*1 is af- Judgment affirmed, the Amended
firmed. TOWNSHIP, Appellant,
BENSALEM IN- LINES SURPLUS
INTERNATIONAL COMPANY; & For- Crum
SURANCE (Ill). Corporation, Managers ster and 93-1072.
Nos. 93-1071 Appeals, Court
United States
Third Circuit. Aug.
Argued on 7, 1994.
Decided Oct. Rehearing Petition
Sur 1, 1994. Banc Nov.
OPINION THE OF COURT ROTH, Judge: Circuit action, plaintiff this Township Bensalem (Township) appeals the district court order dismissing its complaint against defendants, Surplus International Lines Insurance Co. (Insur- & Managers Corp. Crum Forster ers), for failure to pursuant state a claim 12(b)(6). Fed.R.Civ.P. Township had con- tracted with professional Insurers for liabili- ty covering insurance all civil claims first against made the town or its during officials policy period. agreement The included a typical exclusion clause that coverage barred any arising claims pre-policy litiga- tion. Township When renewed its 1989,Insurers language added expanding the scope of what Township had expect come as the standard prior litigation exclusion clause. The new exclusion limited to claims completely unrelated matter, regardless of whether the matter litigation money involved damages. Thereafter, (Blanche Corp. Blanche Road Road), a real developer, estate filed federal rights civil complaint naming Town- several ship officials as defendants. The lawsuit was years result of of friction between Blanche Road regarding the development parcels of certain of land locat- ed in Township. After attempts several obtain under the insurance for the cost of defending the Blanche Road litigation, Township filed the instant com- plaint. The district court subsequently granted dismiss, Insurers’ motion to conclud- ing that the Road Blanche lawsuit fell within express terms policy’s exclusion It clause. held provision barred coverage because the federal cause action involved the same underlying and cir- facts Neil A. (Argued), Morris Neil A. Morris cumstances as several pre-policy state dis- Associates, P.C., PA, Philadelphia, appel- putes. Township challenges decision, ar- lant. guing that the new added Thompson Peter (Argued), G. I. exclusion clause is Charles par- inconsistent with the Hadden, Douglas Nazarian, R.M. Ross, ties’ expectations. Moreover, Dix- reasonable on Masback, & Washington, DC, Frank Mi- maintains that the district court D’Amore,.Saul, chael Ewing, Saul, Remiek erred & not giving it the opportunity to PA, Philadelphia, prove for appellees. through contention develop- further
ment of the record. STAPLETON, Before: HUTCHINSON also appeals the district court ROTH, Circuit Judges. imposing sanction to Fed. of said and written notice period 'policy imposed $2000 R.Civ.P. during Company by the claim is received finding that Township after sanction period. inquiry conduct failed to had the Rule to determine a motion it filed when Company will reimburse B. *3 a while court the district motion in which the Entity all Loss for for Public appeal. on pending rehearing was petition for by law to required entity shall be Public was rea- motion Township contends any claim civil Insureds for indemnify the a circumstances under the sonable against them because made claims first or district divest the not appeal does premature Act, that the claim provided Wrongful of a pending to consider jurisdiction court of policy period and during the made is first 59(e) motion. Rule received claim is of said written notice policy period. during the Company below, we will forth set the reasons For complaint and of the dismissal reverse added). (emphasis consistent proceedings for further remand poli- portion of made the claims While reverse will also opinion. We with agreement, prior that of the cy is identical to against Rule sanction imposing a policy’s in the difference significant there is Township. parties past, the In the provision. exclusion litigation exclu- typical prior agreed to had I. relating to all claims bars sion clause that County, Pennsylvania, Township, a Bucks policy was When the lawsuits. pre-policy state municipality, however, filed renewed, expanded Insurers subsequently re- July Insurers 1991. exclusion provision. The new scope of that Dis- the United States moved the action states: Penn- of Eastern District trict Court the insur- agreed that It is understood following accept as true sylvania. We making any responsible for not er shall be Township’s com- allegations, contained any in connection payment for loss to dismiss. motion light of Insurers’ plaint, based any against insured made claim Allentown, F.2d City Holder See of of, consequence or in upon, arising out Cir.1993). (3d 188, 194 involving: way any or in litigation as (1) pending any prior and/or Policy Insurance A. The including period] [pre-policy 2/1/89 its Public Township renewed April In local, before to matters but not limited Liability Insurance Employees’ Officials’ commissions, boards, or state, or federal year, commenc- for one Policy with Insurers agencies, or administrative Although aware ing April 1989. circumstance, (2) or situation any fact, or litigation exclusion to the addition litigation alleged in such underlying or it was clause, Township apparently believed matter. or type insur- essentially same receiving added). In- always received policy it Insurers added (emphasis had ance only exclu- surers, usual subject effectively essence restricts any pre- completely unrelated sions. those claims the dis- of whether dispute, regardless monetary loss any agreement covers by the legal claim covered pute involved during $1,000,000 claims made for civil up to acts wrongful arising from period states: us and insured. argued both before Township has expect not court that did district before the pay on behalf company will A. The exclusionary language would the new the Insureds all Loss the Insureds pre- been previously had not bar claims pay for obligated to legally shall claims, petitions e.g., to it as insurable against sented first made claim or claims civil before proceedings or injunctive relief Act, provided Wrongful aof them because agencies. administrative during the made the claim first Dispute B. The Blanche Road wages. interest and The suit was settled parties when stipulated both that the build- In December Blanche Road named ing permits would be reinstated.1 many of its current and for- mer employees officials and ain federal civil subsequently Blanche Road filed its feder- rights § suit to 42 U.S.C. rights al civil complaint alleging that certain Corp. See Blanche v. Township, Road No. Township officials had violated the Due Pro- (E.D.Pa. 1989). 89-9040 filed December cess by attempting Clause pay- to coerce The suit years was the culmination of several required ments by impeding law and arising development contention from the development Blanche Road’s of the Industri- the Blanche Road Industrial Park located in addition, al Park. Blanche Road claimed *4 Township. that Township Equal had violated the Protec- In Blanche Road commenced devel- by tion Clause applying different standards opment parcels of certain securing of land from those used for developers. other This necessary building permits town and en- was the first time that Blanche Road filed a tering agreements into of with sale several against federal action Township seeking buyers. Subsequently, Township made some money damages. It was also the first time financial demands which Blanche Road al- that Blanche Road raised constitutional leged required by any were not town ordi- claims and the first many time that nance. then stop issued a work town officials were named as defendants. A order and cited Blanche Road with certain held, trial was jury and a a entered verdict in town ordinance violations. On December favor of Blanche Road in amount appealed Blanche Road the order to $2,000,000plus interest, costs, attorneys’ and Appeals Town Code Board. While the fees. The subsequently district court grant- appeal pending, Township revoked Township’s ed motion for a new trial. That Blanche building permits Road’s and issued a apparently trial is pending. still stop second work order. Thereafter, 20, 1988, January on Blanche Township’s Declaratory C. complaint Road a quo filed warranto in the Judgment Action Court of Common County, Pleas Bucks Once the litigation Blanche Road federal Pennsylvania. sought It declaring order commenced, Township filed a claim with In- Appeals Town Code Board mem- surers under the terms of poli- the insurance appointments bers’ were null and void. cy. Township believed it was entitled to Blanche Road wanted the members excluded rights because the civil complaint from serving on the Board. was filed during policy period and it was Blanche Road also equity filed an action in the first time Blanche Road had filed a feder- state court on February 1988. In that al seeking money suit damages. Township suit, sought Road injunctive Blanche and de- had not filed claim Insurers for claratory relief as well as ancillary some prior Blanche state Road proceedings damages. Blanche Road asked the court to they because equitable involved relief not enjoin Township enforcing from stop work covered under provisions levying penalties. and fines or More- over, it wanted the court to stop declare the work order null and void. only damages dispute After a arose between Insurers Blanche sought Road delay were for the Township regarding coverage under the some construction work and certain policy, related Township filed the complaint instant 1. We note that there were two other state improvements they certain proper- made their to proceedings that ty related to the Blanche Road and to release owners their obli- dispute. proceedings gations Neither of the were under initi- a letter of credit. case, ated Blanche Road. In one certain case, another related official individual owners of lots within the Industrial private swore out a complaint criminal in Dis- complaint Park filed a naming in mandamus against trict Justice one Court of Blanche Road’s Supervisors Town Board as defendants. The principals. dispute to a related sought compel owners approve to the Board to over one of the lots in the Industrial Park. concerning the insurance discussions Bucks Pleas of Common in the Court as policy in as well Endorsement issue seeking both declara- Pennsylvania, County, believe, This, we will also devel- No. 1. removed monetary relief. Insurers tory and generally do op proof Court District States to United the action Defendants’ attempt apply Pennsylvania. or even District the Eastern enforce they in this policy No. as Endorsement alleged that case, i.e., claims. and that uninsurable litigation Road the Blanche covered duty pay de- contractual what Insurers had does not define d.The instant cer- alleged that Township also except by negative costs. fense claim is an insurable ambiguous i.e., ¶4^), were aspects of Definitions, tain in III inference coverage. in favor of construed only. should money be Plaintiff needs damages discovery oral take written and Town- to dismiss a motion Insurers filed discovery believes issue. Plaintiff a claim failing to state complaint for ship’s ‘prior claims reveal that had will granted could upon which relief timely been related thereto’ 12(b)(6). argued that facts They Fed.R.Civ.P. policy, under Defen- Defendants’ filed barred exclusion rejected the claims would have dants involved *5 litigation Road federal Blanche Thus, able to anyway. Plaintiff will be prior state as the issues five facts and similar “prior claim” ex- prove that Defendants’ un- While equitable relief. for proceedings (but is), clusion, ambiguous real- if it not claims provision exclusion the former der “prior claims.” ly meant insurable prior they if related only barred would be deposi- to take g. will need that the lan- maintained litigation, Insurers Plaintiff Township Bensalem tions barred policy specifically in the new offi- guage offormer cials, employees, representatives and/or prior relating administrative claims Township, longer work who no matter. proceeding or for knowledge, under- respect to their motion and opposed Insurers’ Township standing discussions with and Defen- requested opposition this connection with concerning the agents dants and their discovery to permitted to conduct that it be in issue and exclusions policy, claims expectation that its reasonable demonstrate case, Road as the Blanche litigation, such omitted). (footnote In- Brief at 9 Appellant’s Township by the would covered stay discovery pending reso- moved surers areas following explanation of the gave the The dis- to dismiss. motion lution of their discovery and the to take it needed stay March 27. on granted trict court discovery: this underlying for reasons discovery then was issue of further relied, Mo- in their have b. Defendants when, by entered June order mooted dismiss, No. 1 Endorsement tion to mo- granted Insurers’ the district clause, concerning exclusionary as to dismiss. tion litigation. prior claims Plaintiff’s memorandum, dismissing the com- In its what, any, discus- need to discover if that the court held plaint, the district sions, or other explanations information coverage be- precluded expressly exclusion representa- agents or Defendants’, their litigation Road federal the Blanche cause explaining gave to the tives Plaintiff underlying circumstances involved the same exclusion, impact on how would It con- proceedings. state pre-policy as the con- relate to other Township and unambiguous was that the cluded exclusion policy, said flicting exclusions plain according be enforced and should lUd), excluding ie., Definition, § language. “non-money” damages. all claims for depositions discovery and Written Proceedings Post-Judgment D. employees agents
Defendants’ necessary. 23,- Township a letter sent would be On June un- court, was stating that the order to the prior discover needs to c. drafts Plaintiff not indicate whether it did clear memos internal and Defendants’ prejudice and it was with or without did II. specify both defendants. also stat- diversity jurisdiction The district court had that, preju- if ed the dismissal was without pursuant § of this action to 28 U.S.C. dice, it an amended would move to file com- jurisdiction pursuant We to 28 U.S.C.
plaint.
appears
It
intended
§ 1291.
the letter as a motion to amend the district
plenary
We exercise
review of the
59(e).
pursuant
court order
to Fed.R.Civ.P.
district
court’s dismissal of a
under
7,1992,
July
receiving
response
On
12(b)(6).
Fed.R.Civ.P.
Ditri v. Coldwell
court, Township
from the
filed its amended
Inc.,
Affiliates,
Banker Residential
954 F.2d
8,1992,
complaint.
July
On
filed a
(3d Cir.1992).
869, 871
We review the dis
9,1992,
July
appeal.
notice of
On
the district
imposing
trict court
Rule
sanctions
Township’s
court denied
motion to file an
for abuse of discretion. Cooter & Gell v.
complaint.
amended
The order did not ad-
384, 385, 110
Corp.,
Hartmarx
496 U.S.
S.Ct.
59(e)
dress the
motion.
Rule
2447, 2450,
(1990).
1309
France
Co. v. Allstate Ins.
ex-
J.H.
in it a reasonable
had created
Insurers
Refractories
468,
Co.,
185,
472
Pa.Super.
396
578 A.2d
claims
policy would cover
pectation
(1990)
added),
(emphasis
part
by the federal
presented
as that
such
aff'd
(1993).
29,
part,
Pa.
policies. trine Expectations Reasonable in Insur- Decades, assuring Courts should be concerned with ance Law Two 51 Ohio St.L.J. After (1990).4 later, purchasing public’s years however, rea- Five Thus, expectations sonable are appeared pull fulfilled. the court back from its regardless ambiguity, or lack there- enthusiastic endorsement of the doctrine. of, Indeed, given inherent in a set insurance in Standard Venetian Blind v.Co. (whether they applications, documents Empire American Ins. 503 Pa. riders, receipts, (1983), policies, conditional or A.2d 563 the court failed even to whatever), public right expect acknowledge opinion has a in Collister while they something eompa- holding will receive ... “where limitation alleged for Nationwide's Reading concerns in view of the Should an Insured Be Rewarded Not procedures Policy?, (1992); fact that its necessitate reliance Roger 41 Drake L.Rev. 705 Henderson, representations consumer on the Expec- of an insurance C. The Doctrine Reasonable agent." Decades, Id. at 370. This notion that insurers tations in Insurance Law Two After bring upon (1990); Ware, through these Stephen lawsuits themselves Ohio St.L.J. 823 J. A *8 practices Doctrine, something Critique their arcane is of a theme Expectations the Reasonable of Pennsylvania Supreme (1989); Rahdert, subsequent the Court's 56 U.Chi.L.Rev. 1461 Mark C. subject. Reconsidered, cases on the Expectations Reasonable 18 Conn. (1986); Abraham, Judge- L.Rev. 323 S. Kenneth Keeton, Rights 3. Judge-Made Robert E. Insurance Honoring Law at Made and Law Insurance: Provisions, Insured, Policy Variance with 961, Expectations 83 Harv.L.Rev. the Reasonable the of (1970) (providing (1981). following Among the formu- Va.L.Rev. 1151 the courts that doctrine, expectations principle: lation of the clearly adopted reasonable have not the the state- objectively expectations ap- Pennsylvania Supreme "The reasonable ments of the Court are plicants Henderson, regarding perhaps and intended conflicting. E.g., beneficiaries the the most terms of insurance contracts will be honored 51 Ohio St.L.J. at 829-31. though painstaking study policy pro- even of the negated out, expecta- visions would have tions.”). points those 4. As Professor Henderson Professor article, Keeton, by Since Professor Keeton's Judge con- who that time had become Keeton, siderable number of have adopting trees been sacrificed in read Collister as the doctrine of expectations the name expectations explicitly go of reasonable the aca- as reasonable "in a form community ing beyond merely demic has resolving ambiguities against debated what reasonable means, expectations adopted Davenport Royal courts have insurers.” Peters Co. v. Globe doctrine, Co., (D.Mass. the F.Supp. and whether it is desirable for them Ins. 291 & n. 5 1980) (Keeton, J.). generally Ingram, to have done so. See John D.
13H Pennsylvania signifi- This is coverage law. Id. deny stated insurer to upon the relied charge: given content of the dis- cant the conspicuously and clearly is worded may the conse- not avoid the insured played, the cases have said: the This is what by proof that he limitation of that quences ... upon burden is the insurer establish not limitation or he did the that failed to read ... and the awareness under- insured’s so, at 567. Even it.” 469 A.2d understand So, even standing the exclusions. light “in of the manifest that the noted court in this is though the initial burden case an power between bargaining inequality stays plaintiff and it with the with the purchaser of insur- company and a insurance indeed, plaintiff, upon there is a burden justified in ance, may on occasion be a court company in this case to of a con- plain language deviating from prove you by preponderance of the Id. insurance.” tract of evidence, and insured] that was aware [the that understood the exclusion existed Pennsylvania Supreme Finally, in here.... Mut. Farm decided Tonkovic State Court court). the trial (quoting Id. at 922 A.2d 920 Pa. Ins. Auto point consequence is that the second insurer, (1987). followingits In Tonkovic the holding was in ac- expressly noted application and acceptance of the insured’s Collister, proceeded at cord with id. and scope unilaterally limited the payment, provisions of quote the core the Collister by inserting coverage provided opinion, including the second block lan- informed about which never an exclusion quoted at guage that above. Id. we Despite unambiguity of the the insured. exclusion, Vene- the court felt Standard distinguishable. Standard In tian Blind Collister, with Standard Faced Vene Blind, reasoned, poli- the court Venetian Tonkovic, Blind, we are tian unable be, and what cy purported what “was any categorical distinction draw between liability pol- purchased, the insured Pennsylvania types of cases in which courts all the usual icy,” 521 A.2d at expectations of the will allow the reasonable and exclusions. incidents unambiguous language insured to defeat the of an those which insurance between cases find a crucial distinction adhering general rule of courts will follow the type of applies specific for a one where policy. precise to the terms One unilaterally limits coverage and the insurer cases, emerges from all the how theme coverage, resulting policy quite in a ever, chary that courts are to be about requested, from what the insured different companies allowing to abuse their insurance pre- where the insured and cases received Thus we position their customers. vis-a-vis cisely coverage requested that he but insurer or its that where the are confident clauses to read the to discover failed agent in the insured creates usual incident of that are the supported that is not expectation of applied for. expectation policy that by the terms Accordingly, court held that “where Id. prevail will over applies prepays ... individual cases, simply way of many this is another coverage, the insurer specific insurance made supreme court clear saying what the change coverage provid- unilaterally Tonkovic, may not make an insurer *9 showing that the without an affirmative ed un changes policy an insurance unilateral understood, of, the notified and insured was the policyholder the of it both less notifies the insured regardless of whether change, policyholder that the changes and ensures (emphasis at 925 add- policy.” the Id. read significance. In other understands their ed). straightforward more requires a cases equitable es application principles the of Tonko- of couple points about the A of other recognized, which, court has toppel as this mentioning. first of opinion vic bear Park, v. 933 F.2d American Ins. Co. found that West specifically that the court these (3d Cir.1991), 1236, the underlie eases correctly 1239 jury court’s instruction the trial 1312 Township change discussed and are manifest in informed of the and
that we have its repeated significance, prevail then supreme the court’s observations Insurers must be- cause, view, industry policy unambiguously in our the that insurance and its recondite coverage excludes for claims such as practices responsible are for deviations from the one types In of at issue here. rule. both cases the insured, as a result of insurer’s either persuaded by Township’s We are thus ar- actively providing misinformation about the gument that dismissal to Rule by scope coverage provided or of 12(b)(6) inappropriate. Before the dis- notify passively failing to the insured of trict court denied the motion to amend and changes policy, something in the receives Township’s complaint dismissed for failure to thought purchased.5 it In other than what it claim, state a it should have allowed discov- consequence, supreme court as the was care- ery it to enable to review the circumstances Collister, point at ful to out both 388 A.2d surrounding agreement in or- 1353, Tonkovic, 926, 521 A.2d at “the Township might der to determine whether position reap insurer is often expectation have had a reasonable of cover- understanding lack of benefit of the insured’s age in despite language this situation of of the transaction.” will We therefore reverse and remand so that the district court can take In this case had the district court steps. these additional permitted Township to amend its proceed discovery, Township might with Unconscionability B. types have been able to assert one of these of remand, Township might claims. On be able Township argues also that the new change to demonstrate that Insurers did not exclusion clause was unconscionable because language of the exclusion until after most, all, effectively abrogated if not Insurers, agreed had its renew with coverage agreement under the and because notify and that Insurers either did not Town only a handful of type carriers offered this ship change the exclusion or did not coverage. “Unconscionability requires significance explain change. two-fold determination: that the contractual unreasonably terms are Alternatively, Township might favorable to the be able to drafter meaningful there is no demonstrate Insurers somehow misled it that, part party regard choice on the of the other indicating despite ing acceptance provisions.” policy, World claims such as the one at issue wide Brady, Underwriters Ins. Co. v. here would be covered. (3d Cir.1992) (citing F.2d Koval v. sum, In we believe that could Liberty Pa.Super. Mut. Ins. conceivably prove that it had (1987)). A.2d Bishop See also expectation coverage despite policy lan- Washington, Pa.Super. 480 A.2d guage appears to those not familiar with (1984); Robert E. Keeton Alan& relationship unambiguously with Insurers Widiss, 6.3(b)(2) (1988) § I. Insurance Law preclude coverage, and that it therefore (“In ... unambiguous some cases lan might stress, coverage. be able to obtain guage policy provides of an insurance so little however, holding that our must not be over- coverage that it would be unconscionable to If stated. was aware of the it.”). permit the insurer to enforce change provision in the exclusion before it elected to renew its Township argues application Insurers and Here representation Insurers made no arising the exclusion to claims scope reduced, equitable, non-monetary would not be or if disputes, unreason- agreed ably after to renew Insurers favors Insurers. Under the terms of contrast, not, cases like Standard Venetian Blind certain events when its terms it does nor change concern situations where the has no rea- insured made a in the terms of after the *10 believing policy agreed purchase sonable basis for that a covers insured has to insurance with- is, informing change events that it does not. That the insurer has out the insured of the and its policy consequences. neither told the insurer that a would cover Township any party that it is the intention such agreed pay to policy, Insurers the money damages. party responsible the Insureds for for to hold civil claims for all seeking strictly any specified Wrongful suits Act did not cover results of policy if it Township argues that equitable alleged relief.6 to have done done or been commencement of the a claim at the had filed acting capacity in afore- Insureds while dispute, Insurers would Blanche Road state mentioned; or express coverage under have denied (b) Entity or the Insureds The Public Township that it asserts terms any aware of occurrence shall become apply the exclusion for Insurers is unfair may subsequently give rise to a deny coverage of the broadly so as to being against made the Insureds claim § it relat- 1983 action because Blanche Road Act; respect any Wrongful such disputes prior disputes, when these ed Entity Then the Public or the Insureds would not have been of a nature which were give practicable as written shall as soon agreement and thus covered Company receipt of notice to the the basis of a claim not have been would notice under Clause such written or oral prior policy. any similar it or under under 4(a) Clause or of such occurrence under unconscionable, Township The exclusion 4(b). Upon receipt the Insurer’s of such litiga- contends, majority of its because may subsequently any claim which notice originates state administrative tion arising against the Insureds out be made first Generally, a claimant will proceedings. shall, alleged Wrongful Act for the of such Township agency.7 Such relief from a seek Policy, be treated as a purposes of this money rarely ripen into lawsuits for disputes period hr during claim made he cannot damages plaintiff finds unless given given or if which such notice was through agen- local adequate relief obtain discovery during period as the extended this, Township cy proceedings. Because discovery period. during such claim made interpreted by as that the exclusion believes Township can provision As a result of virtually coverage, no Insurers leaves it with coverage long all its claims so as obtain for non-monetary relief that claims for since during potential claims notifies Insurers during policy period are not cov- arise only policy period. effects ered, monetary al- for relief will and claims then, exclusionary language, are to additional inevitably pre-poli- somehow tied most gap in aforementioned create the cy litigation and therefore excluded. of notifica- place and to the additional burden drastically the extent overstates Township. of these effects tion on Neither coverage. exclusion reduces its to which the in our view. unconscionable render gap in reality, only creates a the exclusion those claims that Township’s IV. prior to the effec- arisen in some form policy. This is because of tive date of the contention Lastly, Township’s we address policy, which states as 4 of the Condition abused its discretion that the district court follows: for sanc- by granting cross motion Insurers’ hearing during policy period
If or extended Rule 11. After tions under discovery period: motion, imposed a sanction the district Township had
(a) Entity the sum of $20008 or the Insureds The Public court to deter- a motion with the district oral notice from filed receive written or shall Board, Board, Zoning Hearing Appeals payments Code excludes 6. The Committee, Advisory Budget claims, relief, Environmental seeking or re- 4. a. dress, demands Board, Corp. Development money damages; Economic any than and the form other claims, expenses relating de- b. fees or redress, seeking relief or mands or actions costs 8.Although that their Insurers first claimed damages. money than form other answering the Rule motion associated $8,800, and then lowered amounted to adminis- at least seventeen maintains $5,535, a rea- the court determined Among amount them and Boards. trative Commissions Council, Auditors, $2000. to be sonable sanction Board of are the *11 1314 59(e) Inc., (3d 277, Rule timely Cir.1991), mine the motion while a 930 F.2d 289 cert. — denied,
petition
—,
rehearing
pending
373,
for
was
before
U.S.
112 S.Ct.
(1991)
L.Ed.2d 324
Finding
dupli-
(quoting
this Court.
the motion to be
Jones v. Pitts
cative,
(3d
burgh
Corp.,
1350,
the district
Nat’l
899 F.2d
court held that
Cir.1990)).
inquiry
had failed to conduct a reasonable
prior
filing.
It concluded that Insurers
Township’s
We
original appeal
dismissed
expense
having
incurred needless
to re-
jurisdiction
for lack of
specifying
without
spond Township’s jurisdictionally
defective basis for our
speculat-
decision.
Instead of
motion.
ing
dismissal,
about our
rationale
Township sought
by
clarification of the order
have held
may
that Rule 11 sanctions
filing
petition
for rehearing. Apparently
exceptional
be awarded in
circumstances in
believing
may
that the dismissal
have been
“discourage plaintiffs
order to
bringing
59(e) motion,
pending
due to the
Rule
Town-
making
baseless actions or
frivolous mo-
ship also filed a motion in district court to
Doering
County
tions.”
v. Union
Bd. of
determine that motion.
(3d
Freeholders,
191,
Chosen
857 F.2d
Cir.1988).
Daily
also
See
Morristown
Rec-
correctly
The district court
noted
ord,
Union,
Graphic
Inc. v.
Communications
that,
the well
principle
settled
once a notice
8N,
(3d
31,
Cir.1987)
Local
832 F.2d
32 n. 1
filed,
appeal
jurisdiction
longer
is no
(noting that “Rule 11 is not to be used rou-
vested
the district court. Griggs v. Provi
tinely
parties disagree
when the
about the
56, 58,
dent Consumer Discount
459 U.S.
correct resolution
in litigation”).
of matter
400, 401-02,
(1982).
103 S.Ct.
increase in the cost of
clearly premature
appeal.”
notices
Id.
Township’s
Because
appeal
pre
notice of
was
imposes
The Rule
duty
an affirmative
mature, Township’s filing of the motion to
parties
inquiry
conduct
determine the Rule
motion was not
applicable
into the
law and
facts
objective
outside the bounds of
reasonable
Guides,
filing. Business
Inc. v. Chromatic
ness.
Enters., Inc.,
Communications
498 U.S.
922, 933,
111 S.Ct.
1315 V. the case it dismissed and whether parties requested The letter also prejudice. without dismissing reverse the order We will complaint. While an amended to file leave 12(b)(6) to Fed.R.Civ.P. denying the re- entered an order the court court for and remand the case to the district complaint, the order an amended quest to file opin- with this proceedings further consistent 59(e) As a Rule motion. as to the was silent addition, ion. In we will reverse the order dispose to the court’s failure result of imposing a Rule 11 sanction the district motion, Township’s appeal could well against Township. so, If it premature. would to be deemed of reason for within the bounds then be to determine the HUTCHINSON, to file the motion Judge, Circuit on its conclusion motion based
Rule
Concurring.
continue to exer-
district court would
join
opinion
I
I write
Court.
jurisdiction.
cise
only
emphasize
separately
to
the distinction
Furthermore,
support for
can find no
we
between this case and Standard Venetian
Township’s motion was
any allegation that
Co.,
Empire
Blind Co. v. American
Ins.
503
or cause unneces-
attempt to harass Insurers
300,
(1983),
embodies
Pa.
In the
inas
Furthermore,
A.2d at 1353.
as the Court
policy
claims that the
it received
demonstrates,
cogently
and,
policy
this theme was con-
buy
was not the
it wanted to
most
Tonkovic,
Pennsylvania
tinued in
significantly,
was led
Su-
the insurer to be-
preme
purchasing.
pronouncement
Court’s most recent
discovery
lieve it was
matter,
designed
support
insured seeks is
on this
and thereafter
in the
deci-
Therefore,
allegation.
Pennsylvania
I
sions of
Superior
believe the Court
Court
correctly
decides that the
opinion.
Major-
should also cited
this Court’s
See
given
opportunity
ity Op.
to discover evidence
at 1308-09.1
Tonkovic,
however,
analyzed
policy,
which can be
in terms of an
In a claims-made
limitation of
coverage
illusory promise,
policy
to claims filed within the
term
is relevant here because Bensa-
can sometimes interact with broad exclusions
Township's policy
lem
is a “claims-made"
present
like those
here to defeat the "reasonable
such,
As
it limits
to claims filed within
expectations”
cases,
Tonkovic,
perhaps,
of the insured or
in some
policy's
term. Standard Venetian Blind in-
promised coverage illusory.
make the
See
pro-
volved an "occurrence-made"
920;
513 Pa.
A.2d
Worldwide
vided
covered event that oc-
(3d
Brady,
Underwriters Ins. Co. v.
Pennsylvania would UNITED Venetian here, apply Standard stances to exclude Bensa- language rule
Blind’s plain 93-1377, QUINTERO, Appellant Melba if it coverage it seeks Township from the lem reasonably expected such can show Rodriguez, 93-1386, Appellant Maria Instead, Pennsylvania I think coverage. lan- technical beyond the strict would look 93-1389, Gonzalez, Appellant Santiago exclusion to determine guage policy’s of this told the insurer coverage the insured what Jose Gonzalez-Rivera a/k/a *14 rea- buy the insurer and whether Otero, wanted “Tosti”, Aberto sonably expect it to such led Gonzalez-Rivera, Appellant Jose it tendered. terms 93-1415, opinion of the Accordingly, join I Cruz, Appellant 93-1416, Jose Court. SLOVITER, Judge, Chief Before: Joaquin Morgado, Appellant in 93-1572. MANSMANN, BECKER, STAPLETON 93-1377, 93-1386, 93-1389, Nos. 93- SCIRICA, HUTCHINSON, GREENBERG, and 93-1572. 93-1416 ALITO, ROTH, COWEN, NYGAARD, McKEE, LEWIS, Judges. Circuit Appeals, States Court of United
Third Circuit. FOR REHEARING SUR PETITION Argued March 1994. IN BANC Decided Oct. 1, 1994]
[Nov. by appel- rehearing filed petition for having ease been
lees the above-entitled participated in judges who
submitted to the other of this and to all the
the decision Court regu- judges of the circuit in
available circuit service, judge con- and no who
lar active having for re- in the decision asked
curred majority judges circuit
hearing, and a active service
of the circuit regular court rehearing by
having voted for
banc, petition rehearing is denied. risks, exchange? exclusions in facing of cov- continue such persons similar exclusion question to do no more than here be meant erage particular insured is more for losses that a who, they problem of moral risk. Whether necessary. For solve or less certain to suffer said, go deprive insured of the cover- give up pepper- far as to so it was once would not as who, reasonably expected remains to age to receive exchange pound mat- no corn in long pounds, seen. could ter how well endowed