National Grange Mutual Insurance v. Mutual Benefit Insurance
Docket: No. 09-2501
Court: Court of Appeals for the Third Circuit; February 8, 2010; Federal Appellate Court
National Grange Mutual Insurance Company initiated a declaratory judgment action regarding insurance coverage for a motor vehicle accident involving Michele Kebberly, an employee and sole shareholder of Kebberly, Inc. Mutual Benefit Insurance Company counterclaimed for a declaratory judgment. Both insurers filed cross-motions for summary judgment under Fed. R. Civ. P. 56. The District Court ruled in favor of National Grange and denied Mutual's motion.
Kebberly, Inc. provided various services and owned a Chevrolet Tahoe purchased for business use, which was initially covered under National Grange’s commercial automobile policy. In January 2005, the Tahoe was removed from this policy and added to a personal policy from Mutual. On May 25, 2007, after work, Kebberly was involved in an accident while driving the Tahoe, leading to serious injuries for the Burtons, who subsequently sued her.
National Grange filed for a declaratory judgment asserting it had no duty to defend or indemnify Kebberly in the state court action. Mutual intervened and later settled the state court case, paying an undisclosed amount to the Burtons. Mutual then sought a declaration that National Grange's policy was primary and required reimbursement for defense costs.
The District Court ruled that Kebberly did not qualify as an insured under National Grange's policy due to her status as both an employee of Kebberly, Inc. and an owner of the Tahoe. Mutual appealed. The District Court's jurisdiction was established under 28 U.S.C. 1332, and the appellate court reviewed the summary judgment de novo, affirming the lower court's decision as there was no genuine issue of material fact.
Where a contract has only one reasonable interpretation, a court may interpret it as a matter of law. Summary judgment is affirmed if the contract language is unambiguous and the moving party is entitled to judgment. Mutual contends the District Court wrongly granted summary judgment to National Grange, arguing that the exclusion clause does not apply when an employee co-owns the automobile with the insured employer. Alternatively, Mutual claims both policies cover Ms. Kebberly on a co-primary basis, making National Grange liable for defense and settlement costs under the “other insurance” clauses.
The National Grange policy stipulates coverage for damages caused by an accident involving a covered auto, with specific exclusions for employees using vehicles they own. The court noted that the Tahoe was listed as a covered auto, but Ms. Kebberly's ownership excluded her from being an insured under the policy. The court found that since Ms. Kebberly was both an employee of Kebberly, Inc. and an owner of the Tahoe, the exclusion applied, negating National Grange’s obligation to indemnify Mutual.
Despite Mutual's argument that Kebberly, Inc. also owned the vehicle, the court concluded that Ms. Kebberly’s ownership under Pennsylvania law did not require sole ownership to trigger the exclusion. The court determined that there was no genuine issue of fact regarding Ms. Kebberly’s ownership, leading to the conclusion that she did not qualify as an insured under the National Grange policy. Therefore, the court affirmed the District Court's judgment, stating there was no need to address Mutual’s alternative co-primary coverage argument, as National Grange had no duty to defend or indemnify Ms. Kebberly. The case was subsequently terminated with respect to Ms. Kebberly, Kebberly, Inc., and other related defendants.
