The opinion of the court was delivered by: William W. Caldwell United States District Judge
I. Introduction and Procedural History
This is a diversity action controlled by Pennsylvania law. Plaintiff, Western Heritage Insurance Company, seeks a declaratory judgment that it has no duty to defend or indemnify defendants, the Estate of Harry J. Darrah, Jr.; Neil Albert, Esq., the administrator of the Estate of Harry J. Darrah, Jr.; and Harry J. Darrah, Jr., t/a Darrah's Automotive and Recycling, in a civil suit in the Court of Common Pleas of York County, Pennsylvania. The plaintiff in that state-court action, Joseph Stine, has also been named as a defendant here. He sued to recover for serious personal injuries he suffered, including scarring and disfigurement, while he was working on premises controlled by the "Darrah Defendants."*fn1
This is the second time the parties have been before us litigating whether Western Heritage must defend and indemnify the Estate or Harry J. Darrah, Jr., t/a Darrah's Automotive and Recycling. In the previous case, we ruled that Stine's allegations in his state-court amended complaint did not fall within the scope of Western Heritage's policy, and we entered a declaratory judgment in its favor. Western Heritage Ins. Co. v. Harry J. Darrah, Jr., t/a Darrah's Automotive and Recycling, No. 10-476, 2010 WL 4780955 (M.D. Pa. Nov. 17, 2010). That case is now on appeal in the Third Circuit. C.A. No. 10-4663.
After our ruling, Stine filed in the state-court action a second amended complaint on May 11, 2011, altering the allegations that bear on whether Western Heritage has to provide coverage. The Western Heritage policy provides coverage for an automobile dismantling and recycling operation, but Stine's previous pleading had alleged he was injured while repairing a vehicle in the repair/body shop. His current pleading alleges that the repair/body shop is used in the dismantling and recycling operation and that he was injured while "working on repairing a vehicle in the repair/body shop in use in auto dismantling and recycling operations . . . ."
Two motions to dismiss have been filed, one by the estate; attorney Albert, the administrator of the estate, and Harry J. Darrah, Jr. t/a Darrah's Automotive and Recycling, and the other by Stine (although Stine simply adopts the arguments made by the other defendants). Among other things, they argue that the allegations of the second amended complaint bring Stine's claim within the coverage provided by Western Heritage.
In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), "[w]e '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.'" Byers v. Intuit, Inc., 600 F.3d 286, 291 (3d Cir. 2010) (quoted case omitted). A court may consider documents attached to the complaint if they form the basis of the plaintiff's claim. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). Thus we may consider the second amended complaint in the underlying state-court action and the Western Heritage policy, attached as exhibits to Plaintiff's complaint.
A. The Pertinent Policy Language
The Western Heritage policy is a commercial general liability insurance policy providing coverage for bodily injury or property damage "that the insured becomes legally obligated to pay as damages." (Doc. 1-4, Compl., Ex. C, the Western Heritage policy, ECF p. 14).*fn2 The Declarations page lists as the "Named Insured" "Harry J. Darrah, Jr t/a Darrah's Automotive and Recy[c]ling" with an address at 535 Prospect Street, York, Pennsylvania. (Id., ECF p. 3). The policy period ran from May 9, 2004, to May 9, 2005. (Id.).
Item 4 on the Declarations page includes a description of the business as "Auto Sales/Salvage & Repair Garage." However, an endorsement, effective August 8, 2004, amended that description to "Auto Dismantling and Recycling Operations."*fn3 The endorsement is entitled "Limitation of Coverage to Designated Premises or Project." Underneath this title, the endorsement reads: "This endorsement modifies insurance provided under the following: Commercial General Liability Coverage Part." Below this language is the title "Schedule" and two boxes, one for listing "Premises" and the other for listing a "Project." The "Premises" box is empty. The "Project" box reads: "Auto Dismantling and Recycling Operation." Underneath the boxes, the endorsement reads: "If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement." The endorsement then provides:
This insurance applies only to "bodily injury", "property damage" . . . and medical expenses arising out of:
1. The ownership, maintenance or use of the premises shown in the Schedule and operations necessary or ...