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American Western Home Insurance Company v. Donnelly Distribution

August 2, 2011

AMERICAN WESTERN HOME INSURANCE COMPANY,
PLAINTIFF,
v.
DONNELLY DISTRIBUTION, INC.,
DEFENDANT.



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

MEMORANDUM

Sharon Swanlund sued Defendant Donnelly Distribution, Inc. ("Donnelly") in the Philadelphia County Court of Common Pleas, alleging she was injured when she tripped on one of Donnelly's plastic bundling ties that was left on the street near her home. In the instant action, Plaintiff American Western Home Insurance Company ("American Western"), Donnelly's insurer, seeks a declaratory judgment that it has no duty to defend or indemnify Donnelly in connection with that lawsuit. Currently before the Court is American Western's motion for judgment on the pleadings, or in the alternative, summary judgment. For the reasons stated below, the Court denies American Western's motion and grants summary judgment in favor of Donnelly.

I. BACKGROUND

A. The Underlying Swanlund Litigation

On November 9, 2007, Swanlund filed a negligence action against Donnelly in the Court of Common Pleas for Philadelphia County. (Pl.'s Mot. for Summ. J. Ex. B [Civil Complaint].) Swanlund alleges that on May 24, 2006, she was crossing the street near her house in Philadelphia when, "as she stepped onto the pavement at 5353 Saul Street, she was caused to trip and stumble when her foot became entangled in one of the defendant Donnelly's plastic ties, causing her . . . severe and permanent injuries." (Id. ¶ 6.) According to the complaint, the plastic ties came from bundles of newspapers Donnelly had delivered to a nearby location. (Id. ¶¶ 4-5.) The bundles of papers Donnelly delivers "are secured by loops of plastic ties . . . which the defendant's employees remove at the delivery location and are left by them on the sidewalk and strewn by the employees, by others, or by weather conditions, throughout the neighborhood." (Id. ¶ 5.) Donnelly's alleged negligence consisted of:

a. Failing to have due regard for the right, safety, and position of pedestrians lawfully on the streets and sidewalks of the surrounding areas;

b. Failing to properly and lawfully secure and/or dispose of the plastic ties;

c. Failing to properly supervise, train, and instruct their employees on the proper disposition of the plastic ties and like items; and

d. Permitting or allowing their employees to improperly dispose of the plastic ties.

(Id. at ¶ 7.) Donnelly tendered its defense to American Western, who appointed counsel subject to a reservation of rights. (Pl.'s Statement of Material Facts ¶ 5.)

B. The American Western Insurance Policy

American Western issued a commercial liability insurance policy to Donnelly, with effective dates of January 3, 2006 to January 3, 2007. The policy provides coverage limits of $1,000,000 per occurrence and $2,000,000 in the aggregate. (Def's Mot. Ex. A [Insurance Policy].) Section I of the policy provides:

We [American Western] will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" . . . to which this insurance applies. We will have the right and duty to defend the insured [Donnelly] against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" . . . to which this insurance does not apply. "Bodily injury" is defined as "bodily injury, sickness or disease sustained by a person . . . ." (Id.) The policy contains two relevant exclusions. First, the policy applies only to injuries "arising out of the ownership, maintenance or use" of 1301-05 North Howard Street, Philadelphia, PA 19122, and operations necessary or incidental to that premises. (Id.)

Second, the policy contains an exclusion for "designated professional services." (Id.) The "description of professional services" schedule contains a single entry for "Paper Distributor." Under this exclusion, "[w]ith respect to any professional services shown in the Schedule, this insurance does not apply to 'bodily injury,' 'property damage,' 'personal injury' or ...


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