Scottsdale Insurance Company v. the City of Easton

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-1815
_____________
SCOTTSDALE INSURANCE COMPANY,
Appellant
v.
THE CITY OF EASTON; MATTHEW RENNINGER;
TIMOTHY LAMBERT; ROBERT WEBER;
JOHN MAZZEO; STEVEN MAZZEO;
STUART GALLAHER; PHILLIP B. MITMAN;
CARIN E. SOLLMAN, INDIVIDUALLY AND AS
ADMINISTRATRIX OF THE ESTATE OF JESSE E. SOLLMAN
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civil Action No. 07-cv-03079)
District Judge: Honorable Juan R. Sanchez
____________
Argued on January 28, 2010
Before: RENDELL and JORDAN, Circuit Judges,
and AMBROSE, District Judge.*
Filed: May 11, 2010
__________________
* Honorable Donetta W. Ambrose, Judge of the United States District Court for the
Western District of Pennsylvania, sitting by designation.

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2
Cheryl L. Kovaly
Frank J. Lavery, Jr.
James D. Young [ARGUED]
Lavery, Faherty, Young & Patterson, PC
225 Market Street, Suite 304
P.O. Box 1245
Harrisburg, PA 17108-1245
Attorneys for Appellant
Scottsdale Insurance Company
James T. Huber [ARGUED]
Huber and Waldron
1150 Cedar Crest Boulevard
Suite 201
Allentown, PA 18103
Ronald W. Shipman
Shipman & Grifo
318 Spring Garden Street, Suite 100
Easton, PA 18042
Craig J. Smith
McElroy, Deutsche, Mulvaney & Carpenter
1617 JFK Boulevard, Suite 1500
Philadelphia, PA 19103
Attorneys for Appellees
The City of Easton; Stuart Gallagher;
Phillip B. Mitman
Steven E. Hoffman
Tallman, Hudders & Sorrentino
The Paragon Centre, Suite 300
1611 Pond Road
Allentown, PA 18104
Attorneys for Appellees
Timothy Lambert; Robert Weber;
Steven Mazzeo

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Timothy Lambert, Robert Weber, Steven Mazzeo, and Carin Sollman also appear as1
Appellees on the docket. None of these four Appellees, however, participated in the
briefing of this case or in oral argument. Instead, each of these Appellees adopted the
brief filed by the City of Easton, Mitman, and Gallaher. In addition, the District Court
judge dismissed Lambert, Weber, and Mazzeo as defendants in the underlying civil rights
action. In a footnote to his Memorandum and Order in the instant declaratory judgment
action, the same judge noted that Scottsdale had consented to the dismissal of these
individuals in this case. See Mem. at 3 n.3. To the extent that these four individuals
remain Appellees in this case, our holdings herein apply equally to them. Additional
Defendants Matthew Renninger and John Mazzeo are non-participants in this appeal.
3
John P. Karoly, Jr.
John Peter Karoly, III
Karoly Law Offices
1555 North 18th Street
Allentown, PA 18104
Attorneys for Appellee
Carin E. Sollman, Individually and as
Administratrix of the Estate of Jesse E. Sollman
____________
OPINION OF THE COURT
____________
AMBROSE, District Judge.
This declaratory judgment action involves an insurance coverage dispute between
Appellant Scottsdale Insurance Company (“Scottsdale”) and Appellees City of Easton
(“City” or “Easton”), Phillip B. Mitman, and Stuart Gallaher (collectively “Appellees”)1
regarding Scottsdale’s duty to defend and indemnify Appellees with respect to a civil
rights action brought against Appellees and others in the United States District Court for
the Eastern District of Pennsylvania in 2007 (the “underlying action”). Scottsdale filed

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The District Court had subject matter jurisdiction under 28 U.S.C. § 1332. Our2
appellate jurisdiction is authorized by 28 U.S.C. § 1291.
4
the instant action and moved for summary judgment in the same Court seeking a
declaration that it did not have a duty to defend or indemnify Appellees in the underlying
action under a law enforcement liability policy it had issued to the City of Easton.
Scottsdale appeals an order of the District Court denying its motion for summary
judgment and dismissing its declaratory judgment action against Appellees. For the
reasons set forth below, we will reverse the judgment of the District Court and remand
with directions to enter summary judgment in favor of Scottsdale.2
I.
Because we write solely for the parties, who are familiar with the facts, procedural
history and contentions presented, we will limit our discussion to only those facts
necessary for our analysis.
A. The Underlying Action
On March 25, 2007, Carin Sollman, individually and as the adminstratrix of the
Estate of Jesse E. Sollman, filed a civil complaint against the City of Easton, Mitman,
Gallaher, Matthew Renninger, Timothy Lambert, Robert Weber, John Mazzeo, and
Steven Mazzeo in the United States District Court for the Eastern Pennsylvania at Civil
Action No. 07-1183. On January 16, 2009, after the District Court dismissed counts
against several of the individual defendants, and while Scottsdale’s motion for summary

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5
judgment in the instant declaratory judgment action was pending, Carin Sollman filed an
amended complaint naming only the City of Easton, Mitman, Gallaher, and Renninger as
defendants.
The following facts were pled in the underlying action. On March 25, 2005, Jesse
Sollman (“Officer Sollman”) was a member of the City of Easton Police Department’s
SWAT team. Following a SWAT team exercise on that date, members of the team
returned to police headquarters and began unloading and cleaning the weapons used
during the exercise. Officer Sollman along with fellow SWAT team members Renninger
and Weber performed these tasks in a secondary weapons cleaning room. After cleaning
his weapon, Renninger proceeded to the locker room where he reloaded his weapon.
Upon noticing a mark on the weapon, Renninger returned to the secondary cleaning room
with the loaded weapon. Renninger placed the safety on, cleaned the slide portion of the
weapon to remove the spot, and then removed the safety and turned to exit the room. In
the process of turning, Renninger’s weapon discharged, firing a bullet that fatally
wounded Officer Sollman.
Subsequently, a statewide Grand Jury was empaneled to investigate the
circumstances of Officer Sollman’s death. The grand jury concluded that his death was
the result of
the cumulative effect of: the deficiency of the firearm safety
facilities; the absence of appropriate firearm safety standards;
the failure of the Easton Police Department command
structure to establish and enforce safety standards and

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6
procedures; and, the series of negligent actions by Officer
Renninger.
(App. 442). The amended complaint further alleges a number of practices of the Easton
Police Department that may have contributed to the shooting incident including: that
there were previous incidents of accidental or negligent weapons handling and/or
discharge; that the police department did not provide any training pertaining to the
transport of weapons, loading and unloading of weapons, or cleaning of weapons within
police headquarters; that officers routinely loaded and unloaded weapons without using
sand safety barrels and were not penalized; and that no written policies existed regarding
the transportation, cleaning, loading and unloading, use of a safety, or holstering of
weapons in police headquarters.
Based on the above factual background, Officer Sollman’s widow filed the
underlying action alleging federal claims against the individuals and the City, including
various § 1983 and substantive due process claims, § 1983 supervisory liability and civil
conspiracy claims against the individual defendants, and Monell claims against the City.
The underlying action also asserts various state constitutional and tort law claims against
the individuals and the City.
B. The Applicable Insurance Policy
Scottsdale issued the Public Entity Policy at issue to the City of Easton, effective
January 1, 2004 through January 1, 2005, and renewed for the period from January 1,
2005 through January 1, 2006 (the “Policy”). The Policy provides occurrence-based Law

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Enforcement Liability Coverage in consideration for a specified premium. The Policy
does not provide general liability coverage or coverage for liability arising out of a public
official’s wrongful acts. The Policy initially provided limits of liability of $3 million that
were increased in 2004 to $10 million. The City of Easton is the Named Insured on the
Policy. (App. 83, 255).
C. The Present Declaratory Judgment Action
Scottsdale initially received notice of the Sollman claim on March 12, 2007, and
denied coverage for the claim on March 19, 2007. Subsequently, Carin Sollman filed her
complaint in the underlying action which was sent to Scottsdale and received by a Claim
Specialist on April 2, 2007. The Claim Specialist forwarded that complaint for a
coverage review and assessment. Scottsdale thereafter rescinded the March 19, 2007
coverage denial and accepted the claim subject to a complete reservation of its rights to
seek declaratory relief.
Scottsdale filed the instant declaratory judgment action on July 27, 2007. After
limited discovery, Scottsdale filed a motion for summary judgment on December 15,
2008, seeking a declaration that Scottsdale had no duty under the Policy to defend and/or
indemnify Appellees in the underlying action. Appellees opposed Scottsdale’s motion.
By Memorandum and Order entered March 10, 2009, the District Court denied
Scottsdale’s motion for summary judgment and dismissed the declaratory judgment
action, concluding that Scottsdale had a duty to defend and potentially indemnify

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8
Appellees in the underlying action. With respect to indemnification, the District Court
rejected Scottsdale’s argument that the case fell within the Policy’s exclusion for “injuries
arising out of and in the course of employment by the insured.” In this regard, the District
Court found that the phrase “in the course of employment” in the Policy is black letter
worker’s compensation law and that “[t]he repetition of worker’s compensation language
defines the exclusion as limiting Scottsdale’s coverage to suits other than worker’s
compensation claims.” Mem. at 5. The Court further noted that the Policy states that it
covers civil rights claims arising out of law enforcement activities. Id. The Court
reasoned that Sollman had brought a civil rights claim arising out of a police department
activity within the police department premises and that any worker’s compensation claim
was outside the scope of the underlying action. Id. Accordingly, the Court held that
“[u]nder the plain language of the policy, . . . the underlying case falls within Scottsdale’s
obligation to indemnify the City.” Id.
With respect to the duty to defend, the District Court held that under Pennsylvania
law, an insurer has a duty to defend if the complaint filed by the injured party potentially
comes within the policy’s coverage. Id. The Policy states that Scottsdale “will have the
right and duty to defend any ‘suit’ against the insured even if any of the allegations of the
‘suit’ are groundless, false or fraudulent.” Id. The District Court found that Sollman’s
§ 1983 claims and Monell claim were civil rights claims and, as such, Scottsdale had
undertaken to defend the City in the case. Id. at 6.

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9
On March 20, 2009, Scottsdale filed a timely notice of appeal to this Court from
the District Court’s March 10, 2009 Memorandum and Order.
II.
We exercise plenary review over the District Court’s grant or denial of summary
judgment. Gardner v. State Farm Fire & Cas. Co., 544 F.3d 553, 557 (3d Cir. 2008). In
so doing, we assess the record using the same summary judgment standard that guided the
District Court. Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is
proper only if there are no genuine issues of material fact and if, viewing the facts in the
light most favorable to the nonmoving party, the moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986).
Under Pennsylvania law, which the parties agree applies here, the interpretation of
the scope of coverage of an insurance contract is a question of law properly decided by
the court. Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999); Standard
Venetian Blind Co. v. Am. Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (1983). The
goal of insurance contract interpretation is to “ascertain the intent of the parties as
manifested by the language of the policy.” Visiting Nurse Ass’n v. St. Paul Fire &
Marine Ins. Co., 65 F.3d 1097, 1100 (3d Cir. 1995). When the language of an insurance
policy is clear and unambiguous, the court must enforce that language. Med. Protective
Co., 198 F.3d at 103; see also Madison Constr. Co. v. Harleysville Mut. Ins. Co., 557 Pa.

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10
595, 735 A.2d 100, 106 (1999) (“We will not . . . distort the meaning of the language or
resort to a strained contrivance to find an ambiguity.”).
Generally, “in insurance coverage disputes an insured bears the initial burden to
make a prima facie showing that a claim falls within the policy’s grant of coverage, but if
the insured meets that burden, the insurer then bears the burden of demonstrating that a
policy exclusion excuses the insurer from providing coverage if the insurer contends that
it does.” State Farm Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir.
2009).
An insurer may seek a declaratory judgment with respect to the obligations of the
parties under an insurance contract, including the question of whether the insurer has a
duty to defend and/or indemnify a party making a claim under the policy. Gen. Accident
Ins. Co. of Am. v. Allen, 547 Pa. 693, 692 A.2d 1089, 1095 (1997). In Pennsylvania, an
insurance company is obligated to defend an insured whenever the complaint filed by the
injured party may potentially come within the policy’s coverage. Pac. Indem. Co. v. Linn,
766 F.2d 754, 760 (3d Cir. 1985). The duty to defend “also carries with it a conditional
obligation to indemnify in the event the insured is held liable for a claim covered by the
policy.” Gen. Accident Ins. Co. of Am., 692 A.2d at 1095. “Although the duty to defend
is separate from and broader than the duty to indemnify, both duties flow from a
determination that the complaint triggers coverage.” Id.

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In determining whether an insurer owes a duty to defend or indemnify an insured
in an underlying action, the court must examine the allegations in the underlying
complaint and the language of the applicable insurance policy. State Farm Fire & Cas.
Co., 589 F.3d at 110. Under Pennsylvania law,
an insurer’s duty to defend an action against the insured is
measured, in the first instance, by the allegations in the
plaintiff’s pleadings. . . . In determining the duty to defend,
the complaint claiming damages must be compared to the
policy and a determination made as to whether, if the
allegations are sustained, the insurer would be required to pay
[the] resulting judgment. . . . [T]he language of the policy and
the allegations of the complaint must be construed together to
determine the insurer[’s] obligation.
Id. (quoting Donegal Mut. Ins. Co. v. Baumhammers, 595 Pa. 147, 938 A.2d 286, 290
(2007)) (alterations in original); see also Mut. Benefit Ins. Co. v. Haver, 555 Pa. 534, 725
A.2d 743, 745 (1999) (“A carrier’s duties to defend and indemnify an insured in a suit
brought by a third party depend upon a determination of whether the third party’s
complaint triggers coverage.”).
III.
A. Scope of Coverage
The parties do not seriously dispute that, absent the application of an exclusion, the
Policy would cover the civil rights and other claims set forth in the underlying action.
Indeed, there is little question that the underlying complaint alleges a “loss” resulting
from “law enforcement wrongful act(s)” that arose out of and were committed during the

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The “employee injury exclusion” provides, in relevant part:3
We will not be obligated to make any payment nor to defend any “suit” in
connection with any “claim” made against the insured:
8. For “personal injury” or “bodily injury” to:
a. An employee of the insured arising out of and in the course of
employment by the insured;
. . . .
12
course and scope of “law enforcement activities” to which the Policy at issue applies. As
defined in the Policy, “law enforcement activities” are those activities conducted by the
City of Easton Police Department, and “law enforcement wrongful act” means “any
actual or alleged act, error or omission, neglect or breach of duty by the insured while
conducting ‘law enforcement activities’ which results”, inter alia, in: “personal injury”
or “bodily injury” caused by an “occurrence.” (App. 101-102, 106). The claims asserted
in the underlying action, seeking damages resulting from the March 25, 2005 shooting
death of Officer Sollman by Officer Renninger, plainly fall within these parameters.
B. “Employee Injury” Exclusion
The primary issue before us is whether one or more of the Policy’s stated
exclusions bars coverage in this case. Scottsdale predominantly relies on the “employee
injury” exclusion (Exclusion No. 8) contained in Section II of the Law Enforcement
Liability Coverage Form as the basis for its argument that it does not have a duty to
defend or indemnify Appellees in the underlying action. Specifically, Scottsdale alleges3

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c. The spouse . . . of that employee . . . as a consequence of a. . .
. above.
The exclusion applies:
(1) Whether the insured may be liable as an employer or in
any other capacity.
(App. 103, 275).
13
that this exclusion applies to the claims asserted in the underlying action because all
claims asserted in that action arise from the same occurrence – the accidental shooting
death of Officer Sollman. Because that occurrence and the resultant injury happened in
the course and scope of the Sollman’s employment by the Insured (i.e., the City of
Easton), the “employee injury” exclusion clearly and unambiguously bars coverage.
We agree. Under the plain terms of the employee injury exclusion, Scottsdale has
no duty to make any payment or defend any suit in connection with any claim for
“personal”or “bodily injury” to “[a]n employee of the insured arising out of and in the
course of employment by the insured” or “[t]he spouse . . . of that employee . . . as a
consequence of” the same. (App. 103, 275). The insurance claims at issue are precisely
such claims. That is, all the claims in the underlying action are either for injury to Officer
Sollman stemming from his accidental shooting death or to his wife as a consequence of
the same. The Policy’s definitions of “bodily” and/or “personal” injury unambiguously
encompass, inter alia, physical and mental injuries as well as civil rights violations.
(App. 89, 106-07, 261, 278-79). All of the injuries asserted in the underlying action fall
within these definitions. Moreover, as explained infra, there is no question that the

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shooting death arose out of and in the in the course of Officer Sollman’s employment as a
City of Easton police officer. In addition, the exclusion applies “[w]hether the insured
may be liable as an employer or in any other capacity.” (App. 103, 275). Thus, the
exclusion applies whether the City was sued in its capacity as Officer Sollman’s employer
or as a “state actor” with respect to the civil rights claims in the underlying action.
Because the employee injury exclusion expressly bars coverage for the claims in the
underlying action, the District Court erred as a matter of law in denying Scottsdale’s
motion for summary judgment.
In its March 2009, Memorandum, the District Court summarily rejected
Scottsdale’s argument that the case fell within the employee injury exclusion. Citing the
Pennsylvania Workers Compensation Act, the District Court stated that the phrase “in the
course of employment” in the Policy is black letter worker’s compensation law and that
“the repetition of worker’s compensation language defines the exclusion as limiting
Scottsdale’s coverage to suits other than worker’s compensation claims.” Mem. at 5. The
court further noted that the Policy states that it covers civil rights claims arising out of law
enforcement activities and that Sollman had brought a civil rights claim arising out of a
police department activity within the police department premises. Because any worker’s
compensation claim was outside the scope of the underlying action, the court held that the
employee injury exclusion did not apply and that “[u]nder the plain language of the policy,
. . . the underlying case falls within Scottsdale’s obligation to indemnify the City.” Id.

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The workers’ compensation exclusion is contained in the Common Liability4
Exclusions and Common Liability Definitions section of the Policy and states as follows:
This policy does not apply to:
. . . .
7. Workers Compensation and Similar Laws
Any obligation of the insured under a workers’ compensation, disability
benefits or unemployment compensation law or any similar law.
(App. 89, 261).
15
We find that the District Court’s holding in this regard is erroneous and, contrary
to the Court’s assertions, ignores the plain language of the Policy. As an initial matter,
simply because the Policy covers civil rights claims arising out of law enforcement
activities – a point that Scottsdale does not dispute – that does not mean that a policy
exclusion cannot apply to bar a subset of those claims. As explained above, the employee
injury exclusion, on its face, precludes coverage for precisely the types of claims
contained in the underlying action – i.e., claims for injuries to employees arising out of
and in the course of their employment. Most significantly, the District Court fails to
square its holding that the employee injury exclusion is confined to workers compensation
claims with the fact that the Policy’s definition of “personal injury” explicitly includes
civil rights violations. The District Court also fails to explain why, under its reading of
the exclusion, the Policy contains a separate explicit exclusion for any obligations of the
insured under a workers’ compensation law. (App. 89, 261) ; see, e.g., J.C. Penney Life4
Ins. Co. v. Pilosi, 393 F.3d 356, 363 (3d Cir. 2004) (courts should interpret an insurance
policy to avoid ambiguities and give effect to all of its provisions).

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In addition to urging that we adopt the District Court’s reasoning, Appellees raise
several additional arguments as to why the employee injury exclusion does not apply in
this case. We have examined these arguments carefully and find that they are without
merit.
First, Appellees argue that we should affirm the District Court because the record
evidence shows that Scottsdale intended the employee injury exclusion to apply only to
workers’ compensation claims. We disagree. The record evidence to which Appellees
point is extra-contractual. As Appellees themselves note, “‘[w]hen construing an
insurance policy, [the court’s] duty is to ascertain the intent of the parties as manifested in
the language of the insurance policy.’” Appellees’ Br. at 20 (quoting Nautilus Ins. Co. v.
Gardner, No. Civ. A. 04-1858, 2005 WL 664358, at *4 (E.D. Pa. Mar. 21, 2005))
(emphasis added). It is well-established that where, as here, the contractual language at
issue is clear and unambiguous, the court should not, as Appellees suggest, look beyond
the policy to ascertain the parties’ intent. Steuart v. McChesney, 498 Pa. 45, 444 A.2d
659, 661 (1982) (“[T]he intent of the parties to a written contract is to be regarded as
being embodied in the writing itself, and when the words are clear and unambiguous the
intent is to be discovered only from the express language of the agreement.”).
Second, Appellees argue that the exclusion does not apply because, although
Officer Sollman was acting “in the course of” his employment when he was shot, his
injury with respect to the civil rights claims against Appellees did not “arise out of” that

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employment. Specifically, Appellees argue that the relevant “occurrence” underlying the
civil rights claims was not the shooting, but Appellees’ alleged failure to develop or
maintain adequate policies or customs. Appellees reason that Sollman’s injury, to the
extent it relates to this failure to develop or maintain adequate policies or customs, could
not have “arisen out of” his employment because those actions and failures were
unrelated to that employment and predated the shooting.
We disagree. As an initial matter, the term “occurrence” in the Policy appears in
the definition of “law enforcement wrongful act” and is relevant to whether coverage is
triggered in the first instance. (App. 106, 278). The term does not appear in the
employee injury exclusion or in the definition of “personal injury.” (App. 103, 106-07,
275, 278-79). The relevant issue in terms of the employee injury exclusion is whether the
“injury” arose out of and in the course of the employee’s employment. (App. 103, 275).
Under Appellees’ own definition, “arising out of” one’s employment means “causally
connected with” that employment. See Appellees’ Br. at 27 (citing Forman Ins. Co. v.
Allied Sec., Inc., 866 F.2d 80, 82 (3d Cir. 1989) and McCabe v. Old Republic Ins. Co.,
425 Pa. 221, 228 A.2d 901, 903 (1967)). There is no dispute that the March 25, 2005
shooting triggered the underlying action and no indication that Carin Sollman would or
could have filed that lawsuit absent the shooting. It defies logic to suggest that the
alleged violations of Officer Sollman’s civil rights and other injuries stemming from that

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shooting were not causally connected to his employment as a City of Easton police officer
and SWAT team member.
In a further attempt to support the above argument, Appellees note that if the
officer shot on March 25, 2005 had happened to be from a different municipality, that
officer could have made the exact same civil rights claims as Officer Sollman and the
employee injury exclusion would not apply. Thus, according to Appellees, the claims are
not causally connected to Sollman’s employment. This example is unpersuasive. Again,
simply because Scottsdale might have a duty to indemnify and defend Appellees in a
similar civil rights action involving a non-employee does not mean that Sollman’s injury
did not arise out of his employment. If anything, Appellees’ example further
demonstrates how the Policy’s exclusions apply as they were intended – i.e., to preclude
coverage for claims that the Policy otherwise would cover.
Next, Appellees disagree that the District Court’s interpretation of the employee
injury exclusion renders it superfluous in light of the separate policy exclusion for
workers’ compensation claims. To illustrate, Appellees note that the policy definition of
“personal injury” includes “defamation” and that the Workers Compensation Act does not
apply to injuries to an employee’s reputation. Appellees’ Br. at 33 (citing App. 106).
Thus, in Appellees’ view, a defamation claim is “an example of a factual scenario in
which the workers’ compensation exclusion would not apply, but the employee injury
exclusion would.” Id. This argument is not only inconsistent with the District Court’s

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To the extent Appellees rely on the doctrine of reasonable expectations in support of5
their argument, such reliance is misplaced. Among other things, the doctrine does not
apply where, as here, the language of a contract is clear and unambiguous. See, e.g.,
Frain v. Keystone Ins. Co., 433 Pa. Super. 462, 640 A.2d 1352, 1354 (1994).
19
holding, it also helps make Scottsdale’s point – i.e., that the parties did not intend the
employee injury exclusion to apply solely to workers’ compensation claims. Rather,
under the Policy’s plain language, and contrary to the District Court’s view, the exclusion
expressly applies to other claims – such as defamation and civil rights claims – as well.
Finally, Appellees argue that “were Scottsdale’s expansive reading of the
employee injury exclusion and its application of it to this case accepted, there would be
no place for any municipality to get coverage for situations where a police officer violates
the constitutional rights of another police officer.” Appellees’ Br. at 34. We disagree.
As set forth above, the plain language of the Policy supports Scottsdale’s reading.
Moreover, even if Appellees’ argument were relevant, there is no evidence that since the
exclusion bars coverage in this case, such coverage is uniformly unavailable or that the
City could not have negotiated for such coverage from Scottsdale or another insurer.5
Because, under the plain language of the Policy, the claims arising out of Officer
Sollman’s shooting constitute claims for “personal” or “bodily injury” as the Policy
defines those terms, arising out of and in the course of Sollman’s employment with the
City, the Policy clearly excludes those claims from coverage and the District Court’s

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Because we conclude that the Policy’s employee injury exclusion bars coverage with6
respect to all of the underlying claims, we need not address the applicability of the
“workers’ compensation” exclusion or Scottsdale’s other alternative arguments.
20
holding to the contrary is reversed.6
C. Separation of Insureds Clause
Because we find that the employee injury exclusion applies to bar coverage in this
case, at least with respect to the City of Easton’s claim, we must address the applicability
of the Policy’s “separation of insureds” clause to the claims of the individual Appellees,
Mitman and Gallaher. Since the District Court found that the exclusion did not apply, it
did not reach this argument.
Appellees argue that even if the employee injury exclusion applies to the City’s
claim, the separation of insureds clause renders it inapplicable to the claims of Mitman
and Gallaher. The separation of insureds clause at issue states:
Except with respect to . . . any rights or duties specifically
assigned in this policy to the first Named Insured, this
insurance applies:
a. As if each Named Insured were the only Named
Insured; and
b. Separately to each insured against whom “claim” is
made or “suit” is brought.
(App. 258). Specifically, Appellees argue that because the insurance applies “[s]eparately
to each insured against whom ‘claim’ is made or ‘suit’ is brought,” we must read the
employee injury exclusion to exclude only claims brought by employees of the particular
“insured” being sued. In Appellees’ view, because the individual defendants in the

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underlying action were not Officer Sollman’s “employers,” the language of the employee
injury exclusion in conjunction with the language of the separation of insureds clause
renders the exclusion inapplicable to claims asserted against the individual defendants.
Appellees’ Br. at 35-49. After careful consideration, we agree with Scottsdale that this
argument is contrary to the Policy language when read in conjunction with precedential
Pennsylvania law.
In Pennsylvania Manufacturers’ Association Insurance Co. v. Aetna Casualty and
Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) (“PMA”), the primary case on
which Scottsdale relies, the dispute centered around the meaning of the word “insured” in
an automobile insurance policy. The question for the court was whether the employee
exclusion clause in the policy excluded liability to an employee of the named insured
(“Niehaus”) in an action against another insured under the same policy (“Delaware”)
stemming from an accident in which the Niehaus employee was injured on Delaware
property. The exclusion at issue provided that the policy did not apply “to bodily injury
of any employee of the Insured.” Id. at 455, 233 A.2d at 530. The policy also provided
that “with respect to the insurance for bodily injury liability . . . the unqualified word
‘insured’ included the ‘named insured.’” Id. The Pennsylvania Supreme Court rejected
Delaware’s argument that “insured” as used in the employee exclusion must be confined
to mean the particular insured claiming coverage and held that employees of the named
insured also fall within the employee exclusion. In affirming the lower court on this

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point, the Court rejected the defendant-insured’s reliance on a separation of insureds
clause stating that the term “the insured” is used severally and not collectively. Id. at
456, 233 A.2d at 550.
In reaching this conclusion, the court relied heavily on the contract language that
defined the word “insured” to include the “named insured.” Id. at 455, 459, 233 A.2d at
550, 552. The court also noted that the named insured in the case had already covered his
employees with a workers compensation policy and thus did not intend coverage for his
employees under the automobile insurance policy under the circumstances presented in
the case. Id. at 457. 233 A.2d at 551.
Here, as in PMA, the Policy language unambiguously includes the named insured
in the term “insured.” Specifically, the preamble of the Public Entity Policy, Law
Enforcement Liability Coverage Form, states that “[t]hroughout this policy the words
‘you’ and ‘your’ refer to the Named Insured . . . .” (App. 102). Immediately thereafter, it
provides that “[w]ithin this Coverage Form the word ‘insured’ means any person or
organization qualifying as such under SECTION III – LAW ENFORCEMENT
LIABILITY – WHO IS AN INSURED.” Id. Section III of the form, in turn, provides,
inter alia, that “[e]ach of the following is an Insured: . . . . 1. You for the activities
conducted by the Law Enforcement Department or Agency named in the Law
Enforcement Liability Coverage Part Supplemental Declarations.” Id. at 104 (emphasis
added). Thus, it is clear that the unqualified term “insured” in the employee injury

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Courts in other cases, including a panel of this Court, similarly have held that7
“separation of insureds” language virtually identical to the language in the Scottsdale
policy is not materially distinguishable from the severability language in PMA. See, e.g.,
Brown & Root Braun, Inc. v. Bogan Inc., 54 F. App’x 542, 547-49 (3d Cir. 2002);
N. Wales Water Auth. v. Aetna Life & Cas., No. Civ. A. 96-0727, 1996 WL 627587, at
**7-8 (E.D. Pa. Oct. 30), aff’d, 133 F.3d 910 (3d Cir. 1996); Roosevelt’s Inc. v. Zurich
Am. Ins. Co., No. 3505 July Term 2003, 2005 WL 1240698, at *2 (Pa. C.P. May 23,
2005); see also Transport Indem. Co. v. Liberty Mut. Ins. Co., 398 F. Supp. 1026, 1030
n.3 (E.D. Pa. 1975) (finding severability of interests clause did not reflect a decision that
the employee exclusion clause must be read to refer only to the “insured being sued”).
Although these opinions are not binding on us, we agree with the reasoning therein.
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exclusion includes the named insured, City of Easton. Under PMA, a separation of
insureds clause like the one in this case does not modify the meaning of the word
“insured” in an employee injury exclusion to mean “the insured seeking coverage” or
“the insured being sued.” Accordingly, since Sollman was an employee of the City of
Easton, the employee injury exclusion applies to the Individual Defendants as well as the
City of Easton, and Scottsdale does not have a duty to defend and indemnify those
individuals in the underlying action.
To the extent Appellees argue that the separation of insureds clause at issue in this
case differs significantly from the severability provision at issue in PMA, we disagree.
Although the language of the two clauses is not identical, the differences are immaterial.7
We also do not find any support for Appellees’ argument that PMA somehow does not
control because, unlike PMA, this case involves federal civil rights claims.
Appellees cite to a Pennsylvania Superior Court case, Luko v. Lloyd’s London, 393
Pa. Super. 165, 573 A.2d 1139 (1990), in support of their contention that the separation of

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insureds language in the Scottsdale policy renders the employee injury exclusion
inapplicable to Mitman and Gallaher. Appellees’ Br. at 49. This argument is likewise
without merit. Although the Luko court held that a policy containing a separation of
insureds clause similar to the clause at issue in this case provided coverage for an
employee’s injuries as long as the injured employee was not an employee of the insured
being sued, we disagree with Appellees that Luko is any closer to this case than to PMA
on its facts. We also find the severability clauses in Luko and PMA materially
indistinguishable. To the extent the lower court in Luko takes a different view than the
court in PMA, we are bound to follow the controlling Pennsylvania Supreme Court
precedent in PMA. See McKenna v. Pac. Rail Serv., 32 F.3d 802, 825 (3d Cir. 1994).
D. Line of Duty Death Coverage Endorsement
In addition to the question of Scottsdale’s duty to defend and/or indemnify
Appellees in the underlying action, the parties dispute whether Scottsdale has a duty to
indemnify the City of Easton for any voluntary payments made to the underlying plaintiff
for the injuries to Officer Sollman. At issue is the Policy’s Line of Duty Death Coverage
Endorsement that provides, inter alia:
LINE OF DUTY DEATH COVERAGE
This endorsement modifies insurance provided under the following:
COMMON POLICY CONDITIONS
LAW ENFORCEMENT LIABILITY COVERAGE FORM
1. We will indemnify you for an amount not to exceed $50,000
for voluntary payments made to the family of members of the
household of a Law Enforcement Officer who is injured as

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the result of a felony which occurs during the “policy period”:
. . .
(App. 108, 280). Scottsdale argues that the District Court erred in failing to address this
issue and contends that it has no duty under the Policy to indemnify the City because there
is no allegation that the shooting was intentional or felonious. Rather, the Grand Jury
report avers that Officer Sollman was killed as the result of negligence or gross
negligence. Appellant’s Br. at 53-54. Appellees respond that the question of the
intentionality of the shooting is factually unsettled and, therefore, Scottsdale’s duty to
indemnify the City for voluntary line of duty payments cannot be determined until the
completion of the underlying action. Appellees’ Br. at 51-52.
We agree that Scottsdale’s duty, if any, to indemnify the City for voluntary line of
duty payments is a separate issue from its duty to defend and indemnify Appellees in the
underlying action and that the District Court erred in failing to address it. We also agree
that we do not have sufficient information before us to decide the issue in the first
instance.
Accordingly, we will remand this issue to the District Court for resolution.

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IV.
For all of the reasons set forth herein, we find that the District Court erred as a
matter of law in ruling that Appellant has a duty to defend and/or indemnify Appellees in
the underlying action.
Accordingly, we will REVERSE the judgment of the District Court and remand
with directions to enter summary judgment in favor of Scottsdale and against Appellees
on this issue. We also direct the District Court to address the issue of Scottsdale’s duty,
if any, to indemnify the City of Easton under the Policy’s Line of Duty Death Coverage
Endorsement.

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