Court Opinion

ID: 8967411
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:11:59.911481+00
Date Added: 2024-06-11T17:10:20.713721
License: Public Domain

BECKER, Circuit Judge,
dissenting in part.
It is not often that a worker who suffers bodily injury (or death) as the result of an incident that takes place while he is on the job is not entitled to worker’s compensation. However, as the parties stipulate, this is such a case. Under these circumstances, I simply cannot agree that appel-lee Forum, which furnished appellant Allied Security with a liability policy that covers Allied for the very kind of liability that the Common Pleas jury here found, should escape responsibility on the basis of a workers compensation-based exclusion in its policy. In my view, none of the grounds assigned by the majority for Forum’s exculpation passes muster.
I.
The first prop of the majority’s opinion is its reliance on McCabe v. Old Republic Insurance Co., 425 Pa. 221, 228 A.2d 901 (1967), a reliance I find misplaced. In McCabe, the Pennsylvania Supreme Court was faced with a situation where an employee, Sixto Quinones, was killed while engaged in the construction of a sewer when the trench in which he was digging collapsed due to the absence of shoring. The employer, McCabe, paid worker’s compensation. Failure to shore constituted a violation of state regulations imposed upon the employer.1 Quinones’ administratix sued the township which had contracted for the building of the sewer. The township impleaded the employer, seeking indemnification. The employer then requested its insurance company to defend. It refused and, after a judgment was awarded in the *86administratix’s action against the township and in the township’s indemnity action against the employer, the employer brought suit against the insurance company.
The employer’s insurance company argued that its policy, which, like Forum’s, disclaimed liability for injury or death to an employee “arising out of and in the course of his employment,” did not cover Qui-nones’ death. The employer argued that Quinones’ death did not “arise out of his employment” but “out of the absence of shoring in the trench.” The Pennsylvania Supreme Court disagreed, arguably suggesting that, in construing the disclaimer term “arising out of employment,” a “but for” test was all that had to be satisfied, and that no element of proximate cause had to be shown.
If this proposition constitutes the holding of McCabe, and McCabe is still good law, it would appear that a “but for” test should be used here and that Forum’s exclusion should apply and it should not be liable. That is because “but for” Trahey’s employment his death would not have occurred. I have considerable doubt, however, that this proposition constitutes a holding since Qui-nones’ death was so clearly proximately caused by his employment. Furthermore, while McCabe may be read as adopting a “but for” test, the opinion does not clearly adopt this test. The phrase “but for” enters the opinion only through a quotation from Manufacturers Casualty Insurance Co. v. Goodville Mutual Casualty Co., 403 Pa. 603, 170 A.2d 571 (1961) (highway accident in which automobile crashed into a horse trailer was one arising out of the ownership, maintenance or use of the horse trailer). Immediately after quoting from Goodville, the McCabe Court ended the opinion with the following sentence: “Thus the interpretation given to the phrase in Goodville, supra, is completely contra McCabe’s position herein, since there is an obvious casual connection between Qui-nones’ employment and his death.” 425 Pa. at 224, 228 A.2d at 903. If one were to choose a catch phrase to summarize McCabe, “obvious causal connection” would therefore seem to be more accurate than “but for.”
In the instant case, the causal connection between Vinciguerra’s murder of Trahey and Trahey’s employment does not seem “obvious,” since the jury in Trahey’s estate’s lawsuit in the Philadelphia County Court of Common Pleas found that Vinci-guerra killed Trahey “because of reasons personal to him and not directed against the victim as an employee or because of his employment.” Additionally, applying solely a “but for” test with no proximate cause requirement in construing the term “arising out of employment” could lead to untoward results. To take a simple example, suppose that an employee is killed in an automobile collision while driving to work. “But for” his employment he would not have had occasion to be on the road driving to work and the collision would not have occurred. It would seem that under a “but for” construction of the Pennsylvania Supreme Court’s holding in McCabe, an insurance company with a policy covering damages for injuries “arising out of employment” could be liable for the resulting damages.
I also note that there are post-McCabe Pennsylvania cases finding no causation for purposes of an insurance policy, and while none of them involved employee insurance, they do seem to require that a degree of proximate causation be shown. See Day v. State Farm Mutual Insurance Co., 261 Pa.Super. 216, 396 A.2d 3 (1978) (damages incurred in a fistfight after an automobile collision did not arise out of the ownership, maintenance or use of a motor vehicle); Erie Insurance Exchange v. Eisenhuth, 305 Pa.Super. 571, 451 A.2d 1024 (1982) (injuries occasioned by bullets fired by a police officer whom the plaintiff was trying to run down with his car did not arise out of the ownership, maintenance or use of a motor vehicle). Therefore, it seems that the Pennsylvania courts themselves have failed to construe McCabe as adopting a strict “but for” test in cases involving other types of insurance.
*87II.
At all events, I believe that we are bound by the post-McCabe decision of this court in Federal Rice Drug Co. v. Queen Insurance Co. of America, 463 F.2d 626 (3d Cir.1972). In Federal Rice, as the majority notes, this court construed two exclusion clauses in a comprehensive business insurance policy whose language was essentially the same as exclusion clauses (2) and (3) of the Forum policy. At the time Federal Rice was decided, Pennsylvania law allowed an injured employee to elect between being covered by the worker’s compensation statute or rejecting worker’s compensation coverage and retaining the right to bring suit at common law. We concluded that the first exclusion clause (equivalent to Forum’s exclusion (2)) was intended to disclaim coverage for any liability under the worker’s compensation statute; and that the second exclusion clause (equivalent to Forum’s exclusion (3)) was intended to disclaim coverage for any liability for injuries for which damages were sought at common law, but for which damages could have been sought under the worker’s compensation law. We thus held that the policy’s exclusions (equivalent to Forum’s here) were intended solely to disclaim liability for damages arising from injuries for which claims could be brought under worker’s compensation law, and that, because of the limited scope of the exclusions, the insurance carrier could not escape liability.
The majority attempts to distinguish Federal Rice by reasoning that because the Pennsylvania worker’s compensation statute was amended in 1974 to make worker’s compensation the exclusive remedy for injuries that it covers, Forum’s exclusion (2) now suffices to exclude claims for damages that could be brought under the Pennsylvania’s Worker’s Compensation Act from coverage. The majority then reasons that Forum’s exclusion (3) would have no independent meaning if its exclusionary meaning were limited to claims for injuries that could be brought under the same statute.
The majority’s reasoning, in my view, is flawed because, as Allied argues, the language of Forum's policy was apparently not designed solely for use in Pennsylvania but, rather, for use nationwide. Therefore, while the language of Forum’s exclusion (3) would just be repetitive of the language of Forum’s exclusion (2) in Pennsylvania, it would have an independent meaning in states which still allow employees to elect between being covered by worker’s compensation or retaining the right to bring suit at common law.2
The majority attempts to counter this argument by asserting that Forum’s policy exclusions “must be given meaning in the legal context in which they were written.” However, “a standard form may include provisions appropriate only to some of the transactions in which the form is to be used_” Restatement (Second) of Contracts at § 203(a) & comment b (1981). I believe this to be such a case, for the legal context for which Forum’s policy was written exists in several states. See supra n. 2.
As a result, I believe that Federal Rice is indistinguishable from the present case. Since I believe that we are bound by Federal Rice, I would apply its holding and conclude that the clauses relied on by Forum only exclude claims that are, or could have been, brought under worker’s compensation law. Trahey’s claims, of course, could not be. Accordingly, I would find Forum to be liable to Allied for the amount of the damages awarded to Trahey’s estate. Conversely, since Liberty’s policy uses essentially the same language to define its coverage which Forum’s policy uses in creating its exclusions, I would apply Federal Rice to conclude that Liberty should not be held liable for the damages awarded to Trahey’s estate. Therefore, I would reverse the judgment of the district court insofar as it concluded that Forum’s policy *88does not cover the damages awarded in the verdict obtained by Trahey’s estate against Allied, and that Liberty's policy does.3
I respectfully dissent.

. See Quinones v. Township of Upper Moreland, 187 F.Supp. 260, 262 (E.D.Pa.1960), modified, 293 F.2d 237 (3d Cir.1961).

. See, e.g., NJ.Stat.Ann. § 34:15-7 (1988). Currently five states allow election out of workmen's compensation coverage. In New Jersey, South Carolina and Texas, either the employee or the employer may elect out of coverage. In Arizona and Kentucky only the employee may elect out of coverage. See A. Larson, 2A Workmen's Compensation Law, § 67.10 at 12-95 — 12-97 (1988).

. I also have difficulty with Part V of the majority opinion which vacates that portion of the district court’s decision requiring Liberty to bear liability for the costs of defense and remanding for apportionment between both insurers. The basis of the majority’s ruling is its apparent conclusion that insurance companies have a duty to defend an insured even in a case in which the complaint against the insured does not state a cause of action that is the type covered by the insured’s policy, as long as the insured’s policy could (albeit incorrectly) be construed to cover that type of action. Pennsylvania law may well be inconsistent with the majority’s position. See generally Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 589, 152 A.2d 484, 489 (1959) (" ‘It was the duty of the defendant to undertake the defen[s]e until it could confine the claim to a recovery that the policy did not cover.’ ” (citation omitted)); Wilson v. Maryland Casualty Co., 377 Pa. 588, 594, 105 A.2d 304, 307 (1954) ("[T]he obligation of a casualty insurance company to defend an action brought against the insured is to be determined solely by the allegations of the complaint in the action, and ... the [insurance] company is not required to defend if it would not be bound to indemnify the insured even though the claim against him should prevail in that action.”); Acands Inc. v. Aetna Cas. and Sur. Co., 764 F.2d 968, 975 (3d Cir.1985) (“[T]he insurer 'is not required to defend if it would not be bound to indemnify the insured even though the claim against [the insured] should prevail.’” (quoting Wilson, 377 Pa. at 594, 105 A.2d at 307)); State Auto Ins. Ass’n v. Kuhfahl, 364 Pa.Super. 230, 234, 527 A.2d 1039, 1040-41 (1987) (“In analyzing whether the insurer has a duty to defend, we must first look to the complaint filed against the insureds_ 'After discerning the facts alleged in the complaint, we must then decide whether, if those facts were found to be true, the policy would provide coverage. If it would, then there is a duty to defend.' ” (citations omitted)). It may also be that the broader duty to defend attaches under Pennsylvania law only when it is not entirely clear as a matter of law at the outset of the case whether there is a duty to indemnify. If so, the majority may have reached the correct result. Under these circumstances, and in light of the paucity of Pennsylvania law directly addressing this point and the failure of the parties adequately to brief this issue, I will not dissent from Part V of the majority’s opinion.