Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Civil No. 82-1306).
Adams, Weis, and Wisdom.*fn*
In this diversity case, a wife asserts that as an innocent spouse she is entitled to recover fire insurance proceeds on jointly owned premises that were destroyed by arson for which her husband was convicted. The district court held that since both husband and wife were named insureds in the policy, an exclusion denying coverage where fraudulent act was committed by "any insured" applied. We agree and will affirm summary judgment for the defendant insurer.
Plaintiff Lorraine Spezialetti and her husband Fiorangelo owned and operated a bakery business in Bloomsburg, Pennsylvania. On July 21, 1981, the establishment was destroyed by fire. At that time, the premises were covered by a fire insurance policy issued by defendant. When defendant denied payment, the Spezialettis filed this suit, which was later removed to the United District Court for the Middle District of Pennsylvania.
On January 26, 1984, Fiorangelo was convicted in the Court of Common Pleas of Columbia County, Pennsylvania, of arson for having started a fire with the intent to collect insurance for the loss. Following the conviction, Fiorangelo was dismissed as a party plaintiff by stipulation of the parties. On June 26, 1984, the district court granted summary judgment in favor of defendant
Both Lorraine and Fiorangelo were named insureds under the policy. It contained an exclusion clause stating,S
The insurance shall not apply to loss or damage ... [resulting from] any dishonest act or omission by any insured, or by any authorized representative thereof, or by any employee thereof, while working or otherwise, and whether acting alone or in concert with others."
Rejecting Mrs. Spezialetti's argument that as an "innocent spouse" she was entitled to recover for her interest in the property, the court concluded. "The exclusion clause of the insurance policy relied upon by Pacific could not be any clearer."
On appeal, plaintiff contends that because she was not aware of the exclusion, she is not bound by it. In addition, she argues, that a recent decision of the Pennsylvania Supreme Court permits an innocent insured to recover policy proceeds. As a last resort, she urges that the language of the provision is ambiguous.
For many years Bowers Co. v. London Assurance Corp., 90 Pa. Super. 121 (1926), was the only appellate decision in Pennsylvania discussing the liability of an insurance company to an "innocent insured" after a coinsured had committed arson. In that case, the seller of an automobile under a conditional sales agreement and the owner were both named as insureds under a fire policy "as their interest may appear." The court held that each had a joint interest in the policy, and the seller was barred from recovery by the wrongful action of the owner. "[T]he policy did not purport to insure the interests of the assured in severalty but jointly: and hence "recovery on the policy is prevented by the fraudulent act of either of the assured whether participated in by the other or not." Id. at 125, 127.
The Court of Common Pleas of Washington County, Pennsylvania cited Bowers in denying recovery on a policy which listed husband and wife as insureds. Matyuf v. Phoenix Ins. Co., 27 Pa. D. & C. 2d 351 (1933). In Mele v. All-Star Ins. Co., 453 F. Supp. 1338, 1342 (E.D. Pa. 1978), the court, relying on the "clear, albeit somewhat vintage position of the Pennsylvania courts" reached the same result in a husband-wife case.
The District Court for the Western District, however, permitted an innocent spouse to recover one-half of the loss in Opat v. State Farm Fire & Cas. Ins. Co., 542 F. Supp. 1321 (W.D. Pa 1982), reasoning that the policy language did not state whether the interest of the named insureds or their obligations were joint or several.
The first time the Pennsylvania Supreme Court addressed the issue was in Giacobetti v. Insurance Placement Facility of Pennsylvania, 500 Pa. 447, 457 A.2d 853 (1983). In that case, the named insureds were "Manusov Family Trust, Harry Kracoff, Trustee, and Harry Kracoff, A.T.I.M.A." (as their interest may appear). ...