Forum Insurance Co. v. Allied Security, Inc.

866 F.2d 80
CourtCourt of Appeals for the Third Circuit
DecidedFebruary 15, 1989
Docket88-1583
StatusPublished
Cited by9 cases

This text of 866 F.2d 80 (Forum Insurance Co. v. Allied Security, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Forum Insurance Co. v. Allied Security, Inc., 866 F.2d 80 (3d Cir. 1989).

Opinion

866 F.2d 80

FORUM INSURANCE CO., an Illinois Corporation
v.
ALLIED SECURITY, INC., a Pennsylvania corporation; Liberty
Mutual Insurance Company, a Massachusetts
corporation, and Norman F. Trahey,
Administrator of the Estate of
Ronald F. Trahey, Deceased.
Appeal of ALLIED SECURITY, INC., Appellant in No. 88-1583.
Appeal of LIBERTY MUTUAL INSURANCE COMPANY, Appellant in No. 88-1596.

Nos. 88-1583, 88-1596.

United States Court of Appeals,
Third Circuit.

Argued Dec. 5, 1988.
Decided Jan. 24, 1989.
Rehearing and Rehearing In Banc Denied Feb. 15, 1989.

William Pietragallo, II (argued), Pietragallo, Bosick & Gordon, Pittsburgh, Pa., for Allied Security, Inc.

Lawrence L. Robinson (argued), Thompson & Pennell, Philadelphia, Pa., for Liberty Mut. Ins. Co.

Stephen W. Trout (argued), Murphy, Taylor & Adams, Philadelphia, Pa., for Forum Ins. Co.

Before SLOVITER and BECKER, Circuit Judges and BARRY, District Judge.*

OPINION OF THE COURT

SLOVITER, Circuit Judge.

I.

Vito Vinciguerra, a security guard, attacked and killed Ronald F. Trahey, his fellow employee, while both were on assignment for their employer, Allied Security, Inc. (Allied). In a wrongful death action brought by the estate of Trahey against Allied in the Philadelphia County Court of Common Pleas, the jury found that Vinciguerra killed Ronald Trahey "because of reasons personal to him and not directed against the victim as an employee or because of his employment." App. at 278. The parties agree that this finding established that the killing was not covered by the Pennsylvania Workmen's Compensation Act, which provides that "an injury caused by an act of a third person intended to injure the employe because of reasons personal to him, and not directed against him as an employe or because of his employment" does not qualify as an "injury arising in the course of employment" for purposes of the Act. Pa.Stat.Ann. tit. 77, Sec. 411(1) (Purdon Supp.1988). The jury found that negligence on the part of Allied "in the hiring, retention, placement, supervision or control" of Vinciguerra was a substantial factor in Trahey's death, and assessed $800,000 in damages against the company. App. at 278-79.

Forum Insurance Company (Forum) insured Allied under a Security Guard Policy which covered its obligation to pay damages for personal injury or property damage arising out of its security guard services and by reason of any negligence or dishonesty committed by its employees while providing security guard services. Forum assumed defense of Allied in the Trahey estate suit under a reservation of rights. It then brought a diversity suit for a declaratory judgment against Allied, the Trahey estate, and Liberty Mutual Insurance Company (Liberty), which had issued a "Workers' Compensation and Employers' Liability" policy to Allied. Forum asked the court to declare that Forum had no obligation to provide a defense or coverage of the estate's claim, arguing that the wrongful death suit came within the coverage of Liberty's policy and was expressly excluded from coverage under the Forum policy. The district court agreed with Forum's contentions and granted summary judgment in its favor, holding Forum had no obligation to provide a defense or coverage to Allied and that Liberty is liable for the reasonable costs and expenses that have been or will be incurred in connection with the defense of the Trahey action. 690 F.Supp. 390.

This appeal by Allied and Liberty requires us to conduct a plenary review of the district court's construction of the Liberty and Forum insurance policies.1 Under Pennsylvania law, we must initially look at the policies and determine, as a matter of law, whether the language is unambiguous. Commercial Union Ins. Co. v. Pittsburgh Corning Corp., 789 F.2d 214, 217 (3d Cir.1986). If the language of the insurance policies is unambiguous, then we must construe the language as a matter of law. Id.

II.

The insurance policy issued by Forum to Allied on September 1, 1981 provides coverage, inter alia, for "all sums for which the insured shall become legally obligated to pay as damages ... by reason of any negligent act, error or omission committed by the Named Insured in the conduct of Security Guard Services, or any act of dishonesty committed by an employee of the Named Insured while in the course of employment providing Security Guard Services." App. at 9. The policy excludes claims "arising out of ... (2) Any obligation for which the Named Insured or any carrier as his insurer may be held liable under any workers compensation, unemployment compensation or disability benefits law, or under any similar law; (3) Bodily injury, sickness or disease, including death or disability at any time resulting therefrom to any employee of the Named Insured arising out of and in the course of his employment by the Named Insured or to any obligation of the Named Insured to indemnify another because of damages arising out of such injury." App. at 10 (emphasis added). The policy limit of the Forum insurance is $1,000,000.

The insurance policy issued by Liberty provides for two types of coverage. Under Coverage A, "Workers' Compensation," Liberty agreed to cover all compensation required by "the workers' compensation law." App. at 46. Under Coverage B, "Employers' Liability," Liberty agreed "[t]o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease, including death at any time resulting therefrom, (a) sustained ... by any employee of the insured arising out of and in the course of his employment by the insured...." Id. Coverage B contains a $100,000 cap.

The district court concluded that the death of Trahey arose "out of and in the course of his employment" and therefore that his estate's wrongful death claim fell within Coverage B of the Liberty policy, and was excluded by exclusion (3) from the Forum policy. The court, applying the canon of contract construction that contracts should be read to give effect to all provisions, reasoned that exclusion (3) of the Forum policy was intended to reach injuries other than those covered by workers' compensation; otherwise, exclusions (2) and (3) would be synonymous, and clause (3) would be a superfluity. Finding the allegations contained in the complaint filed in the wrongful death suit to be covered by Liberty's and not Forum's policy, the district court held that Liberty was obligated to indemnify Allied to the extent of its policy limit, and to pay the costs and expenses that had been or would be incurred in defending Allied against the Trahey suit.

III.

We consider first Allied's argument that the district court erred in holding that the injury to and subsequent death of Trahey was one "arising in the course of his employment." We must apply Pennsylvania law. Fortunately, there is a Pennsylvania Supreme Court decision directly interpreting the meaning of the clause "arising out of and in the course of employment." In McCabe v.

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Bluebook (online)
866 F.2d 80, Counsel Stack Legal Research, https://law.counselstack.com/opinion/forum-insurance-co-v-allied-security-inc-ca3-1989.