Markel International Insurance v. Western PA Childcare, LLC , 523 F. App'x 200 ( 2013 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 12-2016, 12-2132
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MARKEL INTERNATIONAL INSURANCE COMPANY
v.
WESTERN PA CHILDCARE, LLC; ROBERT J. POWELL; GREGORY ZAPPALA;
PA CHILD CARE, LLC; MID-ATLANTIC YOUTH SERVICES CORP.; and VISION
HOLDINGS, LLC.,
WESTERN PA CHILDCARE, LLC; GREGORY ZAPPALA; PA CHILD CARE, LLC;
MID-ATLANTIC YOUTH SERVICES CORP.,
Appellants in No. 12-2016
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ALEA LONDON; ATRIUM UNDERWRITERS LIMITED, as lead underwriter for those
Underwriters who subscribe to Policy nos. 12145/ATR 049; and 3525 /ATR 049
v.
PA CHILD CARE LLC.; ROBERT J. POWELL, ESQUIRE; GREGORY ZAPPALA
PA CHILD CARE, LLC; GREGORY ZAPPALA,
Appellants in No. 12-2132
____________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Nos. 3:09-cv-2256, 3-10-cv-01156)
District Judge: Honorable A. Robert Caputo
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Submitted Pursuant to Third Circuit LAR 34.1(a)
June 28, 2013
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Before: FUENTES, FISHER, and CHAGARES, Circuit Judges.
(Filed: July 8, 2013 )
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OPINION OF THE COURT
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FUENTES, Circuit Judge:
In this insurance coverage action, the primary issue is whether the District Court
correctly held that Markel International Insurance Company, Alea London Limited, and
Atrium Underwriters Limited (collectively, the “Insurers”) owe the defendants in the
underlying disputes an obligation to defend or indemnify them. On motions for summary
judgment, the District Court held that the Insurers did not owe the defendants a duty to
defend or indemnify. We will affirm.
I.
Because we write primarily for the parties, we set forth only the facts and
procedural history relevant to our conclusion.
In 2009 and 2010, numerous civil actions (the “underlying actions”) were filed in
the United States District Court for the Middle District of Pennsylvania against various
defendants including Robert Powell and Gregory Zappala, owners and operators of PA
Childcare, LLC (PACC), Western PA Childcare, LLC (WPACC), and Mid-Atlantic
Youth Services Corporation (MAYS) (collectively, the “PACC Defendants”). The
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underlying actions allege that the PACC Defendants, along with former Pennsylvania
state judges Mark A. Ciavarella Jr. and Michael T. Conahan conspired to knowingly
violate the constitutional rights of the plaintiffs in the underlying actions through the
payment of bribes and kickbacks in exchange for influence in the construction of juvenile
detention facilities and sentencing of juvenile offenders to those facilities. According to
the complaints, the PACC Defendants entered into agreements with Conahan and
Ciavarella to place juveniles at these facilities in exchange for concealed payments.
The Insurers issued comprehensive general liability insurance policies to WPACC
and PACC, under which Powell and Zappala qualified as insured. These policies covered
bodily injury and property damage that may arise in connection with the operation of the
youth centers, but were limited to accidental injury and damage and excluded expected or
intended conduct. The policies also covered personal injury, excluding injuries that arose
out of willful violations of penal statutes or were caused by the insured with the
knowledge that the actions would violate the rights of another.
The Insurers brought the instant actions seeking declarations that they have no
duty to defend or indemnify the PACC Defendants in connection with the underlying
actions. The parties cross-moved for summary judgment, and the District Court granted
summary judgment in the Insurers’ favor, ruling that there was no duty for them to
defend or indemnify the PACC Defendants. The PACC Defendants timely appealed.
II.
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332, and we have
jurisdiction under 28 U.S.C. § 1291. We review the District Court’s entry of summary
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judgment de novo and apply “the same standard as the District Court in determining
whether summary judgment was appropriate.” United States ex rel. Kosenske v. Carlisle
HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009).
In the Markel action, the District Court concluded that Markel had no duty to
defend the PACC Defendants against bodily injury or property damage because the
allegations in the underlying complaints failed to qualify as “occurrences” under the
insurance policies because the reckless and intentional conduct alleged was not
“accidental” under Pennsylvania law. The District Court also concluded that there was no
duty for Markel to defend the PACC Defendants against personal injury because the
allegations fell under the exclusion for a knowing violation to the rights of others.
Because there was no duty to defend, the District Court held there was no duty to
indemnify the PACC Defendants. In the Alea and Atrium action, the District Court
concluded for similar reasons as in the Markel action that there was no duty for Alea and
Atrium to defend or indemnify the PACC Defendants for the bodily injury, property
damage, and personal injury alleged in the underlying complaints. The District Court also
held that the alleged conduct failed to qualify as personal injury under two of the Alea
insurance policies because it fell under the “violation of penal statute” exclusion.
We agree. After reviewing the briefs and appendices submitted by the parties, we
find no basis for disturbing the March 8, 2012 and March 19, 2012 opinions of the
District Court. We thus affirm the orders of the District Court substantially for the
reasons set forth in its opinions.
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