Opinion
Civil Action No. 03-CV-05700
March 3, 2004
JOHN E. TYRRELL, ESQUIRE, STEPHEN W. MILLER, ESQUIRE, On behalf of plaintiff
STEVEN E. HOFFMAN, ESQUIRE, THOMAS C. SADLER, ESQUIRE, On behalf of defendant
GEORGE F. SCHOENER, JR., ESQUIRE, On behalf of intervenor John M. Fox
JOSEPH J. MCALEE, ESQUIRE, On behalf of intervenors Philip Wagoner, Paul Getz, Nathan Beil, Michael Toth, Michael Macaulay, Maximillian Sorensen, Matthew C. Smith, John Yorks, Jeffrey Dahlgren, Edward Keegan, Domenico Galati, Daniel Reinert, Dale Howe, Jennifer Lynn Wincer, Brian Wincer, Brandon Murphy, William Cleary, Benjamin Westermann and Andrew Koch
OPINION
This matter is before the court on Plaintiff, United States Fidelity and Guaranty Company's Motion for Summary Judgment filed December 23, 2003 and the Cross-Motion for Summary Judgment of Defendant Lehigh Valley Ice Arena, Inc. filed January 16, 2004. Because we conclude that the unambiguous language of the insurance contract governing the relationship between plaintiff and defendant excludes coverage for the averments made by the intervenors in the underlying state court action, we grant plaintiff's motion for summary judgment and deny defendant's cross-motion for summary judgment.
On October 23, 2003, Defendant, Lehigh Valley Ice Arena, Inc.'s Motion to Dismiss was filed. On December 9, 2003, Defendant, Lehigh Valley Ice Arena, Inc.'s Motion for Preliminary Injunction against Plaintiff was filed. During a Rule 16 status conference held by the undersigned on December 29, 2003, the parties agreed to convert the motions to a motion for summary judgment. Accordingly, we consider herein the arguments raised by defendant in these motions and the arguments raised by plaintiff in response thereto.
In addition to the briefs submitted by the parties in support of the motions, we have also considered the following: Intervenor-Defendant, John M. Fox's Answer to United States Fidelity and Guaranty Company's Motion for Summary Judgment and a brief in support thereof filed January 13, 2004; Interveners Andrew Koch, Benjamin Westermann, William Cleary, Brandon Murphy, Brian Wincer, Jennifer Lynn Wincer, Dale Howe, Daniel Reinert, Domenico Galati, Edward Keegan, Jeffrey Dahlgren, John Yorks, Matthew C. Smith, Maximillian Sorensen, Michael MacAulay, Michael Toth, Nathan Beil, Paul Getz and Philip Wagoner's Answer to Motion for Summary Judgment of United States Fidelity Guaranty Company and brief in support thereof filed January 13, 2004; the Answer of Defendant, Lehigh Velley Ice Arena, Inc. to the Motion for Summary Judgment of Plaintiff, United States Fidelity and Guaranty Company and brief in support thereof filed January 16, 2004; the Answer of Plaintiff, United States Fidelity and Guaranty Company, to the Cross-Motion for Summary Judgment of Defendant, Lehigh Valley Ice Arena, Inc. and a brief in support thereof filed January 23, 2004; the pleadings; and other record papers.
Procedural Background
The within civil action was initiated by a Complaint filed October 14, 2003 on behalf of United States Fidelity and Guaranty Company ("USF G"). Plaintiff seeks a declaratory judgment pursuant to 28 U.S.C. § 2201. The action is before the court on diversity of citizenship jurisdiction. See 28 U.S.C. § 1332. Venue is appropriate because the defendant may be found in Lehigh County, Pennsylvania, and the facts and circumstances giving rise to the cause of action appear to have occurred in Lehigh County. See 28 U.S.C. § 118, 1391.
Plaintiff contends that it is incorporated in Maryland and has its principle place of business in Maryland. Plaintiff asserts that defendant is a Pennsylvania corporation with its principle place of business in Pennsylvania. Plaintiff claims that the amount in controversy exceeds $75,000.00. The subject matter of this action is an insurance contract with a policy limit of $1,000,000.00. "Where a liability policy is involved in proceedings for a declaratory judgment, the amount in controversy for jurisdictional purposes is the maximum amount for which the insurer could be held liable under the policy." Britamco Underwriters, Inc. v. Stone , No. CIV.A. 91-4691, 1992 U.S. Dist. LEXIS 11476, *4, 1992 WL 195378, *2 (E.D. Pa. Aug. 3, 1992).
Because the intervenors are citizens of Pennsylvania and they enter this action in opposition to plaintiff, a citizen of Maryland, we have jurisdiction based upon the diversity of citizenship of the parties. See 28 U.S.C. § 1332.
Facts
Based upon the pleadings and record papers, the following are the pertinent facts.
On July 10, 2003, Andrew Koch, Benjamin Westermann, William Cleary, Brandon Murphy, Brian Wincer, Jennifer Lynn Wincer, Dale Howe, Daniel Reinert, Domenico Galati, Edward Keegan, Jeffrey Dahlgren, John Yorks, Matthew C. Smith, Maximillian Sorensen, Michael MacAulay, Michael Toth, Nathan Beil, Paul Getz and Philip Wagoner (collectively referred to as the "Koch intervenors") filed a Complaint against Lehigh Valley Ice Arena, Inc. ("Lehigh Valley") and Resurfix, Inc. in the Court of Common Pleas of Philadelphia County, Pennsylvania. Subsequently, the Koch intervenors filed a First Amended Complaint in the Court of Common Pleas. This First Amended Complaint asserts causes of action sounding in negligence against Lehigh Valley and Resurfix, Inc. In their First Amended Complaint, the Koch intervenors make a number of factual averments. They claim that they were all members and associates of the Millersville University ice hockey team. They claim that on or about September 29, 2002, the team traveled to Lehigh Valley's ice arena to play an intercollegiate game with the Lafayette College ice hockey team.
Mrs. Wincer's claim in the First Amended Complaint is a derivative claim for loss of consortium. There is no allegation that she joined the other defendants at the ice arena where the remainder of the defendants allegedly suffered harm. Consequently, the references to the Koch intervenors below exclude Jennifer Lynn Wincer.
In the underlying complaint, the Koch intervenors aver that Resurfix, Inc. "was engaged by Lehigh Valley to service, repair, and maintain the accident Zamboni machine." Complaint, Exhibit A, page 4. Resurfix, Inc. is not a party to this action.
When the Koch intervenors arrived at the rink they prepared for the game in the visiting team's locker room. They claim that this locker room was located near the storage area in which Lehigh Valley stored its Zamboni machine. While the team was at the arena, the Koch intervenors aver that they were exposed to harmful levels of carbon monoxide and nitrogen dioxide.
The Koch intervenors specifically aver that the carbon monoxide and nitrogen dioxide emanated from the Zamboni machine. They further contend that the gases flowed through, but were not caused by, the arena's heating and ventilation system. As a result of the exposure to these gases, the Koch intervenors aver that they were harmed.
On November 10, 2003, John M. Fox, another member of the Millersville University ice hockey team, filed a Complaint against Lehigh Valley and Resurfix, Inc. in the Court of Common Pleas of Philadelphia County, Pennsylvania. Mr. Fox's averments are equivalent to those made by the Koch intervenors. Although USFG expressly reserved its rights under the insurance contract, USF G retained counsel on behalf of Lehigh Valley, and that counsel entered an appearance in the underlying state court action. On October 14, 2003, USF G determined that the conduct averred in the underlying Koch complaint did not fall within the coverage of its insurance contract with Lehigh Valley. Accordingly, in a letter sent from USF G to Lehigh Valley, USF G disclaimed coverage and notified Lehigh Valley that it would discontinue its defense of the state court action. Subsequently, during the course of this litigation, the Fox complaint was filed. During the Rule 16 conference held by the undersigned on December 9, 2003, the parties agreed to incorporate the Fox matter into this action.
Standard for Summary Judgment
Summary judgment is proper when no genuine issue of material fact is in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Federal Home Loan Mortgage Corp. v. Scottsdate Insurance Company, 316 F.3d 431, 443 (3d Cir. 2003). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986);see Federal Home Loan Mortgage Corp., 316 F.3d at 443.
Thus, a "material" fact is one that is necessary to establish an element under the substantive law governing a claim. A fact is "genuine" if it is such that a reasonable factfinder could return a verdict for the non-moving party. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 211.
Discussion
An insurer's duty to defend and to indemnify its insured under Pennsylvania law is summarized as follows:
The duty to defend is a distinct obligation separate and apart from the duty to indemnify. Erie Ins. Exchange v. Transamerica Ins. Co. , 516 Pa. 574, 582, 533 A.2d 1363, 1368 (1987). The duty to defend arises whenever claims asserted by the injured party potentially come within the coverage of the policy, Gedeon v. State Farm Mutual Automobile Ins. Co. , 410 Pa. 55, 56, 188 A.2d 320, 321 (1963), while the duty to indemnify arises only when the insured is determined to be liable for damages within the coverage of the policy. See, e.g. , Employers Reinsurance Corp. v. Sarris , 746 F. Supp. 560, 566-68 (E.D. Pa. 1990). It follows then, that when the claims in the underlying action have not been adjudicated, the court entertaining the declaratory judgment action must focus on whether the underlying claims could potentially come within the coverage of the policy. Air Products and Chemicals, Inc. v. Hartford Accident and Indemnity Co. , 25 F.3d 177, 179 (3d Cir. 1994). If there is a possibility that any of the underlying claims could be covered by the policy at issue, the insurer is obliged to provide a defense at least until such time as those facts are determined, and the claim is narrowed to one patently outside of coverage. C. Raymond Davis Sons, Inc. v. Liberty Mut. Ins. Co. , 467 F. Supp. 17, 19 (E.D. Pa. 1979). On the other hand, if there is no possibility that any of the underlying claims could be covered by the policy at issue, judgment in the insurer's favor with regard to the duty to defend and indemnification is appropriate. See, e.g. , Germantown Ins. Co. v. Martin , 407 Pa. Super. 326, 595 A.2d 1172 (1992), alloc. denied , 531 Pa. 646, 612 A.2d 985 (1992).Britamco Underwriters, Inc. v. Stokes , 881 F. Supp. 196, 198 (E.D. Pa. 1995).
In this action, jurisdiction rests upon the diversity of citizenship of the litigants. Accordingly, state law governs the substantive issues raised in plaintiff's Complaint. See Erie Railroad v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The parties agree that Pennsylvania law governs the substantive issues presented.
An insurer's duty to defend is determined solely from the allegations in the underlying complaints giving rise to the claim against the insured. See General Accident Insurance Company of America v. Allen , 708 A.2d 828, 830 (Pa.Super. 1998); Lebanon Coach Company v. Carolina Casualty Insurance Company , 450 Pa. Super. 1, 15, 675 A.2d 279 , 286 (1996); Stidham v. Millvale Sportsman's Club , 421 Pa. Super. 548, 564, 618 A.2d 945, 953-54 (1992). "[T]he particular cause of action that a complainant pleads is not determinative of whether coverage has been triggered. Instead it is necessary to look at the factual allegations contained in the complaint[s]." Mutual Benefit Insurance Company v. Haver , 555 Pa. 534, 538-539, 725 A.2d 743, 745 (Pa. 1999); see Agora Syndicate, Inc. v. Levin , 977 F. Supp. 713, 715 (E.D. Pa. 1997).
Our determination of the duty to defend under an insurance policy is a question of law requiring only an examination of the language of the policy and the allegations in the underlying complaints. Gene's Restaurant, Incorporated v. Nationwide Insurance Company , 519 Pa. 306, 308, 548 A.2d 246, 246-247 ( Pa. 1988).
If the parties to the insurance contract choose not to be their own lexicographer, then an insurance policy must be read as a whole and be construed according to the plain meaning of its terms. C.H. Heist Caribe Corp. v. American Home Assurance Company , 640 F.2d 479, 481 (3d Cir. 1981); Atlantic Mutual Insurance Company v. Brotech Corporation , 857 F. Supp. 423, 427 (E.D. Pa. 1994), aff'd , 60 F.3d 813 (3d Cir. 1995). "Where the language of the contract is clear, a court is required to give the words their ordinary meaning." Brotech , 857 F. Supp. at 427; see also Gene Harvey Builders, Incorporated v. Pennsylvania Manufacturers' Association Insurance Company , 512 Pa. 420, 426, 517 A.2d 910, 913 (Pa. 1986).
The burden is on the insured to establish coverage under an insurance policy. Erie Insurance Exchange v. Transamerica Insurance Company , 516 Pa. 574, 580, 533 A.2d 1363, 1366-1367 (Pa. 1987); Benjamin v. Allstate Ins. Company , 354 Pa. Super. 269, 272, 511 A.2d 866, 868 (1986). The burden of establishing the applicability of an exclusion is on the insurer. Allstate Insurance Company v. Brown , 834 F. Supp. 854, 857 (E.D. Pa. 1993); Erie Insurance Exchange , 516 Pa. at 580, 533 A.2d at 1366 .
In the event, that the insurance contract provides for an exception to an exclusion, the burden lies upon the insured to produce those exceptions which it believes applicable. However, the burden of persuasion remains with the insurer to prove the applicability of the exclusion. See New Castle County v. Hartford Accident Indemnity Company , 933 F.2d 1162, 1182 n. 42 (3d Cir. 1991).
The insurance policy at issue provides in pertinent part:
SECTION I — COVERAGES
1. Insuring Agreement
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies . . .
* * *
2. Exclusions
This insurance does not apply to:
* * *
f. Pollution
(1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants":
(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. However, this subparagraph does not apply to:
(i) "Bodily injury" if sustained within a building and caused by smoke, fumes, vapor or soot from equipment used to heat that building;
* * *
(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations if the "pollutants" are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor. However, this subparagraph does not apply to:
(i) "Bodily injury" or "property damage" arising out of the escape of fuels, lubricants or other operating fluids which are needed to perform the normal electrical, hydraulic or mechanical functions necessary for the operation of "mobile equipment" or its parts, if such fuels, lubricants or other operating fluids escape from a vehicle part designed to hold, store or receive them. This exception does not apply if the "bodily injury" or "property damage" arises out of the intentional discharge, dispersal or release of the fuels, lubricants or other operating fluids, or if such fuels, lubricants or other operating fluids are brought on or to the premises, site or location with the intent that they be discharged, dispersed or released as part of the operations being performed by such insured, contractor or subcontractor;
(ii) "Bodily injury" or "property damage" sustained within a building caused by the release of gases, fumes or vapors from materials brought into that building in connection with operations being performed by you or on your behalf by a contractor or subcontractor;
* * *
SECTION V — DEFINITIONS
* * *
3. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
* * *
12. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:
* * *
b. Vehicles maintained for use solely on or next to premises you own or rent;
* * *
13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
* * *
15. "Pollutants" mean any solid, liquid gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.Complaint, Exhibit B.
With coverage conceded in Section I(1), we must determine whether the injuries alleged in the underlying complaints were caused by conduct governed by the exclusions delineated in Section I(2). If we conclude that the injuries alleged are excluded, we must then determine if an exception to an exclusion is applicable. In proceeding through our analysis we also must determine if there is any ambiguity in the terms of the coverage, the exclusion, or the exception.
Plaintiff contends that it is not required to provide a defense to the underlying action because the conduct which the intervenors contend Lehigh Valley engaged in is excluded by Section I(2)(f)(1)(a). Specifically, plaintiff avers that the nitrogen dioxide and the carbon monoxide which the Zamboni machine emitted were pollutants within the meaning of Section V(15). Plaintiff further asserts that the gases were discharged at Lehigh Valley's premises. Accordingly, USF G contends that the facts averred in the underlying complaints fall squarely within the exclusion found in Section I(2)(f)(1)(a).
Should we conclude that Section I(2)(f)(1)(a) is applicable, then the intervenors counter that the exception found in subsection (i) is applicable. The intervenors argue that because the offending gases were transmitted through the heating and ventilation system the exception found in Section I(2)(f)(1)(a)(i) is triggered. Thus, the intervenors contend that the pollution exclusion does not prevent coverage.
However, defendant and the intervenors contend that the facts asserted in the underlying action are not governed by Section I(2)(f)(1)(a), but rather by Section I(2)(f)(1)(d). Upon such a finding, they then advocate that we find the exception found in either subsection (i) or (ii) therein applicable. Specifically, defendant and the intervenors contend that the gases were the product of the combustion of a "fuel, lubricant or other operating fluids" utilized by mobile equipment within exception (i). Furthermore, they assert that the release of the gases was "in connection with operations being performed" by Lehigh Valley, thus, establishing exception (ii).
Finally, the intervenors contend that there is discord between Section I(2)(f)(1)(a) and Section I(2)(f)(1)(d)(ii). Specifically, the intervenors contend that the sections are mutually inconsistent and create an ambiguity in the insurance contract. They continue that this ambiguity must be read in favor of Lehigh Valley and requires that USF G defend the underlying action.
The insurance contract provides the elements which USF G must establish in order to prove that an exclusion is applicable. In the case of the exclusion found within Section I(2)(f)(1)(a), plaintiff must prove: (1) that there was "bodily injury" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants"; and (2) that (1) occurred at or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. In establishing these elements, plaintiff need not prove that these events actually occurred, but merely that those facts are the sum of those facts averred in the underlying complaints. For the following reasons, we conclude that the conduct alleged against Lehigh Valley in the underlying complaints falls within the exclusion established in Section I(2)(f)(1)(a). In the underlying complaints, the intervenors aver that they sustained bodily injury as a result of inhaling the pollutants discharged from the Zamboni machine at Lehigh Valley's arena. There is no dispute that the nitrogen dioxide and the carbon monoxide are pollutants within the meaning defined in Section V(15). There is also no dispute that the intervenors suffered bodily injury as that term is defined in Section V(3). Accordingly, we conclude the exclusion in Section I(2)(f)(1)(a) liberates USF G from its obligation to defend or indemnify Lehigh Valley unless an exception is applicable or Section I(2)(f)(1)(d) requires a different result.
The exception found in Section I(2)(f)(1)(a)(i) does not compel a different result. Because there is no averment in the underlying complaints that the heating or ventilation system in Lehigh Valley's arena played any more than a passive role in causing the injuries alleged, the intervenors ask that we construe the language "smoke, fumes, vapor or soot from the equipment used to heat the building" to mean that any smoke, fume, vapor or soot that passes through the equipment, rather than smoke, fume, vapor or soot generated by the equipment.
We do not accept the intervenors' interpretation of the word "from". "Words of common usage in an insurance policy are to be construed in their natural, plain, and ordinary sense." Madison Construction Company v. The Harleysville Mutual Insurance Company , 557 Pa. 595, 608, 735 A.2d 100, 108 (1999).
"From" means: (1) "used as a function word to indicate a starting point of a physical movement or a starting point in measuring or reckoning or in a statement of limits"; (2) "used as a function word to indicate physical separation or an act or condition of removal, abstention, exclusion, release, subtraction, or differentiation"; and (3) "used as a function word to indicate the source, cause, agent, or basis". This definition does not permit us to define "from" as meaning "through" as the intervenors suggest. There is no allegation that the nitrogen dioxide or the carbon monoxide originated from the heating or ventilation equipment. The underlying complaint is clear that the heating or ventilation equipment was merely a conduit and not a source of the pollutants that caused the alleged injury. Accordingly, we conclude that the exception found in Section I(2)(f)(1)(a)(i) does not render the exclusion in Section I(2)(f)(1)(a) inapplicable.
Merriam-Webster Online Dictionary, available at http://www.webster.com/cgi-bin/dictionary?book= Dictionaryva=from.
Defendant and the intervenors contend, however, that the facts averred in the underlying complaint should be analyzed under Section I(2)(f)(1)(d) rather than Section I(2)(f)(1)(a). They then argue that either exception (i) or (ii) to Section I(2)(f)(1)(d) are applicable.
In order to access the exceptions in Sections I(2)(f)(1)(d)(i) or (ii), Section I(2)(f)(1)(d) must first be applicable. Thus, there must be an allegation in the underlying complaint that the insured caused "`bodily injury' . . . arising out of the . . . discharge . . . of `pollutants' at or from any premises . . . on which any insured or any contractors . . . are performing operations if the `pollutants' are brought on or to the premises . . . in connection with such operation by such insured". Thus, there must be an allegation that Lehigh Valley brought the pollutants to the premises.
Neither Lehigh Valley nor the intervenors contend that Lehigh Valley brought nitrogen dioxide or carbon monoxide to the arena. Rather, the underlying complaint avers that, because the Zamboni machine was in a state of disrepair, the engine did not properly combust the propane fuel. The alleged result of the misfunction was that the Zamboni machine discharged excess levels of nitrogen dioxide and carbon monoxide. Because the nitrogen dioxide and carbon monoxide resulted from the incomplete combustion of the propane, defendant and the intervenors argue that bringing the propane to the premises fulfills the requirement that Lehigh Valley brought the "pollutant" to the premises for an operation it was performing.
In support of their contention that the propane may be considered the "pollutant", defendant and the intervenors rely on Madison . In Madison , the appellant-insured, Madison, applied a substance called Euco Floor Coat to cement. Madison then enclosed the area in which they used the floor coating. A person who went into the enclosed area was overcome by the fumes from the floor coat, fell, and was injured. That person then sued Madison.
Harleysville, the appellee-insurer, denied coverage to Madison based on exclusion language similar to that presented in Section I(2)(f)(1)(d). Madison argued that the exclusion language was inapplicable because the Euco Floor Coat that Madison used on the cement was a non-pollutant. In so arguing, Madison attempted to distinguish the floor coating from the vapor, which they asserted was the pollutant. However, the Supreme Court of Pennsylvania ruled that because the chemical composition of the substances (the floor coating and the vapor) was identical, "Madison [averred] a distinction without a difference." Madison , 557 Pa. at 608, 735 A.2d at 107 .
Defendant and the intervenors do not provide any argument to harmonize the factual distinction presented herein with that in Madison . In Madison , the chemical composition of the floor coat and the floor coat vapor was identical. Here, however, the propane was broken down into several different constituent substances, including nitrogen dioxide and carbon monoxide. The chemical composition of propane is not similar to that of either nitrogen dioxide or carbon monoxide.
As a result, we conclude that the act of bringing propane onto Lehigh Valley's premises does not constitute bringing the "pollutants" onto the premises. Because there is no allegation that the propane caused any injury in the underlying complaint, we conclude that Section I(2)(f)(1)(d) is inapplicable.
Because we conclude that Section I(2)(f)(1)(d) is inapplicable, we need not address whether an exception to the exclusion is applicable. Moreover, because Section I(2)(f)(1)(d) is inapplicable, we need not address whether there is a conflict between Sections I(2)(f)(1)(a) and I(2)(f)(1)(d)(ii) or whether any ambiguity results therefrom. By definition, because Section I(2)(f)(1)(a) is applicable and Section I(2)(f)(1)(d) is inapplicable, there can be no overlap between the two to cause conflict or ambiguity.
Even if Section I(2)(f)(1)(a) excludes coverage, defendant and the intervenors argue that coverage is established by the doctrine of reasonable expectations. Specifically, they contend that Lehigh Valley reasonably expected that any injury caused by a Zamboni machine to be covered by the insurance contract. Defendant and the intervenors contend that Lehigh Valley's expectations were reasonable because it relied on plaintiff's expertise when defendant contracted for the insurance.
Defendant contends that it purchased the policy from Rice Specialty Risk and that the insurance policy was prepared by American Specialty, a USFG claims administrator.
They further assert that because Zamboni machines are so closely associated with ice arenas, that any insurance policy should be reasonably expected to cover any conceivable harm that may arise from the use of a Zamboni. Implicit in their argument is that Lehigh Valley was justified in abdicating any responsibility it had to read or be bound by the express terms of the contract. For the following reasons, we find the doctrine of reasonable expectations inapplicable to the facts and circumstances presented as a matter of law.
The reasonable expectations doctrine under "Pennsylvania case law . . . dictates that the proper focus for determining issues of insurance coverage is the reasonable expectations of the insured." Reliance Insurance Company v. Moessner , 121 F.3d 895, 903 (3d Cir. 1997)( citing Tonkovic v. State Farms Mutual Automobile Insurance Company , 513 Pa. 445, 521 A.2d 920 (1987)).
However, the doctrine has been applied only in narrow circumstances to "protect non-commercial insured[s] from policy terms not readily apparent", Madison , 557 Pa. at 611 n. 8, 735 A.2d at 109 ( citing Collister v. Nationwide Life Insurance Company , 479 Pa. 579, 388 A.2d 1346 (1978)), and to "protect non-commercial insured[s] from deception", Madison , 557 Pa. at 611 n. 8, 735 A.2d at 109 ( citing Tonkovic v. State Farm Mutual Automobile Insurance Company , 513 Pa. 445, 521 A.2d 920 (1987)). It is also applicable "where . . . an individual applies and prepays for specific insurance coverage" and to prohibit an insurer from unilaterally changing coverage without an affirmative showing that the insured was notified and understood the change regardless of whether the insured read the policy. Reliance , 121 F.3d at 904.
Defendant and the intervenors do not contend that Lehigh Valley is a non-commercial insured. Accordingly, we construe their argument as a request for a substantial expansion of the doctrine.
Even if we were to accept an expansion of the doctrine so as to render it applicable herein, the doctrine of reasonable expectations does not permit the construction that defendant and the intervenors propose. "Where . . . the language of the contract is clear and unambiguous, a court is required to give effect to the language." Standard Venetian Blind Company v. American Empire Insurance Company , 503 Pa. 300, 305, 469 A.2d 563, 566 (1983). "While reasonable expectations of the insured are the focal points in interpreting the contract language of insurance policies . . . an insured may not complain that his or her reasonable expectations were frustrated by policy limitations which are clear and unambiguous." Frain v. Keystone Insurance Company , 433 Pa. Super. 462, 640 A.2d 1352, 1354 (1994).
Defendant and the intervenors do not aver that Lehigh Valley specifically requested coverage for the conduct alleged in the underlying complaint. Rather, Lehigh Valley asked for coverage specifically tailored for an ice arena, and it received such a policy. Moreover, there is no allegation that plaintiff deceived defendant or that there are hidden terms in the contract. Lehigh Valley received an insurance policy designed for an ice arena that is both clear and unambiguous in its terms. Accordingly, we conclude that Lehigh Valley could not have reasonably expected that the insurance policy would cover the conduct averred in the underlying complaint.
Defendant and the intervenors also contend that the doctrine of efficient proximate cause mandates denial of plaintiff's motion for summary judgment. They contend that the injury averred in the underlying complaint was caused because the Zamboni machine was in a state of disrepair and because the Zamboni machine was used while in a state of disrepair. They claim that even if the use of the Zamboni machine is not covered by the insurance policy, the negligent maintenance of the Zamboni machine is covered by the policy. For the following reason, we find no merit to this contention.
The doctrine of efficient and proximate cause holds that "[o]ne, who negligently creates a dangerous situation, cannot escape liability for the natural and probable consequences thereof, even though the innocent act of a third party may have contributed to the result". Polinelli v. Union Supply Company , 403 Pa. 547, 552, 170 A.2d 351, 354 (1961). Applying the doctrine to coverage under an insurance contract, the doctrine permits coverage "when the loss is caused by a covered peril, even though other excluded perils contributed to the loss." Tatalovich v. Pennsylvania Natural Mutual Casualty Insurance Company , 2003 WL 22844173 (C.P. Beaver County October 10, 2003)(Kunselman, J.).
In attempting to apply this doctrine, defendant and the intervenors misread the doctrine and ignore the language of the insurance policy. According to the plain language of the insurance policy, USF G need not defend or indemnify Lehigh Valley unless "bodily injury" is caused by an "occurrence". No bodily injury resulted from Lehigh Valley permitting the Zamboni machine to fall into a state of disrepair. Rather, it was Lehigh Valley's use of the malfunctioning Zamboni machine that caused the harm alleged. Because there is no covered peril, we conclude that the doctrine of efficient proximate cause is inapplicable herein.
The language of the insurance contract unambiguously requires "but for" causation in order to trigger USFG's duty to defend and indemnify. When the language of the policy clearly requires "but for" causation, that language must be given effect. See Madison , 557 Pa. at 612, 735 A.2d at 110; McCabe v. Old Republic Insurance Company , 425 Pa. 221, 224, 228 A.2d 901, 903 (1967).
Conclusion
For all the foregoing reasons, we grant plaintiff's motion for summary judgment, deny defendant's cross-motion for summary judgment and issue declaratory judgment in favor of plaintiff. We conclude that, because the complaint in the underlying state action avers conduct excluded by Section I(2)(f)(1)(a) of the insurance contract, plaintiff need not defend or indemnify Lehigh Valley in the underlying state court actions brought by either the Koch intervenors, including Jennifer Lynn Wincer, or John M. Fox.