446 F. App'x 506
3rd Cir.2011Background
- Brewer, assignee of Tyrone Hamilton, sues United States Fire Insurance Company to obtain coverage under Hamilton's policy.
- Policy contains an Employee Indemnification and Employer's Liability Exclusion that bars bodily injury to an employee of the insured arising out of employment.
- In January 2006, Brewer was injured in a car accident while employed by Service Plus; Hamilton, employed by Safecare, caused the accident; both acts occurred in the course of employment.
- Safecare and Service Plus were named insureds on the U.S. Fire policy; Brewer sought to enforce Hamilton's rights as assignee after a judgment against Hamilton.
- The District Court dismissed Brewer's complaint under Rule 12(b)(6), holding the Exclusion barred coverage for Brewer.
- Brewer appeals the district court's dismissal, arguing the Exclusion does not apply to her under the policy's separation of insureds language.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Exclusion bar coverage for Brewer as an employee of the insured? | Brewer argues the Exclusion should not apply to her because she is not Hamilton's employee and the policy's 'separation of insureds' provision requires a narrower reading. | U.S. Fire contends the Exclusion applies to any employee of the insured and, under the policy language, Brewer is precluded from coverage as Hamilton's assignee. | Exclusion applies; both employers are insured and Brewer is barred from coverage as an employee of the insured. |
| Whether Brewer's bad faith claim survives the Exclusion and dismissal. | Brewer maintains U.S. Fire had a duty to provide coverage and acted with reckless indifference in denying it. | U.S. Fire acted reasonably in denying coverage and the claim cannot meet the clear-and-convincing standard for bad faith. | Bad faith claim properly dismissed; no clear and convincing showing of lack of reasonable basis. |
Key Cases Cited
- Pennsylvania Mfrs.' Ass'n Ins. Co. v. Aetna Cas. & Sur. Ins. Co., 233 A.2d 548 (Pa. 1967) (unambiguous insured includes named insured; employee exclusion applies to insureds' employees)
- Med. Protective Co. v. Watkins, 198 F.3d 100 (3d Cir. 1999) (clear and unambiguous contract language must be enforced)
- Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994) (bad faith requires a clear and convincing showing of lack of reasonable basis)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading a claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading requires sufficient factual matter to raise a reasonable expectation of relief)
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008) (Twombly standard applied to federal pleadings)
- Grier v. Klem, 591 F.3d 672 (3d Cir. 2010) (appellate review of Rule 12(b)(6) de novo standard applied)