United States District Court, M.D. Pennsylvania
Carlson, Magistrate Judge
D. MARIANI, UNITED STATES DISTRICT JUDGE
INTRODUCTION AND PROCEDURAL HISTORY
before the Court is a Report and Recommendation
("R&R") (Doc. 17) by Magistrate Judge Martin C.
Carlson in which he recommends that the Motion of Defendant,
Liberty Mutual Fire Insurance Company, to Dismiss the
Complaint (Doc. 6), be granted (Doc. 17 at 17). The Complaint
at issue is a declaratory judgment action in which
Plaintiffs, who are also the plaintiffs in a state court
action, seek a declaration that Defendant Liberty Mutual Fire
Insurance Company ("Liberty Mutual") has a duty to
defend and indemnify the defendants in the state court action
who were insured by Liberty Mutual at the relevant time.
(Doc. 2 at 4-12.) Magistrate Judge Carlson's
recommendation is based on his conclusion that Defendant has
no duty to defend or indemnify the insureds under the policy
at issue based on both the policy's general liability
coverage provisions and the sexual molestation exclusion
contained in the policy. (Doc. 17 at 9-16.)
District Court may "designate a magistrate judge to
conduct hearings, including evidentiary hearings, and to
submit to a judge of the court proposed findings of fact and
recommendations for the disposition" of certain matters
pending before the Court. 28 U.S.C. § 636(b)(1)(B). If a
party timely and properly files a written objection to a
Magistrate Judge's Report and Recommendation, the
District Court "shall make a cte novo
determination of those portions of the report or specified
proposed findings or recommendations to which objection is
made." Id. at § 636(b)(1)(C); see
also Fed. R. Civ. P. 72(b)(3); M.D. Pa. Local Rule 72.3;
Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011).
"If a party does not object timely to a magistrate
judge's report and recommendation, the party may lose its
right to cfe novo review by the district
court." EEOC v. City of Long Branch, 866 F.3d
93, 99-100 (3d Cir. 2017). However, "because a district
court must take some action for a report and recommendation
to become a final order and because the authority and the
responsibility to make an informed, final determination
remains with the judge, even absent objections to the report
and recommendation, a district court should afford some level
of review to dispositive legal issues raised by the
report." Id. at 100 (internal citations and
quotation marks omitted).
timely filed objections to the R&R (Doc. 18) and a brief
in support of the objections (Doc. 19). Defendant filed a
response to the objections (Doc. 20), and Plaintiffs filed a
reply (Doc. 21). Therefore, this matter is ripe for
conducted the required Gfe novo review, the Court
agrees with the R&R's conclusion that the Motion of
Defendant, Liberty Mutual Fire Insurance Company, to Dismiss
the Complaint (Doc. 6), should be granted. However, because
the Court adds to the analysis set out in the R&R, the
Court will adopt the R&R as modified.
Factual and Procedural Background
accordance with the standard of review for a motion to
dismiss, the Court relies primarily on Plaintiffs'
recitation of facts contained in their brief in opposition to
the pending motion (Doc. 9 at 6-8). The factual assertions in
Plaintiffs' brief reference those contained in their
complaint in the underlying state court action. (Id.
at 7-8.) Reference to the underlying state court complaint is
appropriate because "[a] carrier's duty to defend
and indemnify an insured in a suit brought by a third party
depends upon a determination of whether the third party's
complaint triggers coverage," Mutual Benefit
Insurance Co. v. Haver, 555 Pa. 534, 725 A.2d 743, 745
Plaintiffs initiated the instant action on June 29, 2018, by
filing a Declaratory Judgment Complaint in the Court of
Common Pleas of Lackawanna County against Defendant. (Doc.
2.) Plaintiffs state that they have filed this Declaratory
seeking judgment from the Court that Defendant has a duty to
defend D.H. and minor N.H. in the action brought against them
filed to term number 16-CV-9198 in the Court of Common Pleas
of Monroe County. Plaintiffs are interested parties and thus
necessary parties to the subject declaratory judgment action.
(Doc. 9 at 6-7.)
30, 2018, Defendant filed a Notice of Removal to the United
States District Court for the Middle District of Pennsylvania
based on diversity jurisdiction. (Doc. 1.) On August 1, 2018,
Defendant filed the Motion of Defendant, Liberty Mutual Fire
Insurance Company, to Dismiss the Complaint (Doc. 6) and
supporting brief (Doc. 7), asserting that the underlying
Monroe County complaint shows that it has no duty to defend
or indemnify the defendants in that action.
their responsive brief (Doc. 9), Plaintiffs assert that
[t]he underlying action arises out of serious injuries
sustained by Plaintiff John Doe, 1, a minor, an incident that
occurred on or about June 27, 2015. See a true and
correct copy of the December 9, 2016 Complaint hereto as
"Exhibit B," at ¶4. On that date, John Doe 1
was visiting minor N.H. at 1256 Chateau Drive, 4b, East
Stroudsburg, PA 18301, which was the residence owned by minor
N.H.'s mother D.H.. Id. On the aforementioned
date and at all times pertinent hereto, John Doe 1 and [N.H.]
were under the supervision and control of D.H.. Id.,
at ¶5. On that date, while John Doe 1 was visiting with
minor N.H., minor N.H. sexually abused John Doe 1, who was
five (5) years old at the time, causing substantial harm,
both mental and physical, to John Doe 1. Id., at
¶6. Minor Plaintiff John Doe 1 was too young to have
given any consent and minor N.H.'s abuse was in fact
unwanted and has caused substantial harm to Minor Plaintiff
John Doe 1. Id., at ¶7. Minor N.H. also forced
John Doe 1 to watch pornographic videos. Id., at
¶8. As a result of the incident, John Doe 1, has
suffered great emotional distress resulting in anxiety,
self-aggression, stomachaches, decreased appetite, sleep
disruption, and shock to his nerves and nervous system, all
of which caused him, continue to cause him and will/may cause
him for an indefinite time in the future, great pain, agony
and suffering, both physical and mental. Id., at
On December 9, 2016, Plaintiffs filed the underlying
Complaint against minor N.H. and his mother D.H. in the Court
of Common Pleas of Monroe County, docketed to the term number
16-CV-9198. The Complaint alleges three (3) counts of
negligence, three (3) counts of battery, three (3) counts of
negligent infliction of emotion distress and three (3) counts
of punitive damages. Id. The Complaint alleges that
Plaintiff John Doe 1 suffered serious injuries arising out of
the acts of D.H. and minor N.H. occurring at their household.
Id., at ¶¶9-13. Specifically, the
Complaint alleges that Plaintiff John Doe 1 suffered great
emotional distress resulting in anxiety, self-aggression,
stomachaches, decreased appetite, sleep disruption, and shock
to his nerves and nervous system, all of which caused him,
continue to cause him and will/may cause him for an
indefinite time in the future, great pain, agony and
suffering, both physical and mental. Id., at
(Doc. 9 at 7-8.)
out above, the pending R&R recommends that the Court
grant Defendant's motion. (Doc. 17 at 17.)
"LibertyGuard Deluxe Homeowners Policy"
("Policy") number H32-281-299495-40 issued to D.H.
was in effect from September 5, 2015, to September 5, 2016.
The policy contains the following relevant definitions:
"'Bodily Injury' means bodily harm, sickness or
disease, including required care, loss of services and death
that results"; and "'Occurrence' means an
accident, including continuous or repeated exposure to
substantially the same general harmful conditions, which
results, during the policy period, in: a. 'Bodily
injury'; or b. 'Property damage'." (Doc. 6-3
at 7 (Policy Definitions).)
II of the Policy addresses "Liability Coverages"
wherein Coverage E for "Personal Liability" sets
out the following in pertinent part:
If a claim is made or a suit is brought against an
"insured" for damages because of "bodily
injury" or "property damage" caused by an
"occurrence" to which this coverage applies, we
1. Pay up to our limit of liability for the damages for which
the "insured" is legally liable; and
2 .Provide a defense at our expense by counsel of our choice
even if the allegations are groundless, false or fraudulent.
(Doc. 6-3 at 17 (Policy COVERAGE E).)
III of the Policy identifies "Exclusions" and
states as follows in relevant part: "Coverage E -
Personal Liability and Coverage F - Medical Payments to
Others do not apply to 'bodily injury' or
'property damage':... k. Arising out of sexual
molestation, corporal punishment or physical or mental
abuse.'" (Doc. 6-3 at 11, 12.) An Amendatory
Endorsement in the Policy states the following:
la. under Coverage E - Personal Liability and Coverage F -
Medical Payments to Others is amended as follows:
For "bodily injury" or "property damage"
that results from or may reasonably be expected to result,
from the intentional or criminal acts or omissions of an
"insured," even if it
(1) is of a different kind, quality, or degree than initially
expected or intended; or
(2) is sustained by a different person, entity, real or
personal property, than initially expected or intended.
However, this exclusion does not apply to "bodily
injury" resulting from the use of reasonable force to
protect persons or property.
(Doc. 6-3 at 36 (Policy Amendatory Endorsement).)
complaint must be dismissed under Federal Rule of Civil
Procedure 12(b)(6) if it does not allege "enough facts
to state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007).
"A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiffs
obligation to provide the 'grounds' of his
'entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of a cause of
action's elements will not do." Twombly,
550 U.S. at 555, 127 S.Ct. 1955 (internal citations and
alterations omitted). In other words, "[f]actual
allegations must be enough to raise a right to relief above
the speculative level." (Id.) A court
"take[s] as true all the factual allegations in the
Complaint and the reasonable inferences that can be drawn
from those facts, but... disregard[s] legal conclusions and
threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements." Ethypharm
S.A. France v. Abbott Laboratories, 707 F.3d 223, 231
n.14 (3d Cir. 2013) (internal citations and quotation marks
Twombly and Iqbal require [a court] to take
the following three steps to determine the sufficiency of a
complaint; First, the court must take note of the elements a
plaintiff must plead to state a claim. Second, the court
should identify allegations that, because they are no more
than conclusions, are not entitled to the assumption of
truth. Finally, where there are well-pleaded factual
allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement
Connelly v. Steel Valley Sen. Dist, 706 F.3d 209,
212 (3d Cir. 2013).
Federal Rule of Civil Procedure 8, a complaint need not
anticipate or overcome affirmative defenses; thus, a
complaint does not fail to state a claim simply because it
omits facts that would defeat" an affirmative defense.
Schmidt v. Skolas, 770 F.3d 241, 248 (3d Cir. 2014)
(citations omitted). "Technically, the Federal Rules of
Civil Procedure require a defendant to plead an affirmative
defense ... in the answer, not in a motion to dismiss."
(Id. at 249) (citing Robinson v. Johnson,
313 F.3d 128, 134-35 (3d Cir. 2002)). The Third Circuit Court
of Appeals has explained that "[generally speaking, we
will not rely on an affirmative defense... to trigger
dismissal of a complaint under Rule 12(b)(6). A complaint may
be dismissed under Rule 12(b)(6) where an unanswered
affirmative defense appears on its face, however."
In re Tower Air, 416 F.3d 229, 238 (3d Cir.2005)
(internal citations omitted); see also Borough of Moosic
v. Darwin Nat. Assur. Co., 556 Fed.Appx. 92, 98 (3d Cir.
2014) (citing Victaulic Co. v. Tiernan, 499 F.3d 227
(2007) (quoting In re Tower Air, 416 F.3d at 238)).
decide a motion to dismiss, courts generally consider only
the allegations contained in the complaint, exhibits attached
to the complaint and matters of public record."
Pension Benefit Guar. Corp. v. White Consol. Indus.,
Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (citations
omitted); accord Mayer v. Belichick, 605 F.3d 223,
230 (3d Cir. 2010). "If, on a motion under Rule 12(b)(6)
or 12(c), matters outside the pleadings are presented to and
not excluded by the court, the motion must be treated as one
for summary judgment under Rule 56. All parties must be given
a reasonable opportunity to present all the material that is
pertinent to the motion." Fed.R.Civ.P. 12(d).
"However, an exception to the general rule is that a
document integral to or explicitly relied upon in the
complaint may be considered without converting the motion to
dismiss into one for summary judgment."
Schmidt, 770 F.3d at 249 (internal citations and
quotation marks omitted).
a complaint is vulnerable to 12(b)(6) dismissal, a district
court must permit a curative amendment, unless such an
amendment would be inequitable or futile." Phillips
v. Cnty. of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008)
(citing Grayson v. Mayview State Hosp., 293
F.3d 103, 108 (3d Cir. 2002)).
[E]ven when plaintiff does not seek leave to amend his
complaint after a defendant moves to dismiss it, unless the
district court finds that amendment would be inequitable or
futile, the court must inform the plaintiff that he or she