Demers Bros. Trucking v. Underwriters at Lloyd's
| Decision Date | 03 March 2009 |
| Docket Number | Civil Action No. 07-10902-JLT. |
| Parties | DEMERS BROS. TRUCKING, INC. and Mossberg Realty Corporation, Plaintiffs, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, SUBSCRIBING TO CERTIFICATE NUMBER SRS IM MA 04-124, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
James E. Grumbach, Grumbach & Royal, LLC, Wellesley, MA, William J. Royal, Jr., for Plaintiffs.
Mindy M. Medley, Sava A. Vojcanin, Clausen Miller PC, Chicago, IL, Stephen C. Reilly, Amber Anderson Villa, Sally & Fitch LLP, Boston, MA, for Defendant.
Plaintiffs Demers Bros. Trucking, Inc. ("Demers") and Mossberg Realty Corporation ("Mossberg") bring this action against Defendant Certain Underwriters at Lloyd's, London, Subscribing to Certificate Number SRS IM MA 04-124 ("the Insurer") to enforce an inland marine insurance policy. This action arose out of an insurance coverage dispute resulting from a March 2005 fire at Plaintiffs' Dodgeville Mill. Plaintiffs assert claims for (1) breach of contract; (2) declaratory judgment; and (3) violation of the Massachusetts Consumer Protection law. Presently at issue are Parties' cross-motions for summary judgment,1 For the following reasons, Defendant's Motion for Summary Judgment is ALLOWED IN PART and DENIED IN PART, and Plaintiffs' Motion for Partial Summary Judgment is ALLOWED IN PART and DENIED IN PART.
At all times relevant to this action, Demers operated a rigging and heavy-hauling business at the historic Dodgeville Mill ("the Building") in Attleboro, Massachusetts. Demers leased space at the Building from Mossberg, a realty corporation and owner of the Building. The Insurer issued insurance policy Certificate Number SRS IM MA 04-124 ("the Policy"), effective October 31, 2004 through October 31, 2005, to Demers and Mossberg (collectively "the Insured").2
During the Policy period, two separate fires broke out at the Building: one on March 24, 2005 and the other in July 2005. The cause and origin of both fires were categorized as "suspicious," and a Demers employee was arrested for starting the second fire. The Insured informed the Insurer of the March fire and the loss that it had caused. Because the Insured did not claim any damages for the July fire, this dispute focuses on the March fire ("the Fire").3
The Fire occurred in an upper floor of the Building and caused significant damage including: (1) a one-hundred-by-forty-two-foot hole through the roof; (2) destruction of over eighty windows; (3) damage to the timber framing, roof, walls, and first-wing floor decking; and (4) smoke damage to the third floor. In addition, the Fire activated approximately eighty automatic sprinkler heads. Finally, the Attleboro Fire Department spent approximately four hours applying water to the Fire and various "hot spots" throughout the Building, and punctured additional holes through the roof.
The Insured enlisted Professional Loss Adjusters ("PLA"), a public adjusting firm, to present insurance claims arising from the Fire to the Insurer. Brian Payne, a PLA employee, served as the primary adjuster on the Insured's behalf. Leonard Theran, also a PLA employee, oversaw Mr. Payne's work. Christopher Attles, Demers's vice president, served as the primary contact between PLA and the Insured. Paul Dowling, of McLarens Young International ("McLarens"), served as the Insurer's independent insurance adjuster.
On February 22, 2006, Mr. Payne (for the Insured) sent Mr. Dowling (for the Insurer) a letter that enclosed two Sworn Statements in Proof of Loss. The first was for $518,915.05 in property damage, and the second was for $200,000 in claims related to (1) cargo and transportation and (2) loss of income, rents, and extra expenses. On March 14, 2006, Mr. Dowling informed Mr. Payne that the Insurer approved the $518,915.05 payment but rejected the $200,000 payment. By approximately March 24, 2006, the Insured had received the $518,915.05 from the Insurer.
On July 17, 2006, the Insured submitted a claim package to Mr. Dowling. This package included a Sworn Statement in Proof of Loss of $242,171.84 to reimburse Insurance Reconstruction Services ("IRS") for its efforts in repairing, drying, and protecting the Building. Sometime after July 17, 2006, the Insurer paid the Insured the $242,171.84. On August 17, 2006, Mr. Dowling sent Mr. Payne a letter inviting him to discuss the July 17 claim package, and in October 2006, Mr. Dowling and Messrs. Payne and Theran met to discuss the Insured's claim.
On December 29, 2006, the Insured submitted a "final submission ... to settle the subject claim."4 The Insured's December 29 submission sought coverage for the following: (1) eight line-items under the Real and Personal Property provision; (2) eleven line-items under the heading "Loss of Income/Rents/Extra Expense"; (3) one line-item under the Cargo and Transportation provision; and (4) one line-item under the Riggers Liability provision. On January 16, 2007, Mr. Dowling corresponded with Mr. Payne regarding the December 29 submission and requested that Mr. Attles undergo an Examination Under Oath ("EUO").
Mr. Attles underwent an EUO on March 7, 2007. Approximately two months later, the Insurer received additional documentation that it had requested from the Insured. After receiving this information, the Insurer paid the Insured an additional $253,913.16. To this date, the Insurer has paid the Insured $1,017,500 under the Real and Personal Property provision.
The Insured brought this action in Massachusetts Superior Court on April 11, 2007. The Insurer removed to this court on May 14, 2007. The Insured seek actual, along with double or treble, damages; interest and costs; and a declaration of Parties' rights and obligations under the Policy. On May 2, 2008, the Insurer moved for summary judgment on all counts of the Insured's Second Amended Complaint. On June 2, 2008, the Insured moved for full summary judgment on liability and partial summary judgment on damages that are readily ascertainable or not subject to genuine dispute.
A court may grant summary judgment when the moving party has shown "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."5 The opposing party has the burden of production to "set forth specific facts showing that there is a genuine issue for trial."6 Neither party, however, "may rely on conclusory allegations or unsubstantiated denials, but must identify specific facts derived from the pleadings, depositions, answers to interrogatories, admissions, and affidavits to demonstrate either the existence or absence of an issue of fact."7
According to Massachusetts law, "insurance-contract interpretations pose legal issues for resolution by the court."8 The initial burden of proof rests with the insured to prove "that the loss is within the description of the risks covered."9 After the insured establishes that a claim falls within the coverage terms, the burden shifts to the insurer to demonstrate whether any exclusion applies.10 Insurance coverage exclusions are strictly construed.11
Courts must enforce insurance contracts according to their plain language, unless that language is ambiguous.12 A contract term is ambiguous if "its language is `reasonably prone to different interpretations' or `susceptible to differing, but nonetheless plausible, constructions.'"13 The court is to interpret an insurance contract "according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed,"14 construing the insurance contract terms "in their usual and ordinary sense" and "in the context of the Policy as a whole."15 The court must resolve any contract ambiguity against the insurer.16
In this case, for the Insured's claims that do not present a genuine issue of material fact, the relevant inquiry solely involves the terms of the Policy and is therefore a question of law for this court to resolve.17
The Insurer has already paid the Insured $1,017,500 under the Real and Personal Property provision of the Policy, which the Insurer claims exhausts the Real and Personal Property sublimit.18 Consequently, the Insured argue that (1) certain claims that the Insurer allocated under the Real and Personal Property provision could have been allocated under Policy provisions whose sublimits have not been exceeded, and (2) they have additional claims that fall under Policy provisions whose sublimits have not been exceeded.
At issue in this case are the Insured's insurance claims, listed in their December 29 submission, seeking coverage for the following items: (1) spools of superconductive cables belonging to the Massachusetts Institute of Technology ("MIT cables"); (2) switchgears belonging to Stern-Leach ("switchgears"); (3) IRS's invoiced work ("IRS invoice"); (4) security guard service and security system; (5) various repair expenses; (6) lost rental space and labor to relocate; and (7) loss of rent.19 Also at issue is are the Insured's claims for (1) contractors' equipment and (2) supplemental personal property, rigging equipment, and Mossberg personal property. Finally, the Insured seek (1) reimbursement of the $2,500 deductible, (2) statutory interest, and (3) consequential damages.20
The Insured's claims implicate the Real and Personal Property, Contractors Equipment, Riggers Liability, and Cargo and Transportation Policy provisions. These provisions provide the following coverage:
1. REAL AND PERSONAL PROERTY—All real and personal property (including improvements and betterments) of...
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...2007); Demers Brothers Trucking, Inc. v. Certain Underwriters at Lloyd’s, London, Subscribing to Certificate Number SRS IM MA 04-124, 600 F. Supp.2d 265 (D. Mass. 2009); GE HFS Holdings, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, 520 F. Supp.2d 213 (D. Mass. 2007......
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...2007); Demers Brothers Trucking, Inc. v. Certain Underwriters at Lloyd’s, London, Subscribing to Certificate Number SRS IM MA 04-124, 600 F. Supp.2d 265 (D. Mass. 2009); GE HFS Holdings, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, 520 F. Supp.2d 213 (D. Mass. 2007......
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