Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
7-12-2004
Pizzini v. Amer Intl Specialty
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-1959
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"Pizzini v. Amer Intl Specialty" (2004). 2004 Decisions. Paper 506.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-1959
___________
LORIS PIZZINI; DONNA PIZZINI; LEONE PIZZINI,
MARACHIARA BACHE; THOMAS BACHE; TULLIA PIZZINI;
VALERIO PIZZINI; DODIE PETTIT; KEVIN GRAY,
Appellants.
v.
AMERICAN INTERNATIONAL SPECIALTY
LINES INSURANCE COMPANY
___________________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 99-cv-03297)
District Judge: Honorable Anita B. Brody
_______________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
on February 10, 2004
Before: SCIRICA, Chief Judge, ROTH and MCKEE, Circuit Judges
(Opinion filed : July 12, 2004)
_______________
OPINION
_______________
ROTH, Circuit Judge:
Appellants Loris Pizzini, Donna Pizzini, Leone Pizzini, Mirachiara Bache, Thomas
Bache, Tullia Pizzini, Valerio Pizzini, Dodie Pettit, and Kevin Gray invested in several
Kentucky oil-drilling ventures beginning in 1995. Advising them while making these
investments was Stephen Barry Shellington, a registered representative and agent of the
Equitable Life Assurance Society of the Untied States. Shellington was insured under
professional liability policies issued by American International Specialty Lines Insurance
Company (AISLIC).
After the investments failed, the appellants sued Shellington in Pennsylvania state
court alleging that he had made material misrepresentations regarding the drilling
ventures. AISLIC took over Shellington’s defense, subject to a reservation of rights. A
condition of AISLIC’s defense was that Shellington cooperate with the counsel provided.
The defense attorneys, selected by AISLIC, deemed it impossible to provide an effective
defense absent Shellington himself testifying, something Shellington steadfastly declined
to do.
In 1999, without AISLIC’s consent, Shellington negotiated a settlement with
appellants by agreeing to an entry of a judgement in favor of the appellants for the full
amount of each of their losses. Alleging that ASLIC was now Shellington’s assignee
under policies issued in 1995 and 1996, appellants then brought suit in diversity against
AISLIC for indemnity and also statutory bad faith claims arising from Shellington’s
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conduct. The District Court for the Eastern District of Pennsylvania eventually granted
summary judgement dismissing both appellants’ indemnity and bad faith claims. This
appeal followed.
We have jurisdiction under 28 U.S.C. § 1291. Our review of the District Court’s
order is plenary, and we apply the same standard employed by the District Court under
Fed. R. Civ. P. 56(c). Haugh v. Allstate Ins. Co., 322 F.3d 227, 230 (3d Cir. 2003). We
will affirm the District Court’s grant of summary judgement in favor of AISLIC if it
appears that “there is no genuine issue as to any material fact and that [it] is entitled to a
judgement as a matter of law.” Id. (quoting Fed. R. Civ. P. 56 (c)). In reviewing the
record, we are required to view the inferences to be drawn from the underlying facts in
the light most favorable to the appellants, as the party opposing the motion, and to take
their allegations as true when supported by proper proof whenever these allegations
conflict with those of AISLIC. Id.
AISLIC initially argues in favor of applying New York law while appellants
maintain applying Pennsylvania law is proper. Yet, “before a choice of law question
arises, there must be a conflict between the potentially applicable bodies of law.” On Air
Entertainment Corp. v. National Indem. Co., 210 F.3d 146, 149 (3d Cir.2000). We agree
with the District Court that in this instance, Pennsylvania and New York law are
consistent when determining whether summary judgement is proper in a situation in
which the Appellants’ claims were not first made and reported during a single policy
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period. For that reason, there is no conflict and the District Court acted properly in
deciding to apply Pennsylvania law.
Turning to the substance of the case, appellants first argue that the District Court
erred in not admitting extrinsic evidence in the form of a brochure. This brochure,
appellants claim, may show ambiguity in the policies at issue. However, “the meaning of
a clear and unequivocal written contract must be determined by its contents alone.”
Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79, 92 (3d Cir. 2001).
Appellants do not contest that the language of the actual policies is unambiguous; as the
District Court held, the reporting provisions of the policies are clear and unambiguous,
and the relevant terms are defined. Because “[w]here the intention of the parties is clear,
there is no need to resort to extrinsic aids or evidence” we find that the District Court did
not err by declining to admit extrinsic evidence. Id.
In the alternative, the appellants argue that the District Court should have estopped
AISLIC from denying coverage. Appellants maintain that allowing AISLIC to deny
coverage because of Shellington’s failure to comply with the policies’ reporting
requirements resulted in both Shellington and the appellants being impermissibly misled.
Appellants also argue that in any event AISLIC has waived this defense. Regarding the
purported waiver, we initially note that waiver or estoppel cannot create an insurance
contract where none existed under Pennsylvania law. See Wasilko v. Home Mut. Cas.
Co., 232 A.2d 60, 63 (Pa. Super. Ct. 1967) (citing Donovan v. New York Cas. Co., 94
4
A.2d 570 (Pa. 1953)). Thus, AISLIC did not waive its right to deny coverage under either
the 1995 or 1996 policies because of Shellington’s failure to cooperate with the defense
AISLIC provided. To the extent that AISLIC did not specifically state that this would be
a ground on which to deny coverage in its reservation of rights letters, the letters
nevertheless did contain language reserving the right to raise other issues and defenses
that might affect coverage. Thus, AISLIC did not waive this defense. As to estoppel, the
appellants would have to demonstrate “actual prejudice, that is, when the failure to assert
all possible defense causes the insured to act to his detriment in reliance thereon” in order
to prevail. Mendel v. Homes Ins. Co., 806 F. Supp. 1206, 1215 (E.D. Pa. 1992). Given
that AISLIC’s letters unequivocally communicated its intention to reserve its rights, we
agree with the District Court that no reasonable juror would conclude that Shellington or
the appellants would have suffered actual prejudice.
Appellants’ suggestion that they may have detrimentally relied on -- and indeed
may have been induced by -- the policies’ lack of specificity is merely a permutation of
the above argument, and is similarly swallowed by the language of the policies. The
policies’ language put appellants on notice that the insurance company was reserving
their right to later raise defenses, even though individual defenses were not spelled out.
Appellants could not detrimentally rely on the absence of a specific laundry list of
defenses when the insurance company clearly stated that there was a possibility of other
defenses being raised.
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Finally, appellants argue that even though the District Court held their assigned
policy claims invalid, a statutory bad faith claim should not be precluded. We do not
agree. Having already found that appellants can enforce no right under either policy, they
lack the predicate action needed to pursue a 42 P.S. § 8371 bad faith claim. Polselli v.
Nationwide Mut. Fire Ins. Co., 126 F.3d 524, 530 (3d Cir. 1997). This being the case,
appellants’ bad faith claim is not sustainable.
For the reasons stated above, we will affirm the judgment of the District Court.
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