                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-20-2008

Cincinnati Ins Co v. Trosch
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-3412




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Recommended Citation
"Cincinnati Ins Co v. Trosch" (2008). 2008 Decisions. Paper 1401.
http://digitalcommons.law.villanova.edu/thirdcircuit_2008/1401


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                                                              NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT
                                __________

                                    No. 07-3412
                                    __________

                  THE CINCINNATI INSURANCE COMPANY,
                                               Appellant
                                   v.

                    ERIC W. TROSCH; BRENDAN GEBHART;
                          CHRISTOPHER GEBHART
                                __________

                  On Appeal from the United States District Court
                     for the Western District of Pennsylvania
                           (D.C. Civil No. 07-cv-00399)
                    District Judge: Honorable Nora B. Fischer
                                   __________

                     Submitted Under Third Circuit LAR 34.1(a)
                                on January 28, 2008

           Before: SCIRICA, Chief Judge, and RENDELL, Circuit Judge,
                       and RODRIGUEZ,* District Judge.

                               (Filed March 20, 2008)

                                    __________

                            OPINION OF THE COURT
                                  __________

__________________

   * Honorable Joseph H. Rodriguez, Senior Judge of the United States District Court
     for the District of New Jersey, sitting by designation.
RENDELL, Circuit Judge.

          Appellant, the Cincinnati Insurance Company (“Cincinnati”), brought a

declaratory judgment action in the District Court (“District Court Action”) seeking a

declaration that the homeowner insurance policy issued by it to Dr. James R. Gebhart and

Cynthia A. Gebhart did not provide liability insurance coverage to resident relatives. The

resident relatives, Brendan and Christopher Gebhart (“Gebhart Defendants”), had been

sued by Eric W. Trosch (“Trosch”) in the Court of Common Pleas of Mercer County,

Pennsylvania, for allegedly creating a defamatory profile of Trosh on MySpace.com

(“Underlying Action”).

          In the District Court Action, Cincinnati sought a declaration that it did not owe a

duty to defend the Gebhart Defendants in the Underlying Action based on an exclusion

for certain defamation claims. At a settlement conference held on July 5, 2007, the

parties agreed to stay the District Court Action pending resolution of the Underlying

Action. Three days later, Cincinnati moved to vacate the stay, but the District Court

denied the motion without opinion. On July 17, 2007, the Court entered an order

officially staying the District Court Action. It is from this order that this appeal has been

taken.1


  1
   Because we conclude that the order of the District Court entering the stay is a final
order, we have jurisdiction to hear this appeal. See Terranova Ins.Co. V. 900 Bar, Inc.,
887 F.2d 1213, 1216 (3d Cir. 1989). As we noted in Terranova, “the stay is effectively
final as to [the insurer’s] obligation to provide a defense in the underlying state tort action
and is not inherently tentative.” Id. The ruling in the District Court Action puts
                                                                                 (continued...)

                                                2
       Cincinnati urges that when one compares the averments of the complaint in the

Underlying Action to the policy exclusion, it is clear that there is no coverage and, thus,

no duty to defend. The policy at issue provides coverage for “personal injury,” which

includes “[d]efamation of character.” (App. 65, 42.) However, there is an exclusion from

coverage if the personal injury has been “[c]aused by . . . an ‘insured’ with the knowledge

that the act would violate the rights of another and would inflict ‘personal injury’” or if it

is “[a]rising out of . . . [o]ral or written publication of material, if done by . . . an ‘insured’

with knowledge of its falsity.” (Id. at 70-71.) Because Trosch has alleged that the

Gebhart Defendants knew that the defamatory statements were not true and published the

statements with the intent of harming his reputation, the allegations clearly fall within the

exclusions. Cincinnati contends that this is a sufficient basis for finding no duty to defend

and that there is no need for further investigation of the facts.

       In response, the Gebhart Defendants urge that claims in the Underlying Action

potentially come within the coverage because the Gebhart Defendants could be held liable

for defamation even if their conduct is not found to fit squarely within the exclusion,

particularly as to the issues of knowledge and intent. They argue that coverage depends

upon facts to be determined in the Underlying Action, and thus the District Court Action

was properly stayed.


  1
   (...continued)
Cincinnati “effectively out of court,” Moses H. Cone Mem’l Hops. v. Mercury Constr.
Corp., 460 U.S. 1, 10 (1983) (internal quotation marks omitted), as to the duty to defend
issue, and thus, the Cincinnati is entitled to appeal.

                                                 3
       We review the District Court’s determination to enter a stay for abuse of

discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 289-90 (1995). We find no abuse

here. As the Gebhart Defendants point out, the duty to defend is triggered when the

complaint involves an injury that is “actually or potentially” within the scope of the

policy. Aetna Cas. & Sur. Co. v. Roe, 650 A.2d 94, 99 (Pa. Super. Ct. 1994). Although

the complaint in the Underlying Action avers conduct that would be excluded because of

the alleged intent and knowledge of the Gebhart Defendants, there is the potential for the

claim to be covered if a different level of knowledge or intent were to be found by the

jury. Thus, it was not an abuse of discretion for the District Court to stay the District

Court Action while the Underlying Action proceeds. Accordingly, we will not disturb the

District Court’s entry of the stay.

       In light of the foregoing, we will AFFIRM the Order of the District Court.




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