ANGLO AMERICAN INVESTMENTS, LLC v. UTICA FIRST INSURANCE COMPANY

Filing 16

OPINION AND ORDER THAT THE MOTION OF DEFENDANT UTICA FIRST INSURANCE COMPANY TO DISMISS THE COMPLAIN OF PLAINTIFF ANGLO AMERICAN INVESTMENTS, LLC D/B/A PIZZA PEDDLER IS GRANTED. SIGNED BY HONORABLE LOUIS H. POLLAK ON 2/26/09. 2/27/09 ENTERED AND COPIES E-MAILED.(lisad, )

UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA

A N G L O AMERICAN INVESTMENTS, L L C d/b/a PIZZA PEDDLER, P la in tif f , v. U T IC A FIRST INSURANCE COM PA N Y , D e f e n d a n t. C IV IL ACTION N o . 08-483

P o lla k , J. O P IN IO N

F e b ru a ry 26, 2009

P la in tif f Anglo American Investments, doing business as the restaurant Pizza P e d d le r ("plaintiff" or "Pizza Peddler"), brings this action against its insurance company, d e f e n d a n t Utica First Insurance, alleging that Utica First breached its contract obligations a n d acted in bad faith when it declined to defend or indemnify Pizza Peddler in a tort a c tio n brought in the Chester County Court of Common Pleas. The matter comes to this c o u rt pursuant to the court's diversity jurisdiction, 28 U.S.C. § 1332. Now before the c o u rt is Utica First's motion to dismiss Pizza Peddler's complaint. For the reasons that f o llo w , Utica First's motion will be granted.1
1

The court notes that Utica First filed a reply brief supporting its motion on May 27, 2008. However, Utica First neither sought nor received permission to file this brief in accordance with Local Civil Rule 7.1(c). The court did not consider this submission in 1

I. FACTS T h e underlying tort action was brought by Robert Occhuzzo, who had a physical a lte rc a tio n with a Pizza Peddler employee, Stephen Frayne, on August 20, 2005. Occhuzzo and some friends were patrons at the Pizza Peddler, a restaurant located in W e s t Chester, Pennsylvania. According to Occhuzzo's complaint in the Chester County C o u rt of Common Pleas, Occhuzzo made a comment to one of his companions about a yo u n g woman who was also in the restaurant at that time. A waiter informed Occhuzzo th a t the woman was the girlfriend of Frayne, who was working that evening. Some time la te r, Occhuzzo and his companions left the restaurant, and Occhuzzo went to his car. Frayne, though still "on the clock" at Pizza Peddler, left the restaurant and stood behind O c c h u z z o 's car, blocking Occhuzzo from pulling out and leaving. Frayne began s c re a m in g obscenities and threatening violence to Occhuzzo and his companions. Occhuzzo got out of his car and told Frayne to calm down and go back to work. Frayne m o v e d toward Occhuzzo, still screaming. Occhuzzo "made further attempts to calm F ra yn e ," but Frayne then "intentionally and suddenly, without provocation, reason, or ju s tif ic a tio n , repeatedly struck Mr. Occhuzzo with a closed fist about his left eye and f a c e ." Occhuzzo Compl. ¶ 16. Mr. Occhuzzo suffered physical injuries, including b ru is in g , swelling, bleeding, and a cut to his right eye requiring five stitches. On September 20, 2005, Occhuzzo's attorney sent a letter to Pizza Peddler, stating

evaluating the motion for dismissal. 2

that he represented Occhuzzo and that he wished to resolve any claims Occhuzzo might h a v e against Pizza Peddler. Compl. Ex. A. Pizza Peddler forwarded this letter to Utica F irs t, its insurance provider. Utica First responded on September 23, 2005. Compl. Ex. B . The letter informed Pizza Peddler that because of exclusions in the insurance policy, U tic a First would not be providing coverage for Occhuzzo's claims. O c c h u z z o filed a complaint against Pizza Peddler and Frayne on May 9, 2006 in th e Chester County Court of Common Pleas. The first two counts, battery and assault, are a lle g e d against Pizza Peddler and Frayne. The third count alleges intentional infliction of e m o tio n a l distress against both Pizza Peddler and Frayne. Count four, against Pizza P e d d le r only, alleges negligent supervision. The fifth count alleges negligence against F ra yn e only. P iz z a Peddler sent Occhuzzo's complaint to Utica First, again seeking a defense a n d indemnification under the insurance policy. On May 23, 2006, Utica First responded, in d ic a tin g that, as noted in the September 2005 letter, because of certain exclusions to the in s u ra n c e policy it would not provide a defense or indemnification. Pizza Peddler then h ire d private counsel to defend against Occhuzzo's claims.2 O n January 31, 2008, Pizza Peddler filed a complaint against Utica First in this c o u rt. The first count of Pizza Peddler's complaint alleges breach of contract, and the s e c o n d count alleges bad faith denial of coverage under 42 Pa. Cons. Stat. § 8371,

2

The status or disposition of the state court action is not part of the record in this case. 3

including allegations of bad faith failure to defend, indemnify, and investigate. In lieu of a n s w e rin g , Utica First moved for dismissal of the complaint under Federal Rule of Civil P ro c e d u re 12(b)(6), contending that it had no duty to defend or indemnify Pizza Peddler a n d that therefore Pizza Peddler's complaint does not state a claim upon which relief can b e granted. II. DISCUSSION In order to determine whether plaintiff's complaint in this court has stated claims o n which relief can be granted, the court must determine whether, as a matter of law, U tic a First had a duty to provide Pizza Peddler with a defense against Occhuzzo's c o m p la in t. As the Third Circuit has explained, "[u]nder Pennsylvania law, an insurance c o m p a n y is obligated to defend an insured whenever the complaint filed by the injured p a rty may potentially come within the policy's coverage." Pacific Indem. Co. v. Linn, 7 6 6 F.2d 754, 760 (3d Cir. 1985) (internal citations omitted). The insurer's obligation to d e f e n d is determined solely by the allegations of the complaint in the action, and if even a s in g le claim in the complaint is potentially covered, the insurer must defend all claims u n til there is no possibility that the plaintiff could recover on a covered claim. Frog. S w itc h & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d Cir. 1999). A court m a y not look past the complaint in reviewing whether the obligation to defend has been trig g e re d . Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 9 0 8 A.2d 888, 896 (Pa. 2006). If an insurer seeks to avoid its duty to defend under the

4

policy on the basis of a stated exclusion, the insurer bears the burden to prove the a p p lic a b ility of that exclusion. Canal Ins. Co. v. Underwriters at Lloyd's London, 435 F .3 d 431, 435 (3d Cir. 2006) (citing Madison Constr. Co. v. Harleysville Mut. Ins. Co., 7 3 5 A.2d 100, 106 (Pa. 1999)). Any ambiguities in the policy language must be c o n s tru e d in favor of the insured, and where terms are unambiguous they must be given th e ir plain meaning. St. Paul Fire and Marine Ins. Co. v. Lewis, 935 F.2d 1428, 1431 (3d C ir. 1991). If any of the claims in Occhuzzo's complaint could potentially come within the c o v e ra g e of the Pizza Peddler's insurance policy, Utica First had a duty to provide a d e f e n s e in the state court proceeding. To determine whether this is indeed the case, the c o u rt must review the scope of the insurance policy Pizza Peddler purchased from Utica F irs t and then examine the allegations in the Occhuzzo complaint to ascertain if coverage is potentially triggered. A. T h e Policy T h o u g h Pizza Peddler did not attach a copy of the policy to its complaint, the court m a y still review the policy without converting the present motion to dismiss into one for s u m m a ry judgment.3 The policy is the basis of plaintiff's complaint and is expressly re f e re n c e d in plaintiff's allegations. "Although a district court may not consider matters

A copy of the policy was attached to Utica First's motion to dismiss. See docket entries 8, 9, 10. Pizza Peddler also quoted the relevant language from the "Assault & Battery Exclusion" portion of the policy in its "Memorandum of Law in Opposition to Defendant's Motion to Dismiss." See docket entry 12. 5

3

extraneous to the pleadings, a document integral to or explicitly relied upon in the c o m p la in t may be considered without converting the motion to dismiss into one for s u m m a ry judgment." U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2 0 0 2 ) (internal quotation marks and citations omitted) (emphasis in original). Because p la in tif f 's claims "could not be evaluated without some reference to" the policy, the court w ill consider the policy and is not required to convert the instant motion into one for s u m m a ry judgment. Angstadt v. Midd-West School Dist., 377 F.3d 338, 342 (3d Cir. 2 0 0 4 ). T h e parties seem to agree that the only part of the policy that is at issue is the " A s s a u lt & Battery Exclusion." Neither side points to any other section of the lengthy c o n tra c t as relevant. The "Assault & Battery Exclusion" provides: N o tw ith s ta n d in g anything contained herein to the contrary, it is understood a n d agreed that this policy excludes any and all claims arising out of any a s s a u lt, battery, fight, altercation, misconduct or any other similar incident o r act of violence, whether caused by or at the instigation of, or at the d ire c tio n of the insured, his employees, customers, patrons, guests or any c a u s e whatsoever, including, but not limited to claims of negligent or im p ro p e r hiring practices, negligent [sic] improper or non-existent s u p e rv is io n or employees, patrons or guests and negligence in failing to p ro te c t customers, patrons or guests. D e f .'s Ex. A-2 at 28. This court agrees with the significant number of other courts in Pennsylvania that h a v e found similar "assault and battery" exclusions to be clear and unambiguous. See C e rta in Underwriters at Lloyd's v. Brownie's Plymouth, 24 F. Supp. 2d 403, 405 (E.D.

6

Pa. 1998); Sphere Drake, P.L.C. v. 101 Variety, Inc., 35 F. Supp. 2d 421, 428 (E.D. Pa. 1 9 9 9 ); Acceptance Ins. Co. v. Seybert, 757 A.2d 380, 383 (Pa. Super. Ct. 2000); First Oak B ro o k Corp. Syndicate v. Comly Holding Corp., 93 F.3d 92, 95 (3d Cir. 1996) (affirming d is tric t court decision that had applied plain meaning of assault and battery exclusion). Moreover, though plaintiff notes the general principle of Pennsylvania insurance law re q u irin g that any ambiguities in the language of an insurance contract be construed in f a v o r of coverage, plaintiff does not argue that the language in this contract is ambiguous. Because the court finds the language to be unambiguous and no party contends otherwise, th e language of the exclusion will be given its plain meaning. B. T h e Complaint in the State-Court Action T h e first count of Occhuzzo's complaint alleges that Frayne committed an in te n tio n a l battery, for which Occhuzzo seeks relief from Frayne, and also from Pizza P e d d le r, presumably under a respondeat superior theory. The second count similarly s e e k s recovery from Frayne and Pizza Peddler for Frayne's alleged commission of a s s a u lt. The third count seeks recovery from Frayne and Pizza Peddler for Frayne's in te n tio n a l infliction of emotional distress. The fourth count is directed only at Pizza P e d d le r and alleges that Pizza Peddler negligently supervised Frayne and permitted F ra yn e 's conduct to occur. The fifth count is directed only against Frayne, and alleges th a t Frayne acted negligently by failing to prevent himself from attacking customers.4 The court expresses no views on the merits of any of the counts in Occhuzzo's complaint under state law. 7
4

The first three counts set forth intentional torts alleged to have been committed by F ra yn e against Occhuzzo. The exclusion provides that the policy "excludes any and all c la im s arising out of any assault, battery, [or] fight. . . whether caused by or at the in s tig a tio n of, or at the direction of the insured, his employees, [or] customers." The p la in meaning of the exclusion applies and precludes coverage for these intentional torts. See Brownie's Plymouth, 24 F. Supp. 2d at 405-6 (finding similar assault and battery e x c lu s io n to preclude coverage for claims that "cannot be construed. . . in any other way th a n as stating a claim for assault and battery"). P iz z a Peddler does not contend that Frayne's actions did not constitute an assault o r battery or that Occhuzzo's claims, as a factual matter, fall outside the assault and b a tte ry exclusion. Rather, Pizza Peddler argues that the exclusion "was intended to e x c lu d e coverage for direct responsibility and not indirect responsibility" and "is silent as to any allegations for liability under the theory respondeat superior." Pl.'s Br. in Opp'n at 5 . However, this argument must fail when viewed in light of the plain language of the e x c lu s io n , which covers "any and all claims" stemming from an assault. The language d o e s specifically reference claims of negligent supervision but notes that the exclusion is n o t limited to such claims. Nothing in the language of the exclusion supports plaintiff's c o n te n tio n that coverage is available for "direct responsibility" and not for "indirect re s p o n s ib ility." Coverage is unavailable to plaintiff, under the exclusion, for either type o f claim if the claim "aris[es] out of any assault, battery, fight, altercation, misconduct or

8

any other similar incident or act of violence. . . ." The plain language of the exclusion c o v e rs the intentional torts alleged in the first three counts of Occhuzzo's complaint. The exclusion also specifically precludes coverage for claims of "negligent [sic] im p ro p e r or non-existent supervision of employees, patrons or guests and negligence in f a ilin g to protect customers, patrons or guests." The fourth count of the Occhuzzo c o m p la in t, which alleges that Pizza Peddler "breached its duty to properly supervise its e m p lo ye e by. . . allowing Frayne to go into the parking lot to attack a customer," falls s q u a re ly within this exclusion. It is not the case that an insurance company will always be able to retreat behind an a s s a u lt and battery exclusion where a patron of a bar or restaurant is injured by another p a tro n or an employee; there are instances where an insurer has been found to have a duty to defend an insured from claims arising out of these types of altercations occurring on th e insured's premises. See, e.g., Sphere Drake, P.L.C. v. 101 Variety, Inc., 35 F. Supp. 2 d 421 (E.D. Pa. 1999); Britamco Underwriters, Inc. v. Weiner, 636 A.2d 649 (Pa. Super. C t. 1994). In these cases, the underlying tort complaints had stated alternative theories of re c o v e ry, making claims both based on allegations of intentional assault and battery and a ls o on allegations of additional negligent conduct on the part of the insured. For e x a m p le , in Sphere Drake, two individuals were injured in a bar by a police officer who f ire d his weapon into the bar while responding to an altercation. The injured individuals f ile d a complaint in the Philadelphia Court of Common Pleas, asserting several claims

9

against the bar, including a claim that the bar's owners or employees had negligently p a d lo c k e d the kitchen door, preventing employees and patrons from leaving the e s ta b lis h m e n t. Sphere Drake, 35 F. Supp. 2d at 425. In evaluating whether the bar's in s u ra n c e company was obligated to provide a defense to the bar in the state-court p ro c e e d in g s , the district court found that though the complaint alleged intentional torts, f o r which the exclusion would ordinarily preclude coverage, the inclusion of the a lle g a tio n that the bar had negligently trapped people in the bar brought the entire c o m p la in t out of the ambit of the assault and battery exclusion. Similarly, in Weiner, the plaintiff in the original action alleged that a co-owner and a n employee of a bar struck him in the neck and injured him. The plaintiff alleged a lte rn a tiv e theories of liability, seeking recovery from the bar because "his injuries were e ith e r the result of an `accident,' or intentional or negligent acts of the insured" bar. 636 A .2 d at 652. The court found that the assault and battery exclusion in the bar's insurance p o lic y would not exclude injuries resulting from an accident, and the inclusion of this a lle g a tio n meant that the insurer needed to defend the bar on all claims "until such time as th e claim is confined to a recovery that the policy does not cover." Id. Any reliance Pizza Peddler would place on these cases is unavailing, because O c c h u z z o 's complaint does not contain any claims that fall outside the assault and battery e x c lu s io n . The first three counts allege battery, assault, and intentional infliction of e m o tio n distress resulting from Frayne's "intentional attack." The fourth count, negligent

10

supervision, is also covered by the exclusion. The complaint does not contain a n e g lig e n c e claim against Pizza Peddler comparable to the "padlocked door allegation" or a claim that Frayne's actions were an accident. See Unionamerica Ins. Co. v. Lim, 2000 W L 1056450, *3 (E.D. Pa. 2000) (distinguishing Sphere Drake and Weiner and finding n o duty on part of insurer to defend restaurant where complaint did not state a cause of a c tio n for negligence distinct from the assault and battery and could not allege that injury w a s an accident). Count five of Occhuzzo's complaint does include allegations of general n e g lig e n c e , but this claim is pled against Frayne only, in contrast with the complaint in S p h e r e Drake, which alleged direct negligence on the part of the bar, not the assailant. Pizza Peddler's contention that the court should consider it to be pled against Pizza P e d d le r as well because Occhuzzo could amend his complaint to add Pizza Peddler as a d ire c t defendant in count five is baseless; the court will not speculate as to what O c c h u z z o may claim in the future and must focus on the claims that Pizza Peddler is re q u ire d to defend against now.5

C o u n t five alleges that Frayne breached his "duty to prevent, refrain, and control h im s e lf from attacking customers" when he attacked Occhuzzo. If this count were to h a v e been pled against Pizza Peddler as well, it would seem that such allegations would s till appear to have sounded in negligent supervision, which is covered by the exclusion. See First Oak Brook, 93 F.3d at 95-96 (noting that the exclusion in Weiner did not e x c lu d e negligence claims and so distinguishing that policy from one excluding coverage a risin g from "harmful or offensive contact between or among two or more persons," w h ic h could include injuries arising out of a negligent act).

5

11

In conclusion, Occhuzzo's complaint contains no claims against Pizza Peddler that f a ll outside the assault and battery exclusion. Defendant therefore was under no duty to d e f e n d Pizza Peddler in the state-court action. Because defendant did not have a duty to p ro v id e a defense to Pizza Peddler, defendant, as a matter of law, did not breach its c o n tra c t with Pizza Peddler. Similarly, defendant did not act in bad faith in violation of 4 2 Pa. Cons. Stat. § 8371 when it refused to provide a defense. See Frog, Switch & Mfg. C o ., 193 F.3d at 751 n.9 (rejecting claim for bad faith denial of coverage where there was n o duty to defend). Utica First's motion to dismiss Pizza Peddler's complaint is therefore g ra n te d in an order accompanying this opinion.

12

UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA

A N G L O AMERICAN INVESTMENTS, L L C d/b/a PIZZA PEDDLER,

C IV IL ACTION N o . 08-483

P la in tif f , v. U T IC A FIRST INSURANCE COM PA N Y , D e f e n d a n t.

ORDER

A N D NOW, this 26th day of February, 2009, for the reasons set forth in the a c c o m p a n yin g opinion, it is hereby ORDERED that the motion of defendant Utica First In s u ra n c e Company to dismiss the complaint of plaintiff Anglo American Investments, L L C d/b/a/ Pizza Peddler is GRANTED. B Y THE COURT:

/s/ Louis H. Pollak Pollak, J.

13