Nora Barry Fischer, Senior U.S. District Judge.
This insurance coverage dispute returns to the Court on a contested motion for judgment on the pleadings pursuant to which Plaintiff National Liability & Fire Insurance Company, ("National"), seeks a declaration that it does not owe a duty to defend or indemnify Defendant Brimar Transit, Inc., ("Brimar"), or Intervenor Defendant Pittsburgh Public School District, (the "District"), in the underlying action styled M.M., parent and natural guardian of K.M., a minor v. Pittsburgh Public School District and Brimar Transit, Inc., Case No. GD-18-003257, ("underlying action"), which is on the May 2020 trial list in the Court of Common Pleas of Allegheny County. (Docket No. 53). National is providing a defense to Brimar in the underlying action under a reservation of rights but is not defending the District. (Docket No. 46 at ¶¶ 15-16). Brimar and the District contest the instant motion and assert that they are both entitled to a defense and indemnification in the event they are ultimately found liable. (Docket Nos. 57-58). The motion for judgment on the pleadings has been fully briefed, (see Docket Nos. 53-54; 57-59; 65-66), and was argued at a motion hearing, (see Docket No. 75), the official transcript of which has been received and reviewed by the Court, (see Docket No. 82). At the Court's direction, the parties also submitted supplemental briefing addressing whether this federal insurance coverage case should be stayed pending the trial of the underlying action. (Docket Nos. 80; 83; 84; 89).
The District and Brimar are parties to a contract pursuant to which Brimar agreed to provide student transportation services for the District during several school years. (See "Agreement", Exhibit A, Docket No. 46-1). The relevant terms and conditions of the parties' contract state that Brimar was expected to perform such services using safe vehicles and qualified drivers in accordance with the Pennsylvania Vehicle Code and other highway standards. (Id..). Brimar was also required to maintain insurance coverage for its vehicles and to provide a certificate of insurance to the District each year naming the District "as additional insured, verifying coverage of $1,000,000 per accident and a $5,000,000 umbrella." (Id. at ¶¶ 17-19; 2.f). Brimar further agreed "to indemnify, defend and hold harmless" the District "against any and all loss, damage, cost and expenses which the [District] may hereafter suffer or incur arising from [Brimar's] obligations under this Agreement." (Id. at ¶ 8).
As required under its agreement with the District, Brimar obtained Policy No. 73 APB 001185 from National for the policy period of January 11, 2016 through January 11, 2017, ("Policy"). (See "Commercial Policy", Docket No. 46-2). The Business Auto Coverage Declarations ("Declarations") note that Brimar is the named insured and in the business of "school buses"; Burns & Wilcox, Inc. is listed as the producer or broker on the transaction; and the form indicates that this is a new policy, meaning that it was not renewed from a prior time period. (Docket No. 46-2 at 55). The Declarations state that the Policy provides $1,000,000 in liability coverage for a premium of $69,654 as well as smaller premium amounts for additional coverage for personal injury protection; uninsured motorists; and underinsured motorists. (Id.). The Schedule of Covered Autos lists 26 separate vehicles covered under the Policy, all of which are described as "passenger vans" with listed seating capacities of 7 or 9 seats. (Id. at 57-58).
The relevant terms and conditions of the Policy include the following.
(Docket No. 46-2 at 59-61).
(Docket No. 46-2 at 85).
(Docket No. 46-2 at 90).
The Policy also contains definitions of important terms and phrases quoted throughout the policy, endorsements, and exclusions. (See Docket No. 46-2 at 59 ("Other words and phrases that appear in quotation marks have special meaning. Refer to Section V-Definitions.")). These definitions are relevant.
(Docket No. 46-2 at 68-69).
(Docket No. 46-2 at 61). Again, an earlier portion of the Policy notes that "You" means the named insured listed on the Declarations. (Id. at 59).
National and the District seek competing declarations concerning whether the District is covered as an additional insured under the Policy or entitled to coverage under a separately issued CGL Policy. (See Docket Nos. 46; 47; 48; 52). They also dispute the underlying facts concerning the existence of the CGL Policy. (See id.). To this end, National alleges that the District does not have the status of an insured under the Policy, "is a stranger to the Policy and has no rights of any kind thereunder." (Docket No. 46 at ¶ 55; see also ¶ 23). Brimar and the District deny these assertions. (Docket Nos. 47 at ¶¶ 23, 55; 48 at ¶¶ 23, 55). The District pleads both an affirmative defense and a counterclaim against National stating that it is an additional insured under the Policy and also alleges it is entitled to coverage under an alleged CGL Policy. (Docket No. 48 at ¶¶ 63-78, p. 16 at ¶¶ 7-8). National denies that the District is an insured and that a separate CGL Policy exists. (Docket No. 52 at ¶¶ 2, 7-11, 24). The District further asserts that its contract with Brimar constitutes an insured contract under the Policy. (Docket No. 48 at p. 16, ¶ 6). National again denies such allegation. (Docket No. 52 at ¶ 6).
The services rendered by Brimar under the Agreement with the District included transporting minor students to and from their homes and the Pittsburgh Classical Academy Middle School. (See Agreement; see also Docket No. 46-1 "M.M. Complaint" at ¶ 5). M.M., the mother of a minor student passenger, K.M., and the minor child have sued the District and Brimar in the Court of Common Pleas of Allegheny County asserting six causes of action: Count I — negligence; Count II — breach of contract; Count III — third party beneficiary; Count IV — intentional infliction of emotional distress; Count V — common carrier liability; and Count VI — intentional misrepresentation. (See M.M. Complaint at ¶¶ 56-124). The underlying plaintiffs set forth the following factual allegations against the District and Brimar in their extensive, 124-paragraph pleading. (Id. at ¶¶ 1-124).
K.M. suffers from disabilities which were known by the District and Brimar prior to the events in question. (M.M. Complaint at ¶ 6). During 2016, the District and Brimar assigned K.M. transportation on a smaller school bus operated by Brimar which carried, at most, seven students. (Id. at ¶ 12). Among the students assigned to this bus was a 12-year old male student whom the District and Brimar knew suffered from disabilities and had behavioral issues. (Id. at ¶¶ 6; 13). The District and Brimar were also aware that the male student sexually assaulted K.M. during gym class by grabbing her breasts and understood that the male student remained a threat to engage in similar behavior toward K.M. in the future. (Id. at
The underlying plaintiffs assert that the agreement was enforced for an unspecified period of time with the students being separated while on the bus by both the regular bus driver and a replacement bus driver who picked up the regular bus driver's route after she went on maternity leave. (M.M. Complaint at ¶¶ 18-20). On an unspecified date prior to April 29, 2016, a different bus driver was assigned to operate the school bus on the route in question. (Id. at ¶ 21). According to the underlying plaintiffs, this individual did not adhere to the separation plan and permitted the male student and K.M. to sit together on the bus while transporting the students to and from school. (Id.). This individual also engaged in a pattern of inattentiveness toward the students on the bus and texted and/or otherwise used her cell phone rather than supervising the students. (Id. at ¶¶ 26-27). The underlying plaintiffs contend that Brimar failed to inform the bus driver of the separation plan and to properly train and supervise this individual during the operation of the bus in accordance with the Pennsylvania School Bus Manual and other standards applicable to common carriers to ensure safety of the passengers, including K.M. (Id. at ¶¶ 22; 24-25; 62). They further assert that the District had duties to inform Brimar and its driver of the separation plan; to monitor the activities on the bus; and to ensure safety of the student passengers, including K.M. (Id. at ¶¶ 22-23; 43). They also maintain that the contract between Brimar and the District establishes an agency relationship such that the District is responsible for Brimar's actions and inactions. (Id. at ¶ 11).
On the afternoon of Friday, April 29, 2016, the bus driver did not enforce the separation plan and the male student and K.M. were seated together in the last row of the bus. (M.M. Complaint at ¶¶ 14; 32). A teacher driving in a separate vehicle observed the bus near Liberty Avenue and Main Street and saw that the students were in a seat together and that K.M. was sitting on the male student's lap. (Id. at ¶ 32). At some point, the male student pinned down K.M. on the seat and positioned himself on top of her. (Id. at ¶ 27). K.M. yelled for him to stop. (Id.). Other students on the bus yelled out to the bus driver to get her attention. (Id. at ¶¶ 27-28). The bus driver, who was only a few feet away in the small bus, failed to respond to these calls for help and did not do anything to intervene or separate the students. (Id.). Undeterred, the male student pulled down his pants and K.M.'s pants were also pulled down. (Id. at ¶ 29). K.M.'s calls for the male student to stop and the other students' cries to get the driver's attention continued but no action was taken by the bus driver. (Id.). The male student then sexually assaulted K.M. and penetrated her from behind. (Id.). The assault ended when K.M. pushed the male student off the seat. (Id. at ¶ 46). When she exited the bus, the male student slapped her in the rear end. (Id.).
Despite the fact that a teacher observed the incident, it was not reported to the District or M.M. until the following Monday. (M.M. Complaint at ¶ 32). After being informed of the assault, M.M. took K.M. for treatment at Children's Hospital and she was subject to physical examination, including for sexually transmitted diseases. (Id. at ¶¶ 37-38). K.M. provided a detailed description to medical providers which confirmed penetration and a sexual assault, as well as the male student kissing her chest. (Id. at ¶ 39). The District assessed the male student an out-of-school suspension and informed him that he would not be permitted back on the bus. (Id. at ¶ 32). The District then conducted an investigation and received statements from K.M., the male student and another student who was on the bus. (Id. at ¶ 46). K.M. reported additional incidents which occurred on the bus including one that took place one week before the April 29, 2016 assault, at which time the male student told K.M. to lay down and touched her leg, wanted to kiss her and she resisted; and that on another occasion the male student touched her waist. (Id. at ¶¶ 46-47). In his statement, the male student admitted that on April 29, 2016, K.M. kept saying no and hitting him but he kissed her and penetrated her when their pants were down. (Id. at ¶ 48). The other student reported that she would tell the male student to stop when he touched K.M. inappropriately and that he touched her breast and she did not like it. (Id. at ¶ 49).
K.M. received follow-up treatment at Children's on May 17, 2016, at which time it was reported that a new bus company had been hired for the route in question and the male student had returned to school but no longer rode the same bus as K.M. (M.M. Complaint at ¶ 40). Although K.M. and the male student did not have class together, she would see him at other times during the school day which caused her emotional distress. (Id.). During the next school year, the male student transferred to another school within the District but K.M. encountered him at a District-wide field trip to P.P.G. Paints Arena at which time she once again suffered emotional distress. (Id. at ¶¶ 33; 51). The underlying plaintiffs admit that the male student was unable to appreciate that his actions were wrong due to his disabilities and that he was neither criminally charged nor named as a defendant in the civil action because of his mental incapacities. (Id. at ¶ 35). As noted, they seek to hold Brimar and the District liable for their actions and inactions prior to, during and after the April 29, 2016 incident on the school bus involving K.M. and the male student. (See generally M.M. Complaint). They also assert that the contract between Brimar and the District created an agency relationship such that the District is liable for the negligence of Brimar and its driver. (Id. at ¶ 11).
National initiated this insurance coverage lawsuit against Brimar, only, on August 24, 2018. (Docket No. 1). After denying Brimar's motion to dismiss National's
As to the operative pleadings, National filed its Second Amended Complaint on February 11, 2019. (Docket No. 46). Brimar answered on February 25, 2019. (Docket No. 47). On the same day, the District answered and asserted counterclaims against National and cross-claims against Brimar. (Docket No. 48). Brimar and National answered these pleadings on March 11, 2019 and March 25, 2019. (See Docket Nos. 51; 52).
Over the subsequent months, the parties proceeded to engage in the instant litigation on National's motion for judgment on the pleadings and conduct some discovery, which was subsequently stayed at the parties' joint request until the resolution of the motion. (Docket Nos. 70; 76). As noted, the Court accepted pre-hearing briefing from the parties, (Docket Nos. 53-54; 57-59; 65-66), heard oral argument at a motion hearing, (Docket No. 75), the official transcript of which has been reviewed by the Court, (Docket No. 82), and accepted supplemental briefs on the pertinent issues, including whether a stay of the entire case pending disposition of the underlying action was appropriate, (Docket Nos. 80; 83-84; 89). The Court has also been provided with status reports concerning the underlying litigation, the most recent of which disclosed that the matter has been placed on the May 2020 trial list in the Court of Common Pleas of Allegheny County. (Docket Nos. 81; 90). The Court considers this matter to be fully briefed and ripe for disposition.
Federal Rule of Civil Procedure 12(c) provides that "after the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). Judgment on the pleadings will be granted only if "the movant clearly establishes there are no material issues of fact, and he or she is entitled to judgment as a matter of law." Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 220 (3d Cir. 2005); Knepper v. Rite Aid Corp., 675 F.3d 249, 257 (3d Cir. 2012) (same); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure, § 1367 (2019) ("The motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court."). "A material issue of fact that will prevent a motion under Rule 12(c) from being successful may be framed by an express conflict on a particular point between the parties' respective pleadings. It also may result from the defendant pleading new matter and affirmative defenses in his answer." Morris v. West Manheim Twp., 2014 WL 582265, at *2 (M.D. Pa. Feb. 14, 2014) (quoting Wright & Miller § 1367); Republic Franklin Ins. Co. v. Travelers Cas. Ins. Co. of America, 2018 WL 1420495 at *2 (D.N.J. Mar. 22, 2018) (quoting Gen. Conference Corp. of Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church, 887 F.2d 228, 230 (9th Cir. 1989) ("[A] plaintiff is not entitled to judgment on the pleadings when the answer raises issues of fact that, if proved, would defeat recovery. Similarly, if the defendant raises an affirmative defense in his answer it will usually bar judgment on the pleadings.")).
National seeks the entry of judgment on the pleadings arguing that it does not have a duty to defend or indemnify the District or Brimar under the Policy. (Docket Nos. 53-54; 59). National maintains that the District is not an insured under the Policy and otherwise contends that the claims asserted in the underlying litigation are either not covered by the Policy or excluded under same. (Id.). The District counters that the entry of judgment on the pleadings against it is inappropriate because it disputes National's claim that it has no rights as an insured under the Policy and has advanced its own counterclaim against National asserting that it is an insured under the Policy, both of which it intends to prove after completing necessary discovery. (Docket Nos. 58; 66). Brimar and the District advocate that National's motion should be denied because its duty to defend was triggered by the allegations in the underlying complaint and it is premature to determine if indemnification is required since that case remains ongoing and is presently set for a May 2020 trial in the Court of Common Pleas. (Docket Nos. 57-58; 65-66). After careful consideration of the parties' positions, National's motion for judgment on the pleadings will be denied.
At the outset, the Court agrees with the parties that Pennsylvania law governs this diversity action. See Allegrino v. Conway E & S, Inc., 2010 WL 4052923, at *6 n. 16 (W.D. Pa. Oct. 14, 2010) (declining to engage in choice-of-law analysis where parties agreed that Pennsylvania law applied to insurance coverage dispute). As the Court of Appeals recently recounted, the following legal principles are well established under Pennsylvania law:
Sapa Extrusions, Inc. v. Liberty Mut. Ins. Co., 939 F.3d 243, 249-50 (3d Cir. 2019) (emphases in original) (footnotes omitted).
State Farm Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir. 2009) (citation omitted).
Marks v. Utica First Ins. Co., Civ. A. No. 16-1671, 2017 WL 4867597, at *5 (W.D. Pa. Oct. 27, 2017). "`Exclusionary clauses generally are strictly construed against the insurer and in favor of the insured.'" Doe 1 v. Liberty Mut. Fire Ins. Co., No. 3:18-CV-1513, 2019 WL 4412437, at *6 (M.D. Pa. Sept. 13, 2019) (quoting Swarner v. Mutual Benefit Group, 72 A.3d 641, 645 (Pa. Super. Ct. 2013)).
With these principles in mind, the Court turns initially to the dispute between National and the District as to its status as an insured under the Policy and will then address the contest between all of the parties regarding National's duty to defend under the Policy.
In this Court's estimation, National has failed to meet its burden to demonstrate that there are no material factual disputes and that it is entitled to judgment as a matter of law on either its own claim that the District is not an "insured" under the Policy or the District's counterclaim asserting rights as an "insured." While purely legal issues concerning insurance coverage may be decided on a motion for judgment on the pleadings, such a motion is only an appropriate vehicle to resolve matters when the material allegations are admitted by the nonmoving party. See Sikirica, 416 F.3d at 220. Stated another way, "[w]hen a nonmoving defendant denies a material allegation in its answer, that denial creates a question of fact that prevents judgment on the pleadings." Citizens Ins. Co. of Am. v. Selective Way Ins. Co., 98 F.Supp.3d 782, 788 (E.D. Pa. 2015) (citing Inst. for Scientific Info., Inc. v. Gordon & Breach, Science Publishers, Inc., 931 F.2d 1002, 1008 (3d Cir. 1991)).
National posits that its motion raises purely legal issues of contract interpretation, but a careful review of the parties' pleadings demonstrates that there are several material allegations in dispute between the parties, precluding the entry of judgment on the pleadings as to the District's status as an additional insured under the Policy and whether it is entitled to coverage under a CGL Policy. See Sikirica, 416 F.3d at 220. Although the parties concur that the District is not specifically listed as a named insured on the Declarations of the Policy, they dispute whether the District was named as an additional insured by Brimar, if the District and Brimar have an "insured contract" or if the District is otherwise entitled to coverage as an "insured," as that term is defined under the Policy. (See Docket Nos. 46 at ¶¶ 55; 47 at ¶¶ 23, 55; 48 at ¶¶ 23, 55; 48 at p. 16, ¶ 6; 52 at ¶ 6). At this stage of the proceedings, the Court must accept as true the District's allegations that it was named an additional insured under the Policy and that a separate CGL Policy extends coverage to the District. (Docket Nos. 48 at ¶¶ 63-78, p. 16 at ¶¶ 7-8). Because such allegations rely upon matters outside the pleadings and the Policy and are denied by National, judgment on the pleadings is inappropriate on these disputed contentions. See Citizens Ins., 98 F. Supp. 3d at 788.
With that said, the Court is presently able to decide the separate issue of
Overall, the Court rejects National's arguments that it is entitled to judgment on the pleadings that the District is not an insured under the Policy as the Court holds that the District qualifies as an insured for any vicarious liability claims asserted against it in the underlying action. However, as to any claims for direct liability against the District, there are factual disputes between the parties precluding a determination as to whether it qualifies as an insured at this time. Therefore, the parties will be permitted to conduct discovery as to whether the District was named as an additional insured under the Policy and the alleged existence of a separate CGL Policy.
Having considered the parties' arguments in light of the prevailing legal standards, the Court finds that the M.M. Complaint contains allegations against Brimar and the District which are potentially covered by the Policy and are not otherwise excluded. See Ramara, 814 F.3d at 673. Since the parties agree that Brimar is an insured under the Policy, and the Court has held that the District qualifies as an insured under § II.A.1.c of the Policy, the Court concludes that National has a duty to defend both Brimar and the District in the underlying litigation. The Court reaches these decisions for several reasons.
Initially, National's coverage arguments are largely premised on its narrow characterization of the underlying claims as seeking damages for an alleged sexual assault committed by the male student. (Docket Nos. 53-54; 59). However, that approach ignores the relevant standard which requires the Court to consider the entirety of the factual allegations of the lawsuit, rather than the specific causes of action identified therein, to determine if any claims are potentially covered by the Policy. See Sapa Extrusions, Inc., 939 F.3d at 252 ("Pennsylvania law is clear that facts matter more than labels."). Reviewing the factual allegations within the "four-corners" of the M.M. Complaint, in the light most favorable to the insured, as is required, leads
Next, the Court disagrees with National's interpretation of the Policy's grant of coverage including the undefined term "accident" and the phrase "resulting from the [...] use of a covered auto." To reiterate, the Policy states the following as to the scope of coverage:
See Policy at § II.A. After adhering to the applicable tenets of Pennsylvania insurance law and prevailing caselaw interpreting same, the Court concludes that the Policy extends coverage to the claims in the M.M. Complaint. (See M.M. Complaint at ¶¶ 1-124). Stated succinctly, K.M. and M.M. allegedly sustained "bodily injury," i.e., physical and/or mental harm; caused by an "accident," i.e., Brimar and the District's negligence; "resulting from" K.M.'s occupancy or "use" of the bus, triggering National's duty to defend such claims.
The Court initially assesses the parties' disputes surrounding the correct interpretation of the term "accident," which is undefined in the Policy. (See Docket Nos. 53-54; 57-59; 65-66). National maintains that "accident" should be interpreted narrowly to mean an "auto accident" while Brimar and the District proffer a broader construction covering the claims asserted against them in the underlying litigation. (Docket Nos. 53-54; 59). As the Court commented at the motion hearing, "accident" is not specifically defined by the Policy which operates to expand the definition of "accident" to "include[ ] continuous or repeated exposure to the same conditions resulting in bodily injury." See Policy at § V.A. If National wanted to confine the term "accident" to mean only "auto accidents," as its counsel suggested, it certainly could have written this Policy that way. It did not. Hence, the plain meaning of "accident" controls. As the Court of Appeals explains:
Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d 388, 405-06 (3d Cir. 2016); see also Estate of Mehlman, 589 F.3d at 111. "[I]t is well established that the test of whether the injury or damage is caused by an accident must be determined from the perspective of the insured and not from the viewpoint of the person who committed the injurious act." Nationwide Mut. Fire Ins. Co. of Columbus v. Pipher, 140 F.3d 222, 226 (3d Cir. 1998) (citations omitted).
Courts applying these principles of Pennsylvania law have held that negligence claims were covered as accidents or occurrences in several factual scenarios wherein it was alleged that the insured's negligence resulted in a third party's intentional tortious act. As noted, in Baumhammers, the Pennsylvania Supreme Court concluded that the insurance company did not have a duty to defend Baumhammers, who acted intentionally and was convicted of several counts of murder but had a duty to defend the victims' negligence claims brought against his parents alleging that their errors and omissions led to their son's criminal acts. See Baumhammers, 938 A.2d at 288. Similarly, in Pipher, the Court of Appeals found that the insurance company had a duty to defend the insured property owner from negligence claims related to her hiring of a painter who murdered the tenants of the apartment he was hired to paint. See Pipher, 140 F. 3d at 228. More recently, in State Farm Fire and Cas. Co. v. Motta, 356 F.Supp.3d 457, 470 (E.D. Pa. Dec. 11, 2018), the U.S. District Court for the Eastern District of Pennsylvania determined that the insurance company had a duty to defend a child and his mother against claims
Among other things, M.M. and K.M. allege that Brimar failed to:
(See M.M. Complaint at ¶¶ 58; 62). They further assert that Brimar is responsible for the bus driver's inability to: supervise the male child who committed the sexual assault; adhere to its heightened duty of care owed to the female child victim with special needs; pay attention to the students while driving the bus instead of texting and ignoring the student passengers' calls for assistance to stop the offensive conduct; and, intervene before the sexual assault took place. (Id.).
The underlying plaintiffs contend that the District was similarly negligent by breaching its duties to: provide safe transportation to K.M. by a responsible common carrier given her special needs; separate her from the male student due to the prior assault in gym class; inform Brimar and its drivers of the seating plan and enforce same on the day in question; and, monitor or supervise Brimar and/or its driver. (See M.M. Complaint at ¶¶ 8; 12; 23; 45; 72-104). They also allege that the District is liable for the actions and inactions of Brimar and its driver given their agency relationship established by their separate contractual agreement. (Id. at ¶ 11). All told, K.M. and M.M. allege that Brimar and the District are liable for various negligent acts and omissions which took place during the bus ride, starting with the moment that the male student entered the bus and was permitted to sit next to K.M. and continuing until she exited the bus. (Id. at ¶¶ 1-124). The Court holds that such allegations, when properly viewed from the perspective of Brimar, its driver, and the District, broadly assert negligence theories against them such that the male student's actions constitute an "accident" under the Policy. See Pipher, 140 F.3d at 225.
Moving on, the parties do not dispute the meaning of "bodily injury," a phrase which is specifically defined in the Policy. (See Docket Nos. 53-54; 57-59; 65-66). To this end, National agreed to cover claims for "`[b]odily injury' mean[ing] bodily injury, sickness
Id. (quoting Allstate Property and Cas. Ins. Co. v. Winslow, 66 F.Supp.3d 661, 673 (W.D. Pa. Dec. 15, 2014)). The Doe Court relied upon Glikman v. Progressive Cas. Ins. Co., 917 A.2d 872 (Pa. Super. 2007), which reasoned that:
Id. at 873.
Reviewing the allegations in the M.M. Complaint, in the light most favorable to the insured, demonstrates that the underlying plaintiffs are seeking damages from Brimar and the District for both physical and emotional injuries, including post-traumatic stress disorder. (See M.M. Complaint at ¶ 52 (the underlying plaintiffs seek damages for "emotional anguish, past and future medical expenses, past and future therapy expenses, post traumatic stress, increased risk for post traumatic stress and/or emotional issues associated with victims of sexual assault."); see also Id. at ¶¶ 53-54)). Further, according to the state court pleading, the claims are not limited to damages for physical injuries resulting from the sexual assault, but also seek "damages recoverable for assault and battery, including apprehension." (Id. at ¶ 53).
The next question is whether there is a duty to defend damages claims caused by an accident "resulting from ... the ownership, maintenance or use of the bus." National argues that the bus was merely the location of the event in question and that the Policy language should be read to preclude the claims. (Docket Nos. 53-54; 59). Defendants counter that the Policy is correctly interpreted as providing coverage. (Docket Nos. 57-58; 65-66). Both parties cite precedent in support of their respective positions. (Docket Nos. 53-54; 57-59; 65-66). The Court agrees with the Defendants.
In this Court's opinion, the most analogous case is Lebanon Coach Co. v. Carolina Cas. Ins. Co., 450 Pa.Super. 1, 675 A.2d 279 (1996), wherein the Superior Court found that the insurance company had a duty to defend claims alleging that an insured bus company breached its duty of care to a child who was hit by a car after being dropped off in front of the school. As the Superior Court noted:
Lebanon Coach Co., 675 A.2d at 291. Most pertinent to the instant matter, however, is the Superior Court's discussion of the phrase "use of a motor vehicle."
Lebanon Coach Co., 675 A.2d at 290. The Superior Court concluded that the child's injuries resulted from the "use" of the bus, as the bus company owed a duty to the child to transport her to her destination safely which did not end until she reached her school after safely alighting from the bus. Id.
After viewing the allegations in the underlying pleading in the light most favorable to the insured, this Court holds that K.M.'s alleged bodily injuries resulted from the "use" of the bus. On its face, the Policy provides "business auto coverage" for 26 multi-passenger vehicles operated as "school buses" by a transit company. (See Docket No. 46-2 at 57-58). At the time of the events in question, the bus was being "used" as that term is commonly understood, transporting children from school to their homes. See Smith, 572 A.2d 785, 787. The M.M. Complaint asserts that K.M. and the male student were riding the bus and therefore occupying it at the time the injuries were sustained. (See e.g., M.M. Complaint at ¶¶ 12). The alleged injuries resulted from the "use" of the bus because, akin to Lebanon Coach, the bus company and school district had a heightened duty to safely transport the minor child, with known special needs, from school to her home. See Lebanon Coach Co., 675 A.2d at 291. Despite their knowledge of the prior assault in gym class, the District and Brimar assigned K.M. and the male student to continue to ride the same bus and voluntarily undertook the duty to separate the children by establishing a seating plan
For all of these reasons, National's motion for judgment on the pleadings is denied to the extent that it argues that there is no duty to defend because the claims set forth in M.M. Complaint are beyond the scope of the coverage provided in the Policy.
Since the Court has determined that the underlying complaint contains claims which are potentially covered by the policy, the next step is to evaluate National's position that any such claims are excluded. (Docket Nos. 53-54; 59). To reiterate, as the insurer and moving party, with the burden of proof at trial, National must demonstrate the applicability of the exclusion to bar all claims which are potentially covered. See Mehlman, 589 F.3d at 111. National primarily invokes the abuse and molestation exclusion. (Docket Nos. 53-54; 59). Brimar and the District counter that the exclusion should not be read to exclude all potentially covered claims in the underlying action. (Docket Nos. 57-58; 65-66). Once again, the Court concurs with the Defendants' assessment.
The language set forth in the exclusion is the following:
(Docket No. 46-2 at 90). The phrase "arising out of" is disputed by the parties with National arguing that any claim proximately caused by a sexual assault committed by anyone is excluded and the Defendants countering that a correct interpretation of the language does not limit claims with multiple proximate causes, as is alleged against them in the Court of Common Pleas. (Docket Nos. 53-54; 57-59; 65-66). The contested phrase "arising out of" is not defined in the exclusion or the Policy but has been analyzed in an analogous case which also involved the District.
To this end, in Bd. of Pub. Educ. of Sch. Dist. of Pittsburgh v. Nat'l Union Fire Ins. Co. of Pittsburgh, 709 A.2d 910, 916 (Pa. Super. Ct. 1998), the "complaint alleged that because of various enumerated shortcomings by the School District et. al., [the president of the Parent Teacher Organization, Rudolph Walls] was able to sexually molest R.C.S., in violation of the student's civil rights." Id. at 911. The insurance company invoked the following exclusion attempting to avoid its duty to
This policy does not apply:
Id. at 916. Analyzing the "arising out of language" in subsections b) and c), the Superior Court noted:
Id. at 916. Stated more succinctly,
Id. at 917. The Superior Court further found that the separate exclusion at subsection a) barring claims "involving allegations of ... criminal acts" did not demonstrate that the insurer lacked a duty to defend because it was unknown at the time of the insurance company's refusal to defend its insured whether the alleged acts constituted crimes or not and it was not alleged that the insured had committed any crimes or some type of tortious conduct requiring a lesser mens rea. Id. at 914-15.
Here, the same type of analysis controls the disposition of National's motion for judgment on the pleadings brought at this early stage of the underlying action, i.e.: K.M. and M.M.'s allegations have been denied by Brimar and the District; the Court of Common Pleas has not issued any rulings limiting the scope of those allegations; and the matter is currently listed for trial in May of 2020. As the Court has explained above, viewed in the light most favorable to the insured, the factual allegations against Brimar and the District are very broad, sound in negligence and assert various breaches of duties to K.M. and her mother, M.M. before, during, and after the alleged sexual assault. (See M.M. Complaint at ¶¶ 1-124). Continuing the analogy utilized by the Superior Court, the male student's sexual misconduct grew from the failures of Brimar and the District to tend to the needs of the passengers on the bus, including the victim K.M. See Bd. of Pub. Educ. of Sch. Dist. of Pittsburgh, 709 A.2d at 916. If the seating plan had been enforced, as they had agreed, the alleged actions would not have occurred. Hence, the claims for "bodily injury" asserted against Brimar and the District arise out of their own negligence and not only from the male student's sexual assault.
In any event, the exclusion does not eliminate National's duty to defend all potential claims in the underlying action for several compelling reasons. See Ramara,
Second, the M.M. Complaint is reasonably read as describing the male student's actions as constituting an assault and battery due to non-sexual contact he initiated against K.M.
To conclude, the Court finds that National has failed to meet its burden to demonstrate that an exclusion operates to bar all potential claims asserted against its insured in the underlying action.
Based on the foregoing, National's motion for judgment on the pleadings [53] is denied. An appropriate Order follows.
