NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

No. 12-4135

______________

REGENT INSURANCE COMPANY, 

 Appellant

v.

STRAUSSER ENTERPRISES, INC; GARY STRAUSSER

______________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil No. 5-09-cv-03434)

Honorable James Knoll Gardner, District Judge

______________

Argued May 18, 2020

BEFORE: MCKEE, BIBAS, and COWEN, Circuit Judges

(Filed: August 7, 2020)

______________

Christina Capobianco

Fineman Krekstein & Harris

Ten Penn Center

1801 Market Street, Suite 1100

Philadelphia, PA 19103

Michael S. Saltzman (argued)

Goldberg Segalla

1700 Market Street

Philadelphia, PA 19103

Attorneys for Appellant
2

Patrick C. Campbell, Jr. (argued)

Montgomery McCracken Walker & Rhoads

1735 Market Street

21st Floor

Philadelphia, PA 19103

Attorney for Appellees

______________

OPINION∗

______________

COWEN, Circuit Judge.

In this insurance coverage dispute, Plaintiff Regent Insurance Company

(“Regent”) appeals from the order of the United States District Court for the Eastern

District of Pennsylvania granting in part, denying in part, and dismissing in part the

cross-motions for summary judgment filed by Regent and Defendants Strausser

Enterprises, Inc. (“SEI”) and Gary Strausser (“Appellees”). We conclude that Regent has

no duty to defend (or indemnify) Appellees in the underlying action filed in the District

Court captioned Segal v. Strausser Enterprises, Inc. , case number 07-cv-04647 (“Segal

Action”). Accordingly, we will vacate the order in part and will remand with instructions

to grant Regent’s motion for summary judgment and deny Appellees’ summary judgment

motion as to Count V of Regent’s amended complaint and to enter judgment in favor of

Regent and against Appellees declaring that Regent has no duty to defend or indemnify

Appellees in the Segal Action.

I.

∗ This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7

does not constitute binding precedent.
3

On November 5, 2007, Kenneth Segal, the Karen and Kenneth Segal Descendants

Trust (“Trust”), and Segal and Morel, Inc. (“S & M”) (collectively “Segal Plaintiffs”)

commenced the Segal Action against SEI, Strausser, and Leonard Mellon, Esq. (SEI’s

attorney). The Segal Action arose from purchase agreements in which SEI sold several

parcels of land to S & M (which then assigned its rights and obligations to several limited

liability companies (“the S & M LLCs”), of which Segal and the Trust are the sole

members). Segal and the Trust subsequently contracted to sell their interests in the S &

M LLCs to K. Hovnanian Pennsylvania Acquisitions, LLC (“Hovnanian”). According to

the underlying complaint, SEI, Strausser, and Mellon sabotaged the Hovnanian deal by

manufacturing a frivolous state court lawsuit as well as a frivolous arbitration:

Plaintiffs bring this action to recover significant damages arising

from Defendants’ scheme to use the judicial system to interfere with, and

ultimately cause the buyers of memberships in limited liability companies

to terminate contracts and refuse to negotiate new ones. In short,

Defendants manufactured a frivolous lawsuit and then a frivolous

arbitration in which they sought to invoke non-existent rights of first refusal

that would impede the aforementioned transactions. As is more fully set

forth herein, there were no such rights of first refusal, and Defendants knew

it before the first lawsuit was filed. They persisted with the frivolous

claims nonetheless, ultimately causing Plaintiffs to lose in excess of $10

Million.

(JA72.)

The Segal Action complaint included four counts: (1) tortious inference with

contract; (2) tortious interference with prospective contractual relations; (3) “Malicious

Prosecution; 42 Pa. C.S.A. § 8351 et seq.” (JA104 (emphasis omitted)); and (4) abuse of

process.

Appellees advised Regent of the Segal Action and sought coverage. The
4

insurance policy at issue expressly provides coverage for personal and advertising injury

liability:

COVERAGE B PERSONAL AND ADVERTISING INJURY

LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to

pay as damages because of “personal and advertising injury” to

which this insurance applies. We will have the right and duty to

defend the insured against any “suit” seeking those damages.

However, we will have no duty to defend the insured against any

“suit” seeking damages for “personal and advertising injury” to

which this insurance does not apply. . . .

(JA188.) “SECTION V – DEFINITIONS” defines “Personal and advertising injury”

as:

14. “Personal and advertising injury” means injury, including

consequential “bodily injury”, arising out of one or more of the following

offenses:

. . . .

b. Malicious prosecution;

. . . .

(JA197.) However, Coverage B also includes the following exclusion:

2. Exclusions

This insurance does not apply to:

a. Knowing Violation of Rights of Another

“Personal and advertising injury” caused by or at the direction of the

insured with the knowledge that the act would violate the rights of

another and would inflict “personal and advertising injury”.
5

. . . .

(JA189.)

Regent provided a defense to the Segal Action subject to a reservation of rights

and filed the present action, seeking a declaration that it has no duty to defend or

indemnify Appellees. The parties subsequently filed cross-motions for summary

judgment. Following oral argument, the District Court granted in part, denied in part, and

dismissed in part both motions for summary judgment. Of particular importance in this

appeal, it granted Appellees’ summary judgment motion “to the extent it seeks a

declaration that [Regent] has a duty to defend [Appellees] in the [Segal Action]” and “to

the extent it seeks a declaration that [Regent] has a duty to indemnify [Appellees] for the

malicious prosecution claim in the underlying action, with the exception of punitive

damages.” Regent Ins. Co. v. Strausser Enters., Inc., Civil Action No. 09-cv-0434, at *1

(E.D. Pa. Sept. 28, 2012). In turn, Regent’s motion was denied to the extent it seeks

judgment on Count V of its amended complaint (seeking declaratory relief on the

grounds that the “Knowing Violation of Rights of Another” exclusion applies). Entering

partial judgment in favor of and against both Appellees and Regent, the District Court

declared that Regent has a duty to indemnify Appellees for the malicious prosecution

claim (with the exception of any punitive damages awarded on this claim) as well as to

defend Appellees in the underlying action. “It is the sense of this Order that plaintiff

[Regent] has a duty to defend [Appellees] against all claims (including liability,

compensatory damages and punitive damages) in the underlying action.” Id. at *2 n.1.
6

In a thorough opinion, the District Court explained that the policy language is

ambiguous because malicious prosecution under Pennsylvania law, codified as

“Wrongful use of civil proceedings” by the Dragonetti Act, 42 Pa. C.S.A. § 8351, et. seq.,

requires more than proof of gross negligence. Instead, proof of actual malice or improper

motive is required, and malicious prosecution thereby represents an intentional tort under

state law. According to the District Court, “if malicious prosecution under

Pennsylvania’s Dragonetti Act is an intentional tort, then Coverage B is a Catch-22”

because, on the one hand, “Regent promises to cover the Strausser defendants for claims

of malicious prosecution so long as no exclusion applies to bar coverage” while, on the

other hand, “the ‘Knowing Violation’ exclusion always applies to malicious prosecution

under the Dragonetti Act.” Regent Ins. Co. v. Strausser Enters., Inc., 902 F. Supp. 2d

628, 642 (E.D. Pa. 2012). Resolving this ambiguity in favor of the insureds, the District

Court determined that Regent has a duty to defend Appellees. The District Court then

explained that it would reach the same conclusion even if a malicious prosecution

plaintiff could prevail by proving nothing more than gross negligence. It observed that

there is a potential for the claim to be covered if the underlying complaint alleges a

particular level of knowledge or intent but the defendant would still be held liable under a

different level. “Where there is the potential for a claim against a defendant to be

covered under the defendant’s insurance policy, the insurer has a duty to defend.”1 Id. at

1 We note that the Clerk subsequently granted Regent’s motion to stay its appeal 

pending disposition of the motion for summary judgment filed by Appellees in the 

underlying Segal Action. The stay was lifted after the motion was decided (and, because 
7

642 n.41 (citing Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d

Cir. 1999)).

II.

Initially, the District Court concluded that malice or intent constitutes a necessary

element of a malicious prosecution claim under the Dragonetti Act.

2 Instead of

defending the District Court’s interpretation, Appellees now agree with Regent that

“malicious prosecution claims under Pennsylvania law are based on negligence and/or

gross negligence.” (Appellees’ Brief at 17 (emphasis omitted).) Under the parties’

current interpretation of state law, the policy language clearly does not (as the District

Court put it) result in “a Catch-22.” On the contrary, the policy unambiguously covers

claims for malicious prosecution based on a showing of gross negligence while excluding

coverage for “intentional” (i.e., “Knowing Violation of Rights of Another”) claims of

malicious prosecution.

3

Appellees do contend that Regent has waived its challenge to the District Court’s

interpretation of the Dragonetti Act. We disagree. Admittedly, the insurer did initially

the parties had briefed this matter while the appeal was stayed, the appeal was calendared 

for disposition in due course).

2 The District Court had diversity jurisdiction over this case pursuant to 28 U.S.C. 

§ 1332. We possess appellate jurisdiction under 28 U.S.C. § 1291. 

We exercise plenary review over the District Court’s disposition of the parties’

motions for summary judgment. See, e.g., Blunt v. Lower Merion Sch. Dist., 767 F.3d 

247, 265 (3d Cir. 2014). “The court shall grant summary judgment if the movant shows 

that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a).

3 Accordingly, we need not (and do not) decide whether the interpretation the state 

statute offered by the District Court or the understanding proffered by the parties is 

correct as a matter of law. 
8

indicate in its motion for summary judgment that malice or intent constitutes a required

element of this state law cause of action. See, e.g., Regent Ins., 902 F. Supp. 2d at 641

n.39 (“In its brief in support of its motion for summary judgment, Regent appears to

argue that the ‘Knowing Violation’ exclusion applies to all malicious prosecution claims

because malice is a necessary element. See [JA386-JA389].”). However, Regent did

place particular emphasis on the specific allegations set forth in the underlying complaint

in the Segal Action. (See, e.g., JA380 (“Specifically, the Segal Plaintiffs allege that

Defendants intentionally and knowingly pursued a baseless and frivolous lawsuit and lis

pendens in the hopes of securing monies to which they were not entitled . . . .” (citing

JA70-JA107)).) In any event, Appellees argued in their own summary judgment brief

that “Regent’s denial of coverage based on the intentional acts exclusion is also wrong

because malicious prosecution claims, under Pennsylvania law, are based on negligence

and gross negligence, not intentional acts.” (JA312.) In their brief opposing Regent’s

motion, they continued to insist that malicious prosecution is not an intentional tort. In

its response to Appellees’ motion for summary judgment, Regent essentially agreed with

Appellees’ understanding of Pennsylvania law and clarified its earlier (arguably more

expansive) assertions by stating that, “[a]lthough malicious prosecution is covered when

the alleged conduct is negligent, it is not covered when the malicious prosecution is

intentional and knowing, as alleged by the Segal Plaintiffs.” (JA455.) Appellees, in turn,

acknowledged Regent’s position in their own reply brief and at oral argument. Although

it relied on Regent’s briefing as further evidence of contractual ambiguity (even though

that briefing actually implicated the distinct legal question of how to interpret a
9

Pennsylvania statute), the District Court did not make any waiver determination and, on

the contrary, ruled on the merits of the legal question of whether intent is an element

under the Dragonetti Act.

It is well established that “the obligation to defend arises whenever the complaint

filed by the injured party may potentially come within the coverage of the policy.”

Gedeon v. State Farm Mut. Auto. Ins. Co., 188 A.2d 320, 321-22 (Pa. 1963) (citing

Cadwallader v. New Amsterdam Cas. Co., 152 A.2d 484 (Pa. 1959)). The factual

allegations of the underlying complaint are to be taken as true and to be liberally

construed in favor of the insured. See, e.g., Biborosch v. Transamerica Ins. Co., 603

A.2d 1050, 1052 (Pa. Super. Ct. 1992). In turn, the duty to defend is “fixed solely” by

such allegations. Aetna Cas. & Sur. Co. v. Roe, 650 A.2d 94, 98 (Pa. Super. Ct. 1994)

(footnote omitted) (citations omitted). “In order to determine whether [the insurer] had a

duty to defend [the insured], therefore, we must compare the terms of the [insured’s]

policy with the nature of the allegations of the underlying complaint[] against [the

insured]. We must then determine whether, if the allegations were true, [the insured]

might be obligated to provide coverage.” Id. at 100 (citing Britamco Underwriters, Inc.

v. Weiner, 636 A.2d 649, 651 (Pa. Super. Ct. 1994)).

According to Appellees, “where the underlying complaint alleges intentional

action (which is excluded from coverage), but negligence or reckless action would suffice

to make the insured’s conduct actionable, the claim has the potential to come within

coverage if the underlying complaint could reasonably be amended to state a claim under

the policy.” (Appellees’ Brief at 8 (emphasis omitted).) However, this “amendment”
10

approach is inconsistent with Pennsylvania law. Although the Frog, Switch Court

referenced (and improved upon) the “amendment” line of reasoning adopted by the

district court in Safeguard Scientifics, Inc. v. Liberty Mutual Insurance Co., 766 F. Supp.

324, 330 (E.D. Pa. 1991), rev’d in part on other grounds & affirmed in part, 961 F.2d

209, 1992 WL 12915247 (3d Cir. Mar. 19, 1992) (non-precedential decision), we did so

as part of our summary of one of the insured’s arguments—and did not rely on the

approach to dispose of the appeal in the insurer’s favor. See Frog, Switch, 193 F.3d at

746 & n.2. “While the Supreme Court of Pennsylvania has not had occasion to consider

the validity of the Safeguard Scientifics approach, all intermediate Pennsylvania appellate

courts that have considered this issue since Safeguard Scientifics was decided have not

followed it and have, instead, continued unabatedly to apply the rule that it is the

allegations within the four corners of the complaint that govern.” I.C.D. Indus., Inc. v.

Fed. Ins. Co. ̧ 879 F. Supp. 480, 488 (E.D. Pa. 1995) (citing eight Pennsylvania Superior

Court decisions including Roe and Biborosch). We agree that “‘the four corners of the

complaint’ rule is the correct statement of Pennsylvania law” and that, under this

approach, there is coverage “for claims that ‘potentially fall’ within the scope of

coverage, but only insofar as those ‘potential’ claims are grounded in the complaint

itself.”4 Id. (citing Roe, 650 A.2d at 99; Humphreys v. Niagara Fire Ins. Co., 590 A.2d

4 Relying on I.C.D. Industries, the author of Safeguards Scientifics subsequently 

abandoned his own “amendment” approach. Am. Planned Communities, Inc. v. State 

Farm Ins. Co., 28 F. Supp. 2d 964, 970 (E.D. Pa. 1998) (“While plaintiffs may well be 

correct that the Mazers and Gorens may at some future point amend their complaints so 

as to include allegations of non-intentional acts, the court may not require State Farm to 
11

1267, 1271 (Pa. Super. Ct. 1991)).

Applying this standard, we determine that the malicious prosecution claim set

forth in the underlying complaint in the Segal Action does not “potentially fall” within

the scope of coverage.

The underlying complaint clearly alleged intentional and knowing conduct—as

opposed to negligence (or gross negligence)—on the part of Appellees. The Segal

Plaintiffs specifically alleged that “there were no such rights of refusal, and Defendants

knew it before the first lawsuit was filed.” (JA72.) “As is more fully developed

hereinafter, SEI was aware of an impending transaction and desperately wanted to stop it,

hoping that doing so would garner it leverage from which to secure monetary concessions

from the Segal Sellers. SEI and Strausser, along with Mellon, their long-time counsel,

hatched a baseless, spiteful and malicious plan to derail the transaction by filing a

frivolous lawsuit mentioned below.” (JA84.) Strausser allegedly admitted that he knew

SEI lacked the requisite right of first refusal— “[d]uring this meeting [with

representatives of Hovnanian] Strausser candidly acknowledged to those present that

although SEI filed the Lis Pendens to encompass the entire Property, he knew that SEI

possessed no right of first refusal with regard to the single family lots, ie, those lots

conveyed by SEI to S&M, Inc. (and subsequently by S&M, Inc. to one of the S&M

LLCs) pursuant to the February 28, 2003 Agreement.” (JA89-JA90; see also, e.g., JA90

(“By making this admission during this meeting with Hovnanian’s representatives,

defend or indemnify the present action based upon the present allegations of the 

underlying complaints, all of which allege intentional actions.”). 
12

Strausser openly acknowledged the overbreadth of the Complaint that he verified under

penalty of perjury just three days earlier.”).) Likewise, Appellees’ counsel “admitted to

the Segal Sellers’ counsel [prior to the hearing before the state trial court] that Strausser

had instructed him to file anything that he could to stop the transaction.” (JA92.) Mellon

“also admitted that Strausser, who had verified the [state court] Complaint, had never

actually read the pleading.” (Id.) In the end, the filing of the state court action and the

Lis Pendens had “the desired effect: Hovnanian refused to proceed with a closing.”

(JA87.)

The underlying complaint in the Segal Action further alleged that Appellees

proceeded with the claims against the Segal Plaintiffs despite the contrary rulings of the

state court and the arbitration panel as well as their own prior admissions.

Specifically, the state trial court offered the following explanation for why it was

dismissing the complaint and the Lis Pendens:

Here, [SEI] agrees that ‘the instant dispute over the operation of the

buy back provision is subject to arbitration.’ Plaintiff’s Brief Contra

Defendants’ Petition to Strike Lis Pendens and Dismiss Complaint,

p.2. By its own admission, [SEI’s] complaint is inappropriate. This

admission undermines the notion that [SEI] has pursued its

complaint in good faith, and in the Court’s opinion tips any balance

of the equities against it.

Exhibit “R”, Opinion at 10. A true and correct copy of the February 28,

2006 Opinion in support of the February 28th Order is attached as Exhibit

“R”. In other words, SEI expressly admitted in its very own filing in

opposition to the pending petition to strike, that the dispute underlying its

Complaint was not properly before the Court.

(JA93 (emphasis omitted).) “Despite this admission, SEI inexplicably did not withdraw

its Complaint prior to the February 27 hearing.” (Id.) “With regard to its dismissal of
13

SEI’s Lis Pendens, the Court was equally direct in admonishing SEI for the frivolity of

that filing: ‘Thus, [SEI] has used the lis pendens mechanism as a procedural weapon, and

this is inappropriate.’” (JA94 (emphasis omitted) (quoting Exhibit R at 10); see also,

e.g., id. (“The purpose behind the frivolous filings was not lost on the Court: ‘Plaintiff

filed its Complaint in order to secure a lis pendens attached to the properties at issue in its

dispute . . . the practical effect of a recorded lis pendens is to render a defendants property

unmarketable.’” (quoting Exhibit R at 10)).

SEI instituted arbitration proceedings, and the arbitration panel allegedly rejected

its argument that “the Right of First Refusal provisions” prevented the sale of the

membership interests, e.g.:

81. The Panel found the Right of First Refusal Provisions at issue to be

“clear, precise, and unambiguous,” [Exhibit S at 1-2], and found that they

imposed “a condition upon the sale of individual building lots and [did] not

in any way impose a condition on the individual L.L.C.’s that would

prohibit the sale of membership interest in the L.L.C.’s.” Id. at 4.

82. Based upon these findings, the Panel held:

“The transfer of a membership interest, in whole or in part, by the

L.L.C. assignees of [S&M, Inc.] as set forth in the afore referred to

agreements will not trigger, and are not subject to, the right of first

refusal as set forth in the agreement of April 25, 2003, as amended.”

Id. at 5.

(JA95-JA96 (emphasis omitted).) Meanwhile, SEI appealed from the state trial court’s

dismissal of its state court complaint and Lis Pendens. A letter from Mellon

accompanying the statement of appeal stated that it was filed in order to keep the Lis

Pendens issue alive pending the arbitration and recording of a memorandum of
14

understanding and explained that, “‘[w]hile I understand from Attorney Pastor that the

Havanian [sic] deal is off, we do not want to have the same problem arise again if it is

resurrected, or another third party become interested before the Memorandum of

Understanding is filed or arbitration completed.’” (JA97 (emphasis omitted) (quoting

Exhibit T).) Despite the resolution of the arbitration proceeding, the appeal was not

withdrawn. “By Memorandum Opinion dated October 20, 2006, the Superior Court

dismissed Defendants’ appeal as moot, and so doing noted, ‘we find no basis to disturb

the trial court’s ruling.’” (Id. (quoting Exhibit U at 4).)

Appellees single out just two allegations in support of their assertion that the

underlying complaint set forth a claim for malicious prosecution based on negligent

conduct: “E.g., [JA102] (alleging the appeal and arbitration instituted without a

‘reasonable basis’) & [JA104-JA105] (alleging that SEI and Mr. Strausser could not have

reasonably believed that there was a basis to support claims being advanced).”

(Appellees’ Brief at 19-20).) However, the first allegation clearly implicated the

Appellees’ knowledge, i.e., Appellees, with the assistance of counsel, instituted the state

court complaint, the Lis Pendens, the Pennsylvania Superior Court appeal, and the

arbitration proceeding “knowing that there was no reasonable basis to the claim being

advanced.” (JA102.) In the second allegation, Segal Plaintiffs claimed that Appellees

commenced and continued to prosecute the legal actions “primarily for the improper

purpose of attempting to secure for SEI and Strausser contractual rights that were neither

bargained for nor contained within the Purchase Agreements, as amended.” (JA104.)

Given these circumstances as well as the additional allegations of intentional and
15

knowing actions included in the complaint, the underlying malicious prosecution cause of

action does not trigger Regent’s duty to defend.

5

5

 In addition to noting that “the Segal Entities themselves have characterized the 

argument that the claims in their Underlying Complaint are founded solely on intentional 

conduct as ‘misdirected’” (Appellees’ Brief at 4 (quoting JA481)), Appellees’ counsel 

observed at oral argument that the district court’s “opinion in the recent Motion for 

Summary Judgment in the underlying case, [Segal v. Strausser Enterprises, Inc., CIVIL 

ACTION NO. 07-4647, 2019 WL 2450416, at *11 (E.D. Pa. June 12, 2019),]

characterizes the gist of the claim as one being based on gross negligence” (Transcript of 

Oral Argument at 16). He also refers to the subsequent arbitration proceeding that was 

“peeled off of that case” (Transcript of Oral Argument at 28) in which “Mr. Strausser 

won $20 million from Mr. Segal” (id. at 29). However, we are limited to the factual 

allegations set forth in “the four corners” of the underlying complaint. See, e.g., I.C.D.

Indus. ̧879 F. Supp. at 488. In turn, it is our responsibility (and not the plaintiffs, the 

arbitrators, or the district court in the underlying action) to conduct the requisite analysis 

under applicable state law to determine if the insurer has a duty to defend in the 

underlying proceeding.

Appellees raise a number of additional arguments, but we likewise conclude that 

they are without merit. According to them, “general exclusions cannot, as a matter of 

policy, be used to eviscerate the express coverages.” (Appellees’ Brief at 15 (emphasis

omitted)). However, the unambiguous “Knowing Violation of Rights of Another”

exclusion is a specific component of Coverage B and does not result in illusory coverage 

for all malicious prosecution claims because it does not apply to claims based on alleged 

negligence. Furthermore, the cases cited by Appellees either did not apply Pennsylvania 

law or did not specifically adopt Appellees’ “evisceration” line of reasoning. See HurstRoche Eng’rs, Inc. v. Commercial Union Ins. Co., 51 F.3d 1336 (7th Cir. 1995) (Illinois 

law); Tews Funeral Home, Inc. v. Ohio Cas. Ins. Co., 832 F.2d 1037 (7th Cir. 1987) 

(same); Cincinnati Ins. Cos. v. Pestco, Inc., 374 F. Supp. 2d 451, 460-61 (E.D. Pa. 2004)

(concluding that express exclusion for trademark infringement did not apply to distinct 

claim of trade dress infringement); Fluke Corp. v. Hartford Accident & Indemn. Co., 34 

P.3d 809 (Wash. 2001) (en banc) (Washington law). We further believe that the injury

allegedly intended by Appellees (i.e., to extract additional concessions out of the Segal 

Plaintiffs) is of the same general type as (and in fact closely connected to) the harm that

allegedly resulted from their actions (i.e., the derailing of the Hovnanian deal itself). See, 

e.g., United Servs. Auto. Ass’n v. Elitzky, 517 A.2d 982, 987 (Pa. Super. Ct. 1987). 

Appellees further argue that the exclusion does not apply because the claims are 

potentially vicarious in nature (based on the attorney’s conduct), but Strausser himself 

allegedly verified the state court complaint and instructed Mellon to file anything he 

could to stop the Hovnanian transaction. Finally, the District Court properly 
16

III.

Accordingly, we will vacate the order in part and will remand with instructions to

grant Regent’s motion for summary judgment and deny Appellees’ summary judgment

motion as to Count V of Regent’s amended complaint and to enter judgment in favor of

Regent and against Appellees declaring that Regent has no duty to defend or indemnify

Appellees in the Segal Action.

acknowledged that a duty to indemnify cannot exist in the absence of a duty to defend. 

See Regent Ins., 902 F. Supp. 2d at 636 (“A duty to defend can exist without a duty to 

indemnify. However, a duty to indemnify cannot exist without a duty to defend. Frog, 

Switch & Manufacturing. Co., Inc., 193 F.3d at 746.”).