Mutual Ben. Ins. Co., Aplt v. Politsopoulos, 115 A.3d 844

Leola Restaurant held an umbrella commercial liability policy from Mutual Benefit that contained an employer’s liability exclusion (excluding bodily injury to “an ‘employee’ of the insured arising out of and in the course of ... employment by the insured”).
The policy also included a separation-of-insureds clause: insurance applies separately to each insured against whom a claim is made or suit is brought.
Leola leased property from Property Owners (Politsopoulos and Mihalopoulos); the lease required the owners to be named as additional insureds under Leola’s liability insurance.
Employee Marina Denovitz (Leola employee) fell on stairs and sued the Property Owners for negligence; the Property Owners sought defense/indemnity under the umbrella policy.
Mutual Benefit acknowledged the Property Owners were insureds but denied coverage invoking the employer’s liability exclusion (arguing Denovitz was an employee of “the insured” — i.e., the named insured Leola). The Property Owners argued the exclusion should only bar claims by employees of the specific insured sued.
Procedural posture: trial court granted declaratory judgment for Mutual Benefit following Pennsylvania precedent (PMA); Superior Court reversed; the Pennsylvania Supreme Court affirmed the Superior Court (on different grounds), holding the exclusion ambiguous and inapplicable to the Property Owners.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the employer’s liability exclusion (referring to injury to an employee of “the insured”) bars coverage for a suit against an additional insured who is not the employee’s employer	Mutual Benefit: “the insured” should be read to encompass the named insured generally (PMA), so exclusion bars coverage even if suit is against another insured	Property Owners: the exclusion is ambiguous and, together with the separation clause, should be read to apply only to employees of the particular insured sued	Court: exclusion ambiguous given mixed use of "the" vs. "any/an insured"; read against insurer — excludes only claims by employees of the insured being sued, so exclusion does not apply to Property Owners
Effect of separation-of-insureds clause on interpretation of employer exclusion	Mutual Benefit: separation clause cannot be used to nullify a clear exclusion; PMA supports broad application	Property Owners: separation clause supports reading “the insured” as the particular insured claiming coverage	Court: separation clause reinforces the narrower reading where the policy uses differing articles; it does not override clear exclusions but here helps resolve ambiguity in favor of insureds

Pennsylvania Mfrs.’ Ass’n Ins. Co. v. Aetna Cas. & Sur. Ins. Co., 426 Pa. 453, 233 A.2d 548 (Pa. 1967) (held employer-exclusion language encompassed named insureds broadly; Supreme Court declined to extend that broad reading here)
Patton v. Patton, 413 Pa. 566, 198 A.2d 578 (Pa. 1964) (household exclusion context relied on in PMA)
Great Am. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 412 Pa. 538, 194 A.2d 903 (Pa. 1963) (automobile household-exclusion precedent cited in PMA)
Ohio Cas. Ins. Co. v. Holcim (US), Inc., 744 F. Supp. 2d 1251 (S.D. Ala. 2010) (collects authorities: separation-of-insureds clauses do not negate plainly-worded exclusions, but can affect interpretation where policy language is ambiguous)