United States District Court, M.D. Pennsylvania
the Court is Plaintiff State Farm Fire and Casualty
Company's motion for summary judgment pursuant to Federal
Rule of Civil Procedure 56. (Doc. No. 14.) For the reasons
that follow, the Court will grant the motion.
present action for declaratory judgment arose out of a fire
that occurred at the home of Ralph Weidner on September 8,
2013 and a lawsuit filed in federal court on July 2, 2015.
(Doc. Nos. 1 ¶¶ 21-23; 4-1 ¶ 13; see
Doc. No. 8 ¶ 23.)
2, 2015, Unitrin Auto and Home Insurance Company, as subrogee
of Ralph Weidner, filed an action (“Underlying
Action”) against Defendant Jumper, alleging that the
September 8, 2013 house fire was caused by Defendant's
“negligent, careless and/or reckless acts and/or
omissions.” (Doc. No. 4-1 ¶¶ 17, 18; 14-3
¶¶ 17-18; 15 ¶¶ 10, 11; 18 ¶¶
10, 11.) According to the underlying complaint, Ralph Weidner
allegedly hired Defendant Jumper to investigate and repair
circuit breakers that had been tripping at Weidner's
home. (Doc. Nos. 14-3 ¶10; 15 ¶ 10; 18 ¶ 10.)
The underlying complaint alleges that: (1) Defendant Jumper
installed “larger sized circuit breakers” to
address the problem; (2) the September 8, 2013 fire
“originated in the electrical wiring” of
Weidner's home; and (3) the damage to Weidner's home
was caused by Defendant Jumper, inter alia,
“carelessly and improperly repairing the electronical
system” at Weidner's home. (Doc. No. 14-3 ¶¶
12, 13, 17; 15 ¶¶ 10, 11; 18 ¶¶ 10, 11.)
State Farm Fire and Casualty Company issued a homeowners
policy, No. 38-E5-6609-4 (“the Policy”), to
Defendant Jumper for the period between April 5, 2013 and
April 5, 2014. (Doc. Nos. 1 ¶ 8; 8 ¶ 8.) Plaintiff
has since provided Defendant a defense to the Underlying
Action pursuant to three reservation of rights
letters. (Doc. Nos. 1 ¶ 12; 8 ¶ 12.)
However, on December 11, 2015, Plaintiff filed the
above-captioned action seeking a declaratory judgment that it
owes no obligation to defend or indemnify Defendant Jumper
for claims arising out of the Underlying
Action. (Doc. No. 1 ¶¶ 14, 32, 43-44;
48-49.) First, Plaintiffs contend that the claims asserted in
the Underlying Action “do not fall within the Insuring
Agreement of the Policy” because the Underlying
Action's complaint does not allege an
“occurrence.” (Id. ¶¶ 28-32.)
Second, Plaintiffs argue that the Policy's
“business pursuits exclusion” applies to
Defendant's claim for coverage. (Id.
¶¶ 34, 36-37, 40-43.)
January 20, 2016, Defendant filed an answer to
Plaintiff's complaint for declaratory judgment. (Doc. No.
8.) Plaintiff filed a motion for summary judgment on March
29, 2016. (Doc. No. 14.) In its motion for summary judgment,
Plaintiff submits only its first argument - that “the
allegations of the Underlying Action do not constitute an
‘occurrence' under the Policy.” (Id.
¶ 25.) The motion for summary judgment has been fully
briefed and is ripe for disposition.
Rule of Civil Procedure 56(a) requires the court to render
summary judgment “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). “[T]his standard provides that the mere
existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (emphasis in
original). A factual dispute is material if it might affect
the outcome of the suit under the applicable law, and 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). Thus, where no
material fact is in dispute, the moving party need only
establish that it is entitled to judgment as a matter of law.
Anderson, 477 U.S. at 248. Conversely, where there
is a dispute as to an issue of material fact, the moving
party must establish that the factual dispute is not a
genuine one. Id.
party moving for summary judgment bears an initial burden of
identifying evidence that it believes demonstrates the
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 carried this
initial burden, “the nonmoving party must come forward
with specific facts showing that there is a genuine issue for
trial.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986) (internal quotation
marks omitted). 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).
determining whether there is a genuine issue of material
fact, the court must view the facts and all reasonable
inferences in favor of the nonmoving party. Moore v.
Tartler, 986 F.2d 682 (3d Cir. 1993); Clement v.
Consolidated Rail Corp., 963 F.2d 599, 600 (3d Cir.
1992); White v. Westinghouse Electric Co., 862 F.2d
56, 59 (3d Cir. 1988). In deciding a motion for summary
judgment, the court need not accept allegations that are
merely conclusory in nature, whether they are made in the
complaint or a sworn statement. Lujan v. Nat'l
Wildlife Fed'n, 497 U.S. 871, 888 (1990). Moreover,
the court's function is not to make credibility
determinations, weigh evidence, or draw inferences from the
facts. Anderson, 477 U.S. at 249. Rather, the court
must simply “determine whether there is a genuine issue
for trial.” Id.
motion for summary judgment, Plaintiff contends that it has
no duty to defend or indemnify Defendant because the
allegations in the Underlying Action do not constitute an
“occurrence” under the Policy. (Doc. No. 16 at
6.) Defendant responds that the Underlying Action brings a
“claim for negligent work, ” Plaintiff has an
obligation to defend Defendant for a loss caused by a fire,
and that Plaintiff's November 23, 2015 reservation of
rights letter “should be deemed untimely.” (Doc.
No. 17.) The Court first addresses Defendant's
Timeliness of Plaintiff's Reservation of Rights
urges this Court to deem Plaintiff' second reservation of
rights letter as untimely and, by extension, Plaintiff's
“non-occurrence argument” as waived.
(See Doc. No. 17 at 13-14.) Defendant argues that he
had no notice that the allegations of the Underlying Action
might not qualify as an “occurrence” until he
received the second reservation of rights letter, dated
November 23, 2015. (Id. at 13.) Defendant stresses
that more than six months passed between the commencement of
the Underlying Action and the second reservation of rights
letter. (Id.) Plaintiff responds that
Defendant's timeliness argument overlooks that the
complaint in the Underlying Action was amended on February
16, 2016 and that Plaintiff cited the “relevant
language of the Policy at issue” in its reservation of
rights letters. (Doc. No. 19 at 4-7.)
Pennsylvania law, an insurer is not estopped from denying
coverage when … the insured received a timely
reservation of rights letter.” St. Leger v. Am.
Fire & Cas. Ins. Co., 870 F.Supp. 641, 644 (E.D. Pa.
1994), aff'd, 61 F.3d 896 (3d Cir. 1995).
However, the “[f]ailure to provide timely notice of a
reservation of rights may preclude the insurer from later
denying a duty to defend and/or a duty to indemnify its
insured. When a party seeks to estop an insurer from
withdrawing from a case, the burden is on the party asserting
the estoppel claim to establish that defense by clear,
precise, and unequivocal evidence.” Transportation
Ins. Co. v. C.F. Bordo, Inc., No. 06-2386, 2009
WL 839366, at *5 (M.D. Pa. Mar. 30, 2009) (Vanaskie, J.)
(internal citation omitted).
example, in Erie Insurance Exchange v. Lobenthal,
the Superior Court of Pennsylvania concluded that an
insurer's reservation of rights letter, sent seven months
after the filing of the underlying complaint, was untimely.
114 A.3d 832, 840 (Pa. Super. Ct. 2015). In that case, the
passenger of a car - who suffered injuries in a car accident
- brought the underlying action against the driver and a
family whose daughter had hosted a party preceding the
accident. Id. at 834-35. The underlying complaint
alleged that the daughter - an additional insured under her
family's insurance policy - “encouraged the use of
controlled substances at the party” and provided the
driver in the car accident with controlled substances.
Id. at 838-89.
Erie, although the insurer was “on
notice” that the underlying “allegations fell
under the controlled substances policy exclusion, ” the
insurer did not send the second reservation of rights letter,
which first referenced the policy's controlled substances
exclusion, until seven months after the underlying complaint
was filed and three months after the disposition of
preliminary objections. Id. at 837, 839. The
Superior Court of Pennsylvania reasoned that prejudice, under
the circumstances, could be “fairly presumed, ”
[The insurer] waited to send its reservation of rights letter
until over three months had passed from disposition of its
preliminary objections and the only remaining claim related
to [the daughter's] alleged furnishing of controlled
substances, which was clearly excluded from coverage. . . .
Had [the daughter] been informed of [the insurer's]
intention to deny ...