The opinion of the court was delivered by: (Judge Conner)
Plaintiff Virginia Becker ("Becker" or "Virginia") brings this diversity action for declaratory judgment, and she seeks damages for breach of contract and bad faith from her insurance provider, defendant Farmington Casualty Company ("Farmington").*fn1 Becker accuses Farmington of breaching its duty to defend and indemnify her in an underlying lawsuit filed in 2008 in state court. Presently before the court is Farmington's motion (Doc. 30) to dismiss the complaint for failure to state a claim upon which relief may be granted. For the reasons that follow, the motion will be granted.
I. Statement of Facts*fn2
This case arises from allegations of child molestation. Virginia acted as babysitter of her grandchild, C.B., at various times in 2006 and 2007. (Doc. 24, Ex. A, ¶¶ 6-7.) Leon Becker ("Leon"), Virginia's husband, sexually molested C.B. on multiple occasions while the child was at the Becker home. (Id. at ¶ 8.) On August 5, 2008, Leon was convicted of corruption of minors, indecent assault, and endangering the welfare under Pennsylvania criminal statutes. (Id. at ¶ 14.)
On August 20, 2008, C.B.'s parents, K.C. and C.C., brought a civil action for damages against Leon and Virginia in the Court of Common Pleas of Lebanon County, Pennsylvania. (Doc. 24, ¶ 5; Doc. 24, Ex. A.) The claim against Leon includes counts of assault, battery, false imprisonment, and intentional infliction of emotional distress stemming from the incidents of sexual contact with C.B. (Doc. 24, Ex. A, ¶¶ 32-40.) The claim against Virginia sounds entirely in negligence, with its basic allegation being that her negligent acts or omissions allowed the molestation to occur. (See Doc. 24, Ex. A, ¶¶ 16-31; Doc. 24, ¶ 13.)
Virginia contacted her insurer Farmington, the defendant in this action, shortly after the civil action was commenced. (Doc. 24, ¶ 15.) Farmington responded by letter dated October 9, 2008, informing the Beckers that, although the homeowners policy held jointly by Virginia and Leon generally covered personal liabilities sounding in negligence, the specific claims alleged were excluded on multiple grounds.*fn3 (See Doc. 24, Ex. D.) First, Farmington contended that the heart of the suit is intentional harm committed by one of the insured. (Id.) Farmington interpreted the language of the policy to exclude coverage for all insureds if any insured intentionally caused the bodily injury. (Id.) Second, Farmington contended that claims linked to sexual molestation are specifically excluded from coverage. (Id.) In Farmington's estimation, the common fact of sexual molestation shared by all the claims in the suit precluded defense or indemnification. (Id.) Third, Farmington contended that the nature of C.B.'s alleged injury is emotional or psychological. (Id.) Because the coverage is limited to physical harm, Farmington did not recognize a duty to defend or indemnify.*fn4
Virginia filed a separate action in the Lebanon County Court of Common Pleas on October 16, 2008, seeking a declaratory judgment that Farmington is obliged at this stage to defend her for negligent torts and potentially indemnify her for damages. (See Doc. 1, Ex. 8, amended by Doc. 24.) Farmington removed the action to this court, based on diversity of citizenship. (See Doc. 1.) On July 15, 2009, Farmington filed a motion (Doc. 30) to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(6). Briefs have been filed by all parties and the issue is now ripe for disposition.
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief can be granted.
FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)); see also Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005)). Although the court is generally limited in its review to the facts contained in the complaint, it "may also consider matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).
Federal notice and pleading rules require the complaint to provide "the defendant notice of what the . . . claim is and the grounds upon which it rests." Phillips, 515 F.3d at 232 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To test the sufficiency of the complaint in the face of a Rule 12(b)(6) motion, the court must conduct a two-step inquiry. In the first step, the factual and legal elements of a claim should be separated; well-pleaded facts must be accepted as true, while mere legal conclusions may be disregarded. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Once the well-pleaded factual allegations have been isolated, the court must determine whether they are sufficient to show a "plausible claim for relief." Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1950 (2009) (citing Twombly, 550 U.S. at 556); Twombly, 550 U.S. at 555 (requiring plaintiffs to allege facts sufficient to "raise a right to relief above the speculative level"). A claim "has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, --- U.S. at ---, 129 S.Ct. at 1949. When the complaint fails to establish defendant liability, however, courts should generally grant plaintiffs leave to amend their claims before dismissing a complaint that is merely deficient. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).
At this stage, Becker and Farmington both ask the court to determine whether the homeowners insurance policy issued by Farmington to the Beckers contemplates personal liability ...