Emersons, Ltd. v. Max Wolman Company, Civ. A. No. 74-974.
| Decision Date | 27 January 1975 |
| Docket Number | Civ. A. No. 74-974. |
| Citation | 388 F. Supp. 729 |
| Parties | EMERSONS, LTD., and Emersons, Ltd. of Cinnaminson, Inc., Plaintiffs, v. MAX WOLMAN COMPANY, and Home Insurance Company, Defendants and Cross-Claimants. |
| Court | U.S. District Court — District of Columbia |
Philip L. Cohan, David G. Bress, Martin Jacobs, Washington, D.C., for plaintiff Emersons, Ltd., and others.
Joseph F. Cunningham, Washington, D.C., for defendant Max Wolman Co.
Gary W. Brown, James C. Gregg, Washington, D.C., for defendant Home Ins. Co.
This matter came on for trial before the Court, sitting without a jury, on November 26, 1974. Plaintiffs Emersons, Ltd., et al. (hereinafter "Emersons"), seek to recover under an insurance policy a stipulated business interruption loss of $244,069.58 for its Cinnaminson, New Jersey, restaurant. The restaurant was destroyed by a fire which occurred on or about February 13, 1973. Defendants, Home Insurance Company (hereinafter ("Home"), and its general agent, Max Wolman Company (hereinafter "Wolman"), cross-claimed against one another for indemnification or contribution for any damages awarded, and for other relief.
Jurisdiction is conferred upon this Court by Title 28 U.S.C. § 1332 (diversity of citizenship). Plaintiff Emersons is a Delaware corporation with its principal place of business in the State of Maryland. Defendant Wolman is a District of Columbia corporation with its principal place of business in the District of Columbia. Defendant Home is a New Hampshire corporation with its principal place of business in the District of Columbia. The amount in controversy exceeds $10,000, exclusive of interest and costs.
The parties orally stipulated that the law of the District of Columbia would apply to all questions of law herein.
During the fall of 1972, Defendant Wolman undertook to procure for Plaintiff Emersons a "package" insurance policy which would include coverage for loss of business earnings, commonly referred to as "business interruption coverage". Emersons directed Wolman that the policy should extend to all of its operating restaurants as well as to certain designated proposed restaurants, including Emersons' restaurant in Cinnaminson, New Jersey.
At all times, Wolman was a general agent for Defendant Home and Home authorized Wolman through a general agency agreement to bind Home orally to policy coverage.
In October of 1972, Wolman and Home met twice at Home's Baltimore office to discuss Emersons' requested insurance coverage. At the first meeting, Wolman presented a list of approximately thirty-five existing and proposed Emersons restaurant locations, including Cinnaminson, to be covered under one business owners policy. At the second meeting, Home agreed to a special request by Wolman for complete business interruption coverage for all locations. Wolman then submitted another document, ordering from Home on behalf of Emersons the business owners insurance. The policy was to cover twenty-three specified Emersons restaurants, including Cinnaminson, and was to become effective November 1, 1972. On December 29, 1972, Home issued Emersons a package insurance policy, including business interruption coverage, for the twenty-three restaurant locations listed in the aforesaid order. The policy indicated that November 1, 1972, had been the effective date.
On January 29, 1973, the Cinnaminson restaurant opened for business. Approximately two weeks later, on February 13, it was destroyed by fire.
Shortly after the fire, Wolman notified Home of the amount of business interruption coverage claimed at Cinnaminson. It indicated that Home should cover the loss, regardless of the absence of a binder or specific dollar amounts, because it had orally agreed in October to provide business interruption coverage under the policy which became effective November 1, 1972, and because it had subsequently issued an endorsement to the policy showing Cinnaminson as a covered site.
Following notification of the fire and prior to expiration of sixty days after the fire, Home denied business interruption coverage for the Emersons restaurant in Cinnaminson. Home did, however, acknowledge that there were both fire and contents coverages for the restaurant and immediately paid the amounts claimed under those coverages.
Emersons filed this claim on June 27, 1974, for the stipulated sum of $244,069.58 for its business interruption loss.
Defendant Home argues that Plaintiffs' failure to meet the requirements of the insurance policy's limitation provision bars the insured from recovering under the policy. That provision demands that suit be brought within twelve months after occurrence of a loss.
The facts show that Home, through its attorneys, expressly requested Emersons to delay filing suit to recover under the policy so that settlement negotiations could continue. Undisputed testimony establishes that Home asked Emersons, approximately two weeks before the end of the twelve-month period, to "hold off the suit". Home told the insured, "If we can determine the amount of loss, we will pay."1 Following this conversation, Emersons mailed a confirmatory letter to Home,2 and in reliance on Home's request, delayed filing suit. Good faith negotiations continued up to and beyond the end of the twelve-month period.
Hornblower v. George Washington University, 31 App.D.C. 64, 75, 14 Ann.Cas. 696 (1908).3
Here, the insurer specifically requested that suit not be filed and that the parties reach an amicable settlement. Therefore, Home may not now raise the contractual limitation as a defense. Centennial Insurance Co. v. Dowd's Inc., 306 A.2d 648, 651 (D.C.Ct.App.1973).4
Defendant Homes contends that the Plaintiffs' failure to comply with the policy's requirement that sworn, written proof of loss be filed within sixty days after the loss occurred bars recovery because the insured introduced no evidence to justify this failure.
The record shows that both Home and Wolman were given immediate notice of the fire,5 and that Home denied business interruption coverage within sixty days of the loss.6
Where an insurer denies liability during the period prescribed by the policy for the presentation of proofs of loss, on the ground that the loss was not covered by the policy, the insurer waives the provision of the policy requiring that proofs be presented. General Cas. Co. of America v. Gunion, 99 A.2d 643, 646-47 (D.C.Mun.Ct.App.1953).7 Therefore, this Court holds that Home's oral denial of business interruption insurance constituted a waiver of any rights it otherwise might have had as to this type of coverage under the sixty-day provision of the policy.8
Emersons contends that it is entitled to recover under the business owners insurance policy issued by Defendant Home on December 29, 1972, but that should it fail to recover under the terms and conditions of the policy, it is then entitled to recover against the Defendants in negligence.
Emersons bases its alternative negligence claim on Wolman's failure to forward to its principal, Home, projected sales and opening date information on the Cinnaminson site. This information was in the agent's possession prior to the loss, and Home alleges in its cross-claim that receipt of such information by the carrier is a "condition precedent" to the issuance of a business owners insurance endorsement for any location. The Insurance Company considers it tortious conduct that Wolman never furnished the opening date and projected sales figures for the Cinnaminson restaurant before the fire on February 13, and Home argues that if the Court adopts the tort theory, then Wolman should be held solely liable. The pleadings thus present the issue whether Wolman breached a duty to report the requisite data.
Home contends first that the existence of a "duty to inform" was "assumed" by the parties when the insurance contract was originally negotiated. The evidence shows, however, that in spite of Home's contention, the parties assumed no such duty. Emersons, Home and Wolman met in November, 1972, after the date of policy inception, and discussed various coverages, including business interruption. No mention was made at the time, by anyone, that receipt of projected sales or date of a restaurant's opening was a necessary prerequisite for business interruption coverage. Additionally, Jack Krajick, formerly an underwriter for Home and now an officer with Wolman, testified that Home had informed him in October, 1972, that business interruption coverage would extend automatically to the specified sites. Krajick further stated that it had never been his understanding with Home that a carrier would need projected sales or opening date of a location for any purpose other than premium computation and determination of amount of business interruption coverage for a given site.
Home argues second that the existence of a duty to inform was "admitted" by Wolman. The record reveals, however, that no such duty was ever admitted by Wolman — or by any other party or witness. The only evidence which might be considered an admission is the affidavit of Jack Krajick, which stated that conveyance of such information was the "normal procedure". However, this affidavit was prepared and submitted for Krajick's signature by Home's attorneys, and Krajick later testified at trial that to the extent of his knowledge,...
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