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Management Recruiters of Pittsburgh-North, Inc. v. The Travelers Indemnity Co.

United States District Court, Third Circuit

January 17, 2014

MANAGEMENT RECRUITERS OF PITTSBURGH-NORTH, INC., Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.

MEMORANDUM OPINION AND ORDER OF COURT

TERRENCE F. McVERRY, District Judge.

Now pending are cross-motions for summary judgment: the MOTION FOR SUMMARY JUDGMENT (ECF No. 21) filed by Defendant The Travelers Indemnity Company of America ("Travelers"); and the MOTION FOR SUMMARY JUDGMENT (ECF No. 24) filed by Plaintiff Management Recruiters of Pittsburgh-North, Inc. ("MRI"). The motions have been thoroughly briefed (ECF Nos. 22, 25, 28, 30, 33) and the parties have thoroughly developed their respective positions regarding the Concise Statements of Material Facts ("CSMF") and have submitted numerous exhibits.[1] The motions are ripe for disposition.

Factual and Procedural Background

This case involves an insurance coverage dispute. MRI is a recruiting and placement firm located in Sewickley, Pennsylvania. At all relevant times, Travelers provided commercial general liability insurance coverage to MRI. Among other risks, the Travelers policy provides coverage of up to $150, 000.00 for losses caused by "employee dishonesty." Policy No. I-680-1410A53A-TIA-11 at pp. 5-6, 37. As defined in the Policy, "Employee Dishonesty" means only dishonest acts committed by an "employee." On November 23, 2011, MRI submitted a proof of loss to Travelers arising from the alleged "employee dishonesty" of Abigail Dowling. MRI claimed losses of: (1) $111, 000 in loss payments from clients; (2) attorneys fees of $44, 000; and (3) interest of $34, 500, for a total claimed loss of $189, 000. On November 20, 2012 - almost a year later - Travelers denied the claim. This litigation followed.[2] In the Complaint, MRI asserts claims against Travelers for breach of contract and insurer bad faith pursuant to 42 Pa.C.S.A. ยง 8371.

Travelers denied MRI's claim on the ground that Abigail Dowling was not an "employee" at the time of the alleged loss. The Policy defines the term "employee" as follows:

9. "Employee(s)"
a. Means:
(1) Any natural person:
(a) While in your service (and for 30 days after termination of service);
(b) Whom you compensate directly by salary, wages or commissions; and
(c) Whom you have the right to direct and control while performing services for you;...
b. Does not mean any agent, broker, person leased to you by a labor leasing firm, factor, commission merchant, consignee, independent contractor or representative of the same general character.

(Emphasis added).

On October 1, 2001, Abigail Dowling and MRI entered into an Account Executive Employment Agreement (Defendant Exh. 1). The Employment Agreement defines Dowling as the "Employee" and Dowling performed services for MRI as a professional recruiter. Dowling was paid a base salary plus commission, and was treated as a W-2 employee by MRI. Dowling Deposition at 23. It is undisputed that Dowling was, in fact, an employee of MRI until November 2009. The Employment Agreement contained a one-year, 100-mile ...


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