STATE FARM FIRE AND CASUALTY COMPANY v. RUBY et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 2/2/17. 2/2/17 ENTERED AND COPIES MAILED TO PRO SE AND MAILED/EMAILED TO COUNSEL AND COPY TO LEGAL.(jaa, ) Modified on 2/2/2017 (jaa, ).
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
STATE FARM FIRE AND
TIM RUBY and JACQUELYN
February 2, 2017
State Farm Fire and Casualty Company seeks a declaration that it has no duty to
defend or indemnify its insured, Tim Ruby, in a personal injury action brought against
him in state court. State Farm contends that the business pursuits exclusion in Ruby’s
homeowner’s policy excuses it from covering him.
It moves for judgment on the
pleadings or for summary judgment.
It is disputed whether Ruby was engaged in a business pursuit as State Farm
alleges or was a volunteer as Ruby contends. Therefore, given this disputed material
fact, we shall deny State Farm’s motion.
The plaintiff in the underlying action, Cornelius Jones, alleges that he was injured
when he was ejected from a golf cart operated by Ruby.1 The incident occurred at a
wedding hosted by Michael and Jane Stolper, who hired Kim Rosen Events as the
wedding coordinator and King Limousine to provide transportation services. 2 Jones, an
employee of King Limousine, claims that as he attempted to sit in the golf cart, it
Compl. (Doc. No. 1) Ex. B.
Compl. ¶¶ 23, 25.
“suddenly and unexpectedly took off,” causing him to be “thrown into the air” and
Jones filed a personal injury action in the Court of Common Pleas of Chester
County, naming the Stolpers, Kim Rosen Events, and Ruby as defendants.4 Jones
alleged that Ruby, while acting as an “agent, servant and/or workman for the Stolpers
and/or Rosen, or . . . working on his own behalf,” was careless and negligent in
operating the golf cart.5
At the time of the incident, Ruby was covered by a homeowner’s policy issued by
State Farm to Ruby’s wife, Jacquelyn Andrietta.6
Ruby is covered as Andrietta’s
spouse.7 Ruby requested that State Farm defend and indemnify him in the state court
State Farm brought this action under the Declaratory Judgment Act, 28 U.S.C. §
2201, seeking a declaration that it has no duty to defend or indemnify Ruby in the state
court action. Claiming Ruby was engaged in a business pursuit while operating the golf
cart, State Farm contends that the business pursuits exclusion in the policy excuses it
from covering the claim in the underlying lawsuit.
Ruby counters that he was not
engaged in any business pursuit, but rather “was simply a volunteer at the event.”9 He
claims that his presence at the wedding was “a way to spend some time with his wife”
Compl. Ex. B ¶ 10; see also Compl. ¶ 24; Answer (Doc. No. 12) ¶ 24.
Compl. Ex B.
Compl. ¶¶ 26, 27.
Id. ¶¶ 8, 12.
Id. ¶ 12.
Id. ¶ 15.
Answer ¶¶ 26, 34–36.
while she worked “at a big fancy wedding”.10
Standard of Review
In deciding a motion for judgment on the pleadings made pursuant to Rule 12(c),
we consider only the facts alleged in the pleadings and documents attached as exhibits
or incorporated by reference in the pleadings. See Fed. R. Civ. P. 10(c) (instrument
attached as an exhibit is part of a pleading for all purposes); Commercial Money Ctr.,
Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007); cf. Steinhardt Grp. Inc. v.
Citicorp, 126 F.3d 144, 145 & n.1 (3d Cir. 1997) (in Rule 12(b)(6) context). The wellpleaded factual assertions in the nonmovant’s pleadings are accepted as true and all
contravening allegations in the movant’s pleadings are assumed to be false.
Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. § 1368 (3d ed., Apr.
2016) (citing Allah v. Al-Hafeez, 226 F.3d 247, 249–50 (3d Cir. 2000)).
The movant must establish that no material issue of fact remains to be resolved
and that it is entitled to judgment as a matter of law. Jablonski v. Pan Am. World
Airways, Inc., 863 F.2d 289, 290–91 (3d Cir. 1988); Shelly v. Johns-Manville Corp., 798
F.2d 93, 97 n.4 (3d Cir. 1986). If a material issue of fact arises from the pleadings, the
motion cannot be granted. Inst. for Sci. Info., Inc. v. Gordon & Breach, Sci. Publishers,
Inc., 931 F.2d 1002, 1005 n.3 (3d Cir. 1991) (citing Jablonski, 863 F.2d at 290–91). The
motion can be granted only if the nonmovant cannot prevail under any set of facts.
Green v. Fund Asset Mgmt., L.P., 245 F.3d 214, 220 (3d Cir. 2001); Turbe v. Gov’t of
V.I., 938 F.2d 427, 428 (3d Cir. 1991) (“We can affirm the district court only if no relief
could be granted under any set of facts that could be proved.”).
Defs. Mem. of Law in Opp’n to Pl.’s Mot. for J. on the Pleadings and/or Mot. for Summ. J. (Doc.
No. 18-1) (“Resp.”) at ECF 1.
Interpretation of Insurance Contracts
The interpretation of an insurance contract is a question of law. Am. Auto. Ins.
Co. v. Murray, 658 F.3d 311, 320 (3d Cir. 2011). Whether a claim is within a policy’s
coverage or barred by an exclusion may be determined on a motion for judgment on the
pleadings or a motion for summary judgment. Allstate Fire & Cas. Ins. Co. v. Hymes,
29 A.3d 1169, 1171 (Pa. Super. 2011); Bishops, Inc. v. Penn Nat’l Ins., 984 A.2d 982,
989 (Pa. Super. 2009).
A court must give effect to the plain language of the insurance contract read in its
entirety. Am. Auto. Ins. Co., 658 F.3d at 320. When the policy language is ambiguous,
the provision is construed in favor of the insured. Ramara, Inc. v. Westfield Ins. Co.,
814 F.3d 660, 673–74 (3d Cir. 2016); Pa. Nat’l Mut. Cas. Ins. Co. v. St. John, 106 A.3d
1, 14 (Pa. 2014). Contract language is ambiguous if it is capable of more than one
construction and meaning. Pa. Nat’l, 106 A.3d at 14. However, policy language may
not be stretched beyond its plain meaning to create an ambiguity. Meyer v. CUNA Mut.
Ins. Soc., 648 F.3d 154, 164 (3d Cir. 2011); Trizechahn Gateway LLC v. Titus, 976 A.2d
474, 483 (Pa. 2009).
Where the insurer relies on a policy exclusion as the basis for denying coverage,
the insurer has the burden of proving that the exclusion applies. State Farm Fire & Cas.
Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir. 2009); Wolfe v. Ross, 115 A.3d
880, 884 (Pa. Super. 2015). Policy exclusions are strictly construed against the insurer.
Nationwide Mut. Ins. Co. v. Cosenza, 258 F.3d 197, 206–07 (3d Cir. 2001); Peters v.
Nat’l Interstate Ins. Co., 108 A.3d 38, 43 (Pa. Super. 2014).
Duty to Defend
An insurance carrier’s duty to defend is distinct from its duty to provide coverage.
It is interpreted more broadly than the duty to indemnify.
Kvaerner Metals Div. of
Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 896 n.7 (Pa. 2006).
An insurer may have a duty to defend even though it has no duty to indemnify. Frog,
Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d Cir. 1999). A duty to
indemnify does not arise until the insured is found liable for a covered claim. Id.
Because the duty to defend is broader than the duty to indemnify, the complaint
in the underlying action must be construed expansively. The factual allegations must be
accepted as true, and all doubts as to coverage resolved in favor of the insured.
Roman Mosaic & Tile Co. v. Aetna Cas. & Sur. Co., 704 A.2d 665, 669 (Pa. Super.
1997). To prevent artful pleading designed to avoid policy exclusions, it is necessary to
look at the factual allegations in the complaint, not how the underlying plaintiff frames
the request for relief. Kvaerner Metals, 908 A.2d at 893; Mut. Benefit Ins. Co. v. Haver,
725 A.2d 743, 745 (Pa. 1999). In other words, the focus of the coverage inquiry is on
the substance, not the form, of the allegations.
An insurer is obligated to defend the insured against any suit arising under the
policy “even if the suit is groundless, false, or fraudulent.” Britamco Underwriters, Inc. v.
Weiner, 636 A.2d 649, 651 (Pa. Super. Ct. 1994) (quoting Gedeon v. State Farm Mut.
Auto. Ins. Co., 188 A.2d 320, 321 (Pa. 1963)). Consequently, whenever the complaint
sets forth facts raising claims that could possibly come within the policy’s coverage, the
insurer’s duty to defend is triggered. Erie Ins. Exch. v. Muff, 851 A.2d 919, 931 (Pa.
Super. 2004); Belser v. Rockwood Cas. Ins. Co., 791 A.2d 1216, 1219, 1222 (Pa.
Applying these principles to this case, we examine the language in the insurance
policy and the allegations in the state court complaint. What the underlying complaint
alleges Ruby did and the language of the insurance policy are not in dispute. What is
disputed is Ruby’s role—volunteer or worker—at the time he was operating the golf cart.
The homeowner’s policy excludes coverage for personal liability for bodily injury
arising out of “business pursuits.” The provision reads:
1. Coverage L [personal liability] and Coverage M [medical payments to
others] do not apply to: . . .
b. bodily injury or property damage arising out of business pursuits of
any insured . . . . This exclusion does not apply:
to activities which are ordinarily incident to non-business
The policy does not define business pursuits or non-business pursuits. It defines
“business” as “a trade, profession, or occupation. This includes farming.” 12
Although the state court complaint avers that Ruby was an “agent, servant and/or
workman for the Stolpers and/or Rosen, or . . . alternatively working on his own behalf,”
it does not provide any factual allegations to support this conclusory statement. 13
However, on its face, the complaint infers that Ruby was engaged in a business pursuit
when he was operating the golf cart at the wedding. If so, State Farm has no duty to
defend or indemnify Ruby. On the other hand, if Ruby was not working for himself or
Compl., Ex. A at 16 (emphasis omitted).
Id. at 1.
Compl. Ex. B ¶ 7.
others and was a volunteer, State Farm has a duty to defend and indemnify Ruby.
Thus, Ruby’s status at the time of the incident is dispositive.
To fall within the business pursuits exclusion, the activity causing bodily injury
must be both continuous and driven by a profit motive. Sun Alliance Ins. Co. of P.R.,
Inc. v. Soto, 836 F.2d 834, 836 (3d Cir. 1988); see also Canal Ins. Co. v. Underwriters
at Lloyd’s London, 435 F.3d 431, 439 (3d Cir. 2006). Continuous means the insured
must engage in the activity regularly and customarily. The activity must be more than
casual, irregular, occasional or brief. Travelers Indem. Co. v. Fantozzi, 825 F. Supp.
80, 85 (E.D. Pa. 1993). Profit motive means the activity is intended to generate income
or compensation. A profit motive may be demonstrated by a means of earning a living
or a commercial transaction or engagement.
Sun Alliance, 836 F.2d at 836.
income derived from the activity must be more than incidental. Old Guard Mut. Ins. Co.
v. Quigley, 4 Pa. D. & C.4th 620, 626–27 (Pa. Ct. Com. Pl. 1990).
Indeed, the policy definition of “business” contemplates continuity and profit
motive as the essential elements of a business pursuit. It defines business as “a trade,
profession, or occupation” and “farming.” See Old Guard Ins. Co. v. Sherman, 866 A.2d
412 (Pa. Super. 2004). To be engaged in a trade, profession or occupation, one must
do so continuously and for compensation.
The complaint and the answer raise a disputed issue—whether Ruby was
working for the Stolpers or Kim Rosen Events, or was volunteering his services on this
single occasion. If Ruby was only assisting Kim Rosen Events on this one occasion, his
operating the golf cart that day cannot be deemed continuous. He claims he was an
unpaid volunteer. If so, his activity could not have been motivated by a desire for profit
or compensation. Given this dispute, we cannot determine whether Ruby’s activity at
the wedding was continuous and was instigated by a profit motive.
The pleadings raise a disputed fact. It is disputed that Ruby was engaged in a
business pursuit when he operated the golf cart causing Jones’s alleged injuries. In
light of this dispute, we cannot conclude, as a matter of law, that the business pursuits
exclusion applies. Thus, we shall deny the motion for judgment on the pleadings and/or
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