In Markel Insurance Company v. Young, the court heard cross-motions for summary judgment stemming from an underlying negligence claim against the insured day care facility. The underlying suit arose when an employee of the insured was injured at work. When the insured filed a claim for indemnification and defense, the carrier refused and filed its instant motion for declaratory relief, to which the insured filed a cross-motion. The crux of the claim related to coverage issues arising under the insured’s policy with the carrier. As such the court severed and stayed the insured’s bad faith claims until the cross-motions were adjudicated.
Three primary issues arose with respect to the insured’s general commercial liability policy: (1) whether the insured is covered in her individual capacity under the policy; (2) whether the injuries sustained by the plaintiff in the underlying suit arose out of the operations of the insured’s day care business; and (3) whether the employer liability exclusion clause in the policy precluded coverage of the underlying negligence action.
First, the court ruled that the insured was covered in her individual capacity. It reasoned that the insured was a named insured with respect to the conduct of the insured day care. Second, the court ruled that a causal connection existed between the operation of the business and the underlying plaintiff’s injury, which was caused when a faulty floorboard broke beneath her. Third, the court held that summary judgment should be granted to the carrier because the insured’s policy did not contain express coverage for employees of the named insured. Therefore, coverage was excluded under the policy, rendering the insured unable to seek a defense in the underlying tort litigation.
Given the conclusion of these motions, the court vacated the stay of the insured’s bad faith claims and dismissed the bad faith claims.
Date of Decision: June 12, 2012
Markel Insurance Company v. Young, No. 11-1472, 2012 U.S. Dist. LEXIS 81800, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. June 12, 2012) (Shapiro, J.)