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The Travelers Home and Marine insurance Co. v. Stahley

United States District Court, E.D. Pennsylvania

March 6, 2017

THE TRAVELERS HOME AND MARINE INSURANCE COMPANY, Plaintiff,
v.
HEATHER STAHLEY, et al., Defendants.

          MEMORANDUM OPINION

          Rufe, J.

         I. INTRODUCTION

         Before the Court is the motion for summary judgment of Plaintiff The Travelers Home And Marine Insurance Company (“Travelers”), which seeks a declaration that it does not have a duty under a homeowner's Policy to defend or indemnify Defendants Brian, Heather, and Tristan Stahley in a state action. For the reasons that follow, the motion will be granted.

         II. FACTUAL AND PROCEDURAL HISTORY

         A. Julianne Siller's Murder

         The material facts in this case are undisputed and tragic. On May 25, 2013, Tristan Stahley, who was sixteen years old, invited his girlfriend Julianne Siller to his parents' home in Montgomery County, Pennsylvania. At about 8:00 p.m., Tristan and Julianne engaged in a loud verbal altercation, which continued as they drove away from the house. Shortly thereafter, Tristan killed Julianne by stabbing her repeatedly. Before the murder, Tristan had a well-documented history of mental health and substance abuse issues, which resulted in a pattern of behavioral and disciplinary problems.[1] On September 29, 2014, Tristan was convicted of first- degree murder after a bench trial in the Montgomery County Court of Common Pleas, and he was sentenced to life imprisonment on December 17, 2014.[2]

         B. The Underlying Civil Action

         On May 18, 2015, Gary Siller, Julianne's father and the administrator of her estate, filed a civil complaint seeking compensatory and punitive damages against Tristan and Tristan's parents, Brian and Heather Stahley, in the Montgomery County Court of Common Pleas (the “Underlying Action”).[3] The underlying complaint asserts claims for wrongful death and survival based in part on Brian and Heather Stahley's alleged failure to supervise and control Tristan, as well as their alleged failure to warn Julianne of their son's mental health issues.[4] More specifically, Gary Siller claims Brian and Heather allowed Tristan to keep various knives and swords at home, including the murder weapon, and failed to prevent Tristan from drinking alcohol at their home on the night of the murder, thereby subjecting Julianne to a high likelihood of serious bodily harm.[5] Gary Siller and the Stahleys (“Defendants”) contend that Travelers has a duty to defend and indemnify the Stahleys in the Underlying Action.[6]

         C. The Homeowner's Insurance Policy

         Travelers seeks a declaration that, based on the language of a homeowner's insurance Policy issued to Brian and Heather Stahley, it does not have a duty to defend or indemnify them.[7] The parties agree the Policy was in effect at the time of the murder.[8]

         The Policy requires Travelers to defend and indemnify “an ‘insured' for damages because of ‘bodily injury' or ‘property damage' caused by an ‘occurrence' to which this coverage applies . . . .”[9] An “insured” is defined as “you [Brian and Heather Stahley] and residents of your household who are (a) your relatives; or (b) other persons under the age of 21 and in the care of any person named above.”[10] An “occurrence” is defined as an “accident . . . which results, during the policy period, in ‘bodily injury' or ‘property damage.'”[11] The policy expressly excludes from coverage “‘bodily injury' or ‘property damage' which is expected or intended by an “insured.'”[12] The Policy also contains a “severability clause, ” which states that the insurance policy “applies separately to each ‘insured.'”[13]

         III. STANDARD OF REVIEW

         Upon motion of a party, summary judgment may be granted when, “after considering the record evidence in the light most favorable to the nonmoving party, no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.”[14] A dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party.[15] A factual dispute is “material” only if it might affect the outcome of the suit under governing law.[16] To establish a genuine issue of material fact, the non-moving party must introduce evidence beyond the mere pleadings to create an issue of material fact on “an element essential to that party's case, and on which that party will bear the burden of proof at trial.”[17]

         Evidence that is “merely colorable” or is “not significantly probative, ” does not raise a genuine issue of material fact.[18] Therefore, if, after making all reasonable inferences in favor of the non-moving party, the court determines that there is no genuine dispute as to any material fact, summary judgment is appropriate.[19]

         IV. DISCUSSION

         Travelers instituted this action under the Declaratory Judgment Act, seeking a declaration that it has no obligation to defend or indemnify the Stahleys in the Underlying Action.[20] The principal issue before the Court is whether under Pennsylvania law, a clause excluding intentional acts by “an insured” bars innocent co-insureds from coverage, or only the insured who committed the intentional act.

         A. Applicable Insurance Contract Interpretation Principles

         The interpretation of an insurance policy is a question of law that may be decided on a motion for summary judgment.[21] In determining the scope of insurance coverage, “a court should ascertain the intent of the parties as manifested by the language of the policy.”[22] When the language is clear and unambiguous, it should be given its “plain and ordinary meaning”[23] and the “court must give effect to every word that can be given effect.”[24] However, where a policy provision is ambiguous, ambiguities should be construed against the insurance company.[25] A provision is considered ambiguous if “reasonable persons on considering it in the context of the entire policy could honestly differ as to its meaning.”[26]

         Under Pennsylvania law, an insurer's duty to defend is distinct from, yet intertwined with, an insurer's duty to indemnify.[27] A duty to defend arises when claims asserted by the injured party in the underlying complaint “may potentially” come within the policy coverage.[28]To that end, a court must examine “only those factual allegations made within the four corners” of the underlying complaint. If “the complaint on its face states a claim to which the policy potentially applies, the insurer must defend.”[29] An insurer's duty to indemnify is more limited.[30]It arises “only when the insured is determined to be liable for damages within the coverage of the policy.”[31] Thus, if a court determines that the insurer has no duty to defend in an underlying action, judgment in the insurer's favor with regard to the duty to indemnify is also appropriate.[32]

         B. Scope of the Term “Occurrence”

         A threshold issue is whether the circumstances resulting in Julianne's death constituted an “occurrence” within the meaning of the Policy. As noted, “occurrence” is defined in the Policy as an “accident . . . which results, during the policy period, in ‘bodily injury' or ‘property damage.'”[33] Travelers contends that, because the murder was intentional, this incident, including any negligence that allowed it to occur, falls outside the scope of an “occurrence.”[34]

         It is well-settled in Pennsylvania that an intentional act, such as the murder itself, may not be considered an “occurrence” for insurance purposes.[35] However, in Donegal Mutual Insurance Co. v. Baumhammers, [36] the Pennsylvania Supreme Court determined that the alleged negligence of parents related to their son's intentional and criminal actions may constitute an “occurrence, ” because from the parents' perspective, “[the victims'] injuries were caused by an event so unexpected, undesigned and fortuitous” as to qualify as accidental.[37] Consequently, the court held that Pennsylvania law required the insurer to defend the parents against claims of negligence, “even where that alleged negligence may have led to the intentional acts of a third party.”[38] Thus, the alleged negligence of Brian and Heather Stahley constitutes an “occurrence” within the meaning of the Policy.

         C. Effect of the Intentional Act Exclusion

         Even though Brian and Heather Stahley's alleged negligence constitutes an “occurrence, ” the intentional act exclusion in the Policy bars coverage. The intentional act exclusion states:

[Personal Liability] coverage [does] not apply to “bodily injury” or “property damage”:
1. Which is expected or intended by an “insured” even if the resulting “bodily injury” or “property damage”:
a. Is of different kind, quality or degree than initially expected or intended; or
b. Is sustained by a different person, entity, real or personal property than initially expected or intended.[39]

         When an insurer seeks to deny coverage based on an exclusion, it bears the burden of demonstrating that the exclusion applies.[40] Travelers contends that because the exclusion applies where the bodily injury results from the intentional act of “an insured” under the Policy, and Tristan undoubtedly committed an intentional act, the exclusion bars coverage of all insureds.[41]Defendants argue that the intentional act exclusion does not apply to Brian and Heather Stahley because the use of “an insured” makes the provision applicable only to Tristan, and therefore does not preclude his parents from defense and indemnification.[42]

         Courts in Pennsylvania examine the terms of the contract to determine the nature of the coverage provided.[43] Whether the intentional act of one co-insured will also preclude coverage of innocent co-insureds hinges upon the exclusionary language used in the policy.[44] If the language clearly establishes that the obligations of the insureds are joint, then the “prohibited acts of one insured [will] bar all others from recovering.”[45] However, if after examination of the policy, the court cannot determine whether the obligations of the co-insureds are joint or several, the ambiguity must be resolved in favor of coverage for the insureds, finding the obligations separate.[46] This determination often turns on whether the exclusionary provision applies to “the insured, ” “an insured, ” or “any insured.”[47]

         Under the Policy here, the intentional act exclusion applies to bodily injury expected or intended by “an insured.” Pennsylvania courts have interpreted provisions applying to “an insured” as having the same exclusionary effect as provisions referring to “any insured.”[48] In McAllister v. Millville Mutual Insurance Co., [49] the Pennsylvania Superior Court considered the effect of an intentional act exclusion that precluded coverage for “an act committed by or at the direction of an insured and with the intent to cause a loss.”[50] The policy in McAllister covered a house that was destroyed by a fire that one of the named insureds intentionally set. The insurance company claimed that the wording of the exclusion clearly and unambiguously precluded recovery by the other innocent co-insureds.[51] In reversing the trial court, the Superior Court agreed with the insurer, and ...


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