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American Fire and Casualty Co. v. Normandy Development, L.P.

United States District Court, E.D. Pennsylvania

September 5, 2019

AMERICAN FIRE AND CASUALTY COMPANY, THE OHIO CASUALTY INSURANCE COMPANY
v.
NORMANDY DEVELOPMENT, L.P., et al.

          MEMORANDUM RE: MOTION FOR JUDGMENT ON THE PLEADINGS

          Baylson, J.

         I. Introduction

         In this declaratory judgment action, Plaintiffs American Fire and Casualty Company (“American Fire”) and The Ohio Casualty Insurance Company (“Ohio Casualty”) seek a declaration regarding their rights and obligations under the insurance policies they issued to Defendants Normandy Development, L.P. (“Normandy”) and Hansen Properties, Inc. (“Hansen”). This matter is related to an ongoing personal injury action in Pennsylvania state court (“Underlying Action”) brought by Norman Venezia (“Venezia”) against Defendants Normandy, Hansen, and Ali Mohamad Ali (“Ali”), an employee of Normandy and/or Hansen. The Underlying Action, which does not name American Fire or Ohio Casualty as a defendant, arose from an automobile accident involving Venezia and Ali, who was allegedly operating a vehicle owned by Normandy and/or Hansen.

         Presently before this Court is Plaintiffs' Motion for Judgment on the Pleadings under Federal Rule of Civil Procedure 12(c), which seeks a declaratory judgment that Plaintiffs do not have a duty to defend or indemnify Normandy or Hansen in the Underlying Action.

         For the reasons discussed below, Plaintiffs' Motion is GRANTED.

         II. Factual Background

         A. Parties to the Federal Action

         Plaintiffs American Fire and Ohio Casualty are companies incorporated in New Hampshire with their principal places of business in Massachusetts. (ECF 1, “Compl.” ¶¶ 1-2.) Defendant Normandy is a limited partnership organized under the laws of Pennsylvania with a principal place of business in Blue Bell, Pennsylvania. (Id. ¶ 3.) Defendant Normandy is a corporation incorporated in Pennsylvania that also has its principal place of business in Blue Bell, Pennsylvania. (Id. ¶ 4.) Defendants Ali and Venezia are both citizens of Pennsylvania who reside in Norristown, Pennsylvania. (Id. ¶¶ 5-6.)

         B. Underlying Action

         The events that give rise to this declaratory judgment action are the subject of a complaint in the Underlying Action filed by Venezia against Ali, Normandy, and Hansen in the Court of Common Pleas of Philadelphia County on November 15, 2018 (ECF 1-1, Compl. Ex. A, “Underlying Compl.”). The Underlying Complaint alleges that Normandy and/or Hansen entrusted Ali, an employee, with a 2014 Dodge Ram (“Normandy Vehicle”) that they owned. (Id. ¶ 6.) At approximately 3:23 PM on December 12, 2016, Ali was driving the Normandy Vehicle westbound on Welsh Road near the intersection of Route 202 in Montgomery County. (Id. ¶¶ 7- 8.) While driving erratically, speeding, and operating his cellphone, Ali attempted to pass the vehicle driven by Venezia by entering the eastbound lanes of Welsh Road, and he slammed into the rear of Venezia's vehicle. (Id. ¶¶ 8-9.)

         The Underlying Complaint brings a negligence claim against Ali and alleges that Normandy and Hansen are liable for negligent entrustment and negligent hiring and/or supervision/retention. The Underlying Complaint alleges that Ali was “acting as an agent, servant and/or employee” of Normandy and Hansen and was operating the Normandy Vehicle with their “express and implied knowledge, consent, and permission.” (Id. ¶¶ 10-11.) The Underlying Complaint further alleges that Normandy and Hansen “knew or should have known that [Ali] was excluded as a permissible driver of the Normandy Vehicle.” (Id. ¶¶ 12-13.) Specifically, Venezia alleges that Normandy and Hansen knew that Ali “was on a list of drivers who were not permitted to drive company vehicles due to his poor driving history, including but not limited to [Ali's] prior alcohol abuse, prior propensity to drink and drive and/or poor driving history including traffic violations and/or accidents, and/or his reputation for reckless driving and/or propensities as a motor vehicle operator.” (Id. ¶ 25.) Venezia alleges that he suffered serious injuries, incurred medical expenses, and suffered loss of earnings “[a]s a direct and proximate result of the accident.” (Id. ¶¶ 15-19.)

         C. American Fire Policy

         American Fire issued a Business Auto Coverage Form (“American Fire Policy”) to Normandy and Hansen[1] that was effective from June 6, 2016 to June 6, 2017. (ECF 1-2, Compl. Ex. B, “American Fire Policy.”) Section II - Liability Coverage provides, in relevant part:

A. Coverage
We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto.” . . . .
We have the right and duty to defend any “insured” against a “suit” asking for such damages . . . . However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” or “property damage” . . . to which the insurance does not apply. . . .

         (American Fire Policy ¶ II(A).) The American Fire Policy sets forth the following with respect to the definition of “insured”:

1. Who Is An Insured:
The following are “insureds”:
a. You for any covered “auto.”
b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:
(1) The owner or anyone else from whom you hire or borrow a covered “auto.”. . .
(2) Your “employee” if the covered “auto” is owned by that “employee” or a member of his or her household.
(3) Someone using a covered “auto” while he or she is working in a business of selling, servicing, repairing, parking or storing “autos” unless that business is yours.
(4) Anyone other than your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their “employees”, while moving property to or from a covered “auto”.
(5) A partner (if you are a partnership), or a member (if you are a limited liability company), for a covered “auto” owned by him or her or a member of his or her household.
c. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.

(Id. ¶ II(A)(1).) A “Business Auto Coverage Enhancement Endorsement” amended the definition of “insured” to include:

2. EMPLOYEES AS INSUREDS
g. Any “employee” of yours while operating an “auto” hired or borrowed under a written contract or agreement in that “employee's” name, with your permission, while performing duties related to the conduct of your business and within the scope of their employment. Insurance provided by this endorsement ...

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