                                                                                                                           Opinions of the United
1996 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-4-1996

Assicurazioni Generali v. Public Svc. Mut. Ins. Co.
Precedential or Non-Precedential:

Docket 95-1479




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Recommended Citation
"Assicurazioni Generali v. Public Svc. Mut. Ins. Co." (1996). 1996 Decisions. Paper 208.
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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT

                      ____________________

                          NO. 95-1479
                      ____________________


                ASSICURAZIONI GENERALI, S.P.A.,
                                         Appellee,

                                 v.

 PUBLIC SERVICE MUTUAL INSURANCE COMPANY a/k/a/ PSM; MARKETING
  INDUSTRIES GROUP, LTD., FORMERLY KNOWN AS SERVICE FURNITURE
      DELIVERY, INC.; BLOOMINGDALE'S INC.; WILLIE WIGGINS,

                Public Service Mutual Insurance Company,
                a/k/a PSM,

                              Appellant

                       ___________________

          Appeal from the United States District Court
            for the Eastern District of Pennsylvania
                     D.C. No. 94-cv-06054
             District Judge: Honorable Marvin Katz

                       ___________________

                    Argued December 8, 1995

    Before:   STAPLETON, SAROKIN, and ROSENN, Circuit Judges
                       ____________________

                     (Filed    March 4, 1996)


Bernard E.J. Quinn (argued)
German, Gallagher & Murtagh
200 South Broad Street, 5th Floor
Philadelphia, PA 19102
Counsel for Appellee


Michael J. Cawley (argued)
Eileen C. McGinley
Margolis, Edelstein & Scherlis
Sixth & Walnut Streets


                                 1
The Curtis Center, 4th Floor
Philadelphia, PA 19106
Counsel for Appellants




                     ________________________

                       OPINION OF THE COURT
                     ________________________



ROSENN, Circuit Judge.
          The appeal in this declaratory judgment diversity

action raises a question of insurance policy interpretation

whether one or both insurance companies are obligated to defend

an action for injuries sustained at the hands of their insured.

On June 30, 1994, an elevator operator filed suit in state court

against Marketing Industries Group, Ltd. ("MIG") and

Bloomingdale's, Inc. for injuries he sustained when a bed frame

fell on his foot in the course of a delivery by MIG on behalf of

the vendor, Bloomingdale's.    Assicurazioni Generali, S.p.A.

("Generali") provided vehicle liability coverage to MIG, a

delivery company.   Public Service Mutual Insurance Company

("PSM") provided MIG with a general liability policy.    Generali

brought a declaratory judgment action in the United States

District Court for the Eastern District of Pennsylvania,1

requesting the court to hold PSM obligated to defend and

indemnify MIG in the underlying tort action, and to find that

1
 Marketing Industries Group, Ltd., Bloomingdale's, Inc., and
Willie Wiggins were parties to the action. These parties did not
appeal the district court's order.


                                 2
Generali's policy did not obligate Generali to defend MIG in the

tort suit.2

          The district court found that the Generali and PSM

insurance policies provided concurrent coverage to MIG for the

pending tort litigation.3   PSM timely appealed the court's order

to the extent that it obligated PSM to defend MIG in the

underlying suit.   Generali did not appeal the court's order.     We

reverse the judgment of the district court insofar as it

obligated PSM to defend MIG in the underlying tort action.



                                 I.



          On July 23, 1992, MIG deliverymen delivered a bed,

purchased at Bloomingdale's, Inc., to a condominium building in

Philadelphia, Pennsylvania.   The deliverymen transported the bed,

via the freight elevator, to the purchaser's apartment on the

19th floor of the building.   As the MIG deliverymen moved the bed

from the elevator into the 19th floor hallway, the bedframe fell

on the foot of Willie Wiggins, the elevator operator.   Wiggins

sued MIG and Bloomingdale's alleging that MIG employees

negligently caused the bed frame to fall on Wiggins's foot,

resulting in severe and permanent injuries.


2
  The parties agreed that there were no factual issues in dispute
and requested the court dispose of the declaratory judgment
action through Cross-Motions for Summary Judgment.
3
  The district court properly exercised diversity jurisdiction of
the declaratory judgment action pursuant to 28 U.S.C. § 1332. We
may hear the appeal as a final order of the district court. See
28 U.S.C. § 1291.


                                 3
          At the time of the Wiggins incident, MIG held insurance

policies with both Generali and PSM.      The Generali policy covered

the maintenance and use of trucks and motor vehicles.      The policy

stated, in relevant part:
               A.   Coverage

               We will pay all sums an "insured" legally must pay
               as damages because of "bodily injury" or "property
               damage" to which this insurance applies, caused by
               an "accident" and resulting from the ownership,
               maintenance or use of a covered "auto".4

               (A. 389)

          After Wiggins served MIG with his complaint, Generali

assigned defense counsel to represent the interests of MIG, but

reserved its rights under the policy.      PSM, however, denied any

obligation to defend or indemnify MIG in the tort suit under its

general liability insurance.       The policy provided exclusions,

which stated, in relevant part:


               2.   Exclusions

               This insurance does not apply to:

                    .          .             .

               g.   "Bodily injury" or "property damage" arising
               out of the ownership, maintenance, use or
               entrustment to others of any aircraft, "auto" or
               watercraft owned or operated by or rented or
               loaned to any insured. Use includes operation and
               "loading or unloading". (A. 413).5

4
  The Generali policy contained several exclusions, including an
exclusion for property moved by mechanical device. Generali
argued that the mechanical device exclusion should apply in the
Wiggins action because the deliverymen were using the freight
elevator. The district court rejected this argument, and
Generali did not appeal the court's order.
5
  The policy provided the following definition of "loading and
unloading":

                                    4
            PSM argued that the court should read the term "use" of

an auto in the Generali policy broadly to include the

transportation of the bed between the vehicle and the final place

of delivery, the purchaser's 19th floor apartment.    Further, PSM

asserted that the court should apply the broad reading of the

term "use" to the PSM exclusion clause, and thus conclude that

PSM is not obligated to defend MIG.

            The district court applied the broad definition of

"use" to the Generali policy, and found that Generali was

obligated to defend MIG.    It declined, however, to extend the

definition to PSM's exclusion clause.    The court construed the

exclusion narrowly, and held that it applied only to the

unloading of the truck to the front door of the apartment

building.   Thus, the court found Generali and PSM to be co-

insurers of MIG.



                                II.


            7. "Loading or unloading" means the handling of
            property:

            a. After it is moved from the place where it is
            accepted for movement into or onto an aircraft,
            watercraft or "auto";

            b. While it is in or on an aircraft, watercraft or
            "auto"; or

            c. While it is being moved from an aircraft,
            watercraft or "auto" to the place where it is finally
            delivered; but "loading or unloading" does not include
            the movement of property by means of a mechanical
            device, other than a hand truck, that is not attached
            to the aircraft, watercraft or "auto".(A. 419)

                                 5
            The district court's grant of summary judgment is

subject to plenary review.    Kost v. Kozakiewicz, 1 F.3d 176, 183

(3rd Cir. 1993); see also Electric Ins. Co. v. Rubin, 32 F.3d

814, 815 (3rd Cir. 1994) (district court's interpretation of

insurance contract subject to plenary review).    The parties agree

that New York state law controls the insurance policy

interpretation.

            The leading New York case interpreting the terms

"loading and unloading" in an insurance policy is Wagman v.

American Fidelity and Casualty Co., 304 N.Y. 490, 109 N.E.2d 592

(1952).   In Wagman, the defendant insurance company issued a

policy to a motor carrier which covered claims for damages

arising out of the ownership, maintenance or use of the carrier's

vehicles.    The policy provided that "use of the automobile for

the purposes stated includes the loading and unloading thereof."

Id. at 492.

            When faced with the task of interpreting the policy,

the court noted that policies defining "use" as including

"loading and unloading" have been subject to both narrow and

broad interpretations. It stated:
               The broader construction, adopted in a majority of
               the jurisdictions which have passed upon the
               question, is that "loading and unloading" embrace,
               not only the immediate transference of the goods
               to or from the vehicle, but the "complete
               operation" of transporting the goods between the
               vehicle and the place from or to which they are
               being delivered.

Id. at 494. (citations omitted)



                                  6
            The court favored the "complete operations" doctrine

over a narrower construction of the terms, asserting:

                 The [broad] view impresses us as sounder, as more
                 fully carrying out the aim of the policy to cover
                 the entire operation of making commercial pickups
                 and deliveries in the business of the insured
                 carrier and, indeed, the courts in this state have
                 already signified their approval of it.

Id. (citations omitted)
            In the instant case, the district court noted New

York's pragmatic adherence to the complete operation doctrine.

Thus, it found that the Wiggins claim fell within the scope of

Generali's policy coverage.    The court refused, however, to apply

the Wagman definition of "loading and unloading" to the exclusion

clause in PSM's policy.    It asserted that, under New York law,

exclusions in insurance policies must be construed narrowly.     See

Seaboard Surety Company v. Gillette Company, 64 N.Y.2d 304, 311,

76 N.E.2d 272, 486 N.Y.S.2d 873 (1984) (exclusions from policy

coverage are "not to be extended by interpretations or

implication, but are to be accorded a strict and narrow
construction.").

            The court found the language of the exclusion clause to

be ambiguous:
                 It is not clear whether this exclusion concerns
                 the moving of the bed frame to the Building or to
                 its final position within the purchaser's
                 apartment, or somewhere in between.



Applying a narrow construction, the court determined that the PSM

policy only excluded coverage of the move to the apartment

building.    Because Wiggins's injuries occurred after the MIG


                                 7
employees moved the bed into the building, the trial court held

PSM obligated to defend MIG in the Wiggins suit.

            We do not believe that New York law warrants the

district court's distinction between insurance clauses and

exclusion clauses.    New York courts have applied the Wagman

interpretation of the terms "loading and unloading" to both

insuring and exclusion clauses.       See Broome County Co-Operative

Fire Ins. Co. v. Aetna Life and Casualty Co., 75 Misc.2d 587, 347

N.Y.S.2d 778 (Sup. Ct. 1973); Edmund Mayer Inc. v. Aetna Casualty

and Surety Co., 62 Misc.2d 82, 308 N.Y.2d 667 (Sup. Ct. 1970);

see also Cenven, Inc. v. Bethlehem Steel Corp., 41 N.Y.2d 842,

362 N.E.2d 251, 393 N.Y.S.2d 700 (1977) ("It would be unwise to

proliferate fine distinctions from and exceptions to the now

judicially determined language 'loading and unloading.'").

            The district court relied on Muller v. Sun Indemnity

Co. of New York, 96 N.Y.S.2d 140 (1950) and General Accident

Insurance Company v. United States Fidelity and Guarantee

Insurance Company, 193 A.D.2d 135, 602 N.Y.S.2d 948 (1993) to

support its decision to apply a narrow interpretation to PSM's

exclusion clause.    We believe that the court's reliance on these

opinions is misplaced.    The Muller decision preceded the New York

Court of Appeals decision in Wagman.      Further, General Accident

was based on Muller and makes no reference to the Wagman

decision.

            We conclude that the Wagman decision dominates New York

law on the interpretation of "loading and unloading."      It

requires that this court in the instant case interpret "loading


                                  8
and unloading" broadly to include movement of the bedframe from

the delivery truck to the place of final delivery, the

purchaser's 19th floor apartment.        Thus, the Wiggins claim falls

squarely within the scope of PSM's exclusion clause, and PSM is

not obligated to defend MIG in the tort action.



                                  III.



          Although the district court's holding that PSM was

obligated to defend MIG relied upon a narrow construction of

PSM's exclusion clause, it provided an alternative rationale for

its holding.   The court noted:


                While the parties do not address the issue, the
                court notes that an Endorsement to PSM's general
                liability policy (document titled New York
                Changes-Amendatory Endorsement, CG 01 63 04 86)
                provides that:

                3.   Any definition of "loading and unloading"
                does not apply.

                If this endorsement is applicable, as it appears
                on its face to be, then the claimed injuries
                clearly fall within the coverage of PSM's policy.
                (order at 10 n. 3).


          The district court apparently found that, because the

endorsement deletes any definition of "loading and unloading"

from the PSM policy, the "loading and unloading" exclusion does

not apply to the Wiggins action.
          PSM contends that the endorsement eliminates the

definition of "loading and unloading" in the policy, leaving New



                                   9
York state law to define the terms.     We believe PSM's argument is

persuasive.   The most logical interpretation of the endorsement

is that it refers to the definition of "loading and unloading"

contained within the policy.     In the absence of an agreed upon

meaning, the parties are bound by New York state law.     Thus,

under the "complete operation" doctrine as set forth in Wagman,

PSM's exclusion clause applies to the Wiggins action.



                                 IV.



           In summary, under New York state law, the court must

apply the "complete operations" doctrine to the interpretation of

the terms "loading and unloading" in an insurance contract.       This

broad interpretation applies to both insurance and exclusion

clauses.   PSM's policy excludes coverage for incidents arising

from the use, including loading and unloading, of a vehicle.

Thus, under Wagman, PSM is not obligated to defend MIG in the

Wiggins action.

           Further the court's alternative conclusion that PSM's

Amendatory Endorsement rendered the PSM exclusion inapplicable to

the Wiggins action is in error.    In the absence of a definition

of "loading and unloading" in the policy, the court must apply

New York state law.    Thus, the PSM exclusion clause applies to

the Wiggins suit.

           Accordingly, the judgment of the district court,

insofar as it obligates PSM to defend MIG in the Wiggins action,

will be reversed.     Costs taxed against Generali.


                                  10
11
