499 F.Supp.3d 147
W.D. Pa.2020Background
- Giant Eagle named as defendant in opioid-related lawsuits transferred to the Opioid MDL (two county public-nuisance suits and two NAS suits); plaintiffs seek economic losses tied to opioid-related bodily injuries.
- Giant Eagle had primary Old Republic CGL policies (2015–16 and 2016–17) with $1M per-occurrence limits, each subject to a $1M self-insured retention (SIR) and a $1M deductible; Old Republic’s endorsements treat "Supplementary Payments" (ALAE) separately from other amounts payable.
- AGLIC (2015–16 umbrella) and XL (2016–17 excess) issued follow-form excess/umbrella policies that trigger a duty to defend only after applicable underlying limits are exhausted by payment of “loss.”
- Giant Eagle paid over $5M defending the MDL claims; AGLIC denied coverage/defense and XL issued a reservation of rights; Giant Eagle sought a declaratory judgment and moved for partial summary judgment on duty to defend.
- Judge Schwab previously ruled (law of the case) that the duty-to-defend issue is governed by the eight‑corners analysis and need not await proof of underlying exhaustion; this Court applied Pennsylvania law to decide whether the complaints allege potentially covered claims and whether Giant Eagle’s defense spending can trigger excess carriers’ duties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether underlying complaints seek damages "because of bodily injury" | Complaints seek costs tied to treating opioid-related bodily injuries (medical, detox, recovery), so they potentially seek damages because of bodily injury. | County plaintiffs do not allege bodily injury to themselves; thus claims are not "because of bodily injury." | Court: Plaintiffs’ claims (especially county economic-loss claims and NAS claims) potentially seek damages because of bodily injury; duty-to-defend may be triggered. |
| Whether alleged injuries were caused by an "occurrence"/"accident" under the policies | Complaints allege negligence and failures to prevent diversion—these are unexpected/fortuitous and therefore constitute an "occurrence." | Defendants argue allegations may show deliberate, intentional conduct (not accidental) and rely on cases distinguishing intent. | Court: Allegations (negligence and failures to control/divert) sufficiently plead an "accident/occurrence" for potential coverage at this stage. |
| Whether the suits allege a single occurrence during the relevant policy periods | Underlying complaints can be read as alleging one proximate, continuing cause (systemic failures), so a single occurrence is potentially pled. | Defendants say number/timing of occurrences is a factual question and premature; multiple occurrences would multiply SIR/deductible exposure. | Court: The complaints potentially support a single occurrence; dispute over multiple occurrences is factual and does not defeat duty-to-defend now. |
| Whether Giant Eagle’s payment of defense costs can satisfy Old Republic SIR/deductible and thus trigger AGLIC/XL duties to defend | Defense costs are "other amounts payable under the policy," can satisfy SIR/deductible and erode limits; excess policies define "loss" to include defense if underlying includes defense. Giant Eagle’s >$2M defense spending therefore triggers excess carriers’ duty to defend. | Defendants contend defense costs are "Supplementary Payments"/ALAE that do not satisfy SIR or reducethe limits; insured is not "legally obligated" to pay its own defense, so defense spending cannot trigger exhaustion. | Court: Under Old Republic policy language, "Supplementary Payments" refer to insurer-incurred expenses and do not include insured’s defense payments; defense costs qualify as "other amounts payable" and can satisfy the SIR/deductible and reduce limits. Given Giant Eagle’s >$2M in defense costs and potentially covered claims, AGLIC and XL owe a duty to defend. |
Key Cases Cited
- Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660 (3d Cir. 2016) (explaining eight‑corners rule and that a potentially covered claim triggers duty to defend under Pennsylvania law)
- Sikirica v. Nationwide Ins. Co., 416 F.3d 214 (3d Cir. 2005) (duty to defend is distinct and broader than duty to indemnify)
- Am. and Foreign Ins. Co. v. Jerry's Sport Ctr., 2 A.3d 526 (Pa. 2010) (discussing potential coverage standard and scope of duty to defend)
- Lexington Ins. Co. v. Charter Oak Fire Ins. Co., 81 A.3d 903 (Pa. Super. Ct. 2013) (addressing when an excess insurer’s duty to defend is triggered by actual payment of underlying limits)
- Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286 (Pa. 2007) (defining "accident" and fortuity in insurance context)
- Little v. MGIC Indem. Corp., 836 F.2d 789 (3d Cir. 1987) (under Pennsylvania law, defense costs can reasonably be read as falling within insurer obligations in some policy formulations)
- Cincinnati Ins. Co. v. H.D. Smith, L.L.C., 829 F.3d 771 (7th Cir. 2016) (found insurer owed duty to defend where governmental plaintiff sought economic relief tied to citizens’ bodily injuries)