREED as
(1) The Motion for Summary Judgment of Old Republic
Insurance Company [Doc. No. 35] is DENIED.
(2) The Cross-Motion for Summary Judgment of Defendant
Lumbermens Mutual Casualty Company [Doc. No. 36] is
(3) The Cross-Motion for Summary Judgment of
Defendants Venator Group, Inc. and Foot Locker, Inc.
[Doc. No. 38] is GRANTED.
(4) The Court hereby declares that Old Republic
Insurance Company had the primary duty to defend and
indemnify The Venator Group, Inc. and/or Foot Locker,
Inc. in Ricchiuti v. The Venator Group, Inc., No.
99-CV-1976. It is further declared that Old Republic
Insurance Company is not entitled to recover from
Lumbermens Mutual Casualty Company, The Venator
Group, Inc. and/or Foot Locker, Inc. any sums it paid
in settlement of the Ricchiuti litigation nor is Old
Republic Insurance Company entitled to recover any
costs associated with defending The Venator Group,
Inc. and/or Foot Locker, Inc. in said action. (5) The Clerk is directed to enter judgment in
favor of Lumbermens Mutual Casualty Company, The
Venator Group, Inc. and Foot Locker, Inc. and
against Old Republic Insurance Company.
(6) The Clerk is directed to CLOSE this case for