Court Opinion

ID: 1032376
Source: CourtListenerOpinion
Date Created: 2013-07-08 19:51:11.976143+00
Date Added: 2024-06-11T12:44:18.759730
License: Public Domain

NOT PRECEDENTIAL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. Robert Caputo
                                 ____________
                    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.

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