Phila. Indem. Ins. Co. v. Atl. Specialty Ins. Co.

• Docket Number: 6:20-CV-03065-MDH
• Decision Date: 08 February 2022
• Parties: PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff, v. ATLANTIC SPECIALTY INSURANCE COMPANY Defendant.
• Court: U.S. District Court — Western District of Missouri

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PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff,
v.
ATLANTIC SPECIALTY INSURANCE COMPANY Defendant.

No. 6:20-CV-03065-MDH

United States District Court, W.D. Missouri, Southern Division

February 8, 2022

ORDER

Douglas Harpool, United States District Court Judge

Before the Court are Plaintiff Philadelphia Indemnity Insurance Company's (“Philadelphia”) and Defendant Atlantic Specialty Insurance Company's (“Atlantic”) cross-motions for summary judgment. For the reason set forth herein, Philadelphia's Motion (Doc. 50) is DENIED, and Atlantic's Motion is GRANTED. Summary judgment is entered in favor of Atlantic.

BACKGROUND

This case arises from Philadelphia's claim that Atlantic failed to contribute its alleged pro-rata share to the indemnification of losses sustained by Philadelphia's and Atlantic's common insured Shoji Entertainments, Inc. (“Shoji”). Philadelphia alleges that the terms of each insurance policy place a common obligation on both Philadelphia and Atlantic to indemnify Shoji for a fire in 2017 and burst frozen water pipes in January 2018, and the terms of each insurance policy set forth the ratios at which each insurer is obligated to indemnify Shoji for the alleged commonly insured losses. Philadelphia claims that Atlantic has refused to contribute a pro-rata share of payment for the covered losses. Atlantic claims in response that it provided coverage under its

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“difference in conditions” policy, which it claims covered Shoji for certain discrete risks not covered by Philadelphia. Atlantic argues that the losses suffered by Shoji are not covered by Atlantic's policy and therefore Atlantic is not required to contribute a pro-rata share of the amount paid by Philadelphia for Shoji's covered losses.

Philadelphia issued a policy of insurance to Shoji Entertainments, Inc. (hereinafter “Shoji”) as named insured, having Policy No. PHPK1646281, with effective dates of April 30, 2017, to April 30, 2018 (hereinafter the “Philadelphia Policy”). Defendant Atlantic Specialty Insurance Company (hereinafter “Atlantic”) issued a policy of insurance to Shoji as named insured, having Policy No. 790-02-21-67-0000, with effective dates of April 30, 2017, to April 30, 2018 (hereinafter the “Atlantic Policy”).

Philadelphia's Ultimatecover Property coverage provided blanket limits of $11, 932, 835. Atlantic's DIC coverage included $10, 000, 000 limits for earthquake and flood. The premium for Philadelphia's Ultimatecover Property coverage was $14, 641.00, while the premium for Atlantic's DIC coverage was little more than half of that amount, at $8, 200.00.

On or about May 31, 2017, a fire occurred at Shoji's theater building located at 3260 Shepherd of the Hills Expressway, Branson, Missouri 65616-8104 (hereinafter the “Theater”), which caused damage to the Theater and the personal property located therein. On or about January 2, 2018, the pipes of the water sprinkler system in the Theater froze and burst, causing additional damage to the Theater and the personal property located therein.

Shoji submitted insurance claims to Philadelphia under the Philadelphia Policy, and to Atlantic under the Atlantic Policy, for damage to the Theater, damage to personal property that was located inside the Theater, and business income and extra expense losses resulting from the fire. Philadelphia asserts that it “reviewed the Atlantic Policy and determined that both the

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Philadelphia Policy and the Atlantic Policy provide coverage for Shoji's claimed damage and losses to its Theater and personal property located at its Theater, as well as Shoji's claimed business income and extra expense losses.” (Doc. 51 at 6).

Philadelphia demanded that Atlantic participate in the adjustment and payment of Shoji's losses based on Philadelphia's own interpretation of the Atlantic Policy. Atlantic refused that demand. Philadelphia adjusted and issued payments to Shoji for Shoji's insurance claims “so as to protect the interests of Shoji.” Id. Philadelphia paid Shoji a total of $10, 482, 868.26 for losses arising from the fire, calculated as follows:

$4, 056, 249.00 for damage to the Theater resulting from the fire

$4, 276, 619.26 for damage to personal property resulting from the fire

$2, 150, 000.00 for business income and extra expense losses resulting from the fire. Philadelphia paid Shoji a total of $791, 633.76 for losses arising from the sprinkler incident,

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