The opinion of the court was delivered by: Stengel, J.
Jager Management, Inc., Joel Gershman, and Pennswood Apartments LP were sued as defendants*fn1 in a case involving an automobile accident at Pennswood Apartments in which a young girl was injured. Columbia Casualty Company denied coverage under Jager Management‟s insurance policy and refused to defend Jager Management in the underlying action. Jager Management filed this complaint against Columbia Casualty Company alleging declaratory judgment, breach of contract, and bad faith claims. Columbia Casualty Company filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Jager Management argues that Columbia Casualty Company breached its insurance contract by denying coverage and that a duty of defense is owed to it. Columbia Casualty Company claims that the insurance policy‟s automobile exclusion applies and thus denies coverage. I will deny the motion to dismiss.
Jager Management, Inc. is a real estate management company that manages Pennswood Apartments, a property located in Harrisburg, Pennsylvania. Jaelly, Inc. holds an ownership interest in Pennswood Apartments and Joel Gershman is an officer of Jager Management, Inc.
Brian Kiefer was the maintenance supervisor for Pennswood Apartments.*fn2
Included in Mr. Kiefer‟s job description was that he personally inspect every unit to determine repair needs, ensure that repairs and services are completed on time, and maintain the physical integrity of the property to sustain a safe environment. Wanjiku Compl. ¶ 14. At or about 7:30 p.m. on April 18, 2009, Mr. Kiefer was driving his pickup truck to the Pennswood maintenance office parking lot. While driving with a blood alcohol level of .30%, Mr. Kiefer‟s vehicle struck Mercy Wanjiku, a nine year old girl who was riding a bicycle near the entrance to the maintenance office. Id. ¶¶ 26-27. Mercy Wanjiku suffered several injuries including fractured ribs, a fractured tibia, and post traumatic stress. Id. ¶ 31.
On July 23, 2009, Mercy Wanjiku‟s parents James Paul Kamau and Grace Kamau filed a complaint (Wanjiku action) against Mr. Kiefer, Pennswood Apartments, Jager Management, and Joel Gershman. In the Wanjiku action, the plaintiffs allege Jager Management was vicariously liable for Mr. Kiefer‟s negligence. Id. ¶¶ 9-12, 26. Additionally, the plaintiffs claim that Jager Management was negligent in its failure to maintain a safe environment for its tenants given the history of alcohol consumption by its agents, in its creation of a foreseeable risk of severe injury or death as a result of Jager Management‟s agents driving while intoxicated, and in its failure to take the necessary action to detect and prevent the consumption of alcohol on its premises by its employees or agents. Id. ¶ 10.
Columbia Casualty Company is an insurance carrier which had issued a general liability insurance policy to Jager Management. In response to being named as defendants in the Wanjiku action, Jager Management sought coverage under the Columbia Casualty general liability insurance policy. Compl. ¶ 22. Columbia Casualty denied coverage on the basis of the "auto exclusion" which excludes coverage for: ""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 any insured." Id. ¶ 23. Jager Management claims Columbia Casualty‟s liability policy provides coverage because the Wanjiku action contains counts of "independent" allegations of negligence consisting of its failure to maintain a safe environment for its tenants to live, its failure to take the necessary steps to prevent the consumption of alcohol on its premises by its agent and employees, its failure to provide adequate security to protect its tenants, and fostering an atmosphere conducive to heavy drinking which created a foreseeable risk of injury stemming from driving while intoxicated. Id. ¶ 18.
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for a failure to state a claim upon which relief can be granted examines the legal sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The factual allegations in the complaint must amount to a sufficient claim for relief and not be merely speculative. When a court is determining whether to grant a motion to dismiss, it must accept all factual allegations as true and draw all reasonable inferences in favor of the plaintiff. D.P. Enters. v. Bucks County Cmty. Coll., 725 F.2d 943, 944 (3d Cir. 1984).
The Federal Rules of Civil Procedure do not require a plaintiff to plead in detail all of the facts upon which a claim is based. The Rules require a "short and plain statement" of the claim that will give the defendant fair notice of the claim and the rationale behind it. Conley, 355 U.S. at 47. The claim must contain enough factual matters to suggest the required elements of the claim or to "raise a reasonable expectation that discovery will reveal evidence of" those elements. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007). Neither "bald assertions" nor "legal conclusions" are accepted as true. See Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997).
Under Pennsylvania law, the duty to defend is determined by the allegations contained in the underlying complaint. Telecomm. Network Design v. Brethren Mut. Ins. Co., 5 A.3d 331, 335 (Pa. Super. Ct. 2010). The insurer owes a duty to defend if the allegations in the complaint would bring the claim within the policy‟s coverage. See Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 896-97 (Pa. 2006). The duty to defend is broader than the duty to indemnify. Id. at 896.
Jager Management alleges that Columbia Casualty‟s failure to defend and indemnify them in reference to the Wanjiku action constitutes a breach of the general liability insurance policy issued by Columbia Casualty. Compl. ¶ 34. Columbia Casualty‟s policy states "[w]e will have the right and duty to defend the insured against any "suit‟ seeking" damages because of bodily injury or property damage. Brief of Jager Management, Ex. D, Commercial General Liability Coverage Form at 12. Columbia Casualty denied coverage pursuant to the policy‟s automobile exclusion. The auto exclusion policy provides: ""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 any insured." Id. at 14. Under Columbia ...