Stryker Corp. v. National Ins. Co.
| Decision Date | 07 February 2002 |
| Docket Number | Civil No. 00-2199(RLA). |
| Citation | 187 F.Supp.2d 4 |
| Parties | STRYKER CORPORATION, Plaintiff, v. NATIONAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Luis A. Oliver-Fraticelli, Fiddler, Gonzalez & Rodriguez, San Juan, PR, for Plaintiff.
Vicente Santori-Coll, San Juan, Todd B. Denenberg, Matthew L. Fiedman, Bingham Farms, MI, for Defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Pending before the Court is plaintiff's motion for summary judgment on its claim for declaratory relief and damages, which defendant has duly opposed. A reply and surreply were also filed as part of the dispositive motion package, in compliance with this Court's Standing Order on the Procedure for Filing Dispositive Motions in Civil Trials, as amended effective May 18, 1998. For the reasons that follow after having reviewed the documents on record as well as the applicable law, plaintiff's motion for summary judgment is hereby GRANTED in its entirety.
Plaintiff Stryker Corporation instituted these proceedings against its insurer National Insurance Company as a result of a dispute concerning its rights under a commercial insurance policy issued by National. Plaintiff requests a declaration that the proper deductible to be applied under the policy to its business income losses is $100,000.00. In addition, plaintiff requests an award of damages consisting of the difference between the $100,000.00 deductible allegedly applicable pursuant to the terms of the policy, and the approximately $2.7 million deductible actually applied by the insurer.
The following material facts are undisputed.
Plaintiff is in the business of manufacturing and marketing medical supplies and devices. It operates a manufacturing plant in Las Palmas Industrial Park, in Arroyo, Puerto Rico. For the period of January 1, 1998 through January 1, 1999, plaintiff purchased a primary "All Risk" Commercial lines Policy, No. CLP-98362 from defendant National. The National Policy provides coverage for loss of business income caused by service and supply interruption.
In September 1998, Hurricane Georges struck the island of Puerto Rico. Plaintiff suffered business losses on account of service and supply interruption. As a result, on July 20, 1999 plaintiff submitted a claim for business interruption losses to National. National agreed that plaintiff's claim was an insured business loss under the National Policy and has partially paid the claim.
The dispute between the parties involves the amount of the deductible properly applicable to plaintiff's claim. It is plaintiff's position that a $100,000.00 deductible is applicable pursuant to the terms of the National Policy. Defendant argues that a 2% Windstorm deductible is applicable to plaintiff's business interruption/time element claims. The difference is substantial: the 2% Windstorm deductible translates to a $2,686,434 deduction, according to defendant. Plaintiff further claims however, that even if the 2% Windstorm deductible applies, the same is capped at $100,000.00. As framed by the parties, the following are the issues pending resolution by the Court.
Pursuant to Fed.R.Civ.P. 56, summary judgment must be granted where the record shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Seda Soto v. Corp. of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints, 73 F.Supp.2d 116 (D.P.R.1999).
"In applying this formulation, a fact is `material' if it potentially affects the out-come of the case," Vega-Rodríquez v. Puerto Rico Tel. Co., 110 F.3d 174, 178 (1st Cir.1997), and "`genuine' if a reasonable factfinder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor." Cortes-Irizarry v. Corporación Insular De Seguros, 111 F.3d 184, 187 (1st Cir.1997).
On issues where the nonmovant bears the burden of proof at trial, he may not defeat a motion for summary judgment by relying upon evidence that is "merely colorable" or "not significantly probative." Fajardo Shopping Center, S.E. v. Sun Alliance Insurance Co., 167 F.3d 1, 7 (1st Cir.1999). In this connection, "genuine issues of material facts can only arise out of competent and reasonably definite evidence actually contained in the summary judgment record." Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 253 (1st Cir.1996). Thus, speculation and surmise, even when coupled with effervescent optimism that something definite will materialize further down the line, are insufficient in the face of a properly documented motion for summary judgment. Id. Furthermore, "the evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a fact finder must resolve at an ensuing trial." Mack v. Great Atlantic and Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.1989). Absent such a showing, the trial court must enter judgment for the moving party in accordance with "the plain language of Rule 56(c)." Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Before turning to the merits of the parties' respective positions, we must first identify the applicable substantive law, a subject on which the policy itself is silent. In addition to Puerto Rico, the parties have identified one other forum that might have an interest in the resolution of this matter, namely the State of Michigan.
A federal court sitting in a diversity case must apply the choice of law rules of the forum state. New Ponce Shopping Center v. Integrand Assurance Co., 86 F.3d 265, 267-268 (1st Cir.1996). Puerto Rico has adopted the "dominant or significant contacts" test laid out in the Restatement (Second) of Conflict of Laws. Servicios Comerciales Andinos, S.A. v. General Del Caribe, 145 F.3d 463, 478-479 (1st Cir.1998). Thus, the laws of the jurisdiction with the most significant contacts with respect to the disputed issue will apply. AM Capen's Co. v. American Trading & Prod. Corp., 74 F.3d 317, 320 (1st Cir. 1996).
The parties have not briefed this issue, opting instead to cite freely from caselaw in both jurisdictions. Although it is a close call, under the dominant contacts test it appears that Puerto Rico law should apply. The insured property is located in Puerto Rico, the insurer is a Puerto Rico corporation, and from what we can discern in the record, the insurance contract was entered into in Puerto Rico. We need not resolve the issue definitively, however, as the result of our analysis is the same under the substantive law of either jurisdiction. See Steinke v. Sungard Fin. Sys. Inc., 121 F.3d 763, 775 (1st Cir.1997).
Construction of insurance contracts and application of their terms to established facts are matters of law, ultimately for this Court to determine. Preferred Mut. Ins. Co. v. Travelers Co., 127 F.3d 136, 137 (1st Cir.1997). Here, the inquiry begins and ends with the National Policy itself.
Coverage for plaintiff's business income losses arises from the Business Income Coverage Form and the Off-Premises Services-Time Element Endorsement, neither of which the parties agree, contains any reference to an applicable deductible. Both parties call our attention to the following section of the policy:
DEDUCTIBLES: $100,000 Combined Property and Time Element, except
$ 25,000 Foreign Locations (DIC) Except Earthquake, Flood
Earthquake and Windstorm
$ 25,000 Property at Unnamed Locations
$ 5,000 Transit
$ 5,000 Exhibition
$ 2,500 Salesmen's Samples
$ 2,500 Physical Therapy Mobile Equipment
5% TSI per location $250,000 Minimum-Earthquake
2% TSI per location $250,000 Minimum-Windstorm
This language clearly contemplates that a $100,000 deductible will be applied to "Time Element" losses of the kind at issue here, unless one of the specifically identified exceptions applies. Therein lies the root of the parties' dispute.
Defendant argues that the language of the policy quoted above makes the 2% Windstorm deductible applicable to plaintiff's claim. Plaintiff predictably disagrees and points to the language of the Windstorm deductible itself, among other things, as evidence that its scope does not extend to claims under the Business Interruption Coverage Form or Time Element endorsement. We agree with plaintiff's analysis.
The interpretation of the National Policy must be based on the totality of its terms and conditions, as...
To continue reading
Request your trial