UNITRIN DIRECT INSURANCE COMPANY v. ESPOSITO
2:16-cv-05239
E.D. Pa.Nov 29, 2017Background
- Unitrin issued a homeowner’s liability policy to Esposito; underlying state suit alleges Esposito assaulted the plaintiff, causing bodily injury.
- The policy defines an “occurrence” as an accident and excludes bodily injury expected or intended by the insured, but contains an exception: injuries resulting from the use of reasonable force to protect persons or property (self-defense/defense of another).
- In federal court Unitrin sought a declaratory judgment denying a duty to defend Esposito; court found potential coverage and ordered Unitrin to defend.
- Unitrin moved for reconsideration, arguing the court misapplied Pennsylvania’s four‑corners rule and improperly considered Esposito’s answers/pleadings outside the underlying complaint to find the self‑defense exception might apply.
- The court denied reconsideration, holding that (1) the policy’s definition of occurrence and the self‑defense exception create an ambiguity, and (2) extrinsic pleadings may be considered when an exception to an exclusion potentially creates coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Unitrin has a duty to defend Esposito in the underlying assault suit | Esposito: insurer must defend because the policy’s self‑defense exception could apply | Unitrin: four‑corners rule bars reliance on extrinsic pleadings; no "occurrence" (accident) so exclusions end coverage inquiry | Court: duty to defend exists because ambiguity between "occurrence" and self‑defense exception allows considering extrinsic pleadings to show potential coverage |
| Whether the court may consider pleadings outside the underlying complaint to evaluate the self‑defense exception | Esposito: court may look beyond complaint where exception to exclusion may apply | Unitrin: extrinsic evidence is barred; only complaint and policy control | Court: exception falls within subset of exclusion cases allowing consideration of extrinsic pleadings to show an exception may apply |
| Whether the self‑defense exception creates only duty to defend or also duty to indemnify | Esposito: at least duty to defend pending factual resolution | Unitrin: potential indemnity obligation is improper if conduct was intentional | Court: exception creates duty to defend until facts narrow claim; indemnity depends on underlying factfinder |
| Public policy implications of requiring defense for conduct alleged as intentional | Esposito: public policy favors encouraging rescue/defense; Good Samaritan rationale supports coverage for reasonable self‑defense | Unitrin: public policy disfavors insuring intentional wrongdoing | Court: does not foreclose public policy concerns but finds coverage provision consistent with public policy supporting defense where policy so provides |
Key Cases Cited
- Pa. Nat’l Mut. Cas. Ins. Co. v. St. John, 106 A.3d 1 (Pa. 2014) (policy must be read in full; unambiguous language controls)
- Riccio v. Am. Republic Ins. Co., 705 A.2d 422 (Pa. 1997) (insurance provisions construed in context of full policy)
- Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660 (3d Cir. 2016) (ambiguities construed in insured’s favor)
- Med. Protective Co. v. Watkins, 198 F.3d 100 (3d Cir. 1999) (policy provisions read in context of entire contract)
- Air Prods. & Chems., Inc. v. Hartford Acc. & Indem. Co., 25 F.3d 177 (3d Cir. 1994) (extrinsic evidence may be used to show an exception to an exclusion applies)