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Nationwide Mut. Fire Ins. Co. of Columbus v. Pipher

March 17, 1998

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY OF COLUMBUS, OHIO
v.
LINDA PIPHER; FRANCIS MCFADDEN; FRANCIS MCFADDEN, AS TRUSTEE AD LITEM FOR VIRGINIA ELIZONDO, MICHAEL DARIO AND KRISTEN DARIO; VIRGINIA ELIZONDO; MICHAEL DARIO; KRISTINE DARIO; ERNEST SCHAFER; ROSE SCHAFER; IAN S. WOOD, PHILADELPHIA PHOT #724409 PRISONER #9608644 LINDA PIPHER, APPELLANT



Appeal from the United States District Court For the Eastern District of Pennsylvania D.C. No.: 96-cv-07462 Submitted Under Third Circuit LAR 34.1(a) October 15, 1997

Before: Stapleton, Alito, and Rosenn, Circuit Judges.

The opinion of the court was delivered by: Rosenn, Circuit Judge.

OPINION OF THE COURT

This appeal presents an important question pertaining to the meaning of the term "occurrence" as used in a liability insurance policy. Specifically, it raises the issue whether a plaintiff's bodily injury or death, directly caused by the intentional act of a third party but also attributable to the negligence of the policyholder-insured, constitutes an "occurrence," and thus obligates an insurer to defend, and potentially indemnify, its insured for the insured's alleged negligence. The insurer in this case, Nationwide Mutual Fire Insurance Company of Columbus, Ohio (Nationwide), filed a declaratory judgment action in the United States District Court for the Eastern District of Pennsylvania seeking a declaration that because an intentional act of a third party caused the plaintiff's death, there was no accident or "occurrence" and thus Nationwide has no duty to defend and indemnify its insured. The district court granted summary judgment for the insurance company. The insured appealed. We reverse.

I.

The facts pertaining to this appeal are uncomplicated and, for the most part, undisputed. The insured, Linda Pipher (Pipher), is the owner of a multi-unit dwelling located in Philadelphia, Pennsylvania, previously owned by her parents, Ernest and Rose Schafer. Prior to December 1994, the Schafers and/or Pipher removed the doors to the second floor apartment of the property in order to install new carpeting. These doors were never reinstalled. At all relevant times, Nationwide insured Pipher's property under a "Tenant's Policy."

In December 1994, Pipher leased the second floor apartment to Francis McFadden and his wife, Bernine. On February 3, 1995, Ian S. Wood, whom Pipher hired to paint the apartment, killed Bernine McFadden while she occupied the second floor apartment. As a result of Bernine McFadden's death, her husband, Francis, filed a state survival action for wrongful death against Pipher, Wood, the Schafers, and others in Philadelphia Court of Common Pleas. McFadden v. Pipher, No. 865, May Term 1996. Nationwide undertook Pipher's defense subject to a reservation of rights.

Nationwide then filed a declaratory judgment action in the United States District Court for the Eastern District of Pennsylvania. Nationwide sought a declaration that it has no duty to defend and indemnify Pipher because Bernine McFadden's death was caused by an intentional assault and murder committed by Wood, and thus her death was not an insured "occurrence" as defined in the policy. Because there was no factual dispute, Nationwidefiled a motion for summary judgment. The district court granted Nationwide's motion, thereby relieving Nationwide of its duty to defend and potentially indemnify Pipher. Pipher timely appealed.*fn1

II.

This appeal presents solely a legal issue. Thus, this court's review of the district court's grant of summary judgment is plenary. See Robertson v. Central Jersey Bank & Trust Co., 47 F.3d 1268, 1273 (3d Cir. 1995); see also Fed. R. Civ. P. 56(c); Pacific Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir. 1985) (determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law subject to plenary review).

A.

Pipher's Tenant's Policy with Nationwide provides her with liability coverage for all "damages is legally obligated to pay due to an occurrence." (Tenant's Policy) (emphasis added). The policy, in relevant part, defines occurrence as "bodily injury . . . resulting from: a. one accident." On appeal, Nationwide relies principally upon Gene's Restaurant, Inc. v. Nationwide Ins. Co., 548 A.2d 246 (Pa. 1988), and a progeny of cases in the United States District Court for the Eastern District of Pennsylvania. These cases hold that to constitute an accident, and thus a covered occurrence, the court must focus on the nature of the act which inflicted the injury or directly caused the death, and that act must be unintentional, even when an insured is sued for negligently failing to prevent or for contributing to the harmful intentional acts of the person who directly inflicted the injury or caused the death.*fn2 In Gene's Restaurant, the complaint merely alleged that while she was a patron in the defendant insured's restaurant, the defendant assaulted and violently beat her, causing injuries and damages. The complaint contained no allegations of negligence on the part of the insured. The insurer (Nationwide) refused to defend its insured against the complaint sounding solely in trespass which alleged only a willful and malicious assault and beating. The liability policy at issue in that case similarly defined an "occurrence" as an accident. Accordingly, the Pennsylvania Supreme Court summarily affirmed the Superior Court's holding that the insurer owed no duty to defend its insured based on these facts. That holding is sound, but it in no way dictates that an insurer owes no duty to defend its insured when the complaint also alleges that the assault was made possible by the negligence of the insured.

We believe the holding in Gene's Restaurant was narrow and predicated on the well-established rule of insurance law that an insurer's duty to defend an action brought against its insured is to be determined solely by the allegations contained in the plaintiff 's pleadings. E.g., General Accident Ins. Co. of America v. Allen, 692 A.2d 1089, 1094 (Pa. 1997); Gene's Restaurant, 548 A.2d at 246; Wilson v. Maryland Cas. Co., 105 A.2d 304, 307 (Pa. 1954). Because the complaint alleged solely an intentional act and contained no allegations of negligence on the part of its insured, the Gene's Restaurant court came to the unremarkable Conclusion that an intentional tort was not an accident and thus not a covered occurrence under the policy.

Nationwide contends that under Gene's Restaurant, the intentional murder of Bernine McFadden by Wood is not an occurrence (i.e., an accident) but rather an intentional tort which is not covered by the policy. Thus it claims that it is therefore relieved of its duty to defend and potentially indemnify Pipher, notwithstanding in this case there are distinct allegations of negligence that the insured's conduct made possible the assault and murder. Nationwide's argument, however, is premised on a misreading of ...


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