Opinion

GIANT EAGLE, INC. v. AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY

Court: District Court, W.D. Pennsylvania
Filed: Nov 9, 2020
Cited by: 0 cases
Authority: More cited than 29.3%

“So long as one count or claim is covered under the policy, the duty to defend is triggered.”

How later courts described this case

“So long as one count or claim is covered under the policy, the duty to defend is triggered.”
“Importantly, Pennsylvania adheres to the [‘]four corners[’] rule (also known as the [‘]eight corners[’] rule
“If the allegations of the underlying complaint potentially could support recovery under the policy, there will be coverage at least to the extent that the insurer has a duty to defend its insured in the case.” (citing Sikirica, 416 F.3d at 226)

Written by the judges who cited it.

The opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GIANT EAGLE, INC. and HBC SERVICE )

COMPANY, )

) 2:19-cv-00904-RJC

)

Plaintiffs,

)

Judge Robert J. Colville

)

vs.

)

AMERICAN GUARANTEE AND

)

LIABILITY INSURANCE COMPANY and

)

XL SPECIALTY INSURANCE COMPANY,

)

Defendants. )

____________________________________ )

)

AMERICAN GUARANTEE AND )

LIABILITY INSURANCE COMPANY, )

)

Third-Party Plaintiff, )

)

vs. )

)

OLD REPUBLIC INSURANCE COMPANY, )

)

Third-Party Defendant. )

____________________________________ )

)

XL SPECIALTY INSURANCE )

COMPANY, )

)

Third-Party Plaintiff, )

)

vs.

)

OLD REPUBLIC INSURANCE )

COMPANY, )

)

Third-Party Defendant. )

OPINION

Robert J. Colville, United States District Judge

Before the Court is the Motion for Partial Summary Judgment on the Duty to Defend (ECF

No. 75) filed by Plaintiffs Giant Eagle, Inc. and HBC Service Company (collectively, “Giant

Eagle”). In this declaratory judgment action, Giant Eagle seeks a declaration that Defendants

American Guarantee and Liability Insurance Company (“AGLIC”) and XL Specialty Insurance

Company (“XL”) owe Giant Eagle a duty to defend and coverage with respect to multiple lawsuits

pending against Giant Eagle in the action captioned In re Nat’l Prescription Opiate Litig., No.

2804 (N. D. Ohio) (“Opioid MDL”). Compl. ¶¶ 1-2, ECF No. 46. The Opioid MDL plaintiffs

seek to recover damages from Giant Eagle for harm allegedly caused by Giant Eagle’s distribution

and sale of prescription opioids. Id. Giant Eagle avers that, to date, AGLIC has “denied coverage

and refused outright to defend or indemnify Giant Eagle” in the underlying lawsuits, and that “XL,

after simply ignoring Giant Eagle’s multiple requests for a defense for six months, issued a

reservation of rights without assuming a defense.” Id. at ¶ 2.

In its Motion, Giant Eagle seeks partial summary judgment declaring that AGLIC and XL

have a duty to defend Giant Eagle in four cases (the “underlying lawsuits”)1 that have been

transferred to the Opioid MDL. Br. in Supp. 1, ECF No. 76. AGLIC and XL collectively oppose

Giant Eagle’s Motion for Partial Summary Judgment, and Third-Party Defendant Old Republic

Insurance Company (“Old Republic”), against whom AGLIC and XL have each filed a Third-

Party Complaint (ECF Nos. 41 and 43), also opposes Giant Eagle’s Motion. This Court has

1 These cases are: County of Cuyahoga, Ohio v. Purdue Pharma L.P., et al., Case No 17-OP-45004 (N.D. Ohio);

County of Summit, Ohio v. Purdue Pharma L.P., et al., Case No 18-OP-45090 (N.D. Ohio); Artz, et al. v. Endo

Health Solutions, Inc., et al., Case No 19-op-45459 (N.D. Ohio); and Frost, et. al. v. Endo Health Solutions, Inc., et

al., Case No 18-op-46327 (N.D. Ohio). See Proposed Order 2-3, ECF No. 75-1.

jurisdiction in this matter pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1367. Giant Eagle’s

Motion has been fully briefed, and is ripe for disposition.

I. Factual Background & Procedural History

Unless otherwise noted, the following facts are not in dispute:2

Giant Eagle was covered by commercial general liability policies issued by Old Republic

which ran from April 1, 2015 to April 1, 2016 (the “2016 Old Republic Policy”) and from April

1, 2016 to April 1, 2017 (the “2017 Old Republic Policy”) (collectively, the “Old Republic

Policies”). Resp. to SOF ¶ 1, ECF No. 88. Each of the Old Republic Policies provides a $1 million

per occurrence limit of liability, subject to a $1 million self-insured retention (“SIR”) obligation

and a $1 million deductible.3 Id. at ¶ 3. The Old Republic Policies define “self-insured retention”

as “the amount the insured legally must pay with respect to claims or ‘suits’ to which this insurance

applies.” Resp. to Additional SOF ¶ 10, ECF No. 94. The Old Republic Policies’ SIR

endorsements provide:

A. Our obligations under the Coverages of the policy to pay damages on your behalf

apply in excess of the “self insured retention”. The amount of the “self insured

retention” is shown in the Schedule.

B. The “self insured retention” may be satisfied by any combination of the

following:

2 In reciting the facts of this case, the Court will primarily cite to AGLIC and XL’s Joint Response (ECF No. 88) to

Giant Eagle’s Concise Statement of Material Facts and Giant Eagle’s Response (ECF No. 94) to AGLIC and XL’s

Concise Statement of Additional Material Facts, each of which quotes and responds to Giant Eagle’s Concise

Statement of Material Facts (ECF No. 77) and Supplemental Concise Statement (ECF No. 86) and AGLIC and XL’s

Concise Statement of Additional Material Facts, respectively. The Court will cite to AGLIC and XL’s Joint Response

as “Resp. to SOF ¶ _____, ECF No. 88,” and will cite to Giant Eagle’s Response as “Resp. to Additional SOF ¶ _____,

ECF No. 94.” Giant Eagle has attached an Appendix of Exhibits to its Concise Statement of Material Facts. The

Court will cite to any of the Exhibits set forth in that Appendix in the following manner: “App. Ex. ____, ECF No.

77.” The Court will cite to any Exhibits attached to Giant Eagle’s Supplemental Concise Statement of Material Facts

as: “Supplemental App. Ex. ____, ECF No. 86.” The Court will cite to any Exhibit attached to AGLIC and XL’s

Response to Giant Eagle’s Concise Statements as follows: “Defs.’ App. Ex. _____, ECF No. 88.”

3 The deductible “[e]quals the Limits of Insurance/Liability as provided under the policy plus all

ALAE/Supplementary Payments.” App. Ex. 4 at 16, ECF No. 77. There is seemingly no dispute that the amount

payable under the deductible obligation at issue herein is $1 million. See Br. in Supp. 13, ECF No. 76; Defs.’ Br. in

Opp’n 15, ECF No. 87.

1. Damages and medical expenses payable under the applicable

Coverage(s).

2. Other amounts payable under the policy.

C. Amounts payable under Supplementary Payments, which include but are not

limited to allocated loss adjustment expense(s) (ALAE) do not satisfy the “self

insured retention”.

If Supplementary Payments and/or allocated loss adjustment expense(s) are not

described in the policy, Supplementary Payments and/or allocated loss adjustment

expense(s) are costs associated with the investigation or settlement of any claim or

“suit” against an insured and include but are not limited to defense costs, attorneys’

fees, premiums for appeal and bail bonds, prejudgment and post judgment interest,

expenses incurred by the insurer, first aid expenses, and/or reasonable travel

expenses incurred by the insured at our request when assisting in the investigation

or settlement of any claim or “suit”.

D. In addition to the Scheduled “self insured retention” you are responsible for

payment of a proportion of Supplementary Payments and/or allocated loss

adjustment expenses. Your proportion is equal to the ratio that the “self insured

retention” amount bears to the damages and medical expenses paid. If there is no

loss payment, your proportion of Supplementary Payments and/or allocated loss

adjustment expenses is 100%.

E. The “self insured retention” will apply on the same basis as the Limits of

Insurance (Limits of Liability) applicable to the claim or “suit” regardless of the

number of persons or organizations who sustain damages. The “self insured

retention” is an each and every “self insured retention” and does not have an

aggregate.

F. The “self insured retention” will not reduce the applicable Limits of Insurance

(Limits of Liability).

G. We do not have a duty to investigate, defend or settle any claim or “suit” for

which there may be coverage under this insurance within the “self insured

retention”. Our right and duty to defend or settle any claim or “suit” do apply to

any claim or “suit” that exceeds the “self insured retention”.

You, at your own expense, must investigate, defend or settle all claims or “suits”

within the “self insured retention”. We retain the right to elect to join in the defense

of such claims or “suits” and we will pay any expenses we incur in doing so.

Old Republic’s Br. in Opp’n 3-4, ECF No. 89 (emphasis omitted) (quoting App. Ex. 3 at 21-22;

Ex. 4 at 18-19, ECF No. 77). The Old Republic Policies’ deductible endorsements, in relevant

part, provide:

A. Our obligations under the Coverages of the policy to pay damages are subject to

a deductible. The deductible is shown in the Schedule. Our obligations to pay

damages apply only to the amount of damages in excess of the deductible shown in

the Schedule.

B. The deductible may be satisfied by any combination of the following:

1. Damages and medical expenses payable under the applicable

Coverage(s).

2. Other amounts payable under the policy.

3. Amounts payable under Supplementary Payments, which include but are

not limited to allocated loss adjustment expenses (ALAE):

. . . .

_X_ Amounts payable under Supplementary Payments, which include but

are not limited to allocated loss adjustment expenses (ALAE) do not satisfy

the deductible. In addition to the Scheduled deductible you are responsible

for payment of Supplementary Payments and/or allocated loss adjustment

expenses.

If Supplementary Payments and/or allocated loss adjustment expenses

(ALAE) are not described in the policy, Supplementary Payments and/or

allocated loss adjustment expenses are costs associated with the

investigation or settlement of any claim or “suit” against an insured and

include but are not limited to defense costs, attorneys’ fees, premiums for

appeal and bail bonds, prejudgment and post judgment interest, expenses

incurred by the insurer, first aid expenses, and/or reasonable travel expenses

incurred by the insured at our request when assisting in the investigation or

settlement of any claim or “suit”.

C. The deductible will apply on the same basis as the Coverage(s) Limits of

Insurance/Limit of Liability applicable to the claim or “suit” regardless of the

number of persons or organizations who sustain damages.

D. The deductible amounts:

. . . .

_X_ Described in paragraph B.1. and B.2. will reduce the applicable Limits of

Insurance/Limits of Liability.

Id. at 5-6 (emphasis omitted) (quoting App. Ex. 3 at 19-20; Ex. 4 at 16-17, ECF No. 77). The Old

Republic Policies describe “Supplementary Payments” as follows:

1. We will pay, with respect to any claim we investigate or settle, or any “suit”

against an insured we defend:

a. All expenses we incur.

b. Up to $250 for cost of bail bonds required because of accidents or traffic

law violations arising out of the use of any vehicle to which the Bodily

Injury Liability Coverage applies. We do not have to furnish these bonds.

c. The cost of bonds to release attachments, but only for bond amounts

within the applicable limits of insurance. We do not have to furnish these

bonds.

d. All reasonable expenses incurred by the insured at our request to assist

us in the investigation or defense of the claim or “suit”, including actual loss

of earnings up to $250 a day because of time off from work.

e. All court costs taxed against the insured in the “suit”. However, these

payments do not include attorneys’ fees or attorneys’ expenses taxed against

the insured.

f. Prejudgment interest awarded against the insured on that part of the

judgment we pay. If we make an offer to pay the applicable limit of

insurance, we will not pay any prejudgment interest based on that period of

time after the offer.

g. All interest on the full amount of any judgment that accrues after entry of

the judgment and before we gave paid, offered to pay, or deposited in court

the part of the judgment that is within the applicable limit of insurance.

Id. at ¶ 14.4

4 Giant Eagle and Old Republic separately entered into a Program Agreement (the “Program Agreement”) that defines

“Allocated Loss Adjustment Expenses” to include attorneys’ fees. Resp. to SOF ¶ 49, ECF No. 88. The Program

Agreement provides: “[t]o the extent that any terms or conditions of the aforesaid Policies are inconsistent with any

of the terms or conditions of this Agreement, the latter are to be given effect and the former will be considered

superseded by this Agreement.” Id. at ¶ 50.

The Old Republic Policies provide that Old Republic “will pay those sums that the insured

becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to

which this insurance applies.” Resp. to SOF ¶ 8, ECF No. 88. Under the Old Republic Policies,

“[d]amages because of ‘bodily injury’ include damages claimed by any person or organization for

care, loss of services or death resulting at any time from the ‘bodily injury.’” Id. at ¶ 13. The Old

Republic Polies further provide that Old Republic has the right and duty to defend against any suit

seeking such damages. Id. at ¶ 9. The Old Republic Policies define “bodily injury” as “bodily

injury, sickness or disease sustained by a person, including death resulting from any of these at

any time.” Id. at ¶ 10. The Old Republic Policies apply to bodily injury if the bodily injury is

caused by an “occurrence” that takes place in the “coverage territory” and occurs during the policy

period. Id. at ¶ 11. “Occurrence” is defined by the Old Republic Policies as “an accident, including

continuous or repeated exposure to substantially the same general harmful conditions.” Id. at ¶

12.

AGLIC issued Commercial Umbrella Liability Policy, No. AUC 2856587-17 (the “AGLIC

Policy”) to Giant Eagle for the period of April 1, 2015 to April 1, 2016. Resp. to SOF ¶ 16, ECF

No. 88. The AGLIC Policy identifies the 2016 Old Republic Policy as “underlying insurance,”

and provides, under “Coverage A,”5 that Old Republic will pay “those damages covered by this

insurance in excess of the total applicable limits of underlying insurance.” Id. at ¶¶ 17-18.

AGLIC’s duty to defend arises under the AGLIC Policy’s Coverage A “when the applicable limit

of underlying insurance . . . has been exhausted by payment of loss for which coverage is afforded

under [the AGLIC Policy] . . . .” Id. at ¶ 19. The AGLIC Policy defines “loss” as “those sums

actually paid that [Giant Eagle] is legally obligated to pay as damages for the settlement or

5 Coverage A provides for the “Excess Follow Form Liability Insurance” provided by AGLIC that is relevant herein.

See App. Ex. 1 at 13, ECF No. 77.

satisfaction of a claim[,]” and further provides that: (1) “[l]oss also includes defense expenses and

supplementary payments if underlying insurance includes defense expenses and supplementary

payments in the Limits of Insurance;” and (2) “[l]oss does not include defense expenses and

supplementary payments if underlying insurance does not include defense expenses and

supplementary payments in the Limits of Insurance.” Id. at ¶ 19; Resp. to Additional SOF ¶ 47,

ECF No. 94.

XL issued Commercial Excess Follow Form and Umbrella Liability Policy No.

US00074903LI16A (the “XL Policy”) to Giant Eagle for the period of April 1, 2016 to April 1,

2017. Resp. to SOF ¶ 20, ECF No. 88. The XL Policy identifies the 2017 Old Republic Policy as

scheduled underlying insurance. Id. at ¶ 21. Under Insuring Agreement A6 in the XL Policy, XL

is required to pay on behalf of Giant Eagle:

[T]hose amounts [Giant Eagle] becomes legally obligated to pay as damages in

excess of the “scheduled underlying insurance” as a result of a “claim” covered by

the “scheduled underlying insurance” and this policy, but only if the actual payment

of “loss” to which this policy applies, by you or insurers providing “scheduled

underlying insurance” exceeds the limits of the “scheduled underlying insurance”

and any applicable and collectible “other insurance.”

Resp. to Additional SOF ¶ 57, ECF No. 94 (quoting App. Ex. 3 at 47, ECF No. 77). With respect

to XL’s duty to defend Giant Eagle, the XL Policy provides:

[XL] will have the right and duty to defend any “suit” covered by Insuring

Agreement A, but only if the actual payment of “loss” to which this policy applies,

by you or insurers providing “scheduled underlying insurance” exceeds the limits

of the “scheduled underlying insurance” and any applicable and collectible “other

insurance.”

Id. at ¶ 59. The XL Policy defines loss as: “those sums you become legally obligated to pay as

settlements or judgments in connection with a covered ‘claim.’ ‘Loss’ shall include expenses

6 Insuring Agreement A provides for the “Excess Follow Form Liability” insurance that is relevant herein. See App.

Ex. 2 at 19, ECF No. 77

incurred to investigate a ‘claim’ or defend a ‘suit’ if so provided in the ‘scheduled underlying

insurance.’” Id. at ¶ 60. The XL Policy’s Schedule of Underlying Limits identifies the 2017 Old

Republic Policy and its limits and states that “[d]efense expenses are in addition to the limits.”

Resp. to Additional SOF ¶ 62, ECF No. 94.

Giant Eagle has been named as a defendant in multiple lawsuits, including, inter alia, the

underlying lawsuits, by plaintiffs who seek to recover damages allegedly caused by Giant Eagle’s

distribution and dispensing of prescription opioids. Resp. to SOF ¶ 24, ECF No. 88; Resp. to

Additional SOF ¶ 82, ECF No. 94. The Artz and Frost actions (collectively, the “NAS lawsuits”)

assert claims by legal guardians, on behalf of putative classes of legal guardians, of children

diagnosed at birth with opioid dependence, known as Neonatal Abstinence Syndrome (“NAS”).

Resp. to SOF ¶ 30, ECF No. 88. The complaints in the NAS lawsuits allege that NAS causes the

plaintiff guardians’ children to suffer health conditions and increased risk of certain health

conditions as a result of their in utero exposure to opioids. Id. at ¶¶ 32-35. The plaintiffs in the

NAS lawsuits seek damages for ongoing care allegedly necessitated by, inter alia, Giant Eagle’s

alleged wrongful conduct in distributing and dispensing opioids. Id. at ¶¶ 33-35.

The Summit and Cuyahoga actions (collectively, the “County lawsuits”) were filed on

behalf of Ohio counties seeking damages allegedly caused by Giant Eagle’s alleged wrongful

conduct in distributing and dispensing prescription opioids. Id. at ¶ 36. The plaintiffs in the

County lawsuits allege that the opioid use resulting from Giant Eagle’s conduct has led directly to

“a dramatic increase in opioid abuse, addiction, overdose, and death throughout the United States,”

including in Ohio. Id. at ¶ 37. The complaints in the County lawsuits also aver that the plaintiffs

in those actions do “not seek damages for death, physical injury to person, emotional distress, or

physical damages to property, as defined under the Ohio Product Liability Act.” Id. at ¶ 37; Resp.

to Additional SOF ¶ 82, ECF No. 99. The complaints in the County lawsuits assert that the

plaintiffs in those actions have suffered ongoing harm, and seek damages, inter alia, for emergency

medical treatment, detoxification and addiction treatment, and recovery services related to opioid

use of the County plaintiffs’ citizens. Resp. to SOF ¶ 39, ECF No. 88. Each of the underlying

lawsuits asserts, to some degree, that Giant Eagle “failed to design and operate systems to identify

suspicious orders of prescription opioids, maintain effective controls against diversion, and halt

suspicious orders when they were identified, thereby contributing to the oversupply of such drugs

and fueling an illegal secondary market.” Id. at ¶ 44.

Giant Eagle asserts that it has spent at least $5.7 million in defending against the underlying

lawsuits. Id. at ¶ 47. AGLIC has not reimbursed Giant Eagle for any of these purported defense

costs. Id. at ¶ 48. Old Republic has not paid any defense costs to or on behalf of Giant Eagle with

respect to any of the underlying lawsuits, and further has not paid any judgment or settlement to

or on behalf of Giant Eagle with respect to any of the underlying lawsuits. Resp. to Additional

SOF ¶ 28-29, ECF No. 99.

Giant Eagle filed the operative First Amended Complaint (the “Complaint”) (ECF No. 46)

on October 22, 2019. AGLIC and XL each filed an Answer and Counterclaim (ECF Nos. 52 and

53) on November 5, 2019. Giant Eagle filed Answers (ECF Nos. 64 and 65) to AGLIC’s and XL’s

Counterclaims on November 19, 2019. AGLIC and XL filed their Third-Party Complaints on

October 1, 2019 and October 7, 2019, respectively, and Old Republic filed Answers to the Third-

Party Complaints (ECF Nos. 70 and 71) on December 6, 2019. As explained by the Honorable

Arthur J. Schwab, to whom this case was originally assigned, in his January 2, 2020 Memorandum

Order (ECF No. 79) granting in part and denying in part AGLIC and XL’s Joint Rule 56(d) Motion:

The Third-Party Complaints filed by Defendants [AGLIC] and XL allege that if

Plaintiffs prevail on their claim and obtain a declaration that a defense and/or

indemnification is owed by [AGLIC and XL] with respect to one or more of the

underlying opioid lawsuits, [AGLIC] and XL seek various declarations concerning

the interplay between and among Old Republic, Giant Eagle, and [AGLIC] and XL,

as well as equitable contribution and contractual or equitable subrogation.

Mem. Order 2, ECF No. 85.

Giant Eagle filed its Motion for Partial Summary Judgment on December 12, 2019, along

with a Brief in Support (ECF No. 76) and a Concise Statement of Material Facts (ECF No. 77).

Giant Eagle filed a Supplemental Concise Statement of Material Facts (ECF No. 86) on January

6, 2020. AGLIC and XL, collectively, filed a Brief in Opposition (ECF No. 87) to Giant Eagle’s

Motion on January 10, 2020, along with a Concise Statement of Additional Material Facts (ECF

No. 88) and a Joint Response to Giant Eagle’s Concise Statements. Old Republic also filed a

Response in Opposition (ECF No. 89) to Giant Eagle’s Motion on January 10, 2020. On January

24, 2020, Giant Eagle filed a Response (ECF No. 94) to AGLIC and XL’s Concise Statement of

Additional Material Facts, and also filed a Combined Reply (ECF No. 93) to the Responses filed

by AGLIC and XL and Old Republic. This matter was reassigned to the undersigned on February

4, 2020. Order, ECF No. 101. Giant Eagle filed a Notice of Supplemental Authorities (ECF No.

105) on June 26, 2020, and AGLIC and XL filed a Response (ECF No. 106) to that Notice on July

1, 2020. Giant Eagle filed a Second (ECF No. 107) and Third (ECF No. 108) Notice of

Supplemental Authority on September 18, 2020 and September 23, 2020, and AGLIC and XL

filed Responses (ECF Nos. 109 and 110) thereto on September 23, 2020 and October 5, 2020,

respectively. On October 15, 2020, Giant Eagle filed a Reply to AGLIC and XL’s Response to

Giant Eagle’s Third Notice of Supplemental Authority.

II. Legal Standard

Summary judgment may be granted where the moving party shows that there is no genuine

dispute about any material fact, and that judgment as a matter of law is warranted. Fed. R. Civ. P.

56(a). Pursuant to Federal Rule of Civil Procedure 56, the court must enter summary judgment

against a party who fails to make a showing sufficient to establish an element essential to his or

her case, and on which he or she will bear the burden of proof at trial. Celotex Corp. v. Catrett,

477 U.S. 317, 322 (1986). In evaluating the evidence, the court must interpret the facts in the light

most favorable to the nonmoving party, drawing all reasonable inferences in his or her favor.

Watson v. Abington Twp., 478 F.3d 144, 147 (3d Cir. 2007).

In ruling on a motion for summary judgment, the court’s function is not to weigh the

evidence, make credibility determinations, or determine the truth of the matter; rather, its function

is to determine whether the evidence of record is such that a reasonable jury could return a verdict

for the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51

(2000) (citing decisions); Anderson v. Liberty Lobby, 477 U.S. 242, 248–19 (1986); Simpson v.

Kay Jewelers, Div. of Sterling, Inc., 142 F.3d 639, 643 n. 3 (3d Cir. 1998).

The mere existence of a factual dispute, however, will not necessarily defeat a motion for

summary judgment. Only a dispute over a material fact—that is, a fact that would affect the

outcome of the suit under the governing substantive law—will preclude the entry of summary

judgment. Liberty Lobby, 477 U.S. at 248.

III. Discussion

In his January 2, 2020 Memorandum Order granting in part and denying in part AGLIC

and XL’s Joint Rule 56(d) Motion, Judge Schwab described the scope of Giant Eagle’s Motion for

Partial Summary Judgment, as well as the issues presented therein, as follows:

This Court is satisfied that, under Pennsylvania law, an insurance carrier’s

duty to defend differs greatly from its duty to provide coverage, regardless of

whether that insurer is an excess or primary insurance carrier.

As explained by the United States Court of Appeals for the Third Circuit:

An insurer’s duty to defend “is a distinct obligation” that is

“different from and broader than the duty to indemnify.” Sikirica v.

Nationwide Ins. Co., 416 F.3d 214, 225 (3d Cir. 2005) (citations

omitted). Because an insurer’s duty to defend its insured in a lawsuit

is broader than its duty to indemnify, it necessarily follows that it

will not have a duty to indemnify an insured for a judgment in an

action for which it was not required to provide defense. Id.

(citations omitted) [footnote omitted]. Under Pennsylvania law,

which is applicable on the insurance coverage issue, a court

ascertaining whether an insurer has a duty to defend its insured

makes its determination by defining the scope of coverage under the

insurance policy on which the insured relies and comparing the

scope of coverage to the allegations of the underlying complaint. Id.

at 226; see also Gen. Accident Ins. Co. of Am. v. Allen, 547 Pa. 693,

692 A.2d 1089, 1095 (1997). If the allegations of the underlying

complaint potentially could support recovery under the policy, there

will be coverage at least to the extent that the insurer has a duty to

defend its insured in the case. Sikirica, 416 F.3d at 226 (citing Gen

Accident Ins. Co. of Am., 692 A.2d at 1095).

Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 673 (3d Cir. 2016). In addition,

the Court of Appeals has also held:

To determine whether an obligation to defend exists under the usual

liability policy, the “court typically looks to the allegations of the

complaint to decide whether the third party’s action against the

insured states a claim covered by the policy.” Am. Ins. Grp. v. Risk

Enter. Mgmt., Ltd., 761 A.2d 826, 829 (Del. 2000). So long as one

count or claim is covered under the policy, the duty to defend is

triggered. Any doubt or ambiguity as to the pleadings or the policy

terms should be resolved in favor of the insured. See Cont’l Cas.

Co. v. Alexis I. duPont Sch. Dist., 317 A.2d 101, 105 (Del. 1974).

Am. Legacy Found., RP v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 623 F.3d

135, 139–40 (3d Cir. 2010).

In the instant case, Plaintiffs’ Motion for Partial Summary Judgment on the

duty to defend issue (ECF 75), argues that this Court, upon comparing the

allegations of the instant Complaint with the insurance policies’ language, must

order Defendants to defend Plaintiffs in the underlying lawsuits in accordance with

the terms and conditions of those policies. Colloquially, Plaintiffs suggest this

Court must apply the “eight-corners” test. See Ramara, supra, at 673-74

(“Importantly, Pennsylvania adheres to the [‘]four corners[’] rule (also known as

the [‘]eight corners[’] rule), under which an insurer’s potential duty to defend is

[‘]determined solely by the allegations of the complaint in the [underlying]

action.[’]” [(quoting Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial

Union Ins. Co., 908 A.2d 888, 896 (Pa. 2006))]).

Defendants contend that a determination on the duty to defend issue

utilizing the “eight corners” rule cannot be performed because the insurance at issue

in the instant case is excess insurance which “follows form” of the primary

insurance, and thus there are additional questions to be answered prior to any

determination with respect to the excess carrier’s obligation to defend in the face

of the factual averments set forth in the instant Complaint. Stated differently,

Defendants suggest that because their policies are excess policies which overlay

primary policies (issued by Old Republic) and a self-insured retention policy

(governed by an agreement between Old Republic and Plaintiff Giant Eagle), those

policies must first be exhausted (by a covered loss (or losses)) before Defendants’

excess polic[i]es’ duty to defend can be triggered. Defendants’ Joint Motion to

Extend Time (ECF 79) argues that because exhaustion is a prerequisite to the duty

to defend, Plaintiffs will need to prove to this Court that all of the underlying

policies have been exhausted, before an eight corners analysis can be performed by

this Court to determine whether Defendants owe a duty to defend. Defendants

further argue that in light of the amount of extrinsic evidence created by the layering

of the policies and the need for the Court to first determine whether the underlying

policies have been exhausted – which Defendants contend must first be obtained

for the Court to consider before deciding Plaintiffs’ Motion for Partial Judgment –

there is not sufficient time for Defendant to complete the discovery necessary to

Respond to Plaintiffs’ Motion for Partial Summary Judgment on January 10, 2020.

The Court both agrees and disagrees with Defendants’ position.

First, the Court finds no matter what type of insurance policy is at issue –

excess, umbrella, primary – Pennsylvania law and the Federal Courts applying

Pennsylvania law have consistently and uniformly held that an insurance

company’s duty to defend its insured is a distinct duty which differs from, and is

broader than, its duty to indemnify its insured. Thus, this Court will not allow

Defendants to conflate the policies’ indemnification provisions with the policies’

defense obligations.

To this end, this Court notes that in Lexington Ins. Co. v. Charter Oak Fire

Ins. Co., 81 A. 3d 903, 909–10 (Pa. Super. 2013), the Superior Court of the

Commonwealth of Pennsylvania, specifically discussed an excess insurance

carrier’s duty to defend the insured. In reaching its conclusion the Superior Court

stated:

No Pennsylvania appellate court has addressed when an exhaustion

clause triggers an excess insurer’s duty to defend.

* * *

In our view, the duty to defend is sufficiently different from the duty

to indemnify that we conclude that Zeig and Koppers are not

persuasive. Clearly, one difference is the scope of the duty. The

duty to defend is broader than the duty to indemnify. See Am. and

Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 606 Pa. 584, 2 A.3d 526,

540–41 (2010) (Jerry’s Sport Ctr.) However, the precise question

here is not whether North River should be required to defend CMX,

but rather it is when North River’s duty arises. Thus, there is a

temporal element implicit to the duty to defend that finds no

corollary in the Zeig or Koppers analysis of the duty to indemnify.

Moreover, we agree with recent precedent from the Second Circuit,

distinguishing Zeig. In Ali v. Fed. Ins. Co., 719 F.3d 83, 94 (2d

Cir.2013), the Second Circuit concluded that an excess insurer does

have a relevant interest in awaiting actual payment of a settlement

by the primary insurer. According to the Second Circuit, excess

insurers “had good reason” to dissuade insureds from “structur[ing]

inflated settlements with their adversaries . . . that would have the

same effect as requiring [excess insurers] to drop down and assume

coverage [prematurely].” Id.

Absent binding precedent to the contrary, our analysis is limited to

applying longstanding principles to the interpretation of insurance

contracts. See Baumhammers, 938 A.2d at 290; Genaeya Corp., 991

A.2d at 346–47. After reviewing the North River exhaustion clause,

we conclude that its terms are clear and unambiguous. The clause

provides that North River “will have the right and duty to defend the

[i]nsured ... when the applicable limits of ‘[u]nderlying [i]nsurance’

and ‘[o]ther [i]nsurance’ have been exhausted by payment of

judgments or settlements.” Commercial Umbrella Policy, at 4

(emphasis added). To accept Lexington’s interpretation of this

clause improperly would render superfluous the “by payment of”

language in the North River policy. We must give this language

effect. Baumhammers at 290. Accordingly, we hold that North

River’s duty to defend is triggered by the actual payment of the

relevant primary insurance.

Lexington, [81 A.3d] at 909 – 10 (emphasis in original).

Although no Party referenced Lexington in their briefs, the Court finds that

Defendants’ Joint Motion argues that most, if not all, of the discovery it seeks is

being sought to disprove that the underlying policies have been exhausted by a

covered loss (or losses) due to an occurrence or occurrences. Defendants claim

they need this discovery to defend themselves as to whether they owe a duty defend

and request additional time to flush out discovery on the sub-issues of loss and

occurrence. Discovery of this nature clearly goes beyond whether Defendants owe

a duty to defend.

Second, it appears to this Court that Plaintiffs have already supplied

Defendants with the Old Republic insurance policies over which the Defendants’

policies “follow form.” See ECF 77-4 and ECF 77-5. In addition, it appears to this

Court that Plaintiffs have also supplied Defendants with the language of its self-

insured retention agreement with Old Republic. . . .

. . . .

Finally, as noted above, Plaintiffs bear the burden of proving that no

material fact exists in order for the Court to declare that Defendants owe a duty to

defend. . . .

Mem. Order 4-8, ECF No. 85. This Court agrees with the above-analysis, and will thus address

Giant Eagle’s Motion for Partial Summary Judgment in a manner consistent Judge Schwab’s

analysis.

The issues presented by Giant Eagle’s Motion for Partial Summary Judgment are: (1)

whether the complaints in the underlying lawsuits seek damages potentially covered by the AGLIC

Policy and the XL Policy; and (2) whether Giant Eagle has paid more than $2 million in “loss,”

thus triggering AGLIC’s and XL’s duties to defend under the AGLIC Policy and the XL Policy.

Br. in Supp. 1, ECF No. 76. Giant Eagle asserts that, when comparing the insurance contracts

relevant herein and the complaints in the underlying lawsuits, it is clear that the complaints in the

underlying lawsuits seek damages potentially covered under the relevant policies because: “(1) the

plaintiffs [in the underlying lawsuits] seek damages potentially ‘because of bodily injuries;’ (2)

the alleged bodily injuries potentially took place during [relevant] policy periods; and (3) the

opioid lawsuits allege a single ‘occurrence.’” Id. Giant Eagle further asserts that Giant Eagle’s

payment of its defense costs in the underlying lawsuits, which Giant Eagle asserts exceed the Old

Republic Policies’ limits, constitutes a “loss” under the AGLIC and XL Policies, thus triggering

both AGLIC’s and XL’s duties to defend Giant Eagle in the underlying lawsuits. Id.

AGLIC and XL assert that Giant Eagle’s Motion should be denied because Giant Eagle has

not met its burden of establishing that the complaints in the underlying lawsuits seek damages for

“bodily injury” caused by a single “occurrence” that first manifested during the periods of the

AGLIC and XL Policies, and further because Giant Eagle has not established that Giant Eagle “has

spent over $2 million for every triggered policy year with respect to any and each such covered

‘occurrence.’” Defs.’ Br. in Opp’n 1, ECF No. 87. AGLIC and XL further assert that Giant

Eagle’s Motion should be denied because Giant Eagle cannot prove exhaustion of the Old Republic

Policies because the payment of defense costs does not satisfy Giant Eagle’s SIR and deductible

obligations under the Old Republic Policies. Id. AGLIC and XL argue that Giant Eagle

contractually assumed the responsibility for payment of its defense costs, and that it cannot rely

on a payment of those costs to trigger AGLIC’s and XL’s duties to defend. Id.

Old Republic primarily takes issue with Giant Eagle’s assertion in its Motion for Partial

Summary Judgment that the plaintiffs in the underlying lawsuits seek damages that may be covered

under the Old Republic Policies. Old Republic’s Br. in Opp’n 2, ECF No. 89. Old Republic

asserts that it “disputes Giant Eagle’s unsupported legal conclusion that the [underlying lawsuits]

are covered claims under the Old Republic Policies.” Id.

The arguments raised by Old Republic largely mirror those raised by AGLIC and XL, as

the Defendants and the Third-Party Defendant each assert that Giant Eagle’s Motion should be

denied on the following bases: (1) Giant Eagle’s failure to establish that the underlying lawsuits

seek damages for “bodily injuries,” Defs.’ Br. in Opp’n 15, ECF No. 87; Old Republic’s Br. in

Opp’n 9-10, ECF No. 89; (2) Giant Eagle’s failure to establish that the complaints in the underlying

lawsuits allege an “occurrence” or “accident” under the Old Republic Policies, Defs.’ Br. in Opp’n

13-14, ECF No. 87; Old Republic’s Br. in Opp’n 10-11, ECF No. 89; (3) Giant Eagle’s failure to

establish that the underlying lawsuits assert that a single “occurrence” caused “bodily injury,”

Defs.’ Br. in Opp’n 12-13, ECF No. 87; Old Republic’s Br. in Opp’n 11-12, ECF No. 89; (4) Giant

Eagle’s failure to establish that the Old Republic Policies, the AGLIC Policy, and/or the XL Policy

were triggered in policy years 2015-2017, Defs.’ Br. in Opp’n 10-12, ECF No. 87; Old Republic’s

Br. in Opp’n 9-10, ECF No. 89; and (5) Giant Eagle’s failure to establish exhaustion of the Old

Republic Policies, specifically on the basis that Giant Eagle’s payment of defense costs does not

satisfy its SIR and deductible obligations under the Old Republic Policies, Defs.’ Br. in Opp’n 2-

9, ECF No. 87; Old Republic’s Br. in Opp’n 12-13, ECF No. 89. In addition, AGLIC and XL

argue that, even if Giant Eagle could prove exhaustion through payment of defense costs, there

remains an issue of material fact as to whether Giant Eagle exhausted the Old Republic Policies’

$1 million SIRs and $1 million deductibles for each relevant occurrence. Defs.’ Br. in Opp’n 15,

ECF No. 87.

A. Do the Complaints in the Underlying Lawsuits Seek Damages Potentially Covered

by the AGLIC and XL Insurance Policies?

Initially, the Court notes that many of the arguments raised by AGLIC and XL regarding

whether the plaintiffs in the underlying lawsuits seek damages potentially covered by the AGLIC

Policy and the XL Policy rely on their assertion that Giant Eagle cannot definitively establish that

the underlying lawsuits are covered under the Policies. AGLIC and XL rely heavily on their

assertion that Giant Eagle must, at this stage of the litigation, establish that the underlying lawsuits

are actually, as opposed to potentially, covered by the Old Republic Policies in order to establish

that Giant Eagle has exhausted the Old Republic Policies, thus potentially triggering AGLIC’s and

XL’s duties to defend in the underlying lawsuits under the AGLIC Policy and the XL Policy, which

are excess insurance policies. See Defs.’ Br. in Opp’n 10, ECF No. 87 (“[Giant Eagle] also must

show which Opioid Complaints (if any) are actually covered ─ not that ‘may be covered.’”); id. at

13 (“Because determining exhaustion ─ which is the necessary predicate to triggering the AGLIC

and XL Policies ─ requires Giant Eagle to prove not simply that the Opioid Complaints may be

covered under the Old Republic Policies, but that they (1) are actually covered; and (2) arise out

of only one ‘occurrence’ ─ Giant Eagle bears the burden of making these showings under a duty

to indemnify, not duty to defend, standard because this determination pertains to exhaustion.”);

see also Defs.’ Resp. to Third Notice 2, ECF No. 110 (“Here, the Excess Policies expressly require

that only covered claims exhaust limits. . . . Giant Eagle must show that the Complaints are actually

covered—not just that they may be covered.”).

The Court notes that AGLIC and XL raised the same argument before Judge Schwab in

support of their Joint Rule 56(d) Motion, which sought additional time to oppose Giant Eagle’s

Motion for Partial Summary Judgment on the basis that additional discovery was necessary. See

Reply in Supp. of Defs.’ Joint Rule 56(d) Motion 2, ECF No. 83 (“Even if Giant Eagle’s exhaustion

construct is accepted—i.e., that defense expenditures can erode the limits of all triggered Old

Republic Policies—the Excess Policies are only triggered through the exhaustion of the underlying

policies by covered claims, and, consistent therewith, Giant Eagle can only satisfy its SIRs and

Deductibles through the actual payment of covered claims.” (emphasis added)). Judge Schwab

squarely rejected this assertion in his January 2, 2020 Memorandum Order, specifically explaining: