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Kraus v. Allstate Insurance Co.

decided: June 28, 1967.

JOHN W. KRAUS, JR., APPELLANT
v.
ALLSTATE INSURANCE COMPANY, A CORPORATION, APPELLEE



McLaughlin, Hastie and Freedman, Circuit Judges.

Author: Mclaughlin

McLAUGHLIN, Circuit Judge:

On July 25, 1957, Arthur H. Depew, now deceased, was the insured under an automobile liability insurance policy issued by appellee, Allstate Insurance Company, an Illinois corporation. The coverage was in the amount of up to $5,000 for bodily injury sustained by one person and up to $10,000 when more than one person was injured. The policy provided inter alia:

"Allstate will pay for an insured all damages which the insured shall be legally obligated to pay because of:

A. bodily injury sustained by any person, and arising out of the ownership, maintenance or use, including loading and unloading, of the owned automobile or a non-owned automobile.

Section I -- Part 1. Exclusions -- what this Part of the policy does not cover. (Page 3)

THIS PART 1 DOES NOT APPLY TO :

6. BODILY INJURY OR PROPERTY DAMAGE CAUSED INTENTIONALLY BY, OR AT THE DIRECTION OF, THE INSURED ; or * * *"

Admittedly, on July 25, 1957 Depew was estranged from his wife. On that date he was employed by Dravo Corporation in one of its blasting crews. He had stolen some dynamite from Dravo which he placed in his automobile. That night he met his wife by appointment on East Ohio Street, a public thoroughfare in Pittsburgh, Pennsylvania. While they were both in the automobile of Depew, the latter detonated the dynamite. As a result the automobile was totally destroyed. Depew and his wife were killed. Linda Kraus a pedestrian, plaintiff's decedent, was also killed and several other pedestrians injured. The Kraus administrator and the other people hurt sued the Arthur Depew estate in the Commonwealth Court for the death and said injuries. Appellant Allstate Insurance Company withdrew its appearance for the Depew estate and did not defend the Depew administrator. The case was tried to the Court and there were verdicts and judgments in favor of the Kraus administrator for $12,000; for John W. Kraus, et al. $5,000; for Frank Panza and wife $3,000. After the entry of the judgments the Depew estate assigned all its rights in its policy claim against Allstate to Kraus as administrator of the Linda Kraus estate. Kraus brought this suit in the District Court on the assigned Depew policy cause of action. The complaint, inter alia, alleged that Allstate had wrongfully refused to defend the state court litigation and that a settlement of all causes could have been obtained within the policy limits. The complaint averred bad faith and breach of contract on the part of the insurance company, asserting that this brought about the judgment in excess of the policy limits.

The answer set up ten defenses, all of them deriving from the central contention that under the conceded facts there was no policy coverage arising out of the explosion.

Allstate moved for summary judgment primarily on the ground:

"2. The assignor has no cause of action against this defendant in that:

(a) the assignor's liability did not arise from the operation, maintenance, or use of an automobile, and was not, therefore, within the coverage of the defendant's policy of insurance, and

(b) the defendant did not assume to insure against liability created by the insured-assignor's intentional conduct, and excluded the ...


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