The opinion of the court was delivered by: Ludwig. J.
This is an insurance coverage dispute. Jurisdiction is diversity. 28 U.S.C. § 1332. On March 29, 2009, plaintiff Kathleen M. Kelly, assignee of Brian T. Gill, commenced this action in state court. The action was subsequently removed. According to the complaint, defendant National Liability & Fire Insurance Company violated the terms of a business automobile insurance policy issued by it to Gill's employer, by refusing to provide coverage to Gill for a May 13, 2005 auto accident involving Gill and plaintiff. Complaint, Count I. The complaint also alleges that the refusal to provide coverage was in bad faith. Complaint, Count II.
Defendant counterclaims under the Declaratory Judgment Act, 28 U.S.C. § 2201, and requests a determination that it was not obligated to provide coverage to Gill, and that its coverage denial was not in bad faith. It also moves for summary judgment on all claims. The motion will be granted, and judgment entered in favor of defendant and against plaintiff on both plaintiff's claims and on defendant's counterclaim.*fn1
The summary judgment record establishes the following.*fn2 On May 13, 2005, Gill and plaintiff were involved in an auto accident. Stipulated Facts, 1. At the time, Gill was employed by PHC, and was operating his personally-owned automobile in the course of his employment. Id., 2, 3. He was insured under an automobile insurance policy issued by State Farm Mutual Automobile Insurance Company. Id., 5. On May 9, 2007, plaintiff commenced an action against Gill in state court, to recover damages arising from the accident. Id., 4. It does not name PHC as a defendant. Id., 4. Gill received a defense from his auto insurer, State Farm. Id., 6. PHC was not joined as a third-party defendant in the state court action. Id., 7.
On September 6, 2007, Gill placed PHC on notice of the Kelly action, and shortly thereafter, PHC notified defendant. National Claims Correspondence File, Exhibit "D" to defendant's motion, at D-1. National conducted a lengthy review of possible coverage under the business auto policy issued to PHC and engaged in extensive correspondence with counsel for both Gill and Kelly. Exhibits D-2 through D-12. Ultimately, National determined that (1) no coverage was available for Gill under the policy issued to PHC, and (2) coverage would be available for PHC if it was sued in the Kelly action, but (3) PHC could not be added as a defendant in the Kelly action because the applicable statute of limitations had expired. D-9, Bates no. 01390. On January 17, 2008, National issued a Claim Determination Letter denying coverage to Gill. D-10, Bates no. 1397.
On February 11, 2008, Kelly filed a "Motion for Leave to File an Amended Complaint Nunc Pro Tunc," in an effort to join PHC as a defendant in her state court personal injury action. D-13. National retained counsel to represent PHC. Stipulated Facts, 10. Counsel unsuccessfully opposed Kelly's motion, and PHC was added as a defendant in the Kelly action. Id., 8, 9. On July 14, 2008, PHC was dismissed from the Kelly action by stipulation. Id., 13.
After PHC's dismissal, Kelly and Gill proceeded to binding ADR, at which Kelly was awarded $375,000. D-25, Bates no. 2176. Pursuant to a stipulation between Kelly and Gill, Kelly accepted the limits of Gill's coverage under his State Farm policy and an assignment of Gills' rights as against National. D-24, Bates no.2087-88; D-25. Kelly commenced this action against National as assignee of Gill's rights.
Defendant contends that the terms of the National policy clearly exclude Gill from coverage. The relevant policy language is as follows, some of which is bolded:
BUSINESS AUTO COVERAGE DECLARATIONS ITEM ONE - NAMED INSURED & ADDRESS PHILADELPHIA HOME CARE ONE WINDING DRIVE PHILADELPHIA, PA 19131-2992
BUSINESS AUTO COVERAGE FORM
Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations.
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 ...