Slate Bar & Lounge In v. Founders Insurance Company

Filing 34

MEMORANDUM (Order to follow as separate docket entry) re 31 MOTION for Judgment on the Pleadings filed by Founders Insurance Company, 30 MOTION for Judgment on the Pleadings Proposed Order & Brief in Support filed by Slate Bar & Lounge Signed by Magistrate Judge Joseph F. Saporito, Jr on 10/18/17. (ms)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
SLATE BAR & LOUNGE, INC.,
d/b/a SLATE BAR & LOUNGE,
Plaintiff,

CIVIL ACTION NO. 3:15-cv-02251

v.

(SAPORITO, M.J.)

FOUNDERS INSURANCE
COMPANY,
Defendant.
MEMORANDUM
This insurance declaratory judgment action was removed from the
Court of Common Pleas for Luzerne County, Pennsylvania. The plaintiff,
Slate Bar & Lounge, Inc. d/b/a Slate Bar & Lounge (“Slate Bar”), filed its
original complaint in state court on November 4, 2015. (Doc. 1-3). The
action was timely removed to this Court by the defendant, Founders
Insurance Company (“Founders”), on November 24, 2015, pursuant to 28
U.S.C. §§ 1441(a) and 1446. (Doc. 1).
In this action, Slate Bar seeks a declaration by the Court that
Founders has a duty to defend and indemnify it with respect to a
particular state tort action under a commercial liquor liability policy
issued to it by Founders. In the underlying state court action, the tort

plaintiff seeks an award of damages for injuries he suffered at the hands of
a bouncer employed by Slate Bar during an altercation that occurred when
the tort plaintiff attempted to enter the bar to purchase a twelve-pack of
beer to go. The tort plaintiff was allegedly stabbed with a 3-inch knife.
This matter is now before the Court on the parties’ cross-motions for
judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of
Civil Procedure. (Doc. 30; Doc. 31). For the reasons set forth below, the
defendant’s motion (Doc. 31) will be denied, the plaintiff’s motion (Doc. 30)
will be granted with respect to Founders’ duty to defend it and denied with
respect to Founders’ duty to indemnify it, and judgment will be entered in
favor of the plaintiff with respect to Founders’ duty to defend Slate Bar in
the underlying tort action. The plaintiff’s claim for declaratory relief on
Founders’ duty to indemnify Slate Bar will be dismissed without prejudice
as premature and unripe.
I.

BACKGROUND
The plaintiff is a Pennsylvania corporation with its principal place of

business at 2324 Sans Souci Parkway, Hanover Township, Pennsylvania,
where it at one time operated a drinking establishment, also called Slate
Bar & Lounge. The defendant is an insurance company organized under

-2-

the laws of the State of Illinois, with its principal place of business located
in Des Plaines, Illinois. Because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds $75,000, the
Court has proper jurisdiction over this matter pursuant to 28 U.S.C.
§ 1332.
The complaint in this action was originally filed by the plaintiff in
the Court of Common Pleas for Luzerne County, Pennsylvania, on
November 4, 2015. (Doc. 1-3, at 4–11). It was timely removed to this Court
by the defendant on November 24, 2015. (Doc. 1).
Founders filed a motion to dismiss for failure to state a claim on
November 25, 2015. (Doc. 3). That motion was denied on July 8, 2016.
(Doc. 18; Doc. 19). Founders filed a motion for reconsideration on July 22,
2016. (Doc. 20). On July 26, 2016, Founders filed its answer to the
complaint. (Doc. 21). On January 9, 2017, we denied the motion for
reconsideration. (Doc. 23: Doc. 24).
On March 25, 2017, the plaintiff filed its motion for judgment on the
pleadings, requesting that judgment be entered for the same reasons
stated in our opinion denying the defendant’s original motion to dismiss.
(Doc. 30). On March 27, 2017, the defendant filed its cross-motion for

-3-

judgment on the pleadings, largely relying on the same arguments it had
presented in support of its earlier motion to dismiss. (Doc. 31). On April
10, 2017, the plaintiff filed a brief in opposition to the defendant’s motion.
(Doc. 33). These motions are now ripe for disposition.
A. The Underlying Tort Complaint
The underlying state tort complaint was filed in the Court of
Common Pleas for Luzerne County, Pennsylvania, on February 19, 2013.
(Doc. 1-3, at 25–32). 1 The tort complaint alleged injuries suffered by the
tort plaintiff, Bruce H. Fine, when he was stabbed by Edwin Cortez, a
“bouncer/security guard” employed by Slate Bar. In his complaint, Fine
alleged the following facts:
6. On the evening [of] Saturday, December 8, 2012,
Plaintiff Bruce Fine, along with friends Jennifer
Ruchinski, Jason Girton, and Chastity Girton, traveled to
Defendant, Slate Bar and Lounge, to purchase a twelve
(12) pack of beer. Plaintiff and his friends were not
planning on staying at Defendant, Slate Bar and Lounge,
after purchasing the beer to go.
7. Upon arriving at the door of Defendant, Slate Bar
and Lounge, Plaintiff, Bruce Fine, and his friends were
stopped by Edwin Cortez and two other employees
(hereinafter “Slate Bar Bouncers”) working at the door,
Bruce H. Fine v. Slate Bar and Lounge, Inc. t/a Slate Bar and
Lounge, No. 2076 of 2013 (Luzerne Cty. C.C.P.).
1

-4-

and were informed that there was a $5.00 cover charge,
total[ing] $20.00 for the entire group, for admission [to]
the Defendant bar.
8. The group informed the Slate Bar Bouncers that
they wanted only to purchase beer and leave, the Slate
Bar Bouncers informed the patrons that only the females
were allowed to enter the bar, requiring the males to
remain outside.
9. Mr. Fine and Mr. Girton objected. An exchange of
words ensued. The untrained and unsupervised Slate Bar
Bouncers negligently escalated the matter into an
altercation.
10. During the scuffle, Edwin Cortez, acting as a Slate
Bar Bouncer, suddenly and without warning, produced a
knife and stabbed Plaintiff, Bruce Fine[,] in the abdomen.
11. Jason Girton, recovered Edwin Cortez’s knife[,]
which had a blade of approximately 3 inches. The knife
was turned [] over to police and remains in custody of the
Hanover Township Police.
12. According to a criminal complaint filed against
Edwin Cortez, police responded to the Slate Bar and
noted bruises and abrasions on Plaintiff[] Bruce Fine’s
face, along with stab wounds. . . .
13. According to the criminal complaint, Edwin Cortez
and Justin Catalano, employees of this licensed bar, fled
out the back door of the Defendant, Slate Bar and
Lounge, when police responded to the scene to
investigate what had happened.
14. Using a police dog, police officers tracked Edwin
Cortez.
15. Neither Mr. Mannino nor any other representative
-5-

of Defendant, Slate Bar and Lounge, made any
meaningful attempt to intervene, protect, or assist
Plaintiff, Bruce Fine[,] while the Slate Bar Bouncers
negligently and improperly confronted Mr. Fine.
16. As a direct and proximate result of Defendant’s
negligence, Plaintiff, Bruce Fine[,] has been, and may
continue to be, subjected to further medical procedures
and treatments, and all accompanying risks, hazards,
pain, suffering, discomfort, and economic losses
associated therewith, all to his continuing detriment and
loss, and may be compelled to expend money for medicine
and medical attention in an attempt to cure or relieve the
pain caused by the aforementioned injuries.
(Id. at 26–28 (footnote omitted)).
The single-count tort complaint alleged that Slate Bar was negligent
by reason of the following conduct:
a. Failing to properly train its employees, agents,
and/or ostensible agents to identify and avoid conduct
that could lead to harm to patrons;
b. Failure to properly train its employees, agents,
and/or ostensible agents to intervene in situations where
the probability of harm to patrons is self-evident;
c. Failure to train its employees, agents, and/or
ostensible agents on security techniques;
d. Failure to properly employ experienced security
persons;
e. Failure to properly train security persons;
f. Failure to properly clothe a security person in such a
way as to make his or her status as a security person
-6-

readily apparent;
g. Failure to properly monitor the activities and
practices of its security personnel;
h. Failure to properly intervene, protect, or assist
Plaintiff, Bruce Fine, in any way once he was negligently
and improperly confronted by Edwin Cortez;
i. Failure to keep the business premises under control
and safe for its business invitees;
j. Failure to adequately recruit, train, maintain,
employ and/or supervise its employees, agents, and/or
ostensible agents;
k. Negligently allowing its employees, agents, and/or
ostensible agents to carry knives;
l. Corporate negligence;
m. Negligence per se;
n. Creating hazardous and unsafe conditions in and
outside of Slate Bar;
o. Failing to warn patrons and business visitors that
Slate Bar’s agents, employees, and/or ostensible agents
were armed with weapons such as knives with three (3)
inch blades; and
p. Violations of duties imposed under Pennsylvania
law and the Restatement of Torts, including, but not
limited to, Section 3233. 2
This citation appears to be a scrivener’s error, as there is no
“Section 3233” in the Restatement of Torts. The tort plaintiff likely
intended to cite the Restatement (Second) of Torts § 344, which concerns
(continued on next page)
2

-7-

(Id. at 28–29). The tort complaint specifically noted that:
Pennsylvania Court[s] have long imposed duties upon bar
owners to keep the bar “orderly and well policed.” Ash v.
627 Bar, Inc., 176 A.2d 137, 139 (Pa. Super. [Ct.] 1961)
(affirming judgment against unruly bar when patron
attacked by unknown person). The owner is “bound to see
not only that there is order, but that [patrons are]
properly protected from assaults and insults by those in
its employ and by others who may be in its place of
business.” Id. (emphasis added).
(Id. at 31 (emphasis in original)).
As a remedy for his injuries, the tort plaintiff requested an award of
$50,000 or more in damages. (Id. at 32).
B. The Insurance Policy
Slate Bar is the named insured on a commercial liquor liability
policy, Policy No. LLPA000967, issued by Founders and effective for a
policy period beginning August 15, 2012, and ending August 15, 2013.
(Doc. 1-3, at 13–23). The policy consists of a two-page declarations page, a
seven-page liquor liability coverage form (Form PA-CSL), and two policy
endorsements amending provisions set forth in Form PA-CSL—an
endorsement excluding acts of terrorism (Form CG 21 73 01 08), and an
liability for the acts of third persons with respect to business premises
open to the public. This provision would not trigger coverage under the
Founders policy in any event, so the error is of no consequence here.
-8-

assault-and-battery coverage buy-back endorsement (Form PA-LL01).
(Id.). The policy’s insuring agreement provides as follows:
1. Insuring Agreement
• We will pay those sums that an “insured” becomes
legally obligated to pay as damages because of
“injury” to which this insurance applies if liability
for such “injury” is imposed on an “insured” by
reason of the selling, serving, or furnishing of any
alcoholic beverage; and
• We will defend an “insured” against any “suit”
seeking those damages.
....
We have no duty to defend an “insured” against any
“suit” seeking damages for “injury” to which this
insurance does not apply. . . .
Subject to Exclusions to Coverage (Paragraph 2 below),
this insurance applies to “injury” only if the “injury”
occurs as a direct result of an “insured” selling, serving,
or furnishing alcoholic beverages on the “insured
premises” during the policy period.
(Id. at 17).
In addition to Slate Bar itself, as a corporation, the policy defines
“insured” to include its employees with respect to “acts within the course
and scope of their employment by [Slate Bar] or while performing duties
related to the conduct of [Slate Bar’s] business.” (Id. at 19).
The policy defines “injury” as “all damages, including damages
-9-

because of ‘bodily injury,’ ‘property damage,’ and ‘loss of support.’” (Id. at
22). “Bodily injury” is in turn defined as “bodily injury, sickness, or disease
sustained by a person, including death and loss of society, companionship,
and consortium to others resulting from any of these at any time.” (Id.).
The policy defines “suit” as “a civil proceeding in which damages
because of ‘injury’ to which this insurance applies are alleged,” including
arbitration or other alternative dispute resolution proceedings. (Id. at 23).
The policy defined the “insured premises” as “the premises shown in
the Declarations.” (Id. at 22). The Declarations Page in turn identified the
insured premises by its address: 2324 San Souci Parkway, Hanover
Township, Pennsylvania, 18706. (Id. at 14).
The policy also contains several coverage exclusions, including an
“assault and battery” exclusion (Paragraph 2.k), which provides that the
policy does not apply to injury arising from assault or battery, from the
failure to suppress or prevent assault or battery, from the selling, serving
or furnishing of alcoholic beverages resulting in assault or battery, or from
various forms of negligent conduct resulting in assault or battery. (Id. at
18–19). The assault-and-battery coverage buy-back endorsement (Form
PA-LL01), however, modifies the policy language to effectively eliminate

- 10 -

the “assault and battery” exclusion in its entirety. 3
II.

LEGAL STANDARD
The defendant has answered the complaint and both parties have

moved for judgment on the pleadings under Rule 12(c) of the Federal Rules
of Civil Procedure. Rule 12(c) provides that “[a]fter the pleadings are
closed—but early enough not to delay trial—a party may move for

The endorsement provides that, in consideration for an additional
premium, the policy’s “assault and battery” exclusion (Paragraph 2.k):
shall not apply and coverage for any “injury” that
otherwise would be excluded by the Assault and/or
Battery exclusion referenced herein shall be provided
subject to the Limits of Insurance shown in the
Declarations on the line on which this endorsement is
listed. Any coverage provided under the Limits of
Insurance shown in the Declarations for this
endorsement shall be subject to the Aggregate Limit
applicable to the policy.
(Doc. 1-3, at 16). Under this endorsement language, the only distinction in
the coverage afforded to injuries arising from assault or battery and
injuries that do not arise from assault or battery concerns the applicable
coverage limits. Generally, the policy provides third-person liability
coverage for up to $1 million per occurrence, subject to a $2 million
aggregate limit (i.e., a maximum of $2 million in indemnity payouts for the
entire policy period). (Id. at 14, 20). Claims involving assault and battery,
however, are subject to separate sublimits of $1 million per occurrence and
$1 million in the aggregate. (Id.). Because the coverage question presented
here concerns a single occurrence, and because there is no suggestion by
either party of any other claim that might have eroded available aggregate
coverage limits, this distinction between the applicable coverage limits for
assault-and-battery claims and all other claims is immaterial.
3

- 11 -

judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Under Rule 12(c), a
court must accept all factual averments as true and draw all reasonable
inferences in favor of the non-moving party.” U.S. Fid. & Guar. Co. v.
Tierney Assoc., Inc., 213 F. Supp. 2d 468, 469 (M.D. Pa. 2002) (citing Soc’y
Hill Civic Ass’n v. Harris, 632 F.2d 1045, 1054 (3d Cir. 1980)); see also
Westport Ins. Corp. v. Black, Davis & Shue Agency, Inc., 513 F. Supp. 2d
157, 163 (M.D. Pa. 2007) (“When deciding a motion for judgment on the
pleadings, the court is directed to view ‘the facts presented in the
pleadings and the inferences drawn therefrom in the light most favorable
to the nonmoving party.’”) (quoting Hayes v. Cmty. Gen. Osteopathic Hosp.,
940 F.2d 54, 56 (3d Cir. 1991)). In deciding a Rule 12(c) motion, we may
also consider “matters of public record, and authentic documents upon
which the complaint is based if attached to the complaint or as an exhibit
to the motion.” Chemi SpA v. GlaxoSmithKline, 356 F. Supp. 2d 495, 496–
97 (E.D. Pa. 2005); see also Kilvitis v. Cty. of Luzerne, 52 F. Supp. 2d 403,
406 (M.D. Pa. 1999) (“In deciding a Rule 12(c) motion, however, a court
may take judicial notice of any matter of public record.”). Ultimately, “[a]
party moving for judgment on the pleadings under Rule 12(c) must
demonstrate that there are no disputed material facts and that judgment

- 12 -

should be entered as a matter of law.” U.S. Fid. & Guar., 213 F. Supp. 2d
at 469–70 (citing Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289,
290–91 (3d Cir. 1988), and Inst. for Sci. Info., Inc. v. Gordon & Breach, Sci.
Publishers, Inc., 931 F.2d 1002, 1005 (3d Cir. 1991)). Here, the parties are
in agreement that the pleadings and attached exhibits disclose all of the
facts pertinent to resolution of the coverage question at issue.
III.

DISCUSSION
Slate Bar seeks a declaration by the Court that Founders has a duty

to defend and indemnify it in the state tort action brought by Bruce Fine.
The Third Circuit has summarized the substantive law applicable in this
scenario:
An insurer’s duty to defend “is a distinct obligation”
that is “different from and broader than the duty to
indemnify.” Because an insurer’s duty to defend its
insured in a lawsuit is broader than its duty to
indemnify, it necessarily follows that it will not have a
duty to indemnify an insured for a judgment in an action
for which it was not required to provide a defense. Under
Pennsylvania law, . . . a court ascertaining whether an
insurer has a duty to defend its insured makes its
determination by defining the scope of coverage under
the insurance policy on which the insured relies and
comparing the scope of coverage to the allegations of the
underlying complaint. If the allegations of the underlying
complaint potentially could support recovery under the
policy, there will be coverage at least to the extent that
the insurer has a duty to defend its insured in the case.
- 13 -

As the Pennsylvania Supreme Court has explained,
“[i]f the complaint filed against the insured avers facts
which would support a recovery that is covered by the
policy, it is the duty of the insurer to defend until such
time as the claim is confined to a recovery that the policy
does not cover.” Importantly, Pennsylvania adheres to
the “four corners” rule (also known as the “eight corners”
rule), 4 under which an insurer’s potential duty to defend
is “determined solely by the allegations of the complaint
in the [underlying] action.” Under the four corners rule, a
court in determining if there is coverage does not look
outside the allegations of the underlying complaint or
consider extrinsic evidence.
To determine whether based on its factual allegations
an underlying complaint triggers an insurer’s duty to
defend, a court views the allegations as true and
“liberally construe[s them] in favor of the insured.” An
insurer must defend its insured until it becomes
absolutely clear that there is no longer a possibility that
the insurer owes its insured a defense. Thus, an insurer
has a duty to defend if there is any possibility that its
coverage has been triggered by allegations in the
underlying complaint.
Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 673–74 (3d Cir. 2016)
(citations and footnotes omitted, emphasis and brackets in original).
A. Duty to Defend
Under the policy’s insuring agreement, Founders agreed to
“There will be eight corners because a court in deciding if there is
coverage will look at both the insurance policy and the underlying
complaint.” Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 673 n.9 (3d
Cir. 2016).
4

- 14 -

indemnify Slate Bar for legal damages where (1) liability for an injury is
imposed on Slate Bar or its employees “by reason of the selling, serving, or
furnishing of any alcoholic beverage,” and (2) where “the ‘injury’ occurs as
a direct result of [Slate Bar or its employees] selling, serving, or furnishing
alcoholic beverages” on its premises located at 2324 Sans Souci Parkway,
Hanover Township, Pennsylvania. So long as there is any possibility that
the policy’s coverage has been triggered by the allegations of the
underlying complaint, Founders has a duty to defend Slate Bar in the
underlying tort action.
At bottom, the question presented in this case is whether the
underlying tort complaint sufficiently alleges that Fine’s injuries were “a
direct result of” Slate Bar’s “selling, serving, or furnishing alcoholic
beverages” and that liability should be imposed on Slate Bar “by reason of
the selling, serving, or furnishing of any alcoholic beverage.” (See Doc. 1-3,
at 17). Courts have construed the language used in this policy—“direct
result of” and “by reason of”—to mean “proximately caused by.” See
Jefferson Bank v. Progressive Cas. Ins. Co., 965 F.2d 1274, 1281–82 (3d
Cir. 1992) (noting that “courts have equated ‘direct result’ with ‘proximate
cause of loss,’” and holding that “‘resulting directly from’ means

- 15 -

‘proximately caused by’”) (applying Pennsylvania law); Trexler Lumber Co.
v. Allemannia Fire Ins. Co. of Pittsburgh, 136 A. 856, 858 (Pa. 1927)
(equating “direct cause” with “proximate cause”); Marks v. Lumbermen’s
Ins. Co. of Philadelphia, 49 A.2d 855, 856 (Pa. Super. Ct. 1946) (equating
“direct loss” with “proximately caused by”); see also Caterpillar, Inc. v. Int’l
Union, 107 F.3d 1052, 1068–69 (3d Cir. 1997) (Mansmann, J., dissenting)
(noting that “[d]ictionaries define the phrase “by reason of” to mean
“because of” or “on account of,” and concluding that “the phrase ‘by reason
of x’ refers at a minimum to a major reason for x, not simply a relatively
minor ‘but-for’ cause”); McNeilab, Inc. v. N. River Ins. Co., 645 F. Supp.
525, 535 (D.N.J. 1986) (“The causal connection implied by the phrase ‘by
reason of’ is normally that of proximate causation.”); By reason of, Black’s
Law Dictionary 201 (6th ed. 1990) (defining “by reason of” as “[b]ecause
of,” or “[b]y means, acts, or instrumentality of”).
“Proximate causation is defined as a cause which was ‘a substantial
factor in bringing about the plaintiff’s harm.’ The concept is essentially a
limiting principle that functions as ‘shorthand for the policy-based
judgment that not all factual causes contributing to an injury should be
legally cognizable causes.’” Ramara, Inc., 814 F.3d at 675 (citations

- 16 -

omitted); see also Jefferson Bank, 965 F.2d at 1281 (“Pennsylvania,
consistent with general notions of proximate causation, requires that
plaintiffs in negligence cases show substantiality, rather than immediacy,
in order to demonstrate probable cause.”); Robertson v. Allied Signal, Inc.,
914 F.2d 360, 366–67 (3d Cir. 1990) (“Cause in fact or ‘but for’ causation
requires proof that the harmful result would not have come about but for
the conduct of the defendant. Proximate cause, in addition, requires proof
that the defendant’s conduct was a substantial contributing factor in
bringing about the harm alleged.”). Thus, we must determine whether
Slate Bar’s selling, serving, or furnishing of alcoholic beverages was a
substantial contributing factor in bringing about Fine’s injury. We find
that it was.
It is undisputed that the underlying complaint alleges that Fine and
his friends went to Slate Bar for the express purpose of purchasing a
twelve-pack of beer to go. It is undisputed that the underlying complaint
alleges that Cortez was employed by Slate Bar as a bouncer, in which
capacity he was positioned to interact with Fine and other patrons as they
attempted to enter the bar to purchase alcoholic beverages. It is
undisputed that the underlying complaint alleges that Fine and his friends

- 17 -

told Cortez and the other bouncers that they came to and sought entry into
the bar for the purpose of purchasing alcoholic beverages. Based on these
allegations, we find that Slate Bar’s selling, serving, or furnishing
alcoholic beverages was a substantial contributing factor in bringing about
Fine’s injury, and thus Fine’s injury was proximately caused by the selling,
serving, or furnishing of alcoholic beverages by Slate Bar. See Liberty
Surplus Ins. Corp. v. McFaddens at Ballpark LLC, 116 F. Supp. 3d 447,
457 (E.D. Pa. 2015) (finding liquor liability coverage triggered under
similar circumstances).
Moreover, we note that the underlying tort complaint expressly
alleges a claim of negligence per se (Doc. 1-3, at 29), which under the facts
alleged may only be reasonably construed as a claim that the injury to
Fine was caused by selling, serving, or furnishing of alcoholic beverages to
a visibly intoxicated person,5 in violation of Slate Bar’s statutory duties
under the Dram Shop Act, 47 Pa. Cons. Stat. § 4-493. See Springfield Twp.
v. Indemnity Ins. Co. of N. Am., 64 A.2d 761, 762 (Pa. 1949) (“It is not the
actual details of the injury, but the nature of the claim which determines
whether the insurer is required to defend.”). See generally Miller v. Brass
5

Presumably Cortez, as Fine had not yet entered the bar.
- 18 -

Rail Tavern, Inc., 702 A.2d 1072, 1078 (Pa. 1997) (“A violation of the Dram
Shop Act is negligence per se.”) (footnote omitted).
Accordingly, we find that the allegations of the underlying complaint
potentially could support recovery under the commercial liquor liability
policy issued to Slate Bar by Founders. Therefore, Founders owes a duty to
defend Slate Bar in the underlying tort action, Bruce H. Fine v. Slate Bar
and Lounge, Inc. t/a Slate Bar and Lounge, No. 2076 of 2013 (Luzerne
Cty. C.C.P.).
B. Duty to Indemnify
Slate Bar also seeks a declaration that Founders has a duty to
indemnify it in the event Slate Bar is found liable in the underlying state
tort action. But the question of whether Founders has a duty to indemnify
“is not ripe for adjudication until the insured is held liable, if at all, in the
underlying suit.” Knightbrook Ins. Co. v. DNA Ambulance, Inc., Civil
Action No. 13-2961, 2013 WL 6662745, at *8 (E.D. Pa. Dec. 16, 2013); see
also C.H. Heist Caribe Corp. v. Am. Home Assurance Co., 640 F.2d 479,
483 (3d Cir. 1981) (holding that a decision on an insurer’s duty to
indemnify was premature before entry of judgment against the insured in
the underlying state court action); Unionamerica Ins. Co., Ltd. v. Johnson,

- 19 -

806 A.2d 431, 434 (Pa. Super. Ct. 2002) (“It was premature for the trial
court to rule on the indemnity question. . . . The duty to indemnify is a
conditional obligation. The duty to indemnify arises only if, after trial on
the third-party claim, it is determined that the loss suffered is covered by
the terms of the policy.”). 6 The Court therefore will dismiss, without
prejudice, Slate Bar’s claim for declaratory judgment on indemnity. See
Metro. Prop. & Cas. Ins. Co. v. Spayd, No. 5:16-cv-04693, 2017 WL
3141170, at *2 (E.D. Pa. July 24, 2017) (concluding that where a duty-toindemnify claim is not ripe, the proper disposition is dismissal rather than
a stay) (citing Med. Assurance Co. v. Hellman, 610 F.3d 371, 375 (7th Cir.
2010)).
IV.

CONCLUSION
For the foregoing reasons, the defendant’s motion for judgment on

the pleadings (Doc. 31) will be denied, and the plaintiff’s motion for
judgment on the pleadings (Doc. 30) will be granted with respect to the
plaintiff’s claim for declaratory relief on Founders’ duty to defend it and
The Supreme Court of the United States has held that the question
of ripeness may be considered by a court sua sponte even when it is based
on prudential concerns alone. Nat’l Park Hospitality Ass’n v. Dep’t of
Interior, 538 U.S. 803, 808 (2003); see also Cty. Concrete Corp. v. Town of
Roxbury, 442 F.3d 159, 163 (3d Cir. 2006).
6

- 20 -

denied with respect to the plaintiff’s claim for declaratory relief on
Founders’ duty to indemnify it. Moreover, the plaintiff’s claim for
declaratory relief on Founders’ duty to indemnify it will be dismissed
without prejudice as premature and unripe.
An appropriate Order will follow.

Dated: October 18, 2017

s/ Joseph F. Saporito, Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge

- 21 -