UNITRIN DIRECT INSURANCE COMPANY v. ESPOSITO
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 4/5/2017. 4/5/2017 ENTERED AND COPIES E-MAILED.(sg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
UNITRIN DIRECT INSURANCE COMPANY
April 5, 2017
Unitrin Direct Insurance Company brought this action seeking a declaration that it
has no duty to defend and indemnify its insured, Michael Esposito, in a pending state
court action alleging he assaulted the plaintiff. 1 Moving for judgment on the pleadings,
Unitrin argues that Esposito is not covered because there was no occurrence, as
defined in the policy, causing bodily injury. It also contends that coverage is excluded
because the claim in the underlying action is for intentional bodily harm.
Rather than addressing Unitrin’s coverage defenses, Esposito argues that there
is no federal jurisdiction and that the action should be dismissed for failure to join
His arguments are meritless. 2
Nevertheless, we shall deny
Unitrin’s motion to the extent it seeks a declaration that it need not defend Esposito.
After reviewing the policy, the plaintiff’s complaint in the underlying action, and
the complaint and the answer in this action, we conclude that Unitrin has failed to meet
This action is brought under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.
Subject matter jurisdiction is based upon the diversity of citizenship of the parties pursuant to 28 U.S.C. §
Esposito argues that the complaint must be dismissed for failure to join indispensable parties,
the plaintiff (Anderson) and Esposito’s codefendant (The Deck), in the underlying state court action. Fed.
R. Civ. P. 19. An injured claimant is not an indispensable party to a declaratory judgment action between
the alleged tortfeasor and his insurer. Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 228–30 (3d
Cir. 2005); Scottsdale Ins. Co. v. RSE Inc., 303 F.R.D. 234, 238 (E.D. Pa. 2014) (citing Treesdale, 419
F.3d at 230; and Hartford Cas. Ins. Co. v. Cardenas, 292 F.R.D. 235, 238 (E.D. Pa. 2013)).
its burden of demonstrating that the insurance policy excuses it from defending Esposito
as a matter of law. Although the injury-producing conduct alleged in the underlying
action does not fall within the policy definition of an occurrence triggering coverage, the
policy exclusion for intentional conduct expressly provides coverage when the insured
acts in self-defense or in the defense of others.
Because Esposito claims in the
underlying action that he acted in defense of himself and his wife, Unitrin must defend
him. If the jury rejects his defense and finds against him in the state court action, Unitrin
will have no duty to indemnify him. If it finds for him, the issue of indemnity will be moot.
The Underlying Action
On August 2, 2014, Esposito physically assaulted Mark Anderson at The Deck at
Harbour Pointe, a bar located in Delaware County, Pennsylvania. 3 Anderson sued The
Deck and Esposito in state court. 4 His complaint states causes of action for negligence
against Esposito and The Deck, and for assault and battery against Esposito. In the
assault count, Anderson alleges that Esposito, “without provocation, punched, kicked
and injured [Anderson] causing permanent, significant and disfiguring facial injuries.” 5
Anderson suffered facial fractures, a concussion, nerve damage and scarring. 6 He also
alleges that Esposito pleaded guilty to assault. 7
Compl. (Doc. No. 1) ¶ 4; Compl. Ex. B (2d Am. Compl., C.P. Ct. Phila. Cty.) (Doc. No. 1-3) ¶ 7.
The underlying action has since been transferred to the Court of Common Pleas of Delaware County.
Compl. ¶ 5.
Compl. Ex. B ¶ 7.
Id. ¶ 15(a).
Id. ¶ 8; see also Answer ¶ 10. Neither party has addressed the preclusive effect, if any, of
Esposito’s guilty plea to assault. The issue implicates questions of the statutory definition of the crime of
assault; whether it is a divisible statute providing for conviction predicated on either intentional, knowing
At the time of the assault, Esposito was covered by a homeowner’s policy issued
Unitrin is defending Esposito in the state court action pursuant to a
reservation of rights. 8
We must decide whether Unitrin has a duty to defend and
indemnify Esposito in the state court action.
In other words, we must determine
whether any of the claims in the complaint are potentially covered by the policy.
Standard of Review
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 is barred by an exclusion may be determined on a motion for judgment on
the pleadings. Allstate Fire & Cas. Ins. Co. v. Hymes, 29 A.3d 1169, 1171 (Pa. Super.
In deciding a motion for judgment on the pleadings made pursuant to Rule 12(c),
the court considers 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);
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)
All the well-pleaded factual assertions in the nonmovant’s pleadings are
accepted as true and all contrary allegations in the movant's pleadings are assumed to
be false. 5C 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)).
or reckless conduct; and whether Esposito’s guilty plea precludes him from now asserting a justification
defense. Because the parties did not raise the issue, we shall refrain from considering it.
Compl. Ex. C, Letter to Michael Esposito from Linda Martorella, Litigation Examiner II, Unitrin
Direct Ins. Co., March 14, 2016 (Doc. No. 1-4), at ECF 5–6.
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). 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).
Applying these principles, we examine the insurance policy and the allegations in
the state court complaint.
Because we are deciding a motion for judgment on the
pleadings, we also consider Unitrin’s complaint and Esposito’s answer in this case.
Interpretation of Insurance Contracts
A court must give effect to the plain language of the insurance contract read in its
Am. Auto. Ins. Co., 658 F.3d at 320.
When the language is plain and
unambiguous, the court is bound by that language. Pa. Nat’l Mut. Cas. Ins. Co. v. St.
John, 106 A.3d 1, 14 (Pa. 2014). 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, 106 A.3d at 14. Contract language is ambiguous if it is
reasonably capable of more than one 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,
it 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); Mut. Benefit
Ins. Co. v. Politsopoulos, 115 A.3d 844, 852 n.6 (Pa. 2015) (citing Madison Constr. Co.
v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999)); 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 indemnify. 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).
may have a duty to defend even though it may have 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 liberally. 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 plaintiff in the underlying
action 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.
Super. 2002). If a single claim in a multiple-claim complaint is potentially covered, the
duty to defend attaches until the underlying plaintiff can no longer recover on a covered
Frog, Switch & Mfg. Co., 193 F.3d at 746; Am. Contract Bridge League v.
Nationwide Mut. Fire Ins. Co., 752 F.2d 71, 75 (3d Cir. 1985).
The policy assures that Unitrin will “[p]ay up to our limit of liability for the
damages” resulting from a claim or suit “brought against an ‘insured’ for damages
because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence’ to which this
coverage applies.” 9 The policy defines “occurrence” as an “accident” resulting in bodily
injury or property damage. 10 “Accident” is not defined in the policy.
Undefined terms of common usage in an insurance policy must be construed
according to their plain meaning and a dictionary may inform an understanding of the
terms. Ramara, 814 F.3d at 666–67 (quoting Am. Auto. Ins. Co., 658 F.3d at 320); Wall
Rose Mut. Ins. Co. v. Manross, 939 A.2d 958, 962 (Pa. Super. 2007) (quoting Am. Auto.
Ins. Co., 658 F.3d at 320). The dictionary definition of an “accident” is “an unexpected
happening causing loss or injury which is not due to any fault or misconduct on the part
Compl. Ex. A, Unitrin Homeowner’s Insurance Policy for Michael & Debra A. Esposito, Section
II, Coverage E – Personal Liability (Doc. No. 1-2) ¶¶ A–A.1, at ECF 5.
Id., Definitions (Doc. No. 1) ¶ 8, at ECF 12. Bodily injury includes “bodily harm, sickness or
disease, including required care, loss of services and death that results.” Id. ¶ 2, at ECF 11.
of the person injured but for which legal relief may be sought.” Webster’s Third New
International Dictionary, Unabridged (2017).
Unitrin contends it has no obligation to defend and to indemnify Esposito
because the bodily injury alleged in the underlying action does not arise from an
occurrence or accident, but from an intentional act.
Unitrin argues that because
Esposito pleaded guilty to assault, his actions causing bodily injury do not qualify as an
occurrence under the policy.
Certainly, if Anderson has a negligence claim against Esposito, Unitrin will have
to defend and indemnify Esposito. However, there is no allegation in the underlying
action that Esposito acted negligently.
Although the state court complaint names Esposito as a defendant in the
negligence count, it is neither dispositive nor determinative of whether the incident is
covered. The factual allegations of the underlying complaint are controlling, not the
legal theories asserted. Erie Ins. Exch. v. Fidler, 808 A.2d 587, 590 (Pa. Super. 2002)
(citing Mut. Benefit Ins. Co. v. Haver, 725 A.2d 743, 745 (Pa. 1999)). There is nothing
in the negligence count which, if proven, could establish that Anderson’s injuries
resulted from Esposito’s negligence. The only allegation relating to Esposito in the
negligence count is his assaulting Anderson. The remaining allegations in that count
relate to The Deck’s failure to provide adequate security and surveillance.
Neither Anderson nor Esposito allege that Esposito’s contact with Anderson was
accidental. Instead, Esposito characterizes his contact with Anderson as an altercation,
which required him to defend himself and his wife. 11 In essence, he does not deny
Answer (Doc. No. 3) ¶ 4.
Thus, because Anderson alleges in his complaint that Esposito
acted intentionally and not accidentally, there is no occurrence triggering personal
liability coverage. See Allstate Ins. Co. v. Kenney, No. 02-02387, 2003 WL 22316776,
at *4 (E.D. Pa. Oct. 8, 2003) (citing Nationwide Mut. Fire Ins. Co. v. Pipher, 140 F.3d
222, 226 (3d Cir. 1998); Gene’s Restaurant, Inc. v. Nationwide Ins. Co., 548 A.2d 246,
246–47 (Pa. 1988)); Kvaerner Metals, 908 A.2d at 898–99.
Although there was no occurrence as defined under the policy, the coverage
inquiry does not end. Another policy provision suggests there is coverage. It is the
exclusion for Expected or Intended Injury relied upon by Unitrin.
Unitrin argues that because Esposito’s actions were “expected or intended,” it
has no duty to defend or indemnify him because he is responsible for the natural and
obvious consequences of his intentional acts. 12
Under Exclusion E.1, the policy
excludes coverage for bodily injury that is expected or intended by the insured:
E. Coverage E – Personal Liability And Coverage F – Medical Payments
Coverages E and F do not apply to the following:
1. Expected Or Intended Injury
“Bodily injury” or “property damage” which is expected or intended by
an “insured”, even if the resulting “bodily injury” or “property damage”:
a. Is of a different kind, quality or degree than initially expected or
b. Is sustained by a different person, entity or property than initially
expected or intended.
Br. in Supp. of Mot. for J. on the Pleadings (Doc. No. 9-2) at 17.
However, this Exclusion E.1 does not apply to “bodily injury” or
“property damage” resulting from the use of reasonable force by an
“insured” to protect persons or property. 13
When read in context of the policy as a whole, the language of Exclusion E.1
creates an ambiguity. Stidham v. Millvale Sportsmen’s Club, 618 A.2d 945, 953 (Pa.
Super. 1992) (citing United Servs. Auto. Ass’n v. Elitzky, 517 A.2d 982, 989 (Pa. Super.
1986) (holding that the expected or intended clause is ambiguous as a matter of law
and must be construed against the insurer)). The qualifying language in the exclusion
stating that it does not apply if the bodily injury results from the use of reasonable force
to protect persons conflicts with the policy’s definition of an occurrence. Self-defense or
the defense of another is an intentional act, not an accidental act falling within the
definition of an occurrence. Yet, it is covered. In effect, the qualifying language creates
an exception to the exclusion, affording coverage for bodily injury resulting from an
insured’s use of reasonable force in self-defense or the defense of others. Therefore, in
construing the exclusion against Unitrin, as we must, we conclude that the policy
provides coverage for an insured who causes bodily injury while using reasonable force
to protect persons, including himself and others. See Cosenza, 258 F.3d at 206–07;
Politsopoulos, 115 A.3d at 852; Peters, 108 A.3d at 43.
In his answer to Unitrin’s complaint, Esposito claims that he acted in defense of
himself and his wife. 14 It is disputed whether Esposito acted in defense of himself and
his wife, or acted “without provocation” to carry out an “unjustified assault.” 15 If Esposito
Compl. Ex. A, Section II – Exclusions, Coverage E – Personal Liability (Doc. No. 1-2) ¶¶ E.1–
E.1.b, at ECF 7.
Answer (Doc. No. 3) ¶ 4.
Compl. Ex. B ¶ 7, 13(f).
proves in the underlying action that he used reasonable force to protect himself and his
wife from Anderson, his conduct is covered. If he fails to prove that the force was
reasonable or was in self-defense, his conduct is not covered.
Because the underlying complaint alleges conduct that may fall within the scope
of the policy, Unitrin is obligated to defend Esposito unless and until the claim “is
confined to a recovery the policy does not cover.” QBE Ins. Corp. v. M & S Landis
Corp., 915 A.2d 1222, 1225 (Pa. Super. 2007) (quoting Erie Ins. Exch., 808 A.2d at
590). At this point, we cannot conclude whether Esposito’s conduct falls within the
Expected or Intended Injury Exclusion or the exception to the exclusion. Thus, by the
terms of the policy, Unitrin must defend Esposito in the underlying state action.
Donegal Mut. Ins. Co. v. Ferrara, 552 A.2d 699, 701 (Pa. 1989) (“If the factual
allegations of the complaint on its face states a claim to which the policy potentially
applies, the insurer must defend.” (emphasis in original)) (citations omitted).
The duty to indemnify arises only when the insured is found liable for damages
for claims falling within the policy’s coverage. State Farm Fire & Cas. Co. v. Corry, 324
F. Supp. 2d 666, 673 (E.D. Pa. 2004). There does not appear to be any outcome in the
underlying action where a duty to indemnify will arise. If the jury finds that Esposito did
not act in self-defense or in defense of his wife, Unitrin will have no duty to indemnify
him. If he is not found liable, there will be no need to indemnify him.
The complaint and the answer raise a disputed issue—whether Esposito used
reasonable force to protect himself or his wife.
In light of this dispute, we cannot
conclude, as a matter of law, whether the exception for defense of persons to the
Intended or Expected Injury Exclusion applies or not. Thus, we shall deny Unitrin’s
motion for judgment on the pleadings to the extent it seeks a declaration that it need not
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