PNC Bank NA v. Axis Insurance Co, 24-1670

Background

PNC Bank's parent company acquired National City Corporation on December 31, 2008, and merged it into PNC Bank, making PNC Bank the successor to National City.
Plaintiffs sued PNC Bank and National City for pre-acquisition wrongful acts committed by an entity previously acquired by National City, resulting in a $106M+ judgment against PNC Bank.
PNC Bank sought coverage under its management liability insurance policy, which covered claims made between December 31, 2008, and December 31, 2009.
The insurance policy contained a "Changes in Exposure Provision" that excluded coverage for wrongful acts committed by an acquired company prior to acquisition.
The insurers denied coverage based on this exclusion, prompting PNC Bank to sue for breach of contract and declaratory judgment; cross-motions for judgment on the pleadings followed, with the district court siding with the insurers.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Changes in Exposure Provision exclude coverage for pre-acquisition wrongful acts?	PNC Bank argued it is not an acquired entity and the policy covers claims against it, including as successor to National City.	Insurers argued the provision bars coverage for wrongful acts by any acquired entity committed before acquisition, regardless of subsequent succession.	The court held that the provision applies, and the exclusion bars coverage for losses from wrongful acts committed by acquired entities prior to acquisition.
Does the policy’s coverage term supersede the exclusionary provision?	PNC Bank argued coverage terms are more specific and should prevail over general exclusions like the Changes in Exposure Provision.	Insurers contended that the exclusion is a key limitation that defines, not conflicts with, the policy’s scope.	The court found no conflict; the exclusion unambiguously limits coverage according to its terms.
Is defending and paying the judgment by PNC Bank sufficient to avoid the exclusion?	PNC Bank argued that it, not an acquired company, bore the liability, so exclusion shouldn’t apply.	Insurers maintained the exclusion applies based on the origin of liability (pre-acquisition acts), not who ultimately pays.	The court ruled that the exclusion focuses on the timing and entity of the wrongful acts, not who paid the judgment.
Should ambiguities be construed in favor of coverage?	PNC Bank implied the language was unclear and should be read for coverage.	Insurers said the exclusion’s wording is clear and not ambiguous.	The court held the exclusion was unambiguous and must be enforced as written.

Key Cases Cited

Green v. Fund Asset Mgmt., L.P., 245 F.3d 214 (3d Cir. 2001) (standard for review of order dismissing claims on the pleadings)
Sikirica v. Nationwide Ins. Co., 416 F.3d 214 (3d Cir. 2005) (review of insurance policy interpretation and summary judgment standards)
Westport Ins. Corp. v. Bayer, 284 F.3d 489 (3d Cir. 2002) (insurance policy interpretation as a matter of law)
Gallagher v. GEICO Indem. Co., 201 A.3d 131 (Pa. 2019) (unambiguous policy language must be enforced; policy ambiguities construed in favor of insured)
Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100 (Pa. 1999) (standards for interpreting exclusions in insurance contracts)