                          UNPUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT


NESTOR CORDOVA, Administrator of          
the Estate of Julieta Cordova,
deceased,
                   Plaintiff-Appellant,
                  v.                             No. 99-2410
SCOTTSDALE INSURANCE COMPANY,
Erroneously Named as Nationwide
Mutual Insurance Company,
               Defendant-Appellee.
                                          
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                Leonie M. Brinkema, District Judge.
                          (CA-99-418-A)

                       Argued: October 31, 2000

                       Decided: March 1, 2001

         Before TRAXLER and KING, Circuit Judges, and
      Alexander WILLIAMS, Jr., United States District Judge
        for the District of Maryland, sitting by designation.



Vacated and remanded by unpublished per curiam opinion.


                              COUNSEL

ARGUED: Thomas Phillip Mains, Jr., MAINS & MAINS, McLean,
Virginia, for Appellant. Ronald William Fuchs, ECCLESTON &
2             CORDOVA v. SCOTTSDALE INSURANCE COMPANY
WOLF, P.C., Washington, D.C., for Appellee. ON BRIEF: Matthew
W. Lee, ECCLESTON & WOLF, P.C., Washington, D.C., for Appel-
lee.



Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                               OPINION

PER CURIAM:

   This appeal arises from a direct action initially instituted in state
court by Nestor Cordova against Scottsdale Insurance Company
("Scottsdale"), seeking to recover on a $2,000,000 default judgment
Cordova had obtained against Dr. Carl Alper, one of Scottsdale’s
putative insureds. Determining that Alper was not covered under the
general and professional liability policy issued by Scottsdale (the
"policy"), the district court awarded summary judgment in Scotts-
dale’s favor. Because we are unconvinced that, as a matter of law,
Alper was excluded from the policy’s coverage, we vacate the district
court’s judgment and remand for further proceedings.

                                    I.

                                    A.

   In October 1993, Cordova sued Physicians Clinical Services, a
Pennsylvania medical laboratory, as well as John Crawford and Carl
Alper, for negligently misreading the pap smear of Cordova’s late
wife Julieta. In August 1996, Cordova obtained a $2,000,000 final
default judgment against Crawford and Alper in the Circuit Court of
Fairfax County, Virginia.1 The case against Physicians Clinical Ser-
vices was nonsuited.
    1
   The default judgment against Crawford was vacated in March 1998,
on the basis that Virginia’s long-arm statute failed to confer jurisdiction
over him.
               CORDOVA v. SCOTTSDALE INSURANCE COMPANY                     3
   Unable to execute on the default judgment against Alper, Cordova
filed a state court direct action against Scottsdale,2 pursuant to the
provisions of Virginia Code § 38.2-2200(2).3 The action was thereaf-
ter removed by Scottsdale to federal court in the Eastern District of
Virginia on the basis of diversity of citizenship. Following discovery,
both parties moved for summary judgment. Applying Pennsylvania
law, the district court determined that Alper was not covered by the
policy at the time of his alleged negligence. By its memorandum
opinion of September 15, 1999 (the "Memorandum Opinion"), the
District Court accordingly granted summary judgment in favor of
Scottsdale, which Cordova now appeals. We possess jurisdiction over
the appeal pursuant to 28 U.S.C. § 1291.

                                     B.

                              1. The Entities

   In June 1986, Alper and several colleagues executed a pre-
incorporation agreement, evidencing their intent to form a corporation
"for the purpose of serving as the general partner of a limited partner-
ship to perform or own or operate one or more medical laboratories."
J.A. 41. At that time, Alper subscribed to purchase 30,000 shares of
stock in the proposed corporation and was designated as its director,
officer, and full-time employee. Pursuant to the pre-incorporation
agreement, "Physicians Clinical Services, Ltd." was incorporated in
Delaware in July 1986. Thereafter, a partnership by the name "Physi-
  2
     The named entity in the direct action was initially Nationwide Mutual
Insurance Company, doing business as Scottsdale Insurance Company.
   3
     Virginia’s direct action statute permits litigants bearing unsatisfied
judgments to seek recovery directly from the liable party’s insurer. The
statute provides in relevant part as follows:
      [I]f execution on a judgment against the insured . . . is returned
      unsatisfied in an action brought to recover damages for [an]
      injury sustained [then] the action may be maintained against the
      insurer under the terms of the policy or contract for the amount
      of the judgment not exceeding the amount of the applicable limit
      of the coverage under the policy or contract.
Va. Code Ann. § 38.2-2200(2).
4               CORDOVA v. SCOTTSDALE INSURANCE COMPANY
cians Clinical Services Limited Partnership" was also formed in Dela-
ware; the partnership agreement identified Physicians Clinical
Services, Ltd., as the sole general partner, and an individual, James
L. Flore, as the sole limited partner.

   Once these legal entities had been created, a medical laboratory
doing business under the name "Physicians Clinical Services" com-
menced operations in Exton, Pennsylvania. Correspondence issued by
the laboratory, including the test result reports sent to patients, identi-
fied Alper as the "Laboratory Director."

                              2. The Policy

   Scottsdale issued the policy in June 1988, and it was renewed
effective June 17, 1989. The policy provided "Comprehensive Gen-
eral Liability Insurance" and "Hospital Professional" coverage in the
aggregate sum of $6,000,000.4 It designated "Physicians Clinical Ser-
vices, Inc." as the named insured.5

    The policy defines the persons insured as follows:

        II. PERSONS INSURED

        Each of the following is an insured under this insurance to
        the extent set forth below:

        (a) the named insured[;]

        (b) if the named insured is designated in the declarations
            as a partnership, any partner thereof, but only with
            respect to that partner’s liability as such;

        (c) if the named insured is designated in the declarations
    4
     This maximum coverage sum represents an underlying $1,000,000
policy (commanding a $35,750 premium), and a rider providing an addi-
tional $5,000,000 in coverage (with a premium of $27,750).
   5
     Unfortunately, on this record no legal entity by the name "Physicians
Clinical Laboratory, Inc." ever existed.
              CORDOVA v. SCOTTSDALE INSURANCE COMPANY                  5
           as other than an individual or partnership, any execu-
           tive officer, hospital administrator, stockholder, or
           member of the board of directors, trustees or governors
           of the named insured while acting within the scope of
           that person’s duties as such.

J.A. 92.

   Several form endorsements accompanied the policy when it was
initially issued, and others were subsequently issued by Scottsdale.6
On August 16, 1989, a single-page endorsement to the policy was
issued by Scottsdale, bearing the caption "Endorsement No. 3" and
listing "Physicians Clinical Services, Inc." as the insured. Beyond the
identifying information found at the top of the page, Endorsement No.
3 contained the statement: "It is hereby understood and agreed the
named insured is a partnership."7 J.A. 106. Despite this attempt at
clarification, inconsistency regarding the insured entity’s name (and
status) persisted. Scottsdale continued to address its insured as "Phy-
sicians Clinical Services, Inc." in certain documents post-dating the
issuance of Endorsement No. 3. For example, an endorsement dated
August 18, 1989, referred to "Physicians Clinical Services, Inc." as
the insured party. J.A. 105. On occasion, Scottsdale referred simply
to "Physicians Clinical Services" or "Physicians Limited Partnership"
as its insured party — despite the fact that neither was a legal entity.

                                   II.

   We review de novo an award of summary judgment, viewing the
facts in the light most favorable to the nonmovant. Myers v. Finkle,
950 F.2d 165, 167 (4th Cir. 1991). Summary judgment is appropriate
only "if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there
  6
     It appears that, with one exception, the various endorsements were
never executed either by Scottsdale or by the insured. That single excep-
tion was Endorsement No. 1 (bearing the caption "Special Condition
Endorsement Regarding Subcontractors") which was signed by an autho-
rized agent of Scottsdale, as well as by the laboratory’s CFO.
   7
     By its terms, Endorsement No. 3 purported to be effective as of June
17, 1989.
6            CORDOVA v. SCOTTSDALE INSURANCE COMPANY
is no genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).

                                   III.

                                   A.

   Despite the confusion with respect to the entities referenced as the
insured, the issue on appeal is straightforward: Does the policy
encompass and insure the acts of Alper, insofar as he was serving as
an agent and employee of the "Physicians Clinical Services" medical
laboratory?

                                    1.

   Maintaining that Alper was beyond the scope of coverage, Scotts-
dale relies on the plain language of Endorsement No. 3, which pro-
vided that "[i]t is hereby understood and agreed that the named
insured is a partnership." Scottsdale insists that Endorsement No. 3
must be read in conjunction with the policy’s "persons insured"
clause. Accordingly, Scottsdale concludes that the policy unambigu-
ously designated Physicians Clinical Services Limited Partnership as
the named insured, with coverage encompassing Physicians Clinical
Services, Ltd., as its sole general partner, under subparagraph (b) of
Section II, "but only with respect to that partner’s liability as such[.]"
In Scottsdale’s view, Physicians Clinical Services, Ltd. enjoyed cov-
erage in its capacity as general partner, but such coverage did not
trickle down — as would be the case under subparagraph (a) of Sec-
tion II — to its individual corporate directors, officers or sharehold-
ers, including Alper.

  In awarding summary judgment, the district court essentially
adopted Scottsdale’s position, concluding:

     [Endorsement No. 3] was issued two months after the origi-
     nal policy and, importantly, weeks before the negligent
     reading of Julieta Cordova’s lab reports. Moreover, each
     subsequent endorsement lists the named insured as "Physi-
     cians Clinical Services[,]" the trade name of the limited
              CORDOVA v. SCOTTSDALE INSURANCE COMPANY                      7
      partnership. Thus, we find that at the time of the alleged
      negligence in reading the lab report in question, the limited
      partnership, Physicians Clinical Services, was the named
      insured. Because Alper was not a partner of that partnership,
      he is not covered by this policy.

Memorandum Opinion, at 10-11.

                                     2.

   Cordova contends, inter alia, that the district court’s interpretation
of the policy does not comport with the "reasonable expectations of
the insured." Indeed, under Pennsylvania law,8 courts are instructed
  8
    Neither party to this appeal quarrels with the district court’s decision
to treat Pennsylvania law as that governing the policy. See Memorandum
Opinion, at 8 ("[B]ecause the general partner which arranged for the
insurance contract was located in Pennsylvania and the insurance con-
tract was delivered to Pennsylvania, we find that Pennsylvania law
should cover the interpretation of the insurance policy at issue."). We
also accept the district court’s decision to apply Pennsylvania’s substan-
tive law.
   Scottsdale, however, summarily contends on appeal that the Virginia
direct action statute, see supra note 2, is not applicable to Cordova’s suit,
since that statute "expressly limits its application to policies ‘issued and
delivered in this Commonwealth.’" Appellee’s Br. at 20. If Pennsylva-
nia’s direct action counterpart were instead applied, Scottsdale contends,
it would be incumbent upon Cordova "to allege and present admissible
evidence demonstrating that his collection efforts against Alper were
unsuccessful due to Dr. Alper’s insolvency or bankruptcy." Id. at 23
(emphasis added). Cordova failed to so allege and establish; accordingly,
Scottsdale insists, Cordova lacked standing to bring this direct action. In
his Reply Brief, Cordova asserts that Scottsdale waived this defense
"[b]y contending in its summary judgment motion that the sole issue
before the court involved the question of coverage for Alper[.]" Appel-
lant’s Reply Br. at 8. Moreover, as Cordova observes, this issue was nei-
ther addressed nor decided by the district court. Id.
   While Scottsdale characterizes this issue as one of "standing," it relates
solely to the adequacy of Cordova’s pleadings. As such, we will decline
to consider the issue, since it was neither addressed by the district court
8             CORDOVA v. SCOTTSDALE INSURANCE COMPANY
to consider the reasonable expectations of the insured in determining
coverage issues — and even, on occasion, to give precedence to such
expectations over the express language of a policy. See Bensalem
Township v. Int’l Surplus Lines Ins. Co., 38 F.3d 1303, 1311 (3d Cir.
1994). Cordova challenges a result by which Scottsdale would effec-
tively reduce the scope of its coverage without either obtaining the
insured’s direct consent, i.e., a written acknowledgment of Endorse-
ment No. 3, or reducing the premium commensurately.

   In its Memorandum Opinion awarding summary judgment to
Scottsdale, the district court did not address the "reasonable expecta-
tions of the insured." Instead, it determined that the policy initially
covered the officers, directors, and administrators of Physicians Clini-
cal Services, Ltd.:

     We are satisfied that there is no material difference between
     "inc" and "ltd" and that on this record until August 16, 1989,
     the policy covered Physicians Clinical Services, Ltd.

Memorandum Opinion, at 9. The district court, however, then pro-
ceeded to conclude that the issuance of Endorsement No. 3 had the
effect of immediately terminating the corporation’s coverage. At that
time, "it became unambiguously clear that the parties to the contract
intended that the partnership, Physicians Clinical Services, was the
named insured and not the corporation, Physicians Clinical Services,
Ltd." Id. As further evidence of the parties’ intentions, the district
court observed that all subsequent endorsements "list[ed] the named
insured as ‘Physicians Clinical Services’, the trade name of the lim-
ited partnership." Id. at 10.

nor fully briefed by the parties. Cf. Singleton v. Wulff, 428 U.S. 106, 121
(1976) ("The matter of what questions may be taken up and resolved for
the first time on appeal is one left primarily to the discretion of the courts
of appeals[.]"). Upon remand, the district court may, if it deems it appro-
priate, determine whether Scottsdale has waived this defense and, if not,
evaluate its merits in the first instance.
             CORDOVA v. SCOTTSDALE INSURANCE COMPANY                    9
                                   B.

                                    1.

   Although the plain terms of Endorsement No. 3 cannot be ignored,
we must reject the district court’s conclusion that this endorsement
validly and unambiguously amended the policy. Under Pennsylvania
law, if the provisions of an insurance policy are clear and unambigu-
ous, they are to be given their plain and ordinary meaning. Riccio v.
Am. Republic Ins. Co., 705 A.2d 422, 426 (Pa. 1997). If, instead, the
policy’s provisions are ambiguous, they must be construed in favor
of the insured and against the insurer as the drafter of the instrument.
Id. In determining ambiguity, a court must read the policy in its
entirety and ascertain its intent from consideration of the entire instru-
ment. Id.

   Where, as appears to be the situation here, an amendatory endorse-
ment has been issued containing terms which conflict with those in
the main policy, the endorsement’s terms prevail. See St. Paul Fire
& Marine Ins. Co. v. United States Fire Ins. Co., 655 F.2d 521, 524
(3d Cir. 1981). In particular, an endorsement that expands the scope
of coverage will be regarded by Pennsylvania courts as trumping
more restrictive coverage terms contemplated by its underlying form
policy. See id. On the other hand, an insurer cannot reduce the scope
of coverage merely by issuing an amendatory endorsement. Of impor-
tance, Pennsylvania law instructs that insurance policies, like other
contracts, cannot be changed or modified without the consent of both
parties. See, e.g., J.M.P.H. Wetherell v. Sentry Reinsurance, Inc., 743
F. Supp. 1157, 1170 (E.D. Pa. 1990) (noting that an insurer "may not
modify the terms of a contract by issuing a certificate which conflicts
with the terms of the agreed upon contract"); Murray v. John Han-
cock Mut. Life Ins. Co., 69 A.2d 182, 183 (Pa. Super. Ct. 1949)
("[O]rdinarily, a contract of insurance cannot be changed without the
consent of both parties."); see also 4 Eric Mills Holmes, Holmes’
Appleman on Insurance 2d, § 20.1 at 157-58 ("Almost any change of
the policy may be made by endorsement with consent. . . . [N]o con-
sideration is required where the endorsement is attached before the
policy is delivered.") (emphasis added).
10           CORDOVA v. SCOTTSDALE INSURANCE COMPANY
                                   2.

   In order to evaluate the validity and effect of Endorsement No. 3
— which, Scottsdale implicitly concedes, was issued separately from
the policy — we must first identify the insured party when the policy
was issued. As we have observed, the district court construed the poli-
cy’s references to "Physicians Clinical Services, Inc." to warrant the
conclusion that the original insured was the corporation, Physicians
Clinical Services, Ltd. See Memorandum Opinion, at 9. While the dis-
trict court’s inference was not entirely unreasonable, we are not satis-
fied, as a matter of law, that Physicians Clinical Services, Ltd. was
the intended insured.

   Scottsdale’s use of "Inc." in references to the insured entity cer-
tainly implies an understanding that the entity enjoyed corporate sta-
tus; the fact that the policy denominated the insured as a corporate
entity cannot, however, support a legal conclusion that Physicians
Clinical Services, Ltd. was the actual insured. By its terms, the policy
was by no means clear and unambiguous as to the insured’s identity.
In the absence of other compelling evidence evincing the parties’
intent, we must conclude that a factual question remains as to the
identity of the insured at the time the policy was issued.

                                   3.

   Just as the policy, when initially issued, did not denominate the
insured entity clearly and unambiguously, the factual record available
to us also does not clearly establish the intended effect of Endorse-
ment No. 3. That is, it is not apparent whether this endorsement was
intended to memorialize the parties’ understanding of the policy as
issued, or was instead intended to materially alter the terms of the pol-
icy’s coverage.

   Under these circumstances we also must conclude that genuine
issues of material fact remain as to the identity of the named insured
at the time of the endorsement’s issuance. If, as the district court
determined, the corporation (Physicians Clinical Services, Ltd.) was
the original named insured, then Endorsement No. 3 would have the
effect of modifying, indeed diminishing, the scope of coverage. Cor-
porate directors, officers, and stockholders (including Alper) who
             CORDOVA v. SCOTTSDALE INSURANCE COMPANY                 11
were initially insured, under subparagraph (c) of Section II of the pol-
icy, would be stripped of coverage by Endorsement No. 3 — despite
the fact that neither the insured’s written consent had been obtained
nor the premium reduced to reflect the diminished coverage. Such a
result would do violence to the fundamental principle that a contract
cannot be modified without the consent of both parties. See J.M.P.H.
Wetherell, 743 F. Supp. at 1170.

   The evidence produced by Scottsdale in support of its motion for
summary judgment fails to establish that it obtained valid consent and
agreement to the issuance of Endorsement No. 3. Without such con-
sent, this endorsement, which would give rise to coverage of a part-
nership under subparagraph (b) of Section II of the policy, cannot be
given legal effect. In sum, because factual issues exist as to the iden-
tity and nature of the insured, and also as to the validity of Endorse-
ment No. 3, Alper’s coverage under the policy cannot be denied as
a matter of law.

                                  IV.

   For these reasons, we vacate the district court’s award of summary
judgment to Scottsdale and remand for further proceedings.

                                        VACATED AND REMANDED
