Younis Bros. & Co. v. CIGNA Worldwide Ins. Co.

• Decision Date: 25 September 1995
• Docket Number: 91-6785.,Civ. A. No. 91-6784
• Citation: 899 F. Supp. 1385
• Parties: YOUNIS BROTHERS & CO. v. CIGNA WORLDWIDE INSURANCE COMPANY. The ABI JAOUDI AND AZAR TRADING CORPORATION v. CIGNA WORLDWIDE INSURANCE COMPANY.
• Court: U.S. District Court — Eastern District of Pennsylvania

899 F. Supp. 1385

YOUNIS BROTHERS & CO. v. CIGNA WORLDWIDE INSURANCE COMPANY.

The ABI JAOUDI AND AZAR TRADING CORPORATION v. CIGNA WORLDWIDE INSURANCE COMPANY.

Civ. A. Nos. 91-6784, 91-6785.

United States District Court, E.D. Pennsylvania.

September 25, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John J. Seehousen, Langhorne, PA, for plaintiffs.

David R. Strawbridge, Cozen and O'Connor, Philadelphia, PA, for defendant.

MEMORANDUM

O'NEILL, District Judge.

I. Introduction

With respect to the procedural history of these cases reference is made to this Court's November 16, 1994 memorandum reported at Younis Bros. & Co., Inc. v. Cigna Worldwide Ins. Co., 882 F.Supp. 1468 (E.D.Pa.1994).

Currently before the Court are the post-trial motions of the parties.

Defendant CIGNA argues that the following entitle it to judgment as a matter of law:

1. The suit limitation clause contained in the fire policies issued by defendant to plaintiffs bars plaintiffs' claims with respect to those policies;

2. Plaintiffs failed to make out a prima facie case establishing their right to coverage under the insurance policies;

3. The war risk exclusion provisions contained in the policies bar plaintiffs' claims;

4. Neither defendant's refusal to pay plaintiffs' claims nor its manner of investigating those claims can constitute bad faith under 42 Pa.S.C.A. § 8371.

Defendant argues that the following entitle it to a new trial on plaintiffs' contract and bad faith claims:

5. The Court committed reversible error in instructing the jury with respect to ambiguity in the insurance contracts;

6. The Court committed reversible error in instructing the jury with respect to plaintiffs' alleged fraud and noncooperation.

Defendant also asserts the following:

7. The Court's decision to allow plaintiff AJA to assert its Harbel fire loss claim constituted reversible error;

8. AJA forfeited fire loss coverage with respect to the Harbel location by violating the notice provision contained in the Harbel fire policy.

Plaintiffs argue that they are entitled to a new trial as to those issues upon which they did not prevail because plaintiffs were prejudiced by this Court's determination:

1. Not to disqualify the jury panel due to the allegedly improper voir dire and striking of minority persons from the jury pool by defendant's counsel.¹

Plaintiffs also argue that this Court erred by:

2. Failing to rule that as a matter of law the suit limitation policy contained in the fire policies did not bar their suit;

3. Failing to rule as a matter of law that the coverage limits of the policies were those amounts contained in the policies' renewal endorsements;

4. Limiting plaintiffs' cross-examination of defendant's witness John Smith;

5. Failing to compel defendant to produce unredacted copies of reports which defendant introduced into evidence.

Plaintiff AJA argues that the Court erred by:

6. Failing to rule as a matter of law that—with respect to AJA's fire and burglary policies—defendant was liable for the entire amount of coverage stated in the renewal endorsements;

7. Refusing to award plaintiff AJA partial judgment in the amount of the damages stipulated at the Harbel supermarket and warehouse, the Randall Street supermarket and wholesale warehouse, the Freeport administrative offices and bonded warehouse and the Old Road manager's residence;

8. Incorrectly charging the jury with respect to the issue of plaintiff AJA's alleged fraud.

Plaintiff Younis argues that with respect to its bad faith claim pursuant to 42 Pa.S.C.A. § 8371 the Court erred by:

9. Failing to permit the jury to determine whether Younis was entitled to recover interest, counsel fees and costs and the amount of those sums;

10. Excluding testimony regarding defendant's conduct;

11. Charging the jury that it could award punitive damages against defendant only if it first determined that defendant's actions were outrageous and permitting the jury to hear additional evidence regarding defendant's conduct after the jury had determined that defendant had acted in bad faith;

12. In failing to incorporate findings of facts in this Court's memorandum dated November 16, 1994 and in failing to award Younis damages pursuant to § 8371.

Plaintiff Younis also argues that this Court erred in refusing to award Younis expenses which it incurred allegedly due to defendant's actions.

II. Discussion

Motion For Judgment NOV

Defendant seeks judgment notwithstanding the verdict pursuant to Fed.R.Civ.P. Rule 50(b) which provides:

Whenever a motion for a judgment as a matter of law made at the close of all evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to the later determination of the legal questions raised by the motion.... If a verdict was returned, the court may, in disposing of the renewed motion, allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as a matter of law. If no verdict was returned, the court may, in disposing of the renewed motion, direct the entry of judgment as a matter of law or may order a new trial.

The Court of Appeals has held that "when deciding a motion for judgment n.o.v., the trial judge must determine whether the evidence and the justifiable inferences most favorable to the prevailing party afford any rational basis for the verdict." Bhaya v. Westinghouse Elec. Corp., 832 F.2d 258, 259 (3d Cir.1987) citing Berndt v. Kaiser Aluminum & Chem. Sales, Inc., 789 F.2d 253 (3d Cir.1986), cert. denied, 488 U.S. 1004, 109 S.Ct. 782, 102 L.Ed.2d 774 (1989). The standard is the same whether the motion is one for a directed verdict or for judgment n.o.v. The standard for granting a Rule 50 motion is also identical for the trial court and upon appeal. See Gilpin v. Langan, 789 F.2d 1034 (3d Cir.1986). With respect to that standard the Court of Appeals has stated that the court:

must examine the record in a light most favorable to the verdict winner, and review the specific evidence in the record and all inferences reasonably capable of being drawn therefrom. The court must determine whether, as a matter of law, the record is critically deficient of that minimum quantum of evidence from which a jury might reasonably afford relief.... It should be granted sparingly and circumspectly. Nevertheless the federal courts do not follow the rule that a scintilla of evidence is enough. The question is not whether there is literally no evidence supporting the party against whom the motion is directed but whether there is evidence upon which the jury could properly find a verdict for that party.

Patzig v. O'Neil, 577 F.2d 841, 846 (3d Cir. 1978) (citations and quotations omitted).

Suit Limitation Clause

Each of the fire policies issued by defendant to plaintiffs contains a suit limitation clause which provides:

No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity ... unless commenced within twelve months next after inception of the loss.

Plaintiffs filed suit on all claims except the Harbel market fire loss claim on October 31, 1991. Plaintiff AJA first asserted its Harbel claim during trial (February 1994) and defendant argues that I abused my discretion in permitting AJA to assert the claim at that time. It is not disputed that each of plaintiffs' fire losses occurred before October 30, 1990.

Plaintiffs argue that their claims are not barred because: (1) the closure of Liberian courts between June 29, 1990 and November 4, 1991 voided the suit limitation clauses; and (2) the actions of defendant's agents and employees estop defendant from asserting the clauses as a defense. Plaintiff AJA also argues that this Court acted properly when it allowed AJA to amend its pleadings to assert its Harbel market fire loss.

Upon review of the record and of the authorities cited by the parties I conclude that—excluding the Harbel market fire claim—the suit limitation clauses do not bar plaintiffs' fire loss claims. Because of my determination with respect to defendant's war risk exclusion defense I need not address the propriety of my decision to permit plaintiff AJA to assert its Harbel market fire loss claim; any references to plaintiffs' "losses" or "claims" in the following suit limitation discussion excludes the Harbel market fire claim.

Plaintiffs assert that disputes involving the suit limitation clauses are controlled by Liberian law which looks to American common law.² The parties agree that there is no conflict between Liberian law and Pennsylvania common law on this issue.

In Semmes v. Hartford Ins. Co., 80 U.S. (13 Wall) 158, 20 L.Ed. 490 (1871), the Supreme Court determined the effect of a twelve month suit limitation clause when a citizen of Mississippi brought suit against a Connecticut insurance company in 1866 for coverage on a loss sustained in 1860. The Court held that the Civil War, which it described as a war between the countries in which the parties resided, imposed a disability on plaintiff which "relieved him from the consequences of failing to bring suit within twelve months after the loss, because it rendered a compliance with that condition impossible and removes the presumption which that contract says shall be conclusive against the validity of the plaintiff's claim." Id., 80 U.S. at 161. Since the suit limitation provision was a term negotiated by the parties and not a legislatively enacted statute of limitations the Court held that the plaintiff's claim was timely because it was brought within the applicable statutory period. Id.

The suit limitation provisions in the present fire policies are required by Pennsylvania law to be included in all policies insuring property within the Commonwealth. However, the insured property in the present case was located in Liberia and the policies were issued there; therefore, I will regard the limitations as part of...