The opinion of the court was delivered by: (Chief Judge Kane)
Currently pending before the Court are Plaintiff State Automobile Mutual Insurance Company's motion for summary judgment (Doc. No. 33), Defendant Clinton Bonson's cross-motion for summary judgment (Doc. No. 36), and Defenant Lucchesi's cross-motion for summary judgment (Doc. No. 40).*fn1 For the reasons stated more fully herein, the Court will grant State Auto's motion and deny Mr. Bonson's and Mr. Lucchesi's motions and enter judgment in favor of State Auto.
The above-captioned action was instituted by Plaintiff State Auto to determine its rights and obligations pursuant to a general liability insurance policy it had issued to Defendants Scott Lucchesi and Champs Sports Bar & Grill regarding a lawsuit filed by Defendant Bonson in the Court of Common Pleas of Centre County, Pennsylvania, against Defendants Lucchesi, Champs, Klett, and Spencer. (Doc. No. 33-2 ¶ 1; Doc. No. 38 ¶ 1.) According to Mr. Bonson's complaint, on the evening of October 24, 2009, Mr. Bonson was a patron at Champs where he was served alcoholic beverages by Lucchesi, Klett, and Spencer while he was visibly intoxicated. (Doc. No. 36-3 ¶¶ 27-29.) Mr. Bonson further alleges that at some point in the evening of October 24, 2009, or in the early morning of October 25, 2009, Champs, acting through Lucchesi, Klett, and Spencer, permitted Mr. Bonson to leave the establishment, whereupon Mr. Bonson attempted to cross North Atherton Street, the street on which the establishment is located. (Id. ¶¶ 30-34.) While attempting to cross the street, Mr. Bonson was struck by a car, causing him to suffer severe injuries. (Id. ¶¶ 35-37.) Among other things, Mr. Bonson's state court complaint alleges that Champs, Lucchesi, Klett, and Spencer, were negligent in permitting him to leave the premises while visibly intoxicated, failing to administer programs designed to identify and assist intoxicated patrons, and failing to ensure that he left the establishment with a competent individual. (Id. ¶ 43.)
The insurance policy belonging to Champs, bearing policy number PBP 940582714, which is at issue in the present declaratory judgment action, has an effective date of May 24, 2009. (Doc. No. 33-2 ¶ 3; Doc. No. 38 ¶ 3.) Under the terms of the policy, State Auto agrees to "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." (Doc. No. 33-2 ¶ 4; Doc. No. 38 ¶ 4.) The policy further explains that the policy applies to bodily injury and property damage if "the 'bodily injury' or 'property damage' is caused by an 'occurrence' that takes place in the 'coverage territory.'" (Id.) Of particular relevance to the present case, the policy contains an exclusion for liquor liability as follows:
c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of:
(1) Causing or contributing to the intoxication of any person;
(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
This exclusion applies only if you are in the bus iness of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. (Id.) The parties have filed cross-motions for summary judgment over the issue of whether the liquor liability exclusion relieves State Auto of the duty to defend and indemnify Lucchesi, Champs, Klett, and Spencer with respect to the claims raised against them in Mr. Bonson's state court action.
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment is warranted "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." Fed. R. Civ. P. 56(a). A factual dispute is material if it might affect the outcome of the suit under the applicable law, and it is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). At summary judgment, the inquiry is whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law. Id. at 251-52. In making this determination, the Court must "consider all evidence in the light most favorable to the party opposing the motion." A.W., 486 F.3d at 794.
The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, "the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument." Berckeley Inv. Grp. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006); accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial," summary judgment is warranted. Celotex, 477 U.S. at 322. With respect to the sufficiency of the evidence that the non-moving party must provide, a court should grant summary judgment where the non-movant's evidence is merely colorable, conclusory, or speculative. Anderson, 477 U.S. at 249-50. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id. at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Further, a party may not defeat a motion for summary judgment with evidence that would not be admissible at trial. Pamintuan v. Nanticoke Mem'l Hosp., 192 F.3d 378, 387 (3d Cir. 1999).
In its motion for summary judgment, State Auto seeks a declaration that it need not defend or indemnify Champs, Lucchesi, Klett, or Spencer in Mr. Bonson's suit against them. Mr. Bonson's motion for summary judgment seeks a declaration that State Auto does have a duty to defend and indemnify Champs, Lucchesi, Klett, and Spencer. Mr. Lucchesi's cross-motion is identical in all material respects to Mr. Bonson's cross-motion. Because the motions for summary judgment concern identical issues and there are no disputes of material fact, the Court will address all three motions concurrently.
A. Interpretation of Insurance Contracts
The interpretation of an insurance contract is a question that is generally resolved by the court.*fn3 Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 290-91 (Pa. 2007) (citations omitted). Insurance policies are contracts, and the interpretation of insurance policies are governed by the rules of contract law. Am. & Foreign Ins. Co. v. Jerry's Sport Ctr., Inc. (Jerry's Sport Center II), 2 A.3d 526, 540 (Pa. 2010). Where there is ambiguity in the policy, the ambiguity should be resolved in favor of the insured. Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 893 (Pa. 2006) (reasoning that because the contract's prime purpose is indemnification of the insured and because the insurer drafts the policy ambiguity should be construed in favor of the insured). Further, where "an ...