American Automobile Insurance v. Murray
2011 U.S. App. LEXIS 18558
3rd Cir.2011Background
- Easter sued Ennie and Meloni in state court for liquor liability after the 2006 accident; the suit prompted Ennie to seek defense/indemnification from Century, which declined and led to a separate declaratory action; Ennie then sued Murray, alleging malpractice by failing to obtain liquor liability coverage; Murray sought coverage under his AAIC professional liability policy (claims-made and reported) with a lapse in coverage between USLIC (2004–2005) and AAIC (2006); AAIC sought a declaration that Murray’s acts were not covered; the district court granted summary judgment for AAIC and Ennie/Easter appealed; the Third Circuit addressed standing first and held Ennie has standing while Easter does not, and also analyzed retroactive date and timing of the wrongful act to determine coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to appeal in DJ action | Ennie is directly injured and has independent rights; Easter's interests are derivative. | Easter and Ennie lack independent standing; only Murray’s insurer dispute matters. | Ennie has standing; Easter does not. |
| Retroactive date interpretation | Retroactive date should be based on the policy’s amendatory endorsement; likely November 24, 2004. | Retroactive date is January 1, 2006 due to lapse in coverage. | Retroactive date is January 1, 2006. |
| Wrongful act occurred wholly after retroactive date | Murray’s wrongful act occurred after 2004 and again at renewal; acts after retroactive date create coverage. | Wrongful act occurred in 2002–2005 and continued; not wholly after retroactive date. | Murray’s wrongful acts did not occur wholly after January 1, 2006; no coverage. |
Key Cases Cited
- Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345 (3d Cir.1986) (injured third parties have standing to appeal a declaratory judgment insurer action when rights are not purely derivative)
- Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131 (3d Cir.2009) (standing as a justiciability doctrine in declaratory judgments)
- D'Auria v. Zurich Ins. Co., 352 Pa. Super. 231, 507 A.2d 857 (Pa. Super. 1986) (occurrence-related timing guidance for negligent acts under insurance policies)
- Med. Protective Co. v. Watkins, 198 F.3d 100 (3d Cir.1999) (ambiguities in insurance contracts resolved in favor of insured)
- C.H. Heist Caribe Corp. v. Am. Home Assurance Co., 640 F.2d 479 (3d Cir.1981) (interpretation of policy terms with standard contractual language)
- Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100 (Pa. 1999) (policies interpreted to give effect to all provisions when clear)