Allstate Insurance v. Sheridan ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
12-22-2003
Allstate Ins Co v. Sheridan
Precedential or Non-Precedential: Non-Precedential
Docket No. 02-4222
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-4222
ALLSTATE INSURANCE COMPANY
v.
ROBERT SHERIDAN; EDWARD COLE;
SHIRLEY COLE; THE BLOOMSBURG HOSPITAL;
LUZERNE-WYOM ING CENTER #1,
t/a Community Counseling Center of
Northeastern Pennsylvania
The Bloomsburg Hospital,
Appellant
Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil Action No. 00-cv-01381)
District Judge: Honorable John E. Jones, III
Submitted Under Third Circuit LAR 34.1(a)
December 12, 2003
Before: AMBRO, FUENTES and GARTH, Circuit Judges
(Opinion filed : December 22, 2003)
OPINION
AM BRO, Circuit Judge
Bloomsburg Hospital appeals the District Court’s award of summary judgment to
Allstate Insurance Company on its action for declaratory judgment. Allstate sought a
declaration that it is not obligated to defend or indemnify Robert Sheridan, named as a
defendant in a Pennsylvania state court civil action, for claims arising out of a shooting
incident in Bloomsburg, Pennsylvania. The District Court interpreted Sheridan’s Renters
Insurance Policy (“Policy”) to exclude coverage for the conduct at issue and concluded
that neither Sheridan nor other parties to the action may seek indemnification or
contribution from Allstate. Because the Policy, by its plain language, does not cover
intentional acts committed by insured persons, we affirm.
I. Factual and Procedural History
This federal action involves Allstate’s purported obligation to defend or
indemnify Robert Sheridan in an underlying state court action arising from an incident
that occurred on March 24, 1998. That afternoon Edward Cole was in his car, stopped in
traffic, outside of Sheridan’s apartment. Sheridan shot Cole, through the window of his
apartment, with a 20-gauge shotgun. Cole sustained personal injuries as a result of the
shooting.
Prior to the incident, Sheridan was treated at Bloomsburg Hospital for psychiatric
or psychological illnesses. Upon his discharge, Sheridan received from the Hospital
instructions for out-patient medical care, as well as drug prescriptions. He failed to
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follow these instructions and began to self-medicate. In the state court action, Cole has
alleged that the Hospital’s careless, reckless, or negligent failure to render appropriate
professional mental health care to Sheridan increased the risk of harm to Cole. The
Hospital denies liability for the shooting. In the alternative, it contends that any finding
of liability against the Hospital would entitle it to contribution or indemnification from
Sheridan. It further argues that Sheridan’s failure to comply with his discharge
instructions and his practice of self-medication constitute negligent conduct that is
covered by his insurance policy.
The Allstate Renters Insurance Policy provides:
Subject to the terms, conditions, and limitations of this policy, Allstate
will pay damages which an insured person becomes legally obligated
to pay because of bodily injury or property damage arising from an
occurrence to which this policy applies, and is covered by this part of
the policy.
An “occurrence,” as defined by the Policy, is “an accident including continuous or
repeated exposure to substantially the same general harmful conditions, during the policy
period, resulting in bodily injury or property damage.”
The Policy specifically excludes from coverage all damage resulting from
intentional conduct.
We do not cover any bodily injury or property damage intended by,
or which may reasonably be expected to result from the intentional or
criminal acts or omissions of, any insured person. This exclusion
applies even if:
a) such insured person lacks the mental capacity to govern his or her own
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conduct;
b) such bodily injury or property damage is of a different kind or degree
than intended or reasonably expected; or
c) such bodily injury or property damage is sustained by a different person
than intended or reasonably expected.
This exclusion applies regardless of whether or not such insured person is
actually charged with or convicted of a crime.
In June 2000 Sheridan pled guilty but mentally ill to one count of Aggravated
Assault and two counts of Recklessly Endangering Another Person. He admits to having
“shot at the individual in the car” and “aim[ed] at the driver.”
Sheridan is a named defendant in a civil action pending in the Court of Common
Pleas of Columbia County, Pennsylvania. Allstate filed this action in the United States
District Court for the Middle District of Pennsylvania, seeking a declaration that it is not
obligated to indemnify Sheridan in the underlying state action. The District Court
granted Allstate’s motion for summary judgment in October 2002. Bloomsburg Hospital
appeals.
The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1332, based on
diversity of citizenship and amount in controversy. We have jurisdiction pursuant to 28
U.S.C. § 1291. We review de novo the District Court’s award of summary judgment.1
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“Summary judgment is appropriate when ‘there is no genuine issue as to any
material fact and . . . the moving party is entitled to a judgment as a matter of law.’ While
the record on appeal must be viewed in the light most favorable to the party who lost on
summary judgment in the District Court, an appellate court may only review the record as
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Union Pacific R. Co. v. Greentree Transp. Trucking Co., 293 F.3d 120, 125-26 (3d Cir.
2002).
II. Discussion
The disagreement between the parties in this case turns on a logic game. It is
undisputed that Sheridan’s act of shooting Cole was intentional within the meaning of
the Policy. It necessarily follows that Allstate is not obligated to indemnify Sheridan for
liability he incurs as a result of his act of shooting Cole; by the express terms of the
policy, Sheridan’s purported lack of mental capacity at the time of the shooting is
irrelevant.2
In an attempt to avoid this result, the Hospital cleverly suggests that Allstate is
liable based on Sheridan’s “negligent” failure to comply with his discharge instructions.
In other words, the Hospital contends that Allstate may be exempt from financial
responsibility for damages that stem from the shooting but nonetheless liable for the
same damages to the extent they may be traced to Sheridan’s prior act of disregarding the
it existed at the time summary judgment was entered.” Union Pac. R.R. Co. v. Greentree
Transp. Trucking Co., 293 F.3d 120, 125-26 (3d Cir. 2002) (citations omitted).
2
The standard for interpreting the Policy under Pennsylvania law is well-
established. The terms of the Policy are to be given their ordinary meaning. While
ambiguous terms are construed against the insurer, a term will be considered ambiguous
only if reasonably intelligent persons would “honestly” differ as to its meaning, when
considering it in the context of the entire policy. Finally, in determining the parties’
intent, the court must consider not only the language of the Policy, but also the
surrounding circumstances. United Servs. Auto Ass’n v. Ellitzky, 517 A.2d 982, 986 (Pa.
Super. 1986).
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Hospital’s instructions.
While we appreciate the Hospital’s ingenuity, we decline to deprive Allstate of the
benefit of its bargain in this fashion. The plain language of the Policy absolves Allstate
of responsibility for intentional acts, such as the shooting at issue in this case, even when
the insured lacks mental capacity or injures an unintended victim. We will not permit the
Hospital to end-run this exclusion by identifying an attenuated, albeit potentially
proximate, cause of Cole’s injury. After all, every insurance policy is susceptible to
circumvention of this kind. An insured held liable for an intentional injury might argue,
by similar reasoning, that he or she negligently failed to seek psychological treatment.
We need not, however, rest on policy considerations. The Hospital’s argument
suffers from a fatal logical infirmity. To be sure, the state court complaint against
Bloosmburg is premised on the Hospital’s allegedly negligent dissemination of medical
treatment. The District Court noted that the parties did not dispute “that Sheridan not
only failed to adhere to the Bloomsburg Hospital’s discharge instructions, but also began
to self-medicate subsequent to his release from the hospital.” The Hospital concludes
therefrom that the parties agree that Sheridan negligently failed to follow the instructions
of his treating healthcare providers.
This step we cannot make. The Hospital’s allegedly negligent failure to supervise
Sheridan does not render Sheridan’s disruption of his treatment also negligent. Put
simply, the Hospital may be correct that “the trial court in the underlying civil action has
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already held that Edward and Shirley Cole have stated a claim for injuries against the
Bloomsburg Hospital that is not based on intentional and/or criminal acts.” It does not
follow, however, that the Hospital’s entitlement to indemnification from Sheridan is also
based on negligence—nor that Allstate is thereby required to indemnify Sheridan.
The Hospital’s strongest theory for pursuing indemnification from Sheridan is his
intervening act of shooting Cole. Less likely, but nonetheless plausible, is Sheridan’s
failure to follow his medical regimen. There is no indication that either act was anything
but intentional, as that term is defined in the Policy. The Hospital admits that the
shooting was intentional and, consequently, that Allstate need not reimburse Sheridan for
the resulting damages. But the Hospital’s alternative strategy suffers from the same
defect. While Sheridan may not have been acting with full mental capacity when he
chose to self-medicate, the intentional act exclusion “applies even if [the insured] lacks
the mental capacity to govern his or her own conduct.” Sheridan did not self-medicate by
accident. Cf. Allstate Ins. Co. v. Fischer, No. 97-4806, 1998 WL 205693, at *3 (E.D. Pa.
Apr. 28, 1998) (defining accident as a “fortuitous, untoward or unexpected
happening[].”). There is no indication in this case that Sheridan acted in any way but
intentionally, within the meaning of the Policy, when he discontinued his prescribed
treatment. Cf. Acceptance Ins. Co. v. Seybert, 757 A.2d 380, 383 (Pa. Super. 2000).
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III. Conclusion
Sheridan’s Policy specifically excludes from coverage liability for damage
resulting from intentional acts by the insured. Because we find that Sheridan acted
intentionally (as the Policy defines that term) both when he began to self-medicate and
when he shot Cole, we affirm the judgment of the District Court.
TO THE CLERK:
Please file the foregoing Opinion.
By the Court,
/s/ Thomas L. Ambro
Circuit Judge