Lead Opinion
The Board of Education of the School District of Pittsburgh (the “School District”) appeals from the order of the Court of Common Pleas of Allegheny County granting the motion for judgment on the pleadings filed by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). For the following reasons, we reverse.
On April 2, 1992, a civil rights complaint was filed on behalf of a minor student, (“R.C.S.”), against the School District, the Board of Public Education of the City of Pittsburgh, the principal of the Margaret Milliones Middle School, and Rudolph B. Walls, president of the middlе school’s parent-teacher organization. The complaint alleged that because of various enumerated shortcomings by the School District et. al, Walls was able to sexually molest R.C.S., in violation of the student’s civil rights.
This policy does not apply:
a) to any claim involving allegations of ... criminal acts ...
b) to any claims arising out of ... (3) assault or battery ....
c) to any claim arising out of bodily injury to ... any person_
The record reflects repeated requests by the School District’s solicitor that National Union reconsider its refusal to defend, emphasizing the underlying complaint alleged negligent supervisory conduct and not conduct expressly excluded under the policy. The School District ultimately settled the ease on February 23, 1994, then filed the instant action against National Union, alleging breach of contract and bad faith.
On March 9, 1995, National Union filed a motion for judgment on the pleadings as to issues of coverage under the policy, which motiоn was granted by the trial court. The trial court reasoned “[t]he language utilized in the assault and battery exclusion is clear and unambiguous. No matter how the allegations against the School District are phrased in the R.C.S. claim, all the claims against all the Defendants therein ‘arise out of the assaults and batteries by Defendant Walls against R.C.S.” Trial Court Opinion (Corrected), 8/9/95, at 8-9. This appeal followed.
The School District contends the trial court erred in determining (1) its causes of action for breach of contraсt and bad faith are barred by the terms of the policy, (2) the terms of the assault and battery exclusion relieve National Union of its duty to defend and indemnify against the claims asserted by R.C.S., and (3) National Union had no duty to defend or indemnify against the claims asserted by a non-insured under the policy.
A motion for judgment on the pleadings is properly granted only if the pleadings show no genuine issue of fact exists, and the mov-ant is entitled to judgment as a matter of law. Kelly v. Nationwide Insurance Co.,
Although we are reviewing the trial court’s interpretation of the instant policy in light of the claims raised in the undеrlying complaint, we need not defer to the trial court’s finding since the construction of a contract of insurance is a question of law. United Services Automobile Association v. Elitzky,
An insurer’s duty to defend is distinct from, and broader than, its duty to indemnify an insured. Aetna Casualty and Surety Co. v. Roe,
An insurer who refuses to defend its insured from the outset does so at its peril, Roe,
The question before us is not whether National Union was obliged to pay anything; rather the question is whether it had a duty to defend the School District. More precisely, the issue is whether the exclusionary language of the policy excused, as a matter of law, the otherwise manifest obligation to defend. If it does not do so unambiguously, we must reverse the trial court.
Under the policy, National Union agreed to provide coverage for claims alleging “any Wrongful Act (as herein defined) of the Insured or of any other person for whose actions the Insured is legally responsible ...”, and to “[d]efend any action or suit brought against the Insured alleging a Wrongful Act, even if such action or suit is groundless, false or fraudulent.” By an endorsement to the policy, the definition of Insured was amended to include volunteers. The policy defined Wrongful Act as “any actual or alleged breach of duty, neglect, error ... or omission committed solely in performance оf duties for the School District.”
The R.C.S. complaint alleged the Board of Education failed to screen persons they knew would have access to young students and failed to implement procedures, policies, or background checks of those in contact with students to facilitate discovery of any criminal history of sexual abuse of children. The complaint also alleged the School District failed to train, instruct or inform its teachers, administrators and employees not to permit unsupervised сontact between students and unscreened PTO volunteers, and averred this failure “was so grossly negligent that deprivation of Plaintiffs constitutional rights was substantially certain to result.” R.C.S. Complaint, Count I, Paragraph 59, at 9. R.C.S. also alleged acts and omissions of the School Board and the School District “deprived Plaintiff of liberty without Due Process of Law in violation of the Fourteenth Amendment of the U.S. Constitution and 42 U.S.C. § 1983.” R.C.S. Complaint, Count I, Paragraph 60, at 9-10.
In Grzeskiemcz, a patron of the insured (a pub) alleged injuries resulting from an attack by another pаtron. The pub sought coverage for the patron’s personal injury claims under its multi-peril policy, and the insurer sought a declaratory judgment that it had no duty to indemnify or defend the pub. The exclusionary language at issue provided:
Assault & Battery, Endorsement [T]he Company [Britamco] is under no duty to defend or to indemnify an insured in any action ... alleging such damages:
1.) Assault;
2.) Battery;
3.) Harmful or offensive contact between two or more persons ...
Regardless of degree of culpability or intent and without regard to:
C. The alleged failure of the insured or his officers, employers, employees, agents or servants to attempt to prevent, bar or halt any such conduct.
Id. at 62,
Here, unlike Grzeskiewicz, the R.C.S. complaint includes allegations grounded in negligence and the policy does not expressly exclude coverage for claims of negligence. Therefore, the Grzeskiewicz decision does not control our result.
The underlying complaint in Britamco Underwriters, Inc. v. Weiner,
... it is understood and agreed that this policy excludes claims arising out of:
Assault & Battery, whether caused by or at the instructions of, or at the direction of, the insured, his employees, patrons or any causes whatsoever and
Allegations of negligent hiring, supervision, retention or control of employees by or on behalf of the insured.
Id. at 281,
Thе exclusions in the present case are less expansive, and less explicit, than the exclusions in Grzeskiewicz and Weiner. Notably, the policy contains no express exclusions for negligent supervision, control, or hiring, or for civil rights violations. Moreover, the exclusions do not by their terms apply to the conduct of a non-insured. We will not supply exclusionary terms neither bargained for nor agreed to by the parties.
We turn to the three exclusionary paragraphs herein. Exclusion (a) deals with claims “involving ... criminal acts”. This language, at face value, would eliminate coverage for any factual scenario “involving”
The claim against the School District “involves” criminal acts, in that it is alleged that its negligence allowed Walls’ criminal acts to occur, and that R.C.S. suffered thereby. However, the criminality alleged is one party removed from the insured; it is not allegеd the claim involved criminality by the insured School District itself.
Thus the insurer, to avail itself of this exclusion, would interpret the policy to mean “We will defend you against claims of your own negligence, and claims your negligence allowed others to cause injury negligently, but if by reason of that identical negligence any other person acts criminally, you’re on your own.” That is, under appellee’s interpretation, the exact same allegations of the district’s negligence could result in coverage, or not, deрendent solely on the degree of culpability alleged on the part of parties other than the insured district itself. This would be an anomalous result at best, allowing one’s right to a defense against covered claims to rise or fall solely on the alleged nature of the acts of others.
Exclusion (a) does not specify whether a criminal act committed by a non-insured is meant to excuse coverage. If three separate entities are insured, can criminality by one deprive the other two of сoverage? If the conduct of one insured is arguably criminal, can the insurer refuse to defend innocent or merely negligent insureds who had no complicity in the criminal acts? Put another way, can allegations of negligence against an insured, clearly covered by the policy, be swept outside the policy’s ambit solely by the nature of the allegations against another insured? We think not. A fortiori, if the criminal actor is not even an insured,
The District paid appellee an additional premium to expand the policy’s coverage to volunteers; this cannot have been meant to diminish existing coverage to the School District That is, if the School District had not expanded the range of those covered, its members would expect coverage even though criminality of volunteers was alleged; their expectations appear no.less simply because more persons are added to the roll of those to whom the insured was paid to cover.
Erie Insurance Exchange v. Claypoole, 449 Pa.Super. 142,
Exclusion (b) excuses coverage for claims “arising out of ... assault or battery.”
The injuries arise, according to the pleadings to which we are restricted, from the School District’s negligent acts and omissions; the omissions and negligence (the “claim”) did not arise from the molestation. That is, Walls’ acts “arose out of’ the failings of the School District, not the other way around. The complaint of R.C.S. challenged the improper tending of the garden from which the weeds of Walls’ misconduct grew, but it is clearly the latter which arose from the former. The weeds give proof of the bad gardening, but the claim, the ability to hold the gardener responsible, arises from the acts and omissions of the gardener, not the mere presence of weeds. Likewise, Walls’ acts alone do not create or give rise to a claim against appellants; that claim cannot stand on allegations of assault alone. It arises, if at all, from other facts, grounded in negligence.
Exclusion (c) excludes coverage for claims “arising out of ... bodily injury.” For the same reasons exclusion (b) does not control, exclusion (c) is equally uncontrolling. The injury to R.C.S. is alleged to have risen from the appellant’s negligence—the negligence did not arise from the injury.
Further, the R.C.S. complaint did not allege injury to the body, but rather injury to the civil rights of the plaintiff as manifested by “severe psychological trauma, severe depression, paranoia, loss of self-esteem, mental anguish, embarrassment and humiliation.” R.C.S. Complaint at 10. The damage alleged is not “bodily injury”; it is certainly injury, and significant injury at that, but is it injury to the body? He alleged no physical wounds or injury; the damage alleged is to R.C.S.’s civil rights, to his emotions, and to his psyche. While he was seriously affected without question, his injuries are not “bodily injury” within any reasonable interpretation of the terms of the policy exclusions, and we must interpret any ambiguity against the insurer. Ryan Homes, Inc. v. Home Indemnity Co.,
Thus none of the three exclusions, in our estimation, eliminate National Union’s duty to defend.
Recent eases in other jurisdictions have involved National Union policies with exclusionary language as herein, with opposite results. National Union offеrs the recent case of Winnacunnet Cooperative School District v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania,
In reaching its conclusion, the Winnacun-net court broadly interpreted “arising out of’ as a term even more comprehensive than the concept of proximate cause. The court determined that under the evidence of record, the alleged injuries originated from or arose out of the murder; the underlying plaintiffs could not prove their claims of negligence without showing how they were affected by the murder. Id. at 35-36.
At first blush, the reasoning of Winnacun-net appears persuasive; however, we note the court looked well beyond the terms of the pleadings, to depositions, to determine the exclusions precluded coverage. As previously stated, under Pennsylvania law, an insurer’s duty to defend is detеrmined solely by the allegations of the underlying complaint.
Further, as previously noted, we disagree with the Winnacunnet court’s determination that the negligence arises from the subsequent crime. Where it is alleged that negligence allowed a crime to occur, does the claim against the negligent arise from the negligence or from the criminality? We believe it is the former.
In contrast to Winnacunnet, the court in Durham City Board of Education v. National Union Fire Insurance Co. of Pittsburgh, Pa.,
We find this reasoning more persuasive and appropriate to this case than the Winna-cunnet decision. The allegations against the School District were of negligence and violations of the student’s constitutional rights. While there was a criminal act and an assault or battery here, that was not the act of the School District. To deny the School District a defense against claims that do not allege excluded conduct by the District would be intolerable.
In Search EDP, Inc. v. American Home Assurance Co.,
The purpose of the errors and omissions policy is to protect an insured who commits an act of professional negligence. If an act of professional negligence causes actionable damage to another, but if the insured’s right to protection depends not on the nature of the act but rather on the nature of the resulting damage, we believe that the stated policy objective would be substantially nullified.
With this concept, we agree. Therefore, under the facts of this case, we find the underlying complaint alleged acts whiсh are potentially within the coverage of the policy. The trial court erred as a matter of law, in holding that the policy unambiguously excludes R.C.S.’s allegations of civil rights violations and negligent supervision, and that National Union was justified in refusing to defend against these claims from the outset. Accordingly, we reverse the order of the trial court granting judgment on the pleadings.
Order reversed. Case remanded for proceedings consistent with this opinion. Jurisdiction relinquished.
DEL SOLE, J., files a Concurring Opinion which is joined by BECK and KELLY, JJ.
Notes
. The complaint was filed and served on April 2, 1992. The answer was due within twenty days, and default judgment was entered on April 24, 1992. Judgment was ultimately set aside upon motion of the School District.
. A third count based on the unfair trade practices act and consumer protection law was dismissed by order of court.
. Count II contained the same allegations against the principal, but averred in the alternative that the Board delegated certain policy-making authority to him. Count III contained the complaint’s sole allegation of intеntional conduct, battery against Walls.
. Further proof of the agreement of the parties was provided by the application for the policy which expressly excluded the defense of claims of "negligence in hiring, retention and control of employees.” Id. at 62-63,
. The School District has consistently maintained Walls was not an insured under the policy and did not seek a defense on his behalf. The trial court determined Walls was an insured under the policy pursuant to an endorsement providing a "volunteer” falls within the definition of insured. We have reviewed the pleadings and attached documents and exhibits and conclude Walls' status as an insured is unclear from the record and is disputed by the parties. A determination of Walls’ status cannot be made without facts beyond those in front of us. This is a motion for judgment on the pleadings; determination of Walls’ status was therefore premature.
Concurrence Opinion
concurring.
I join the Majority’s conclusion that the trial court erred in entering Judgment on the Pleadings on behalf of Appellee, National Union. In considering whether thе claims in this matter “arise out of’ assaults and batteries, as found by the trial court, or out of alleged negligent supervisory conduct, as found by the Majority, one is reminded of the
Both the trial court and the Majority correctly note that where a third party complaint on its face clearly establishes conduct which is excluded under the terms of the policy, there is no duty to indemnify and no corresponding duty to defend. However, the obligation to defend will arise whenever the complaint filed by the injured party may potentially come within the coverage of the policy. Seaboard Industries Inc. v. Monaco,
Where a elaim is potentially within the scope of an insurance policy, and the insurer refuses to defend at the outset, it acts at its own peril. Aetna Casualty and Surety Co. v. Roe,