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Vol. 7 - Issue 9
December 19, 2018


Third Circuit Puts The Kibosh On A Pennsylvania Self-Defense Exception To “Four Corners”


I have always considered Pennsylvania to be a strict “four corners” state for purposes of determining an insurer’s duty to defend.  [An exception being that a court may be willing to ignore a “negligence” allegation if the complaint belies that a defendant-insured’s actions could have been negligent.] 

In the last issue of Coverage Opinions I addressed Lupu v. Loan City, LLC, No. 17-1944 (3d Cir. Sept. 10, 2018) (published), where the strictness of Pennsylvania’s “four corners” test was further stated.  The Third Circuit in Lupu acknowledged that Pennsylvania has long employed the “four corners” test for purposes of determining an insurer’s duty to defend.  The court also had no hesitation pointing out shortcomings of the four corners rule:  “[T]he inflexible application the ‘four corners’ rule allows an insurer to plead Sergeant Schultz’s ‘know nothing’ defense, and thereby successfully ignor[e] true but unpleaded facts within its knowledge that require it, under the insurance policy, to conduct the putative insureds defense.”  Further, the court conceded that “harsh consequences [] can be wrought by the ‘four corners’ rule, and no doubt a wooden application leaves would-be insureds in the lurch if a covered claim is not identifiable in the complaint.  But Pennsylvania courts tolerate this measure of concern in exchange for a clear rule’s benefit.”  The court acknowledged that, under the four corners rule, the party seeking insurance is left at the mercy of the manner in which the underlying plaintiff pleads its case.

Despite this, in Unitrin Direct Ins. Co. v. Esposito, 280 F. Supp. 3d 666 (E.D. Pa. 2017), the Eastern District of Pennsylvania held that, at least in one situation, an exception to the four corners rule applied.  But the Third Circuit recently put the kibosh on this when it reversed the District Court.

The District Court in Esposito had held that an insurer was obligated to defend its insured, Michael Esposito, for claims arising out of a bar fight.  The court found that there was no occurrence.  However, the insured argued that he was acting in self-defense of himself and his wife.  The court concluded that the self-defense exception to the “expected or intended” exclusion applied.    

The District Court saw it this way: “If a court could not look beyond the complaint in the underlying action alleging that the insured assaulted the plaintiff, an insured claiming self-defense could not invoke a duty to defend.  How else could a court determine that an insured was claiming self-defense if it could not consider what his defense was in the underlying action? It could do so only by considering his answer in the underlying case or his answer in the declaratory judgment action. Otherwise, the insurer could avoid its duty to defend under the exception to the exclusion.”

But the Third Circuit, in Unitrin Direct Ins. Co. v. Esposito, No. 17-3810 (3rd Cir. Oct. 17, 2018) reversed, holding that, once the District Court concluded that there was no occurrence, it should have stopped there.  At that point, the appeals court explained, the case was over, and there should have been no consideration of whether any exclusions, or exceptions to exclusions, applied. 

Nonetheless, the Third Circuit went on to address the self-defense exception, to the “expected or intended” exclusion, and concluded that it did not apply to create a duty to duty.  In the Third Circuit’s view, the test for determining an insurer’s duty to defend is “four corners.”  The complaint alleged that Esposito, without provocation, punched, kicked and injured the plaintiff.  Thus, the court concluded that there was no allegation in the complaint that Esposito acted in self-defense.  
But of course there wasn’t any such allegation. This was the point made by the District Court.  A plaintiff, in an assault and battery case, would not allege that the defendant acted in self-defense.  To do so would be an admission by the plaintiff that he or she was an aggressor.  This is why some “four corners” states apply an exception, that allows a defendant-insured to argue that self-defense can be considered when determining duty to defend, despite the absence of any self-defense allegations within the four corners of the complaint.  But the Third Circuit did not go down this road.  Four corners is four corners.  


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