Opinion
CIVIL ACTION NO. 02-1048
February 11, 2004
MEMORANDUM
State Farm Fire Casualty Company ("State Farm") instituted the instant declaratory judgment action against its insured, Frances Ann Czop ("Czop"), seeking a determination that State Farm is not obligated to provide coverage to her as to claims for fraud and breach of contract instituted against Czop in Pennsylvania state court by Pat Sparango, Inc., Sparango Construction Company, and Nobel Manor, Inc. t/a Sparango Evergreen Associates, L.P. by its General Partner, Nobel Manor, Inc. ("Sparango").
Presently before the Court are the parties' Cross-Motions for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. Oral argument was held on February 2, 2004. For the reasons stated more fully below, State Farm's Motion for Summary Judgment will be granted and Czop's Motion for Summary Judgment will be denied.
I. Background
On or about June 7, 1996, Czop and Sparango entered into an agreement for the sale of real estate, under which Czop agreed to sell a parcel of land suitable for subsequent development with an address commonly known as 204 through 210 Flourtown Road in Whitemarsh Township, Montgomery County, Pennsylvania for $525,000. After discovering that the property contained a landfill over several lots and upon learning that the Township preliminarily would not issue building permits for the contaminated portions, Sparango filed, on December 15, 1999, a complaint and civil action against Czop and two other defendants in the Court of Common Pleas of Montgomery County. Sparango's amended complaint (the "Montco. Complaint") contains seven counts, two of which are directed against Czop: Count I — "Breach of Contract" and Count II — "Fraud." The "Breach of Contract" count alleges that Czop breached the Agreement of Sale and Addendum between the parties. (Montco Compl. ¶ 105.) The "Fraud" count alleges that Czop concealed or failed to disclose defects in the property and misrepresented the property's true condition. (Id. ¶¶ 109, 112.)
At all material times, State Farm had issued two rental dwelling insurance policies and one homeowner's insurance policy to Czop for the property. State Farm is providing a defense to Czop pursuant to reservation of rights letters, but has instituted this instant declaratory judgment action to determine the issue of coverage based upon the terms and provisions in the three policies. The policies issued by State Farm provide that there is coverage for bodily injury or property damage caused by Czop arising from an "occurrence," which is defined in the policies as an "accident." All three policies provide as follows:
Section II — Liability Coverages
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence, we will:
1. pay up to our limit of liability for the damages for which the insured is legally liable; and
2. provide a defense at our expense by counsel of our choice. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit ends when the amount we pay for damages, to effect settlement or satisfy a judgment resulting from the occurrence, equals our limit of liability.
(E.g., Docket No. 25, Ex. D, at 9) (emphases removed). An "occurrence" is defined in the policies as follows:
"Occurrence," when used in Section II of this policy, means an accident, including exposure to conditions, which results in:
a. bodily injury; or
b. property damage; or
c. personal injury;
during the policy period. Repeated or continuous exposure to the same general conditions is considered to be one occurrence.
(E.g., id. at 2) (emphases removed). According to the policies, "`property damage' means physical damage to or destruction of tangible property, including loss of use of this property. Theft or conversion of property by any insured is not considered to be property damage." (E.g., id.) (emphases removed). Attached to Czop's policies is a "Debris Removal Endorsement," which provides that State Farm will pay the reasonable expenses incurred by the insured in the removal of debris of covered property "when coverage is afforded for the peril causing the loss." (See Docket No. 20, Ex. A.)
II. Jurisdiction and Legal Standard
State Farm has filed its complaint for declaratory judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., This Court has diversity subject matter jurisdiction over this matter under 28 U.S.C. § 1332(a) as the parties are residents of different states and the amount in controversy exceeds $75,000. A federal court exercising diversity jurisdiction must apply the substantive law of the state in which it sits. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Therefore, this Court will apply Pennsylvania law as it applies to insurance coverage. Venue is appropriate under 28 U.S.C. § 1391 (a).
The standards by which a court decides a summary judgment motion do not change when the parties file cross-motions. Southeastern Pa. Transit Auth. v. Pennsylvania Pub. Util. Comm'n, 826 F. Supp. 1506, 1512 (E.D. Pa. 1993). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.
____A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. After the moving party has met its initial burden, "the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. Civ. P. 56(e). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson, 477 U.S. at 255.
III. Discussion
A. The Parties' Contentions
State Farm argues that because its policies only cover occurrences or accidents, it has no duty to defend or indemnify Czop in the Montco Complaint. Because that complaint has its origins in Czop's alleged breach of contract and fraud two claims not ordinarily arising from accidental behavior, as supposedly within the scope of the policies — State Farm contends that it therefore is entitled to judgment as a matter of law.
In her cross-motion, Czop argues that Sparango's alleged damages were neither expected nor intended by Czop, but instead attributable to forgivable oversight, as opposed to willful malice. Czop contends that Sparango's alleged damages were the result of an accident, that Czop's purportedly accidental behavior does trigger coverage under the policy, and that Czop therefore is entitled to judgment as a matter of law. Moreover, Czop argues that even if the allegations as pleaded would support judgment for State Farm, this Court nonetheless should rule in favor of Czop as Sparango might amend its complaint to include otherwise covered allegations.
According to the Montco. Complaint docket, (Docket No. 24, Ex. A), Sparango filed a Motion for Leave to File a Second Amended Complaint on May 2, 2002. The court denied Sparango's Motion on November 12, 2002. Sparango filed a Motion for Reconsideration on November 19, 2002, which was denied by the court on December 30, 2002. State Farm contends that Sparango has made no effort to certify the matter for interlocutory appeal.
B. Analysis
Under Pennsylvania law, "[t]he interpretation of an insurance contract is a question of law that is properly decided by the court." Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir. 1997). In interpreting the policies at issue, the Court is guided by the following rules of contract interpretation:
1) terms must be given their ordinary meaning;
2) ambiguous terms should be construed against the insurer;
3) a term is ambiguous only if reasonably intelligent men on considering it in the context of the entire policy would honestly differ as to its meaning; and
4) the parties' true intent must be determined not only from the language but from all the surrounding circumstances.State Farm Fire Cas. Co. v. Dunlavey, 197 F. Supp.2d 183, 186-67 (E.D. Pa. 2001) (quotations omitted). In a declaratory judgment action, a court must first determine the scope of the coverage of the policy at issue and then examine the complaint in the underlying action to determine if it triggers coverage. Gen. Accident Ins. Co. of Am. v. Alien, 692 A.2d 1089, 1095 (Pa. 1997). At oral argument, the parties agreed that there is no genuine issue of material fact for trial and that the instant action can be resolved entirely on the papers.
State Farm's duty to defend its insured is measured by Sparango's state court pleadings. As noted above, Czop would have this Court contemplate those allegations Sparango might eventually allege in the Montco. Complaint should the state court grant Sparango leave to file an amended complaint. Under this reasoning, State Farm would be obligated to defend Czop so long as the complaint could reasonably be amended to state a claim which would qualify for coverage under the policy. This approach has been rejected by Pennsylvania appellate courts which "unabatedly . . . apply the rule that it is the allegations within the four corners of the complaint that govern." I.C.D. Indus., Inc. v. Fed. Ins. Co., 879 F. Supp. 480, 488 (E.D. Pa. 1995) (Robreno, J.) (collecting cases). The day after the Court held oral argument, counsel for Czop supplemented his argument in support of extra-Complaint consultation by citation to
Safeguard Scientifics v. Liberty Mutual Insurance Co., 766 F. Supp. 324 (E.D. Pa. 1991) (Katz, J.). The court in Safeguard Scientifics advocated against a "wooden application" of the traditional "four corners of the complaint rule," preferring a rule "requiring the insurer to provide a defense where, notwithstanding the complaint allegations, underlying facts made known to the insurer create a reasonable possibility that the insured may be held liable for some act or omission covered by the policy." 766 F. Supp. at 330 (quotations omitted). This Court will not follow Safeguard Scientifics for two reasons. First, the lengthy and thorough dissection and rejection of the Safeguard Scientifics holding by Judge Robreno in I.C.D. Industries, 879 F. Supp. at 487-89, and the Pennsylvania cases he cites refusing to follow the Safeguard Scientifics approach are persuasive as showing that Safeguard Scientifics should not directly control this case. Second, Judge Katz, who authored the opinion in Safeguard Scientifics, appears to have questioned its precedential value, as he later wrote in another case,
Finally, the insureds repeatedly argue that, even if the complaints in the underlying action are construed as alleging only intentional action, State Farm is obligated to defend so long as the complaint could reasonably be amended to state a claim within the coverage of the policy, citing Safeguard Scientifics v. Liberty Mutual Insurance Company, 766 F. Supp. 324 (E.D. Pa. 1991). While Safeguard Scientifics did so hold, as was noted in I.C.D. Industries. Inc. v. Federal Insurance Company, 879 F. Supp. 480 (E.D. Pa. 1995), every intermediate Pennsylvania appellate court that considered the issue following Safeguard "continued unabatedly to apply the rule that it is the allegations within the four corners of the complaint that govern." Id. at 48 8. If the underlying complaint includes allegations of both intentional and negligent action, Pennsylvania courts have consistently required coverage. However, if the complaint makes no allegation of non-intentional action, Pennsylvania courts have consistently denied coverage. See, e.g., Britamco Underwriters, Inc. v. Weiner, 431 Pa. Super. 276, 636 A.2d 649 (Pa.Super. 1994) (requiring defense in case alleging intentional assault because part of the complaint described incident as "accident" and otherwise presented negligence theory of recovery); cf. Britamco. Underwriters v. Grzeskiewicz, 433 Pa. Super. 55, 639 A.2d 1208 (Pa.Super. 1994) (denying coverage because underlying complaint only alleged intentional actions and did not suggest negligent or even reckless cause of action). While plaintiffs may well be correct that the [complaints may be amended] so as to include allegations of non-intentional acts, the court may not require State Farm to defend or indemnify the present action based upon the present allegations of the underlying complaints, all of which allege intentional actions.Am. Planning Cmtvs. v. State Farm Ins. Co., 28 F. Supp.2d 964, 970 (E.D. Pa. 1998) (Katz, J.) (second emphasis added).
The Court must compare the facts alleged in the Montco. Complaint to the coverage provided by the policy to determine whether State Farm is obligated to defend and potentially indemnify its insured. If the allegations, if true, would be covered under the policy, then State Farm would owe a duty to defend Czop; conversely, if Sparango's allegations, if true, would not be covered under the policies issued to Czop, then State Farm would owe no duty to defend. Allstate Ins. Co. v. Fischer, No. 97-4806, 1998 U.S. Dist. LEXIS 5834, at *5-6 (E.D. Pa. Apr. 28, 1998). If the Court concludes that State Farm owes no duty to defend Czop, then it may also conclude that State Farm owes no duty to indemnify either. Id. at *6. "Obligations to defend are wider than obligations to indemnify. The duty to defend carries with it the conditional obligation to indemnify until it becomes clear that there can be no recovery under the policy." United States Fire Ins. Co. v. Rothenberg, No. 98-2275, 1998 U.S. Dist. LEXIS 15009, at *18 (E.D. Pa. Sept. 25, 1998). An insurer need only indemnify those insureds found liable for conduct that actually falls within the scope of the policy.TIG Ins. Co. v. Nobel Learning Cmtys., Inc., No. 01-4708, 2002 U.S. Dist. LEXIS 10870, at *16 (E.D. Pa. June 19, 2002).
State Farm's policies at issue here only provide coverage in the event of an "occurrence," which the policy defines as an "accident"; "accident" goes undefined in the policy. Pennsylvania courts have defined "accident" as a "fortuitous, untoward or unexpected happening." See, e.g., McGaw v. Town of Bloomburg, 257 A.2d 622, 624 ( Pa. Super. 1969). Upon review of the facts Sparango pleaded in the amended complaint, relating to Czop's alleged breach of conduct and fraudulent activity, this Court concludes that an "occurrence," as defined within the scope of the policies, has not been alleged against Czop and that consequently State Farm has no obligation to defend Czop on the underlying Montco. Complaint. This Court concludes that the alleged breach of contract could not constitute an accident or occurrence under the policies such that coverage would be triggered. Pennsylvania state courts and Eastern District courts that have addressed similar allegations of contractual breaches concluded that those breaches do not qualify as accidents or occurrences under typical insurance policies. See, e.g., DDF Contracting Co. v. The Ohio Cas. Group of Ins. Cos., No. 97-3310, 1998 U.S. Dist. LEXIS 9653 (E.D. Pa. June 16, 1998). In Augenblick v. Nationwide Insurance Co., No. 99-3419, 1999 U.S. Dist. LEXIS 16183 (E.D. Pa. Oct. 8, 1999), Ms. Augenblick had entered a contract to sell a single-family dwelling to a married couple. The married couple subsequently sued Ms. Augenblick, claiming that she had concealed defects in the property and had misrepresented its true condition. Id. at *2. Ms. Augenblick consequently sought a declaratory judgment against her insurer, Nationwide Insurance Company, arguing that the dissatisfied purchasers alleged facts sufficient to demonstrate that an "occurrence," as within the scope of the policy, had transpired, thus obligating the insurer to defend and potentially to indemnify her. Id. at * 1. Judge Buckwalter granted the defendant's motion to dismiss, concluding that those portions of the underlying complaint that alleged intentional conduct simply could not have constituted an accidental occurrence, presumably since "intentional" conduct and "accidental" conduct are mutually exclusive terms. Id. at *8.
State Farm relies on Berg Chilling Systems, Inc. v. Hull Corp., No. OO-CV-5075, 2002 U.S. Dist. LEXIS 12281 (E.D. Pa. Apr. 2, 2002),rev'd, Berg Chilling Sys., Inc. v. Hull Corp., No. 02-2241, 2003 U.S. App. LEXIS 14304 (3d Cir. July 11, 2003), remanded sub nom. to Acceptance Ins. Co. v. Hull Corp., No. 01-0605, 2003 U.S. Dist. LEXIS 20182 (E.D. Pa. Nov. 3, 2003). The Court notes that after remand, Judge Schiller concluded that the insurance company in the Berg litigation had a duty to defend its insured, but not a duty to indemnify.
The subsequent case history of the Berg litigation does not change the Court's conclusion (especially in view of the unbroken line of Pennsylvania precedent), but rather continues to support its determination. In Acceptance Insurance Co., Judge Schiller applied the standard enumerated in Nationwide Mutual Fire Insurance Co. v. Pipher, 140 F.3d 222, 226 (3d Cir. 1998), which noted, "whether the injury or damage is caused by an accident must be determined from the perspective of the insured and not from the viewpoint of the person who committed the injurious act." 2003 U.S. Dist. LEXIS 20182, at *17 (emphasis inAcceptance Ins. Co.),
This case can be distinguished from the Berg litigation because the insured and the person who committed the injurious act are one and the same, Ms. Frances Ann Czop. Unlike the Berg litigation, where the insured requested coverage from its insurer in response to the injuries and delays caused unexpectedly by third parties, Czop requests insurance coverage from State Farm in response to the injuries caused by herself alone, without involvement of uncontrollable third parties. Further supporting this Court's conclusion that the cases are factually inapposite, Judge Schiller cites United Services Automobile Association v. Elitzky, 517 A.2d 982, 989 ( Pa. Super. 1986), for the proposition that an "expected and intended exclusion" in a general liability insurance contract excludes damages that the insured intended to cause. 2003 U.S. Dist. LEXIS 20182, at * 18. Judge Schiller determined that one "occurrence" in particular was not entitled to coverage as it had indeed been disqualified by explicit policy language that specifically excluded the occurrence. Here, as determined by the Court and as agreed to by the parties at oral argument, the Sparango complaint only alleges intentional conduct — i.e., breach of contract and fraud — against Czop, and, as the parties agreed, intentional conduct is expressly excluded from coverage under the policy.
Judge Buckwalter's analysis did not terminate with his conclusion that allegations of intentional activity could not serve as the basis for Ms. Augenblick's claim for coverage, but also considered whether allegations of negligent misrepresentation in relation to Ms. Augenblick's sale of real property could trigger coverage under the policy. The negligent misrepresentation analysis is relevant to the instant case for two reasons: one, it is possible that, should the state court approve, Sparango might amend his complaint to contain a comparable allegation; two, as indicated by her references to her deposition testimony on point, it is Czop's contention that her misrepresentations regarding the property were neither deliberate nor fraudulent, but at worst negligent. The court in Augenblick determined that "it [was] possible that Ms. Augenblick should have known of the defects, and was merely negligent in not properly inspecting the premises when misrepresenting the fitness of her home." Id. at *11. However, even having broadly interpreted the underlying complaint to allege negligent misrepresentation, the court concluded that those allegations would not qualify as an "occurrence." The court wrote, "[A]t first glance . . . a suit alleging negligent misrepresentation is not the kind of contingency for which one purchases a homeowner's insurance policy. A homeowner's policy is usually purchased as protection against chance events that cause bodily injury to the insured or another party, or property damage to the insured home." Id. at * 12. The court inAugenblick concluded that the real issue was breach of contract:
[The insurer] had no obligation to defend Ms. Augenblick based on a charge of Negligent Misrepresentation because any damage arises out of a breach of contract, not from an accident. Ms. Augenblick entered a contract that required her to present to the [purchasers] a reasonably sound house. According to the Underlying Complaint, she either intentionally or negligently failed to do this. In other words, she breached the contract. The purpose and intent of an insurance policy is to protect the insured from liability for essentially accidental injury to the person or property of another rather than coverage for disputes between parties to a contractual undertaking.
The contract required truthful representations by Ms. Augenblick. If she failed to comply with the terms of this contract, whether intentionally or negligently, she may have breached the contract.Id. at * 12-14. Assuming that Czop breached her contract with Sparango, however she might have done so, whether intentionally or negligently, would not be of legal significance to the disposition of the cross-motions for summary judgment. Any such breach would not be an accident or occurrence within the scope of the insurance policies, which instead envision unforeseen and sudden physical calamities. Id. at * 12. Intentional acts certainly cannot be described as accidental, and a negligent misrepresentation is no accident either. Id. at 16.
State Farm also refers this Court to a Memorandum and Order issued by Magistrate Judge Blewitt, in the Middle District of Pennsylvania: State Farm Fire Cas. Co. v. Povilitus, No. 3:CV-01-2119 (M.D. Pa. filed July 14, 2003). Povilitus favorably cites Augenblick as authority for its similar conclusion, directly applicable to the instant case: misrepresentations, whether negligent or intentional, made in the context of a real estate transaction cannot obligate an insurer to provide a legal defense or indemnification where the policy only guarantees coverage in the event of an occurrence or accident. InPovilitus, the insurance company sought declaratory relief that it was not obligated to defend its insured, the Buraks, in a suit brought against them which claimed they had made material misrepresentations about the condition of their home and in-ground swimming pool when selling it to the Povilituses. The precise issue in Povilitus, as in the instant case, was whether the property damages alleged by the Povilituses had been the result of an accident or occurrence as defined by the Buraks' insurance policy.
The insurer in Povilitus argued that the underlying action asserted claims of intentional concealment and misrepresentation, and because it did, the insurer should have no duty to indemnify for the conduct, expressly excluded in a policy provision. The insureds claimed that they had made full and complete disclosure, that they used the pool for many years without problem, and that it was accidental that they had not ever realized the pool's defective condition, discoverable only after the Povilituses had drained the pool post-purchase to winterize it. In the instant case, Czop makes a similar argument: that she believed she had made full and complete disclosures to Sparango, that she had owned and used the land for many years without problem, and that it was accidental that she had not ever realized there was a landfill on the property, which was discovered only after Sparango's intensive and extensive survey of the land post-purchase. Magistrate Judge Blewitt in Povilitus agreed with the insurance company and wrote, in pertinent part:
The policy at issue excludes coverage for intentional, willful or malicious conduct. The question is whether the underlying action against the Buraks assert[s] claims of intentional concealment or misrepresentation, as [the insurance company] argues, or if it asserts claims of negligent misrepresentation, as the Buraks contend it does. It is clear that the insurer has no duty to defend for allegations of intentional conduct. We find that the allegations against the Buraks in the underlying action do not fall squarely within the policy exclusions for intentional, wilful, or malicious conduct.
However, we agree with [the insurer] that, even if the underlying action alleges negligent misrepresentation, as the Povilituses have made sufficient allegations to support the possibility that the Buraks acted negligently (i.e., they acted with reckless disregard and knew or should have known), [the insurer] has no duty to defend the Buraks because the damages claimed clearly arose out of a breach of contract and not from an accident. The underlying case concerns a contractual dispute between the Buraks and Povilituses over the condition of the pool as contained in the Disclosure Statement and sales agreement to purchase the property. All of the allegations which the Povilituses make against the Buraks center around the sale fo the Buraks' real property to the Povilituses and the breach of the real estate sales contract with respect to the condition of the property in question. Additionally, as the Court in Augenblick, found, [the insurer] in our case has no obligation to insure since the alleged negligent misrepresentations of the Buraks is not an "occurrence" as defined by their policy. Rather, it is a breach of contract to provide a structurally sound pool that is alleged.State Farm Fire Cas. Co. v. Povilitus, No. 3:CV-01-2119, slip op. at 8-10 (M.D. Pa. filed July 14, 2003) (footnotes omitted). Along these lines, assuming arguendo that Sparango's action alleged negligent misrepresentation, (even though the parties agreed during oral argument that the complaint does not), State Farm still would have no obligation to defend and indemnify Czop as the damages claimed clearly arose out of a breach of contract and not from an accident.
Further, Sparango's allegations of Czop's fraudulent behavior during the real estate negotiation and transaction could not constitute an accident or occurrence under the policy such that coverage would be triggered. Accusing Czop of fraudulent behavior correspondingly imports a requirement of intentional action into the claim. The elements of fraud are: 1) a representation; 2) that is material to the transaction at hand; 3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; 4) with the intent of misleading another into relying on the misrepresentation; 5) justifiable reliance on the misrepresentation; and 6) the resulting injury was proximately caused by the reliance. E.g., Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994). Sparango's complaint contains the following language regarding Czop's alleged actions:
Defendant Czop knowingly and intentionally misrepresented material facts and/or failed to disclose or concealed or caused a failure to disclose or a concealment of material facts with the intend [sic] to induce and which did induce [Sparango] to purchase the Property.
Defendant Czop knew and/or should have known that [the plaintiff] would rely on her false and/or fraudulent representations and/or omissions and/or concealments.
The conduct of defendant Czop complained of was intentional and/or knowingly reckless and in wanton disregard of [the plaintiffs] interests.
(Montco. Compl. ¶¶ 109, 110, 112.) As stated above, the policies at issue reserve coverage only for occurrences or accidents, thus foreclosing any recovery for intentional actions.
Czop has defended Sparango's claims by asserting that there was no intent to mislead or to misrepresent the condition of the property, and that any resultant damage to Sparango was unintentionally — or negligently — caused. Czop's planned defense, however, does not influence the disposition of the instant motions for summary judgment. Whether Czop was negligent or whether she intentionally misled Sparango into purchasing the property will be adjudicated at trial between those parties; what matters to this declaratory relief action is whether the wrong alleged within Sparango's complaint is covered by Czop's insurance policy or exempted by an exclusion. See, e.g., Gene Harvey Builders. Inc. v. Pa. Mfrs.' Assoc. Ins. Co., 517 A.2d 910. 914 ( Pa. 1986). As stated above, intent is a requirement of fraud under Pennsylvania precedent. Fraud is purposeful conduct that requires a material misrepresentation "with the intent of misleading another." Gibbs, 647 A.2d at 889. Given that the policies at issue in the instant case only are invoked upon unintentional, accidental occurrences, the Court concludes that Sparango's allegations of fraud do not constitute an "occurrence" within the scope of Czop's insurance policy such that State Farm would be obligated to defend her or potentially to indemnify her in the underlying Montco. Complaint.
Lastly, reference to the Debris Removal Endorsement provision will not prove beneficial to Czop's claims. The Debris Removal Endorsement provision provides that State Farm will pay the reasonable expenses incurred by the insured in the removal of debris of covered property "when coverage is afforded for the peril causing the loss." (See Docket No. 20, Ex. A.) As this Court concludes that the Montco. Complaint evinces no allegations that would obligate State Farm to provide coverage to its insured, Czop's reference to a specific policy provision, which by its terms limits its applicability only to instances where coverage has already been authorized, is unpersuasive.
IV. Conclusion
Because Czop's behavior, as alleged by Sparango in his Montco Complaint, does not indicate an "occurrence" or "accident" as understood by the policies at issue, by the common interpretation of those terms, or by case law, State Farm has no duty under its policies issued to Czop to defend or to indemnify her. State Farm is entitled to summary judgment as a matter of law, and Czop's cross-motion will be denied.
An appropriate order follows.
ORDER
AND NOW, this day of February, 2004, upon consideration of the parties' cross-motions for summary judgment (Docket Nos. 17, 18, 21), it is hereby ORDERED that Plaintiff's motion is GRANTED. The defendants' motions for summary judgment are DENIED.
Judgment is granted in favor of Plaintiff State Farm Fire Casualty Company and against all Defendants.