Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

AETNA CAS. & SUR. CO. v. TRANS WORLD ASSUR. CO.

July 12, 1990

THE AETNA CASUALTY & SURETY COMPANY, Plaintiff,
v.
TRANS WORLD ASSURANCE COMPANY, et al., Defendants



The opinion of the court was delivered by: PECKHAM

 ROBERT F. PECKHAM, UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION.

 The parties come before the court on plaintiff Aetna Casualty & Surety Company's ("Aetna") motion for summary judgment or, in the alternative, partial summary judgment. This is an action for declaratory relief in which Aetna seeks a ruling from the court that it is not obligated to defend or indemnify defendant Trans World Assurance Company ("Trans World") for the costs of an action brought against Trans World by third parties. *fn1" Aetna believes that it is entitled to summary judgment on the grounds that the insurance policy it issued to Trans World ("the policy" or "the Aetna policy") does not cover the type of damages Trans World will incur as a result of the underlying action.

 Aetna contends that it issued only a premises liability insurance policy to Trans World, including coverage only for tort claims arising out of the ownership or operation of Trans World's facility at San Mateo, California. Aetna therefore moves for summary judgment on several grounds. First, it argues that any damages sustained by Trans World as a result of the underlying action are not covered under the policy, because such damages would not meet the definitions of property damage, personal injury, bodily injury, or advertising injury covered by the policy. Second, Aetna argues that the underlying action does not constitute an "occurrence" as defined by the policy. Third, Aetna contends that there is no coverage for damages from the underlying action because such damages arise out of an alleged breach of contract rather than an accident. Finally, Aetna asserts that there is no coverage because damages from the underlying action do not arise out of the ownership or operation of Trans World's San Mateo premises.

 Trans World opposes Aetna's motion for summary judgment. As an initial matter, it contends that summary judgment is premature in this case because the facts of the underlying action are still developing, meaning that the nature of the claims for which it seeks coverage may change. Second, Trans World argues that the complaint in the underlying action alleges advertising injuries covered by the Aetna policy. Third, it argues that the underlying action -- contrary to Aetna's argument -- constitutes an occurrence under the policy. Fourth, Trans World argues that the policy does provide coverage for damages arising out of breach of contract. Finally, Trans World opposes Aetna's interpretation of the policy as limited to premises liability.

 II. BACKGROUND.

 The underlying action for which Trans World is seeking defense and indemnification from Aetna involves a fraudulent tax shelter scheme allegedly perpetrated by Donald Fletcher, a former Trans World insurance agent. Fletcher, while under contract as an agent for Trans World, *fn2" conducted a series of tax seminars around the country. He convinced participants that they could reduce their tax liability to zero by investing half the value of their previous year's tax liability in a home business and the other half in life insurance.

 Fletcher allegedly profited from the scheme solely by garnering commissions from the insurance policies purchased by the participants. The life insurance policies involved in the scheme were issued by Trans World and by one other company. Trans World states that it neither knew of nor authorized Fletcher's seminars or tax scheme. Declaration of Charles Royals at para. 10.

 The participants in the seminars who followed Fletcher's advice were eventually assessed back taxes, penalties, and interest by the Internal Revenue Service. Some of the seminar participants have filed suit in the Southern District of Ohio, alleging, inter alia, violations of RICO, fraud, and misrepresentation. Trans World is a named defendant in this action. The plaintiffs in the underlying action are currently seeking class certification; they state that the number of plaintiffs exceeds 750. Adler complaint at para. 29. Only three plaintiffs are currently named in the complaint, however.

 Aetna issued a Special Multi-Peril Insurance Policy No. 05 SM 800900 to Trans World. The policy was in effect from March 23, 1983 to March 23, 1986. There is no dispute that the policy was in effect during a portion of the time in which Fletcher was conducting the tax seminars. The parties dispute only whether the scope of coverage for this policy includes the type of damage Trans World may sustain as a result of Fletcher's actions and the underlying claim. The terms of the policy will be discussed in greater detail below in the context of discussing the parties' particular arguments.

 III. DISCUSSION.

 A. Standard for Granting Summary Judgment.

 Federal Rule of Civil Procedure 56(c) provides for the granting of summary judgment where there is no genuine issue as to any material fact and where the moving party is entitled to judgment as a matter of law. The burden of establishing that there is no genuine issue of material fact lies with the moving party. Celotex Corp. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.