2013 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-8-2013

Markel Intl Ins Co v. Western PA Childcare LLC

Precedential or Non-Precedential: Non-Precedential

Docket No. 12-2016

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Recommended Citation

"Markel Intl Ins Co v. Western PA Childcare LLC" (2013). 2013 Decisions. Paper 579.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 12-2016, 12-2132

_____________

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

____________

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. Richard Caputo

____________
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Submitted Pursuant to Third Circuit LAR 34.1(a)

June 28, 2013

____________

Before: FUENTES, FISHER, and CHAGARES, Circuit Judges.

(Filed: July 8, 2013 )

____________

OPINION OF THE COURT

____________

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.