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Fireman's Fund Insurance Co., 580 & 530 Swedesford Associates v. Zurich American Insurance Co

July 19, 2011

FIREMAN'S FUND INSURANCE CO., 580 & 530 SWEDESFORD ASSOCIATES, LP & KEYSTONE PROPERTY GROUP, GP, LLC, PLAINTIFFS,
v.
ZURICH AMERICAN INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Rufe, J.

MEMORANDUM ORDER AND OPINON

In this insurance-coverage dispute, both parties have filed motions for summary judgment. The court will grant the Defendant's motion for summary judgment and deny the Plaintiff's motion for partial summary judgment.

I. B ACKGROUND*fn1

The pending litigation arises from two insurance companies' dispute over which is responsible for the costs of defending a civil tort action brought against 580 & 530 Swedesford Associates, L.P and Keystone Property Group, GP, LLC.

The underlying civil tort action took place in the Chester County Court of Common Pleas, Pennsylvania under the caption Dadario v. 580 & 530 Swedesford Associates, L.P., et al.. *fn2 That case involved an injury allegedly sustained by Dadario, a security guard, when he boarded an elevator on the third floor of 530 East Swedesford Road, Wayne, Pennsylvania ("530 East") *fn3

Swedesford owns and operates 530 East; Keystone manages the premises. *fn4

In January 2008, Dadario filed his claims against Swedesford and Keystone in state court, alleging that in August 2006, he tripped and fell over the "defective, uneven and/or irregular surface of the elevator floor" at 530 East. *fn5 Dadario's complaint alleged, inter alia , negligent supervision of the maintenance and inspection of the elevators. A year later, Swedesford and Keystone filed a four-count joinder complaint against Schindler Elevator company, which had contracted with Swedesford to maintain and inspect the elevators located on its property, *fn6 alleging negligence and breach of contract. *fn7 In its answer to the joinder complaint, Schindler admitted that it performed maintenance on the elevators at 530 East five days before the accident.*fn8

At the time of that accident, Fireman's Fund Insurance Company insured Swedesford under a primary commercial general liability policy. *fn9 Swedesford and Keystone were also insured by Defendant Zurich American Insurance Company, under a Owner's and Contractor's Protective Liability ("OCPL") policy issued to Schindler, which provides coverage for injuries arising out of work performed by Schindler. Schindler secured the OCPL policy pursuant to a Continuing Service Contract with Swedesford. *fn10 In late 2009, Fireman's Fund wrote to Zurich, demanding it indemnify and defend Swedesford and Keystone pursuant to the OCPL policy. *fn11 Zurich refused, *fn12 and Fireman's Fund assumed Swedesford's and Keystone's defense in the Dadario litigation.*fn13

On July 27, 2010, Plaintiffs Fireman's Fund, Swedesford, and Keystone filed a three-count complaint in the Court of Common Pleas, Philadelphia County against Zurich. In Count One, pursuant to the Pennsylvania Declaratory Judgments Act, *fn14 Plaintiffs sought an order, inter alia : (1) declaring that Zurich was obligated to defend and indemnify Swedesford and Keystone in the Dadario litigation; *fn15 and (2) directing Zurich to reimburse Fireman's Fund for all costs expended in the defense of Swedesford and Keystone. *fn16 In counts Two and Three, Plaintiffs sought compensatory damages for breach of contract and breach of the duty of good faith arising out of Zurich's refusal to defend. *fn17 Invoking this Court's diversity jurisdiction, Zurich removed the action to this Court on August 24, 2010. *fn18

On January 31, 2011, a jury found Swedesford, Keystone, and Schindler negligent, but concluded that their negligence was not a factual cause of Dadario's injuries and did not award him damages. *fn19 Thus, the pending motions, filed March 21, 2011, solely present the question of whether Zurich had an obligation to defend Swedesford and Keystone pursuant to the OCPL policy. *fn20

II. S TANDARD OF R REVIEW

Under Federal Rule of Civil Procedure 56(a), a court may grant summary judgment only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." *fn21 A fact is "material" if it could affect the outcome of the suit, given the applicable substantive law. *fn22 A dispute about a material fact is "genuine" if the evidence presented "is such that a reasonable jury could return a verdict for the nonmoving party." *fn23

In considering a summary judgment motion, the Court does not weigh the evidence or make credibility determinations; moreover, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." *fn24 The same standard applies when there are cross-motions for summary judgment.*fn25

III. D ISCUSSION

A. I NSURER' S D UTY TO D EFEND

Under Pennsylvania law, *fn26 "[a]n insurer is obligated to defend its insured if the factual allegations of the complaint on its face encompass an injury that is actually or potentially within the scope of the policy." *fn27 To determine whether a claim against an insured is potentially covered, the Court compares "the four corners of the insurance contract to the four corners of the complaint." *fn28 "As long as the complaint 'might or might not' fall within the policy's coverage, the insurance company is obliged to defend." *fn29 Conversely, there is no duty to defend where it is apparent that the policy does not cover the injuries alleged. *fn30 The allegations in the underlying complaint-and not the causes of action pleaded-must inform the court's determination in this respect. *fn31 Similarly, "it is the face of the complaint and not the truth of the facts alleged therein which determines whether there is a duty to defend." *fn32 Thus, to determine whether a claim may come within the coverage of a policy, "the court must ...

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