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Selective Insurance Company of South Carolina v. Anthony Ferguson Trading As

October 23, 2012

SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, PLAINTIFF,
v.
ANTHONY FERGUSON TRADING AS FERGUSON TREE & STUMP SERVICE; DEFENDANT, LAWRENCE STEVENS, INTERVENOR DEFENDANT,
ANTHONY FERGUSON, COUNTER-CLAIMANT,
v.
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, COUNTER-DEFENDANT.



The opinion of the court was delivered by: Magistrate Judge Maureen P. Kelly

[ECF Nos. 53, 59 and 70]

OPINION

KELLY, Magistrate Judge

Pending before the Court are two motions by Selective Insurance Company ("Selective" or "Plaintiff"); first, a Motion for Leave to Amend Complaint [ECF No. 70] and second, a Motion for Summary Judgment [ECF No. 59]. Also pending is a Motion for Summary Judgment filed by Intervenor Defendant Lawrence Stevens ("Stevens" or "Intervenor").

Selective's original Complaint, filed on January 19, 2011, seeks a declaration that coverage is not afforded to Defendant Anthony Ferguson, t/a Ferguson Tree & Stump Service ("Ferguson" or "Defendant") under the terms of a comprehensive general liability policy, for injuries sustained by Stevens in an accidental shooting. [ECF No. 1]. Selective now seeks to amend its complaint to add additional policy defenses, which it asserts it could not have known were implicated until discovery was nearly complete. Selective also moves the Court for the entry of summary judgment in its favor as a matter law as to Ferguson's state law claim for bad faith claims handling. In addition, Selective moves for the entry of summary judgment in its favor as a matter of law with regard to the asserted absence of coverage under the policy for the accidental shooting. Neither Ferguson nor Stevens oppose the motion for summary judgment as to the bad faith claim; however, Stevens seeks the entry of judgment in favor of Defendants Ferguson and Stevens as to the existence of coverage under the policy for Stevens' injuries, contending that discovery conducted to dates establishes Ferguson's entitlement to coverage as a matter of law.

For the following reasons, the Motion for Leave to Amend the Complaint [ECF No. 70] is denied; Selective's Motion for Summary Judgment [ECF No. 59] is granted in part with regard to the state law bad faith claim, but is denied as to all other claims; and Steven's Motion for Summary Judgment [ECF No. 53] is denied.

I. FACTUAL AND PROCEDURAL BACKGROUND

Selective initiated this diversity action by filing a Complaint pursuant to 28 U.S.C. §§ 2201, et. seq., seeking a declaration that it does not owe coverage to its insured, Anthony Ferguson, with regard to a civil action filed against Ferguson in the Court of Common Pleas of Allegheny County, Pennsylvania (the "Stevens Complaint"). [ECF No. 1]. The lawsuit, Lawrence Stevens v. Anthony Ferguson t/d/b/a Ferguson Tree and Stump Service, arises out of injuries that Stevens sustained as a result of an alleged accidental discharge of a firearm on or about September 5, 2009, at Ferguson's residence and place of business. The Stevens Complaint alleges that in the course of repairing business equipment, Ferguson went into his house to obtain a mirror to use for the repairs. As he emerged from the house with a mirror, he also carried a .357 revolver which he believed was unloaded. The Stevens Complaint further alleges that "[a]s Mr. Ferguson negligently pointed the revolver towards Stevens, the gun accidentally fired and the bullet struck Mr. Stevens in the chest." [ECF No. 1--2, pp. 3--4]. Mr. Stevens suffered paraplegia, as well as other severe and permanent injuries, all of which are alleged to have been caused by Ferguson's negligence in handling a loaded revolver. Id.

Upon receipt of Ferguson's claim for defense and indemnification, Selective issued a reservation of rights letter, reserving its rights to deny coverage under the terms of the policy, and appointed counsel to defend Ferguson. [ECF No. 1, p. 4]. Subsequently, Selective commenced this action against Ferguson, disputing any obligation to provide coverage to indemnify or defend him under the terms of the commercial liability policy at issue.

On August 4, 2011, this Court entered a Case Management Order, requiring the filing of any amended pleadings and the joinder of any additional parties to be completed by September 30, 2011. Cross-Motions for Judgment on the Pleadings were to be filed by August 19, 2011, and discovery as to Selective's policy defenses, as well as depositions of Ferguson and Stevens were to be completed by August 31, 2011. [ECF No. 27]. On August 19, 2011, both Selective and Ferguson filed cross-motions for judgment on the pleadings [ECF Nos. 29, 31]. Ferguson's Motion for Judgment on the Pleadings [ECF No. 31] was granted in part, and the Court held that the allegations of the Complaint and the terms of the policy at issue gave rise to a duty to defend Ferguson in the underlying Stevens action. However, the Court denied both parties' cross-motions with regard to Selective's duty to indemnify, based upon the apparent existence of material issues of fact as to Ferguson's asserted business purpose in carrying the gun at the time of the accident. [ECF No. 39].

Prior to the entry of this Court's Order as to the cross-motions for judgment on the pleadings, Selective entered into an agreement with Stevens to pay him $350,000, with a potential payment of the policy limits in the event this declaratory judgment action results in a finding of coverage under the policy. [ECF No. 73, p.2].

The policy at issue provides Ferguson coverage as to business related activities: SECTION I-COVERAGES COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABLITY

1. Insuring Agreement

a. We will 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. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply....

SECTION II-WHO IS AN INSURED

1. If you are designated in the Declarations as:

a. An individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner .... [ECF No. 1-3, p. 60].

Each party asserted that coverage under the policy could be determined solely by resolving whether Ferguson's handling of the weapon was related to his business operations. As summarized in this Court's earlier Opinion:

Selective contends that in purchasing the subject policy, Ferguson represented that he was seeking coverage for his lawn maintenance and stump removal business. Because the stump removal business "does not involve the sale, servicing or handling of handguns, ..." Selective argues, "Ferguson's utilization of the handgun on the date of the accident has no relationship to the conduct of his business." Therefore, according to Selective, Ferguson is not "an insured" as defined by the policy and no coverage is due for the claim. [ECF No. 1, pp. 5, 6]. Ferguson counters, and moves for Judgment on the Pleadings, asserting Selective owes him a duty to defend and a duty to indemnify because he was carrying both the gun and the mirror to repair business equipment at the time the weapon discharged. Thus, according to Ferguson, he "was clearly an insured ... in that he was engaged in the conduct of his business at ...


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