                                                            NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT
                                  ______

                                    No. 12-3237
                                      ______

                               STEPHEN P. KOONS
                                              Appellant

                                         v.

                        XL INSURANCE AMERICA, INC.;
                         GREENWICH INSURANCE CO.

                                       ______

                   On Appeal from the United States District Court
                       for the Eastern District of Pennsylvania
                            (D.C. Civil No. 2-11-cv-02956)
                   District Judge: Honorable William H. Yohn, Jr.
                                        ______

                 Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                 March 19, 2013


   Before: SMITH, GREENAWAY, JR., and VAN ANTWERPEN, Circuit Judges.

                          (Opinion Filed: March 25, 2013)
                                      ______

                            OPINION OF THE COURT
                                    ______

VAN ANTWERPEN, Circuit Judge.

      Stephen P. Koons (“Koons”) filed a complaint seeking declaratory judgment that

XL Insurance America, Inc. (“XL Insurance”) and Greenwich Insurance Company
(“Greenwich”) had a duty to defend and indemnify him in a personal injury action filed

against him. The parties filed cross-motions for summary judgment, and the District

Court denied Koons‟ motion and granted XL Insurance‟s and Greenwich‟s motions. On

appeal, Koons only challenges the District Court‟s decision to grant Greenwich‟s motion

for summary judgment. For the reasons that follow, we will reverse and remand the

matter.

                                             I.

       This action arises out of a tragic incident occurring on April 18, 2008, in which

Jeremy J. Andre, an employee of Ches-Mont Disposal, LLC, was killed while operating a

garbage disposal truck.1 Andre‟s Estate filed an action alleging, inter alia, that Koons

had caused the death because he owned the truck which killed Andre and had failed to

properly maintain it. Disposition of the instant matter hinges on the relationship between

Koons, Ches-Mont Disposal, LLC (and its predecessors), and the truck which allegedly

killed Andre.

                                A. Factual Background

       In 1999, Koons purchased Miller Concrete and ran it as a sole proprietorship.

Miller Concrete‟s business was selling and installing underground tanks. While he

owned and ran Miller Concrete, Koons was also the sole shareholder and President of No

Fun Allowed, Inc. (“NFA”) d/b/a Ches-Mont Disposal. Ches-Mont Disposal is a waste

collection, recycling, and disposal company. Therefore, Koons owned the tank


1
 In the record, the company is alternatively referred to as “Chesmont Disposal,” but for
consistency‟s sake, we will use the hyphenated version of the name.
                                             2
installment company as a sole proprietorship (Miller Concrete) and simultaneously was

the President and sole shareholder of the waste collection and disposal corporation (NFA

d/b/a Ches-Mont Disposal).

       On October 22, 2001, Stephen Koons d/b/a Miller Concrete purchased Mack

Truck Model No. MR688S, VIN 1M2K195C71M018188 (“the Truck”) from McNeilus

Truck and Manufacturing Company for $136,000. (Appendix (“App.”) at 411). This is

the Truck that allegedly caused the death of Jeremy Andre. McNeilus‟ invoice

documenting the sale lists Ches-Mont Disposal as the Final User of the Truck. (Id. at

411). The Truck is a trash disposal truck, specially fitted with a twenty-five-yard high

compaction rear loader.

       The Truck was delivered on November 7, 2001. On November 12, 2001, Koons

entered into a lease agreement with NFA, in which Koons agreed to lease the Truck to

NFA for thirty-six months, at a rate of $2,657.41 per month. Koons asserts NFA never

actually made lease payments to him, since he was the sole owner of NFA. The record

contains no evidence, such as cancelled checks or other documents, that NFA made any

payments. Although the lease expired in November 2004, as of October 6, 2009, the

Pennsylvania Department of Transportation (“PENNDOT”) listed Stephen Koons d/b/a

Miller Concrete as the owner of the Truck, and NFA d/b/a Ches-Mont Disposal as the

lessee. (App. at 438).

       After the lease expired in November 2004, Ches-Mont Disposal continued to make

exclusive, uninterrupted use of the Truck. Koons did not perform any maintenance on



                                             3
the Truck; it was exclusively inspected, maintained, and repaired by employees of Ches-

Mont Disposal.

         In 2006, Koons acquired two partners, Richard Godshell and Patrick Kelly.2 The

three formed Ches-Mont Holdings, LLC (“the Holding Company”); Koons holds a 35%

share of the Holding Company, with Godshell and Kelly owning the rest. At the same

time, Ches-Mont Disposal, Inc. changed from an S-Corporation to a limited liability

corporation, and became Ches-Mont Disposal, LLC. The Holding Company was the sole

owner of Ches-Mont Disposal, LLC, and Koons was President of the disposal company.

Therefore, at the end of the corporate restructuring, Ches-Mont Disposal was wholly

owned by the Holding Company, and Koons owned 35% of the Holding Company and

was President of Ches-Mont Disposal, LLC.3 After this restructuring, Ches-Mont

Disposal continued to make exclusive and uninterrupted use of the Truck, even though

the lease had long expired, and Koons continued to not receive any compensation for his

provision of the Truck.

                                       B. Procedural History

         Andre‟s Estate sued Koons, along with other defendants not relevant to this case,

as the owner of the Truck, alleging that he failed to properly inspect, maintain, and/or

repair the Truck, which contributed to Andre‟s death. Andre‟s Estate did not sue either

Ches-Mont Disposal, LLC or Ches-Mont Holdings, and does not allege Koons is liable


2
 In 2004 or 2005, NFA changed its name to Ches-Mont Disposal, Inc., but did not
otherwise change its structure.
3
    This was the corporate structure in place at the time of Andre‟s death.
                                               4
because of his relationship to either of those companies. Koons‟ alleged liability is

premised solely on his ownership of the Truck.

       Koons sought defense and indemnification from XL Insurance and Greenwich,

which they refused to pay. He then filed the instant action seeking declaratory judgment

that both companies had a duty to defend and indemnify him. After all the parties filed

motions for summary judgment, the District Court granted the motions of XL Insurance

and Greenwich against Koons. Koons appeals only from the District Court‟s decision

that Koons is not an “Insured” under “Coverage B” of the Greenwich policy.

       Under the Greenwich policy, Ches-Mont Disposal, LLC, is the Named Insured.

Coverage extends to the “Insured,” defined as:

          1. The Named Insured
          …
          3. your [the Named Insured‟s] partners, joint venture members,
          executive officers, employees, directors, stockholders or volunteers
          while acting within the scope of their duties as such.

(App. at 237) (emphasis added). The District Court found that Koons was not an

“Insured” under the policy. The court concluded that, based on the record, no reasonable

jury could find that Koons had purchased the Truck in his role as owner of the

predecessor of Ches-Mont Disposal, LLC, and therefore he was not being sued for

conduct committed “while acting within the scope of [his] duties.” The District Court

denied Koons‟ motion to alter or amend judgment, and Koons timely appealed.


                                            II.




                                             5
       The District Court had jurisdiction under 28 U.S.C. § 1332 and we have

jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over a grant of

summary judgment, applying the same standard as the District Court. Dee v. Borough of

Dunmore, 549 F.3d 225, 229 (3d Cir. 2008). Summary judgment is appropriate if “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). “Material facts are those that could affect the

outcome of the proceeding, and a dispute about a material fact is genuine if the evidence

is sufficient to permit a reasonable jury to return a verdict for the nonmoving party.”

Roth v. Norfalco LLC, 651 F.3d 367, 373 (3d Cir. 2011) (internal quotation marks

omitted). We view the evidence “in the light most favorable to the nonmovant and draw

all reasonable inferences in that party‟s favor.” Id. at 373-74.


                            A. Interpretation of the Contract

       Koons argues that the District Court erred because it failed to consider the purpose

of umbrella insurance policies, as well as the reasonable expectations of the parties, and

that under such considerations, the contract should be broadly construed in his favor.

This argument fails.

       Under Pennsylvania law, which the parties agree governs here, “the interpretation

of the scope of coverage of an insurance contract is a question of law properly decided by

the court, a question over which we exercise plenary review.” Med. Protective Co. v.

Watkins, 198 F.3d 100, 103 (3d Cir. 1999). If “„the language of the [insurance] contract

is clear and unambiguous, a court is required to give effect to that language.‟” Madison


                                              6
Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999) (quoting Gene &

Harvey Builders, Inc. v. Pa. Mfrs. Ass’n Ins. Co., 517 A.2d 910, 913 (1986)). “„Where a

provision of a policy is ambiguous, the policy provision is to be construed in favor of the

insured and against the insurer, the dafter of the agreement.‟” Id. “This is not a question

to be resolved in a vacuum. Rather, contractual terms are ambiguous if they are subject

to more than one reasonable interpretation when applied to a particular set of facts.” Id.

       The contract language is clear. “Insured” is defined as the “partners, joint venture

members, executive officers, employees, directors, stockholders or volunteers” of the

Named Insured, “while acting within the scope of their duties as such.” (App. at 237).

This unambiguously indicates that the relevant individuals are not covered for all of their

conduct, but rather only the conduct they commit “while acting within the scope of their

duties” as employees or owners of Ches-Mont Disposal. Since this language is

unambiguous, it controls, and we need not address Koons‟ policy-based arguments, the

reasonable expectations of the parties, or Greenwich‟s claim that Koons has waived this

line of argument. Madison Constr. Co., 735 A.2d at 106.


                       B. Genuine Dispute as to a Material Fact4



4
  We do not address whether the contract language unambiguously indicates that Koons‟
conduct, as the sole shareholder and President of the predecessor to the Named Insured,
would be covered by the contract. As explained above, assessing contract language for
ambiguity is a fact-based analysis, dependent on the specific circumstances of the case.
Madison Constr. Co., 735 A.2d at 106. The District Court did not decide this issue,
instead finding that there was insufficient evidence in the record to allow a jury to find
that Koons had provided the Truck to Ches-Mont Disposal, LLC in his capacity as the
owner of the predecessor of Ches-Mont Disposal. Since the District Court and the parties
                                             7
       The Andre Estate alleged Koons was liable because he owned the Truck and failed

to properly maintain it. Greenwich argues that Koons‟ alleged liability is not related to

his duties as part-owner and President of Ches-Mont Disposal, LLC or his ownership of

its predecessor. Koons argued, and argues on appeal, that he acted within his role as an

owner when he provided the Truck to Ches-Mont Disposal. The District Court found that

there is “no evidence in the record from which a jury could reasonably find that [Koons]

purchased and leased the truck in his capacity as the founder and sole owner of the

predecessor of Ches-Mont LLC,” and based its holding on that ground. The District

Court erred.

       In an insurance coverage dispute, “an insured bears the initial burden to make a

prima facie showing that a claim falls within the policy‟s grant of coverage.” State Farm

Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir. 2009). For summary

judgment to be denied, the record need not contain direct evidence to create a genuine

issue as to a material fact; circumstantial evidence which would allow a jury to find for

the nonmovant is sufficient.5 See, e.g., Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155,

1165 (3d Cir. 1990) (“[N]othing in Rule 56 prevents [plaintiffs] from creating a genuine

issue of material fact by pointing to sufficiently powerful countervailing circumstantial

evidence.”).

did not address the issue, and since resolution of the issue is fact-dependent, it would be
inappropriate for us to decide it here.
5
  This is particularly true when disposition of an issue turns on the individual‟s state of
mind, and the record contains circumstantial evidence of that state of mind.
Schoonejongen v. Curtiss-Wright Corp., 143 F.3d 120, 130 (3d Cir. 1998). Though this
case does not directly turn on Koons‟ state of mind, it does implicate his purpose or
motivation in purchasing the Truck.
                                             8
       Here, the issue is whether there is sufficient evidence in the record, viewing the

record and reasonable inferences therefrom in the light most favorable to Koons, that

Koons purchased the Truck in his capacity as the founder and sole owner of the

predecessor of Ches-Mont LLC. We conclude that there is.

       The Truck is specially designed for waste disposal purposes; it is a trash truck.

The Truck was purchased by Koons d/b/a Miller Concrete, even though Miller Concrete

sold and installed septic tanks. At the time of purchase, Koons was also the sole owner

of Ches-Mont Disposal, a waste disposal company. The fact that Koons purchased a

specially designed trash disposal truck, and at the time owned both a septic tank company

and a trash disposal company, would allow a reasonable jury to infer that he purchased

the trash disposal truck “in his capacity as the founder and sole owner” of the trash

disposal company, rather than for the benefit of the tank installment company.

       This conclusion is supported by other evidence in the record. Koons purchased

the Truck for $136,000 on October 22, 2001, and it was delivered on November 7, 2001.

Almost immediately after delivery, Koons began to “lease” the Truck to NFA, the

predecessor to Ches-Mont Disposal, LLC. Though NFA d/b/a Ches-Mont Disposal was

supposed to pay Koons $2657.41 per month, Koons testified that no payments were ever

made to him, and there is no evidence of any payments in the record.6 Additionally, the

lease expired in November 2004, but NFA and its successors continued to make




6
 Koons testified that because “[he] was the company [Ches-Mont Disposal],” he was
“giving the Truck to [himself],” without compensation. (App. at 408).
                                             9
exclusive, uninterrupted use of the Truck after the end of the lease period; Koons never

used the Truck for his personal benefit or for the benefit of Miller Concrete.

       Furthermore, the Truck vendor‟s invoice, which documented the purchase of the

Truck, identified Koons as the buyer of the Truck but listed Ches-Mont Disposal as its

Final User. Although this document was created over two weeks before Koons leased the

Truck to NFA, it already noted that Ches-Mont Disposal was the intended Final User of

the vehicle.

       In sum, the record establishes that Koons purchased a $136,000 trash disposal

truck, almost immediately provided it to his trash disposal company, received no

financial compensation for it, did not personally use it, and did not allow Miller Concrete

to use it. The record shows that the trash company maintained and used the Truck

exclusively and without interruption after receiving it from Koons, continued to do so

after the lease period expired, and did not pay Koons anything for the use of the Truck,

either during or after the lease period. This provides sufficient evidence to allow a

reasonable jury to infer Koons purchased the Truck in his capacity as the owner of Ches-

Mont LLC‟s predecessor. To conclude otherwise, we would have to hold that every

reasonable jury would find that Koons had purchased the $136,000 trash disposal truck

and provided it to the trash disposal company that he owned, without compensation, for

reasons other than his ownership of the company. We are unwilling to do so.

                                            III.

       For the foregoing reasons, the District Court‟s Order is reversed, and the matter is

remanded for further proceedings consistent with this opinion.

                                            10
