United States District Court, E.D. Pennsylvania
NATIONAL RETAIL SYSTEMS, INC., et al.
MARKEL INSURANCE COMPANY
BARCLAY SURRICK, J.
before the Court in this insurance coverage dispute is
Defendant Markel Insurance Company's
(“Markel”) Motion to Compel Supplemental
Discovery Responses (ECF No. 32). For the following reasons,
the Motion will be granted in part and denied in part.
FACTUAL AND PROCEDURAL HISTORY []
parties' dispute involves a Commercial Crime Policy
issued by Markel to Plaintiff National Retail Systems, Inc.
(“National Retail”) as the Named Insured.
(Policy, Declarations, ECF No. 1-1.) Plaintiff Keystone
Freight Corporation (“Keystone”) and a number of
other entities are additional insureds under the Policy
pursuant to Endorsement 1. (Policy, Endmt. 1.) Among the
Policy's Insuring Agreements is one for Employee Theft,
which provides, in relevant part:
[Markel] will pay for loss of or damage to
“money”, “securities” and
“other property” resulting directly from
“theft” committed by an “employee”,
whether identified or not, acting alone or in collusion with
(Policy § A.1.)
allege that during a several month period in 2015 and 2016,
two employees of Keystone, Richard Joseph Allen
(“Allen”) and Brian Keith Allison
(“Allison”), acting under false pretenses and
without permission, sold approximately seventy trailers and
miscellaneous scrap metal owned by Keystone Freight and kept
the proceeds. (Compl. ¶¶ 13-17, ECF No. 1.)
Plaintiffs allege that Allen's and Allison's theft
caused National Retail and Keystone to sustain a loss in
excess of $75, 000. (Compl. ¶ 18.) National Retail
reported the theft to the authorities, and Allen and Allison
subsequently pled guilty to the resulting charges.
(Id. ¶¶ 19-21.)
about April 26, 2016, National Retail notified Markel of the
loss and sought coverage under the Policy. (Id.
¶¶ 22-24.) By letter dated July 21, 2006, Markel
denied coverage based on the following Policy exclusion (the
“Prior Act Exclusion”):
1. This Policy does not cover:
* * *
b. Acts Committed By Your Employees Learned Of By You Prior
To The Policy Period.
Loss caused by an “employee” if the
“employee” had also committed “theft”
or any other dishonest act prior to the effective date of
this Policy and you or any of your partners,
“members”, “managers”, officers,
directors or trustees, not in collusion with the
“employee”, learned of such “theft”
or dishonest act prior to the Policy Period shown in the
(Disclaimer Ltr., ECF No. 1-4; Policy § D.1.b.) In its
denial letter, Markel stated that the Prior Act Exclusion
bars coverage because:
[T]he employee involved in the loss, Brian Allison had a
criminal record prior to this loss. The public criminal
records for Brian Allison show a previous felony and two
misdemeanors. He also committed a dishonest act while in your
employment in 2004.
(Disclaimer Ltr. 2.)
February 14, 2017, Plaintiffs filed a Complaint against
Markel alleging that its denial of coverage constitutes a
breach of contract. (Compl. ¶¶ 31-35.) On March 7,
2017, Markel filed an Answer to the Complaint (ECF No. 3). On
March 24, 2017, Markel filed a Motion requesting a transfer
of venue to the United States District Court for the District