Prytania Park Hotel, Ltd. v. General Star Indem. Co.

• Decision Date: 17 June 1999
• Docket Number: No. 97-30635,97-30635
• Citation: 179 F.3d 169
• Parties: The PRYTANIA PARK HOTEL, LIMITED; Alvin Halpern; Theone M. Halpern, Plaintiffs-Appellees, v. GENERAL STAR INDEMNITY COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 169

179 F.3d 169

The PRYTANIA PARK HOTEL, LIMITED; Alvin Halpern; Theone M Halpern, Plaintiffs-Appellees, v. GENERAL STAR INDEMNITY COMPANY, Defendant-Appellant.

No. 97-30635.

United States Court of Appeals Fifth Circuit.

June 17, 1999.

Rockne Locke Moseley, Janet Mary Ahern, Moseley & Associates, New Orleans, LA, for Plaintiffs-Appellees.

Christopher Joseph Aubert, Raymond Joseph Pajares, John Fitzgerald Willis, Aubert & Pajares, Covington, LA, for Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before GARWOOD, JONES and WIENER, Circuit Judges.

WIENER, Circuit Judge:

At the core of this appeal are insurance claims for property damage and business interruption loss attributable to a fire at the Prytania Park Hotel ("the Hotel") in New Orleans, owned by Plaintiffs-Appellees ("the Halperns"). The insurer of the Hotel, Defendant-Appellant General Star Indemnity Company ("General Star"), appeals the district court's denial of its motion for a judgment as a matter of law ("JML") or, alternatively, a new trial. General Star grounds its appeal in numerous assignments of error that it claims adversely affected the jury trial, the resulting verdict, and ultimately the judgment in this case.

A principal bone of contention is the district court's pre-trial grant of a partial summary judgment in favor of the Halperns. The court held that fire-damaged, custom-made furniture, which was attached by screws or bolts to the walls of guest rooms in the Hotel ("the Furniture" ¹), were "[p]ermanently installed: [f]ixtures ...," a category of movable property that is listed in the COVERAGE provision of General Star's policy ("the Policy") among those that are components of the "Building. " The Policy differentiates between loss to the Building and loss to the insureds' "Business Personal Property. " By treating the Furniture as permanently installed fixtures, the court eschewed the possibility that it could be "[f]urniture and fixtures" which, in the COVERAGE provision, are listed among the types of movables that are components the insureds' Business Personal Property. The practical effect of this holding, when incorporated by the trial court into its jury instructions, was to cause the Furniture to be valued at its full replacement cost rather than at its actual cash value as used hotel furniture on the second-hand furniture market. Consistent with this ruling, the jury was instructed to include the Furniture under the Policy's coverage for loss or damage to the Building ("the building claim")--and to use the new, replacement value of the Furniture in calculating any award of damages for its loss--rather than under the Policy's coverage for loss or damage to the insureds' Business Personal Property, i.e., the contents of the Hotel ("the contents claim"), at actual cash value.

We conclude that in granting this partial summary judgment the district court erred as a matter of law in several respects: first, when it implicitly rejected General Star's legal contention that the Furniture was not "fixtures" for purposes of the Policy; second, when it explicitly ruled that the question whether removal would cause substantial damage to the Furniture or to the Hotel was not material; and third, when it granted the partial summary judgment holding that, for purposes of the insurance coverage provided by the Policy, the Furniture was permanently installed fixtures, not furniture and fixtures, and thus compensable under the building claim at replacement value. Our de novo review leads us to the opposite result, which we reach in alternative holdings: (1) The Furniture was not "fixtures" for purposes of the building claim; but (2) if we assume arguendo that the Furniture is "fixtures," it was not "permanently installed" and therefore not includable in the building claim. Either way, then, the Furniture is covered by the Policy only as "[f]urniture and fixtures," an element of the Halperns' Business Personal Property, compensable at market value under the contents claim. We therefore reverse the partial summary judgment which, when translated into a jury instruction, produced an excessive jury award and thereby constitutes reversible error. Unfortunately, given the generality of the jury's non-itemized, global damages awards on both the building claim and the contents claim, neither we nor the district court on remand is able to remedy the effects of this error by rendering a modified judgment as to the building and contents claims. We are thus left no choice but to vacate the judgment of the district court on the building and contents claims and remand this case for a new trial, consistent with this opinion, on the entirety of those claims. Finding no reversible error in connection with the jury's business interruption award, however, we affirm that aspect of the district court's judgment.

I. FACTS AND PROCEEDINGS

The Hotel sustained a fire that caused extensive damage to one of its several buildings and to contents and component parts of that building. The fire interrupted the Hotel's business operations as well. The Hotel was insured under the Policy, which provided coverage for (1) loss or damage to the Building, defined as including, inter alia, "[p]ermanently installed: [f]ixtures; [m]achinery; and [e]quipment," compensable at replacement value; (2) loss or damage to the insureds' Business Personal Property, defined as including, inter alia, "[f]urniture and fixtures," compensable at actual cash value; and (3) loss of "[b]usiness income" resulting from business interruption from the time of the fire until the insureds should "as quickly as possible" resume operations.

The Halperns submitted (1) the building claim for $276,687.96, covering the damaged hotel building, including in it all the Furniture as "[p]ermanently installed: [f]ixtures" at full replacement value; (2) the contents claim for $85,888.10, covering business personal property, but not including any of the Furniture in it; and (3) the business interruption claim for $75,000.00, covering loss of income resulting from interrupted occupancy and operations. Following completion of the adjusting process, General Star paid $186,448.47 on the building claim, which payment did not include anything for the Furniture; $68,273.93 on the contents claim, which included the Furniture at market value under the "[f]urniture and fixtures" element of the Halperns' Business Personal Property, and $34,988.00 on the business interruption claim. As these payments totaled less than the aggregate amount sought, the Halperns filed this declaratory judgment and breach of contract action seeking to recover those portions of their claims that remained unpaid.

During the course of the proceedings prior to trial, the Halperns and General Star filed cross-motions for summary judgment on several issues, including the proper classification of the Furniture. The district court granted the Halperns' partial summary judgment, as described above, and ultimately instructed the jury accordingly.

As fate would have it, this particular issue was addressed, seriatim, by three different judges of the Eastern District of Louisiana, the first of whom died after granting the partial summary judgment, and the remaining two of whom, in turn, declined to amend or revise it. All three judges concluded that the Furniture should be categorized as "[p]ermanently installed: [f]ixtures," thus bringing it under the building claim and making it compensable by General Star at full replacement value.

On appeal, General Star advances numerous assignments of error regarding the district court's preliminary rulings and its conduct of the trial, including evidentiary rulings and jury instructions. All such claims of error, save the ones attacking the partial summary judgment that held the Furniture to be permanently installed fixtures, become moot for purposes of this appeal in light of our determination that the court's grant of the Halperns' partial summary judgment on the Furniture must be reversed and the case remanded for a new trial on the entirety of the building and contents claims. ² The only survivor of our partial vacature of the district court's judgment, and our reversal and remand, is that portion of the court's final judgment that implements the jury's award of damages for business interruption, which portion we address briefly below and affirm.

II. ANALYSIS

A. Standard of Review

The decision to grant or deny a motion for a new trial is within the discretion of the trial court and will not be disturbed absent an abuse of discretion or a misapprehension of the law. ³ Under our well known standard, we review summary judgment rulings de novo, applying the same criteria as does the district court. ⁴

B. The Furniture: "Furniture and Fixtures" or "Permanently Installed Fixtures"?

1. District Court's Grant of Partial Summary Judgment

The first of the three district judges to address the central issue of this diversity case started correctly by turning to Louisiana law. Rather than beginning with the Civil Code, though, the court quoted the Louisiana Supreme Court's opinion in Pareti v. Sentry Indemnity Co. ⁵ for the general truisms that an insurance policy is a contract like all others, is the law between the parties, is enforceable as written, and is to be construed as a whole without interpreting one portion alone while disregarding another. The district court nevertheless failed to construe two key provisions of the Policy in pari materia or in the context of either the Policy as a whole or its entire COVERAGE provision. Instead, the court proceeded next to center its attention on another Louisiana Supreme Court pronouncement that "[w]ords and phrases used in insurance policies are to be construed in their plain, ordinary and popular sense." ⁶ This appears to have led the court to disregard entirely the phrase "[f]urniture and fixtures" in...