LIBERTY INSURANCE CORPORATION v. KECK et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE JOHN R. PADOVA ON 8/22/2011. 8/22/2011 ENTERED AND COPIES E-MAILED AND MAILED TO UNREPS.(jmf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
LIBERTY INSURANCE CORP.
ALICIA KECK, ET AL.
August 22, 2011
Liberty Insurance Corp. (“Liberty”) brought the instant action against Alicia Keck, George
Hickey, Edward Roop, Carol Roop, Eagles Stadium Operator, LLC, and National Event Services,
Inc. seeking a declaration that it has no duty under a homeowner’s insurance policy issued to the
Roops to defend or indemnify George Hickey in connection with a lawsuit brought by Alicia Keck
against Hickey, Eagles Stadium Operator, LLC and National Events Services, Inc. in the
Philadelphia County Court of Common Pleas. Hickey and the Roops have asserted a Counterclaim
against Liberty in the instant action, asserting that Liberty denied coverage in bad faith, in violation
of 42 Pa. Cons. Stat. Ann. § 8371. Before the Court is Liberty’s Motion to Dismiss the Counterclaim
pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Motion is
On or about June 29, 2009, Alicia Keck was assaulted by George Hickey while attending a
The facts recited in this section of the Memorandum are drawn from Liberty’s Complaint
and its attachments and from the Answer and Counterclaim filed by Hickey, Edward Roop and Carol
Roop (the “Hickey Answer”).
concert at Lincoln Financial Field in Philadelphia. (Keck Compl. ¶¶ 8, 13.2) Hickey punched Keck
twice in the face, once on her nose and once in her left eye. (Id. ¶ 13.) Hickey fled before security
arrived. (Id. ¶ 17.) As a result of the assault, Keck sustained numerous injuries, including head
injuries, nasal fractures, a left cheekbone fracture, and an orbital blowout fracture. (Id. ¶ 20.) As a
result of her injuries, Keck has suffered pain, embarrassment, anxiety, and depression, and has been
prevented from continuing her previous modeling career. (Id. ¶¶ 21-22.)
Hickey was criminally charged in the Court of Common Pleas of Philadelphia County with
recklessly endangering another person, simple assault, and aggravated assault in connection with his
assault of Keck. (Commonwealth v. Hickey, Docket No. CP-51-CR-10582-2009 (Phila. Cnty. Ct.
of Common Pleas).3) On March 22, 2010, he pled guilty to aggravated assault and was sentenced
to five years of probation and restitution in the amount of $2,195.39. (Id. at 3, 8.) The other charges
against Hickey were nolle prossed. (Id. at 3.)
Keck filed suit against Hickey, Eagles Stadium Operator, LLC, and National Events Services,
Inc. in the Court of Common Pleas of Philadelphia County. (Keck Compl.) The Keck Complaint
asserts a claim against Hickey for negligence. (Id. ¶¶ 57-60.) Hickey made a demand of Liberty for
a defense and for indemnification with respect to the negligence claim asserted against him by Keck.
The Keck Complaint, captioned Alicia Keck v. Eagles Stadium Operator, LLC and Nat’l
Events Servs., Inc. and George Hickey, Sept. Term, 2010 No. 3675 (Phila. Cnty. Ct. of Common
Pleas), is attached to the Liberty Complaint as Exhibit B .
We may consider “public records (including court files, orders, records and letters of official
actions or decisions of government agencies and administrative bodies)” in deciding a motion
pursuant to Rule 12(b)(6). Miller v. Cadmus Commc’ns, Civ. A. No. 09-2869, 2010 WL 762312,
at *2 (E.D. Pa. Mar. 1, 2010) (citing Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380,
1384 n. 2 (3d Cir. 1994)). The docket from Commonwealth v. Hickey is attached to the Liberty
Complaint as Exhibit C .
(Liberty Compl. ¶ 14; Hickey Answer ¶ 14.) Hickey made his demand pursuant to a homeowners
insurance policy issued by Liberty to Edward and Carol Roop effective March 9, 2009 through
March 9, 2010, policy number H37-288-330730-409 (the “Liberty Policy”).4 (Liberty Compl. ¶ 11,
Hickey Answer ¶ 11.) At the time he assaulted Keck, Hickey lived with Carol and Edward Roop,
his mother- and father-in-law. ( (Liberty Compl. ¶ 12, Hickey Answer ¶ 12.) The Liberty Policy
includes personal liability coverage in the amount of $500,000 per occurrence. ( (Liberty Compl. ¶
11, Hickey Answer ¶ 11.)
The Liberty Policy provides for personal liability coverage as follows:
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 will:
Pay up to our limit of liability for the damages for which the
“insured” is legally liable . . . ; and
Provide a defense at our expense by counsel of our choice,
even if the suit is groundless, false or fraudulent. We may
investigate and settle any claim or suit that we decide is
appropriate. Our duty to settle or defend ends when the
amount we pay for damages resulting from the “occurrence”
equals our limit of liability.
(Liberty Policy at 12, Section II - Liability Coverages.) The Liberty Policy defines occurrence as
“‘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.’” (Id. at 1, Definitions ¶ 5.) The Liberty Policy excludes
coverage for personal liability as follows:
A copy of the Liberty Policy is attached to the Liberty Complaint as Exhibit A.
Coverage E - Personal Liability and Coverage F - Medical
Payments to Others do not apply to “bodily injury” or “property
Which is expected or intended by the “insured”, even if the
resulting “bodily injury” or “property damage”
is of a different kind, quality, or degree than initially
expected or intended; or
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
(Id. at 12, Section II - Exclusions, as amended by Amendatory Endorsement FMHO 2493 at 2.)
On February 23, 2011, Liberty filed the instant Action for Declaratory Judgment, seeking a
Declaration that it is not required to indemnify Hickey from any judgment, verdict, or award entered
against him as a result of the Keck lawsuit, and that it is not required to provide a defense to Hickey
in connection with his assault of Keck. (Liberty Compl. ¶ 30.) Liberty asserts in its Complaint that
Keck’s injuries did not result from an “occurrence” as defined by the policy because they were not
the result of an accident, but were expected or intended by Hickey as they resulted from an
aggravated assault. (Id. ¶¶ 28-29.) Liberty further asserts in its complaint that, because Keck’s
injuries were expected or intended by Hickey, they are specifically excluded from coverage under
the Liberty Policy. (Id. ¶ 29.)
On March 21, 2011, George Hickey, Carol Roop, and Edward Roop filed an Answer to the
Liberty Complaint in which they assert a Counterclaim against Liberty for bad faith pursuant to 42
Pa. Cons. Stat. Ann. § 8371. (Hickey Answer ¶ 40.) The Counterclaim alleges that Liberty violated
the terms of the Liberty Policy, and breached its duty to Hickey, by denying coverage without any
reasonable basis for doing so. (Id. ¶ 39.) The Counterclaim further alleges that Liberty acted in bad
faith by denying coverage and by refusing to defend Hickey in connection with the Keck lawsuit
based solely on its review of the Keck Complaint, and without conducting any investigation of the
facts underlying Keck’s allegations against Hickey. (Id. ¶¶ 36-39.)
Liberty asks that we dismiss the Counterclaim pursuant to Rule 12(b)(6) on the ground that
the Counterclaim fails to state a claim upon which relief may be granted. When considering a
motion to dismiss pursuant to Rule 12(b)(6), we “consider only the [counterclaim], exhibits attached
to the [counterclaim], [and] matters of public record, as well as undisputedly authentic documents
if the [counterclaimant]’s claims are based upon these documents.” Mayer v. Belichick, 605 F.3d
223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d
1192, 1196 (3d Cir. 1993)). We take the factual allegations of the counterclaim as true and draw all
reasonable inferences in favor of the counterclaimant. Id. at 229 (citing Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). To survive a motion to dismiss brought pursuant to
Rule 12(b)(6), “[t]he pleading must contain sufficient factual allegations so as to state a facially
plausible claim for relief.” Id. at 230 (citing Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d
187, 190 (3d Cir. 2009)). “A claim possesses such 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.’” Id. (quoting Gelman, 583 F.3d at 190).
The Pennsylvania insurance bad faith statute provides as follows:
In an action arising under an insurance policy, if the court finds that
the insurer has acted in bad faith toward the insured, the court may
take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim
was made by the insured in an amount equal to the prime rate of
interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
42 Pa. Cons. Stat. Ann. § 8371. In order to succeed on a claim of bad faith of an insurer pursuant
to 42 Pa. Cons. Stat. Ann. § 8371, “a plaintiff must satisfy a two-prong test: 1) the insurer did not
have a reasonable basis for denying coverage and 2) the insurer knew or recklessly disregarded its
lack of a reasonable basis when it denied coverage.” Post v. St. Paul Travelers Ins. Co., 609 F.
Supp. 2d 382, 385 (E.D. Pa. 2009) (citing Greene v. United Servs. Auto. Ass’n, 936 A.2d 1178, 1189
(Pa. Super. Ct. 2007)). The party making a bad faith claim need not establish that the insurer was
motivated by “self-interest or ill will,” but evidence of those motivations “is probative of the second
element . . . i.e., [that] ‘the insurer knew or recklessly disregarded its lack of reasonable basis in
denying the claim.’” Greene, 936 A.2d at 1191 (quoting Terletsky v. Prudential Prop. & Cas. Ins.
Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994)). The Pennsylvania Superior Court has cautioned that
“‘mere negligence or bad judgment is not bad faith.’” Id. at 1188 (quoting Condio v. Erie Ins.
Exchange, 899 A.2d 1136, 1143 (Pa. Super. Ct. 2006)). Furthermore, “‘[S]ection 8371 is not
restricted to an insurer’s bad faith in denying a claim. An action for bad faith may [also] extend to
the insurer’s investigative practices.’” Id. at 1187 (alterations in original) (quoting Condio, 899 A.2d
Indeed, the term “bad faith” “encompasses a wide variety of objectionable conduct” including
“‘lack of good faith investigation into facts, and failure to communicate with the claimant[;]’” and
“‘arbitrarily refus[ing] to accept evidence of causation.’” Greene, 936 A.2d at 1187-88 (quoting
Condio., 899 A.2d at 1143). Moreover, “[a]n insurer may not justifiably refuse to defend a claim
against its insured unless it is clear from an examination of the allegations in the complaint and the
language of the policy that the claim does not potentially come within the coverage of the policy.”
Am. and Foreign Ins. Co. v. Jerry’s Sport Center, Inc., 2 A.3d 526, 541 (Pa. 2010) (citations
omitted). “The question of whether a claim against an insured is potentially covered is answered by
comparing the four corners of the insurance contract to the four corners of the complaint.” Id.
(citing Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 290 (Pa. 2007)). When we make
this determination, we take the “‘factual allegations of the underlying complaint against the insured
. . . as true and liberally construe [them] in favor of the insured.’” Id. (quoting Frog, Switch & Mfg.
Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d Cir. 1999)). “If coverage (indemnification)
depends upon the existence or nonexistence of undetermined facts outside of the complaint, until the
claim is narrowed to one patently outside the policy coverage, the insurer has a duty to defend claims
against its Insured.” State Farm Fire and Cas. Co. v. Dunleavy, 197 F. Supp. 2d 183, 187 (E.D. Pa.
2001) (citing Stidham v. Millvale Sportsmen’s Club, 618 A.2d 945, 953-54 (Pa. Super. Ct. 1992)).
Liberty argues that the Counterclaim does not state a claim upon which relief may be granted
because the Keck Complaint does not contain any allegations of fact that could possibly trigger
coverage under the Liberty Policy. Liberty contends that it only has an obligation to provide
coverage and a defense to Hickey under the Liberty Policy if Keck’s injuries were accidental, and
that it had no duty to investigate the facts underlying the Keck Complaint because the Complaint
does not allege that her injury was accidental. Liberty further argues that it has no duty to defend
Hickey in the Keck action because Pennsylvania law does not require an insurer to defend allegations
of intentional acts where the policy language excludes intentional conduct from its coverage.
The Liberty Policy does indeed exclude from personal liability coverage bodily injury
“[w]hich is expected or intended by the ‘insured.’” (Liberty Policy at 12, Section II - Exclusions,
as amended by Amendatory Endorsement FMHO 2493 at 2.) That, however, is not the end of our
analysis. The Keck Complaint does not allege that Hickey’s actions were intentional. The Keck
Complaint refers to Hickey’s actions as an assault and as an aggravated assault, and states that he
was convicted of aggravated assault. (Keck Complaint ¶¶ 16-17, 25, 33-35, 48-50, 60.)
“[A] conviction in prior criminal proceedings cannot preclude a victim from litigating the
issue of the insured actor’s intent where a determination of intent was not essential to the
conviction.” Dunleavy, 197 F. Supp. 2d at 188 (citing Stidham, 618 A.2d at 954). Hickey’s
conviction cannot justify Liberty’s refusal to defend and indemnify Hickey unless his criminal
proceedings established “the extent, if any, of his conscious awareness of [his] action[s] or the
substantial likelihood of the results.” Id. (citing Stidham, 618 A.2d 955-56). “Moreover, imbibed
intoxicants must be considered in determining if the actor has the ability to formulate an intent.”
Stidham, 618 A.2d at 953 (citing Nationwide Mut. Ins. Co. v. Hassinger, 473 A.2d 171, 176 (Pa.
Super. Ct. 1984)).
The Keck Complaint does not allege that Hickey’s aggravated assault conviction required
a determination that he intended to cause Keck’s injuries. Intent is not an element of the crime of
aggravated assault under Pennsylvania law. See 18 Pa. Cons. Stat. Ann. § 2702(a) (stating that “[a]
person is guilty of aggravated assault if he: (1) attempts to cause serious bodily injury to another,
or causes such injury intentionally, knowingly or recklessly under circumstances manifesting
extreme indifference to the value of human life”); see also Dunleavy, 197 F. Supp. 2d at 188
(explaining that intentional conduct is not an element of aggravated assault because that crime “may
be predicated on reckless conduct”). Accordingly, an aggravated assault conviction “may be
predicated upon reckless . . . conduct which does not bar recovery pursuant to an insured’s policy
under prevailing Pennsylvania case law.” State Farm Mut. Auto. Ins. Co. v. Neff, Civ. A. No.
04-CV-0087, 2006 WL 3484340, at *5 (M.D. Pa. Nov. 30, 2006) (citing Dunleavey, 197 F.Supp.
2d at 188)).
Furthermore, the Keck Complaint alleges that Hickey imbibed intoxicants prior to punching
Keck. (Keck Compl. ¶ 54.) Given that Pennsylvania law states that a criminal conviction is not a
bar to recovery “where a determination of intent was not essential to the conviction,” Dunleavy, 197
F. Supp. 2d at 188 (citation omitted), and that “imbibed intoxicants must be considered in
determining if the actor has the ability to formulate an intent,” Stidham, 618 A.2d at 953 (citation
omitted), we conclude that the Counterclaim plausibly alleges that Liberty’s disclaimer of coverage
based solely on a review of the Keck Complaint was unreasonable and that Liberty knew or
recklessly disregarded its lack of reasonable basis when denying Hickey’s claim for coverage. See
Post, 609 F. Supp. 2d at 385 (citation omitted). We further conclude that the Counterclaim plausibly
alleges that Liberty acted in bad faith in failing to investigate Hickey’s claim and in refusing to
defend Hickey in the Keck Litigation. See Greene, 936 A.2d at 1188.
For the foregoing reasons, we conclude that the Counterclaim alleges a plausible claim that
Liberty acted in bad faith by unreasonably denying coverage based on the allegations of the Keck
Complaint, by failing to conduct a good faith investigation into the facts underlying Keck’s
negligence claim against Hickey, and by refusing to defend Hickey in the Keck litigation. Liberty’s
Motion to Dismiss the Counterclaim is accordingly denied. An appropriate order follows.
BY THE COURT:
/s/ John R. Padova
John R. Padova, J.
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