STEADFAST INSURANCE COMPANY v. TONY TOMEI T/A/ SUNKISSED TANNING & SPA, ET AL.
2016 Pa. Super. Unpub. LEXIS 1864
On May 24, 2016, the Appellate Division affirmed the Westmoreland County Court of Common Pleas’ granting of summary judgment to Steadfast Insurance Company (“Steadfast”) and Nationwide Property & Casualty Insurance (“Nationwide”) declaring that those companies have no duty to defend or indemnify the Appellants in the underlying negligent security civil action.
The context of the appeal arises from a case captioned Kaylor, et al. v. Tony Tomei t/a d/b/a Sunkissed Tanning & Spa, et al., where 37 Plaintiffs discovered surreptitious videotaping of Sunkissed Tanning & Spa’s (“Sunkissed”) patrons by a third party (Jesse Macklin) as those patrons undressed during tanning sessions at Sunkissed. Subsequently, Mr. Macklin posted the videos for public viewing on the internet.
Generally, the 37 Plaintiffs claimed to have suffered injuries consisting of humiliation, embarrassment, shame, mental anguish, and mental trauma as a result of discovering images of themselves nude on the internet. The Kaylor Complaint alleges that the Defendants, inclusive of the shopping center association, Countryside Shopping Center Associates (“Countryside”), and the leasing company, Colony Development Company/Colony Holding Company (“Colony”), all failed to ensure the safety and security from third party’s misdeeds.
Both Steadfast and Nationwide, the insurance carriers to the Kaylor Defendants, filed a separate declaratory action to have the Court determine if they had a duty to defend and a duty to indemnify the underlying Defendants.
Countryside, as the lessor, was endorsed as an additional insured under the policies for Steadfast issued to Sunkissed. Steadfast provided Commercial General Liability coverage to Sunkissed for certain dates, and Nationwide insured Countryside as well as Colony for the relevant timeframe.
The Court was faced with two insurance exclusions. The first was if Plaintiffs’ injuries, as pled in the Complaint, could be considered a “bodily injury.” The second dealt with personal and advertising injury liability.
As with all declaratory actions, the Court relies heavily upon the Complaint and the allegations therein to determine if there is insurance coverage. In this instance, none of the Plaintiffs alleged any injury beyond emotional considerations. The Court acknowledged that certain Plaintiffs alleged “physical symptoms” as a result of the emotional distress, embarrassment, and humiliation; however, there was no physical injury or impact.
The Court also distinguished Glikman v. Progressive Cas. Ins. Co., 917 A. 2d 872 (Pa. Super. 2007), which found, in important part, that a diagnosis of post-traumatic stress disorder (“PTSD”) could be considered a disease under that insurance policy’s definition of bodily injury which included “bodily harm, sickness or disease, including death that results from bodily harm, sickness or disease.” However, in this instance, none of the Plaintiffs sustained a bodily injury. Additionally, while PTSD can be considered a disease, here, by contrast, the underlying Plaintiffs alleged vague physical symptoms brought on by their emotional distress after learning that videos of them had been posted on the internet. Even the 12 Plaintiffs who at least alleged some physical symptoms associated with emotional distress did not allege any antecedent physical injury or impact to themselves or anyone else. Nor did Plaintiffs allege anything resembling a “disease” as in Glikman.
Here, the Court affirmed the Trial Court’s decision that emotional distress, humiliation, and embarrassment does not qualify as claims for “bodily injury” under the at-issue insurance policies.
The second exclusion was somewhat more esoteric. According to the Court, Coverage B which is Personal and Advertising Injury Liability, provides coverage for those sums that the insured becomes legally obligated to pay as damages because of “personal or advertising injury.” The insurance carriers have a right to defend the insured against any “suit” seeking those damages. However, they do not have to defend an insurer against a suit alleging personal or advertising injury to which the insurance does not apply.
In this instance, negligent security is not one of the defined risks specified in this coverage. There are no allegations that the insureds participated in the taking of the offensive video or the posting of those videos on the internet. There is no allegations that the insureds published oral or written material that violated the underlying Plaintiffs’ right to privacy or negligently enabled the publication of the videos on the internet or are vicariously liable for Macklin’s criminal conduct. The claim against the insureds in the underlying civil action solely sound in negligence, and there are no claims of invasion of privacy pending against them. Therefore, the County Court did not err in precluding this coverage.
This case goes to show that proper analysis of coverage must begin and end with the Complaint itself. Defendants sued in an action could lose their insurance coverage if the claims are inartfully pled. Although these are clearly negligent security-type claims, specifically for allowing an individual to place a video camera in such a private area, the Defendants could still be without insurance recourse in having to pay out-of-pocket for the defense and indemnity under such circumstances.