MEMORANDUM AND ORDER
Plaintiff, Covington Township, commenced this declaratory judgment action on April 19, 1985, against Defendant, Pacific Employers Insurance Co., seeking to compel defendant to provide a legal defense for plaintiff in accordance with an insurance contract between the parties. Essentially, plaintiff seeks a declaratory judgment that defendant provide legal defense for law suits against plaintiff “arising out of the causes of actions for the presence of giardia cysts in the Elmhurst and Springbrook Reservoirs.”
See
Documеnt 1 of the Record. Additionally, plaintiff requests costs and expenses incurred for defense of eight (8) lawsuits already commenced, as well as interest and attorney’s fees. Plaintiff filed a Motion for Summary Judgment and supporting documents on August 2, 1985.
See
Document 9 of the Record. Plaintiff filed a Brief in Support of Motion
FACTUAL BACKGROUND
Defendant entered into a Professional Liability Insurance Policy contract with plaintiff, coverage commencing on April 29, 1982. See Brief in Support of Motion for Summary Judgment, Document 10 of the Record and Memorandum on Behalf of Pacific Employers Insurance Company, Document 25 of the Record. The insurance contract, PEL 00 02 03, was to remain in effect until April 29, 1985. See Document 25 of the Reсord — Exhibit A. In essence, the contract provides:
I. INSURING AGREEMENT AND CLAIMS MADE CLAUSE TO PAY ON BEHALF OF THE INSURED ALL SUMS WHICH THE INSURED SHALL BECOME LEGALLY OBLIGATED TO PAY AS “DAMAGES” AS A RESULT OF CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD BY REASON OF ANY ACT, ERROR, OR OMISSION IN SERVICES RENDERED IN THE DISCHARGE OF PUBLIC ENTITY DUTIES.
Id. at 1. The term insured includes the Public Entity itself 1 and defendant has the duty to defend any claim against the insured to which the insurance applies. 2 Id.
Plaintiff maintains that defendant is bound to provide a defense for eight (8) suits filed against plaintiff as the result of the recent giardia cyst contamination of drinking water. The eight (8) complaints filed against plaintiff allege, inter alia, that plaintiff negligently caused the contamination of the Springbrook reservoir. See Document 9 of the Record — Exhibits B to I. Basically, the eight (8) suits aver that plaintiff failed to provide adеquate sewage treatment, granted sewage permits which permitted inadequate sewage treatment and failed to properly monitor and warn of the contamination of the drinking water supply. The “Insuring Agreement and Claims Made Clause” is broad in scope and, consequently, defendant relies on policy exclusions in denying its duty to defend.
Defendant contends that the insurance contract excludes coverage for the type of damages sought in the complaints filed against plaintiff. The policy, in pertinent part, prоvides:
This policy does not apply to any claim made against the Insured
3. for any damages, direct or consequential, arising from bodily injury, sickness, disease or death of person, orfor damage to or destruction of any tangible property including loss of use thereof.
See Document 25 of the Record — Exhibit A at 3. Furthermore, defendant maintains that the manner in which plaintiff allegedly caused the injury falls outside the ambit of the insurance contract. In this regard, the policy states:
This policy does not apply to any claim made against the Insured
7. for any damages arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
Id.
Defendant avers that plaintiff also carried general liability insurance with Pennsylvania National Mutual Casualty Insurance Company (“Pennsylvania National”). See Document 25 of the Record at 3. Plaintiff admits that Pennsylvania National has supplied counsel to represent plaintiff in the eight (8) lawsuits commenced. Plaintiff, however, maintains that Pennsylvania National “is not properly engaged in the defense of Covington Township.” 3 Document 27 of the Record at 17. Furthermore, plaintiff asserts that Pennsylvania National voluntarily assumed defense of these lawsuits while reserving its right to disclaim the defense at any time. Whatever the reason, the fact remains that Pennsylvania National is providing a defense for plaintiff in the eight (8) lawsuits already commenced. Defendant’s policy provides:
1. OTHER INSURANCE
Subject to the limitation of coverage as set forth in the policy section entitled THE COVERAGE 1 for prior insurance, this insurance shall be in excess of the amount of the applicable deductible of this policy and any other valid and collectible insurance available to the Insured, whether such other insurance is stated to be primary, pro-rata, contributory, excess, contingеnt or otherwise, unless such other policy is written only as a specific excess insurance over the limits of liability provided in this policy.
See Document 25 of the Record — Exhibit A at 3-4. The issue is whether defendant has the duty to defend plaintiff in the eight (8) lawsuits already filed and in any other lawsuit arising out of the causes of action for the presence of giardia cysts in the Elmhurst and Springbrook Reservoirs.
DISCUSSION
The first issue is the propriety of granting a Motion for Summary Judgment in a declaratory judgment suit seeking to enforce an insurer’s duty to defend its insured. Summary judgment is appropriate only when it is demonstrated “that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R. Civ.P. 56(c);
see Riehl v. Travelers Insurance Co.,
In
C.H. Heist Caribe Corp. v. American Home Assurance Co.,
“Under Pennsylvania law, ... the task of interpreting a contract is generally performed by a court____ The goal of that task is, of course, to ascertain the intent of the parties as manifested by the languаge of the written instrument.”
ACANDS, Inc. v. Aetna Casualty and Surety Co.,
In determining whether the “policy potentially applies”, the factual allegations of the third-party complaints are controlling.
Id. See also Pacific Indemnity Co. v. Linn,
Ambiguities in the policy are to be strictly construed against the insurer, but “the language of a policy may not be tortured ... to create ambiguities.”
Pacific Indemnity Co. v. Linn, supra,
at 761. Moreover, “exclusions from coverage contained in an insurance policy will be effective against an insured if they are clearly worded and conspicuously displayed, irrespective of whether the insured read the limitations or un
The court starts with the proposition that it should read the policy exclusions so as to avoid ambiguities, if the plain language permits.
See Treasure Craft Jewelers, Inc. v. Jefferson Insurance Co.,
Plaintiff concedes that defendant need not рrovide a defense for suits alleging bodily injury as a result of contracting giardiasis. As plaintiff states, “the Plaintiff in the case at bar is not presently contesting the exclusion for bodily injury as it applies to Claimants who suffer from giardiasis.” Document 10 of the Record at 12. The exclusion in question provides that the policy does not apply to a claim “for any damages, direct or consequential, arising from bodily injury, sickness, disease or death of person____” Clearly, four (4) of the eight (8) pending lawsuits,
see
Document 9 of the Record — Exhibits B, C, D and I, seek recovery fоr more than bodily injury, etc. For example, Civil No. 84-1519 (Middle District of Pennsylvania) seeks recovery for,
inter alia,
“economic harm in the form of reduced property values, lost businesses, reduced earning, evacuation costs, etc.”
See
Document 9 of the Record — Exhibit 6 at H 65; Exhibit C at It 33; Exhibit D at 1112 and Exhibit I at If 37. The other four (4) suits appear to seek recovery for damages arising from bodily injury.
See
Document 9 of the Record — Exhibit E at 1119, Exhibit F at ¶ 19, Exhibit G at ¶ 19 and Exhibit H at 1119. In each, however, the complainants seek “other consequential, incidential, general and special damagеs____”
Id.
— Exhibit E at ¶ 31(g); Exhibit F at 1131(g); Exhibit G at ¶ 31(g) and Exhibit H at 1131(g). If an insurer must defend any claims against an insured in a third-party complaint, it must defend all of them.
Baldt Inc. v. American Universal Insurance Co.,
Defendant also asserts that the policy excludes coverage for damages resulting frоm the diminution of real estate, property values, lost profits, etc. The third exclusion
4
provides that the policy does not apply to a claim “for damage to or destruction of any tangible property including loss of use thereof.” Plaintiff avers that claims for diminution of real estate, lost profits, etc., are not excluded from coverage by reason of this third exclusion so as to negate defendant’s duty to defend. The court agrees with plaintiff.
Defendant’s contention is that as a professional liability policy, the policy in question is not a substitute for liability coverage.
See
Document 25 of the Record at 13. Defendant does not, however, discuss the distinction between damage to tangible property and lost profits, etc.
Cf. American Motorists Insurance Co. v. Trane Co.,
Defendant avers that the cause of the alleged injuries is specifically outside the ambit of the insurance contract. 5 Plaintiff asserts that the third-party suits allege, inter alia, that defendant had a duty to monitor the water supply and wrongfully issued sewage permits. Plaintiff contends that it did not release sewage into the water. Thus, plaintiff’s position is that the seventh exclusion does not аpply because plaintiff’s liability, if any, is not based on its discharge of any waste material. Again, the court agrees with plaintiff.
The seventh exclusion states that the policy does not apply to any claim for damages “arising out of the discharge, dispersal, release or escape of ... waste materials or other irritants, contaminants or pollutants into or upon ... any watercourse or body of water.” Assuming arguendo that the contamination of the water supply was not sudden or accidental, see Document 25 of the Record аt 16-29, the theories of liability contained in the eight (8) lawsuits are not predicated solely on plaintiff’s discharge, etc. of waste material into the water supply.
While damages resulting from a failure to monitor, etc., arguably still could be said to arise from a discharge of waste material, the seventh exclusion apparently applies only when a named insured discharges, etc., waste material. At best, the seventh exclusion is ambiguous. The term “arising out of” is not defined in the policy and the intent of the parties as to the meaning of this term has not been placed in dispute by the supporting documentation.
Insurance clauses are regarded as ambiguous if they are “reasonably susceptible of more than one interpretation.”
Pacific Indemnity Co. v. Linn, supra,
at 763
citing C.H. Heist Caribe Corp. v. American
In
Techalloy Co. v. Reliance Insurance Co., supra,
the issue was whether the discharge by the insured was sudden and accidental. The third-party complaint was bаsed on the insured’s dumping and storing of a dangerous chemical.
See also Great Lakes Container Corp. v. National Union Fire Insurance Co., supra
(similar exclusion; reading the insurance policy together with the third-party complaint demonstrated no ambiguity and the exclusion applied). This fact is absent in the present dispute. At most, the improper discharge or storage of sewage is but one of the theories on which the insured’s liability is based. Certainly, other theories,
i.e.,
failure to monitor or wrongfully issuing permits, are not contained in the seventh exclusion. Again, it is established that if an insurer must defend any claims against an insured in the third-party complaint, it must defend all of them.
Baldt Inc. v. American Universal Insurance Co., supra.
“The insurer is obliged to defend the entire claim if some of the allegations in the complaint fall within the terms of coverage and others do not.”
C. Raymond Davis & Sons, Inc. v. Liberty Mutual Insurance Co., supra,
at 19
citing Cadwallader v. New Amsterdam Casualty Co.,
In this case, defendant admits that the policy obligates it to “pay on behalf of Covington for damages ‘by reason of any act, error or omission in services rendered in discharge of public entity duties.’ ” Document 25 of the Record at 1. Certainly, the allegations in the third-party complaints may potentially come within this coverage. To the extent defendant argues that there are insufficient facts in the record to invoke the duty to defend, the rule is “if coverage depends upon the existence or nonexistence of facts outside of the complaint that have yet to be determined, the insurer must providе a defense until such time as those facts are determined, and the claim is narrowed to one patently outside of coverage.” C. Raymond Davis & Sons, Inc. v. Liberty Mutual Insurance Co., supra, at 19. Moreover, the duty to defend is determined solely by the allegations in the third-party complaints. See Pacific Indemnity Co. v. Linn, supra; C.H. Heist Caribe Corp. v. American Home Assurance Co., supra. While many courts will not apply the rule of construction that ambiguities must be resolved against the insurer until they have attempted to ascertain the intent of the parties through extrinsic evidence, see C.H. Heist Cаribe Corp. v. American Home Assurance Co., supra, in this case, as in Heist, defendant does not present any affidavits or other supporting papers raising issues of material fact concerning the parties' intent. Id. at 482. In any event, defendant cannot deny its duty to defend plaintiff on the basis of these two (2) exclusions and summary judgment is appropriate.
Finally, defendant apparently maintains that it has no duty to defend plaintiff because defendant’s role is that of an excess insurer. This fact alone, however, does not eliminate defendant’s duty to defеnd plaintiff in the third-party suits. The court stresses that the issues of indemnifi
In
Pacific Indemnity Co. v. Linn,
In passing, the court notes that the district court in
Linn
recognized that “it has not been determined under Pennsylvania law how defense costs are to be distributed between insurers.”
Pacific Indemnity Co. v. Linn,
Plaintiff has not briefed the issue of attorney’s fees, reimbursement of costs actually expended or interest. The court recognizes that Pennsylvania National has been defending plaintiff to date in the aforementioned lawsuits. There is no indication in the record that plaintiff actually expended funds in its own defеnse thus far. The issue of distributing costs of defense between defendant and Pennsylvania National is not before the court.
Plaintiff’s failure to brief these issues and failure to document expenses actually incurred by plaintiff, can be deemed a withdrawal of these requests. See Local Rule 401.5. The court, however, will hold the requests for reimbursement of expenses and interest on this amount in abeyance pending receipt of proper documentation and supporting brief from plaintiff. Certainly, plaintiff cannot expect to be reimbursеd for funds which Pennsylvania National expended in defense of plaintiff. Likewise, it would appear that interest may be payable to Pennsylvania National in the appropriate action. 6 Thus, plaintiff will be afforded ten (10) days to establish that it is entitled to reimbursement with interest. A failure to submit this documentation will result in the conclusion that the requests are withdrawn.
Plaintiff’s request for costs and attorney’s fees incurred in bringing this action will be denied. “A court may award attorney’s fees and costs incurred in bringing an action to establish the duties to defend and indemnify where the insurer’s refusal to defend is unreasonable and in bad faith.”
Pacific Indemnity Co. v. Linn,
An appropriate Order will enter.
ORDER
In accordance with the reasoning set forth in the accompanying Memorandum, IT IS HEREBY ORDERED THAT:
(1) Plaintiff's Motion for Summary Judgment is granted insofar as it relates to defendant’s duty to defend plaintiff in the eight (8) lawsuits already commenced.
(2) Defendant must provide a legal defense for plaintiff in the eight (8) lawsuits referred to in the accompanying Memorandum.
(3) Plaintiff’s request for reimbursement of money expended in defense of the aforementioned lawsuits and for interest on the expenses paid to date is held in abeyance.
(4) Plaintiff is granted ten (10) days to file documentation and supporting brief in support of its request for reimbursement and interest.
(5) Plaintiff’s request for attorney’s fees is denied.
Notes
. In the definition section of the policy, the word "Insured” is defined as:
(a) the Public Entity;
(b) all persons who were, now are or shall be lawfully elected or lawfully appointed officials, members or employees of the Public Entity;
(c) all persons who were, now are or shаll be lawfully elected or lawfully appointed officials, members or employees of commissions, boards or other units operated by or under the direction of the Public Entity. Note that unless specifically endorsed on to this policy, this definition of ‘Insured” shall not include any of the following commissions, boards or units or any of their officials, members or employees:
(1) School;
(2) Airport;
(3) Utilities;
(4) Hospitals; or other Health Care Operations;
(5) Housing Authorities;
(6) Transit Authorities;
(d) the heirs, executors, administrators, assigns and legal representatives of each Insured above in the event of death, incapacity or bankruptcy.
. Defendant emphasizes the difference between a general liability policy and a professional liability policy. While these types of policies are distinguishable, the fact remains that the policy in question covers "any act, error, or omission in services rendered in the discharge of public entity duties.” See supra, at 795.
. Apparently, Pennsylvania National has retained one (1) counsel to represent four (4) municipalities. Plaintiff asserts that this presents an improper conflict.
. This exclusion, set out in full in this Memorandum, is numbered three (3) in the policy doсuments. See supra, at 795-96. The court refers to it as the third exclusion for purposes of clarity.
. Defendant relies on the exclusion numbered seven (7) in the policy. This exclusion is set out in full in this Memorandum. See supra, at 795-96. For purposes of clarity, this exclusion will be referred to as the seventh exclusion.
. “Carriers entitled to re-imbursement for defense ... costs are also entitled to prejudgment interest on the reimbursed funds."
Pacific Indemnity Co. v. Linn,