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Selective Insurance Company of South Carolina v. Lower Providence Township

United States District Court, Third Circuit

June 26, 2013




Currently pending before the Court are the Cross-Motions for Summary Judgment by both Defendant Lower Providence Township and Plaintiff Selective Insurance Company of South Carolina. For the following reasons, Defendant Lower Providence Township's Motion is granted and Plaintiff Selective Insurance Company's Motion is denied.


On March 5, 2010, John Roberto and his wife Patricia Roberto filed a complaint against Lower Providence Township, Pennsylvania Department of Transportation and the Commonwealth of Pennsylvania, Department of General Services in Montgomery County Court of Common Pleas. (Stipulation of Facts ("Stipulation") ¶ 1, April 19, 2013.) Thereafter, on August 12, 2010, the Robertos filed an Amended Complaint alleging that, on July 22, 2008, Mr. Roberto was "walking on the sidewalk and/or property area, of Peacock Drive, in Lower Providence Township, when he stepped off the curb and onto the street, twisting his left foot as a result of a dangerous condition of a hole, sink hole, depression, of the street and/or property area of the aforesaid address causing the Plaintiff to fall into the hole and sustain injuries and other loss hereinafter set forth." (Id. ¶¶ 2-3.) Mr. Roberto claimed to suffer severe injuries to his left foot and ankle and alleged that, as a result, he experienced severe pain and suffering, mental anguish, an inability to attend to usual duties and occupation, and financial loss and detriment. (Id. ¶¶ 4, 6.) Mrs. Roberto further alleged a loss of consortium resulting from her husband's injuries. (Id. ¶ 7.) At the time of this incident, Mr. Roberto was an employee of Defendant Lawn Rangers, Inc. ("Lawn Rangers") and was working in the course and scope of his employment with Lawn Rangers. (Id. ¶ 5.) The amended complaint in the Roberto litigation ("Roberto litigation") asserted that the accident was proximately caused by the negligence of Defendants, including the creation of dangerous conditions on the property, failing to warn Plaintiff, allowing the dangerous condition to remain, failing to protect, failing to properly supervise, failing to adequately inspect, and failing to warn pedestrians of the defective condition. (Id. ¶¶ 8-9.) Lawn Rangers was not named as a defendant in that action. (Id. ¶ 10.)

On August 23, 2011, Defendant Lower Providence Township (the "Township"), having been given leave of court, filed a joinder complaint ("Joinder Complaint") joining Lawn Rangers as an additional Defendant in the Roberto litigation under a theory of breach of contract. Underlying this cause of action was the fact that Lawn Rangers and the Township had previously entered into an Agreement (the "Agreement") to perform landscaping services within Lower Providence Township and specifically in the area around Peacock Drive where the alleged accident occurred. (Id. ¶¶ 11-12.) Lawn Rangers agreed to indemnify the Township pursuant to the following provision:

The Contractor [Lawn Rangers] shall, at all times, indemnify and save harmless the Owner [Lower Providence Township]... of and from all claims of whatsoever nature, including without limitation claims which may be made by any employees of the Contractor [or] by any employees of any Subcontractor to whom the Contractor may have let the performance of any part of the work embraced by this Contract, and the contractor will appear for and defend the Owner... against any and all such claims.

(Id. ¶ 14.) Under the Agreement, Lawn Rangers was also required to obtain insurance coverage for the benefit of Lower Providence Township as follows:

Each Insurance policy required by this contract, excepting policies for workers compensation/employer's liability shall contain the following clauses:
"The owner [Lower Providence Township] and engineer, their officials, employees, and volunteers are added as additional insureds as respects operations and activities of, or on behalf of the named insured [Lawn Rangers], performed under the contract with the owner."
"It is agreed that insurance maintained by owner [Lower Providence Township] and engineer shall apply in excess of an not contribute with insurance provided by this policy."

(Id. ¶ 15.)

Plaintiff Selective Insurance Company of South Carolina ("Selective") afforded coverage to Lawn Rangers under Commercial General Coverage Policy S 1312035 (the "Policy"). (Id. ¶ 16.) This Policy was in effect during the time period March 15, 2008 through March 15, 2009. (Id. ¶ 17.) The Policy provided limits of liability in the amount of $1, 000, 000 per occurrence, $3, 000, 000 in the aggregate. (Id. ¶ 18.) A Certificate of Insurance, dated March 4, 2008, was issued to the Township as the Certificate Holder, identifying the Policy as having been issued to Lawn Rangers, effective March 15, 2008 to March 15, 2009, and providing that the Township was "added as additional insured" under the Policy "as respects operations and activities of or on behalf of, the Named Insured performed under contract with the Certificate Holder." (Id. ¶ 19.) The Certificate went on to state that, "It is agreed that insurance maintained by the Certificate Holder and its Engineer shall apply in excess of and not contribute with the General Liability insurance provided by the Named Insured." (Id.)

Pursuant to the provisions of the Policy, an "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Id. ¶ 20.) The parties in this case agree that Mr. Roberto's alleged damages arose from an "occurrence" as so defined, and that his injuries arose out of and in the course of his employment with Lawn Rangers and while he was performing duties related to the Lawn Rangers Agreement with the Township. (Id. ¶¶ 21-23.)

The Policy contains several important provisions that are at issue in this case. First, the "Employer's Liability" exclusion in the Policy bars coverage for:

"Bodily injury" to:
(1) An "employee" of the insured arising out of and in the course of:
(a) Employment by the insured; or
(b) Performing the duties related to the conduct of the insured's business or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of Paragraph (1) above.
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
This exclusion does not apply to liability assumed by the insured under an "insured contract."

(Id. ¶ 24.) An "insured contract" is defined in the Policy as:

f. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

(Id. ¶ 25.) The Policy also contains the following Contractual Liability exclusion, which provides.

"Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(2) Assumed in a contract or agreement that is an "insured contract" provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement. Solely for the purposes of liability assumed in an "insured contract", reasonable attorney fees and necessary litigation expenses incurred by or for a party other than expenses incurred by or for a party other than the insured are deemed to be damages because of "bodily injury" or "property damage", provided:
(a) Liability to such party for, or for the cost of that party's defense has also been assumed in the same "insured contract"; and
(b) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in damages to which this insurance applies are alleged.

(Id. ¶ 26.) In addition, the Separation of Insureds provision in the Policy states that the terms of the Policy "appl[y]... [s]eparately to each insured against whom claim is made or suit' is brought." (Id. ¶ 27.) Finally, the "Elite Pac-General Liability Extension" amends the definition of "insured" in the policy as follows:

Blanket Additional Insureds - Broad Form
Vendors - As Required by Contract
WHO IS AN INSURED is amended to include as an additional insured any person or organization with whom you have agreed in writing in a contract, agreement or permit that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect ...

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