Unijax, Inc. v. Factory Ins. Ass'n

Decision Date01 March 1976
Docket NumberNo. X--122,X--122
Citation328 So.2d 448
CourtFlorida District Court of Appeals
PartiesUNIJAX, INC., a Florida Corporation, Appellant, v. FACTORY INSURANCE ASSOCIATION, etc., et al., Appellees.

John B. Chandler, Jr. and G. Kenneth Norrie, of Rogers, Towers, Bailey, Jones & Gay, Jacksonville, for appellant.

Delbridge L. Gibbs, of Marks, Gray, Conroy & Gibbs, Jacksonville, John W. Morrison, of Clausen, Miller, Gorman, Caffrey & Witous, Chicago, Ill., to appellees.

BOYER, Chief Judge.

This is an appeal from a Final Summary Judgment, and a subsequent order denying a motion for consideration, entered by the Circuit Court of Duval County. The real issue, though not so framed by any party hereto, is whether appellant (as distinguished from its subsidiaries) sustained an insured loss under a certain policy of insurance issued by appellee, Factory Insurance Association.

It is axiomatic that summary judgment may not be used as a substitute for trial and that if the pleadings, depositions, answers to interrogatories, admissions, affidavits and other evidence in the file raise the slightest doubt upon any issue of material fact then a summary judgment may not be entered. (Connell v. Sledge, Fla.App.1st 1975, 306 So.2d 194) We must, therefore, in order to resolve the issues presented by this appeal, examine the uncontroverted evidence in the light of those principles of law.

The litigation giving rise to this appeal was commenced, ant at all times has been maintained, by appellant (Unijax) on its own behalf, to recover under a business interruption policy issued by appellee (FIA) for a loss Unijax claims to have sustained. In each count of its six count Complaint directed against FIA, (Count VII was later amended as to defendant, Womble, only), appellant alleged an August, 1969, fire loss to a paper mill in Elizabeth, Louisiana, and that it (Unijax) did 'own and operate said paper mill through its subsidiaries'. Appellant alleged further that 'as a direct result of said fire loss, Unijax sustained a business interruption loss of $4,447,361.00'. The amount claimed to be due from FIA to Unijax, after credit for a prelitigation payment of $3,494,874.00, is $952,487.00.

FIA asserted defenses to each count of the Complaint alleging inter alia, that:

1. Unijax sustained no loss insured against under the policy sued upon; and alternatively,

2. By reason of a coinsurance clause in the policy, FIA's liability is limited to, and cannot exceed, that amount paid under its policy prior to the commencement of suit.

The Circuit Court entered its summary judgment based upon its finding that Unijax has not sustained an insured loss; i.e. that Unijax's business had not been interrupted by the Louisiana fire.

It is important that we emphasize that the issues raised by the parties, and therefore herein resolved, Do not relate to whether the subject policy afforded coverage (except as to the dispute relative to the coinsurance clause) for the fire loss, nor as to whether appellant's subsidiaries have a viable claim. Since those issues are not raised, we do not address them.

The insurance contract, which forms the basis for this litigation, identifies the insureds as:

'Jacksonville Paper Company and all subsidiary and affiliated companies as normally constituted whether owned or leased, Elizabeth, Louisiana'.

The coverage afforded by the policy, (i.e. the subject of the insurance), is delineated throughout the contract as follows:

'Subject to all its provisions this Policy insures against loss resulting only from the necessary interruption of business conducted by the Insured on premises situated: within the area located on both side of Main Street and westerly of Highway Route No. 112 in Elizabeth, Allen County, Louisiana.'

It is readily apparent from the foregoing provisions of the policy that in order for Unijax (successor to Jacksonville Paper Company) to have a claim under the policy It (Unijax) must have suffered a loss resulting from interruption of Its business conducted on the described premises in Louisiana. This is necessarily so because the subsidiaries of Unijax (as well as its affiliated companies) are also insureds and they (not Unijax) are entitled to a claim for Their losses, if any, within the coverage of the policy.

The designated insureds under the policy sued upon, their relationship Inter se and to the property described in appellee's policy, are as follows:

Unijax, Inc., a Florida corporation, appellant herein, is the successor to the corporation heretofore known as Jacksonville Paper Company, a Florida corporation. (There is no contention that Unijax does not enjoy the same protection under the policy as that afforded its predecessor.) Unijax is a wholly-owned subsidiary of IU International Corporation and is the parent of Calcasieu Paper Company and Southern Maid Paper Company. (Neither Unijax, nor its predecessor, were ever authorized to do business in Louisiana; the location of the fire which has given rise to this litigation.) Calcasieu Paper Company (Calcasieu) is a Louisiana corporation not admitted to do business in Florida. It is a subsidiary of Unijax, and was, together with Southern Maid Paper Company, the owner of the property affected by the subject fire. Southern Maid Paper Company (Southern Maid) is a Florida corporation, admitted and doing business in Louisiana. IU International Corp. (IU), formerly International Utilities Corporation, is a Maryland corporation, which, at times relevant, had its offices in Philadelphia, Pennsylvania, its principal place of business being in Wilmington, Delaware. IU has literally hundreds of other subsidiaries. One of those subsidiaries is an operations controlling company, which is known as International Utilities Management and Services Corporation, (Management & Services Company), located in Philadelphia, Pennsylvania. The function of the Management and Services Company was inter alia, to provide consulting assistance and 'to see that the subsidiaries were well-run and profitable'.

In 1968, IU acquired Jacksonville Paper Company and all its subsidiaries, including Calcasieu and Southern Maid. Thereafter, IU caused the name of Jacksonville Paper to be changed to Unijax. From December of 1968, up through and including the date of the fire, Management & Services Company, on behalf of the parent IU, had the power to exercise complete control over Unijax (Jacksonville Paper), Calcasieu and Southern Maid.

In military terms, the 'chain of command' between the above-named companies from top to bottom was: IU had the 'power' of control over Management & Services Company, which had the power of control over Unijax, which had the power of control over its subsidiaries Calcasieu and Southern Maid, which had the power of control and owned the property damaged by the fire, which was located in Elizabeth, Louisiana. It was that fire which resulted in the business interruption losses, which are the subject of this action by Unijax.

The amount of the policy in force on the date of loss, and at all times prior thereto, was determined by Reports of Values (business interruption work sheets) filed on behalf of Calcasieu and Southern Maid only. No reports of business interruption values were filed prior, or subsequent to, the loss for Unijax or Jacksonville Paper.

Following the fire in August of 1969, at the insured premises in Louisiana, interruption of business losses were incurred. When the parties attempted to adjust the losses a disagreement arose as to the application of a coinsurance provision in the policy. FIA acknowledged, however, notwithstanding the coinsurance penalties, that it did incur obligations on account of the fire. To the end of satisfying its obligations, FIA sought agreement as to the amounts of the losses sustained on the Calcasieu and Southern Maid properties. Upon agreement as to the extent of the business interruption losses sustained as a result of the fire, the parties agreed that the maximum amount recoverable under the policy was $4,447,361.00. It was then determined that if, as FIA contended, the coinsurance provision was applicable, the recovery would in the aggregate, be reduced by $952,487.00. The sum of the uncompensated loss was arrived at by reducing the recoverable loss of Calcasieu by $695,609.00 and of Southern Maid by $256,878.00. FIA, thereupon, paid $3,494,874.00. The difference between the amount paid ($3,494,874.00) and the maximum agreed to be recoverable ($4,447,361.00) is the amount claimed by appellant in this lawsuit.

As of the date of the post-loss agreement, August 20, 1970, it was understood by all concerned that the loss and penalty calculations were predicted upon and limited to business interruption losses of Calcasieu and Southern Maid. The source of all dollar amounts referred to in the agreement came from information furnished as to the business interruption losses of Calcasieu and Southern Maid. Unijax never did business in Louisiana, and it owned no property in Louisiana affected by the fire.

The agreement for payment, which was between FIA and Unijax, hereinabove referred to concluded with the following paragraph:

'4. Except as specifically provided herein, nothing contained in this Agreement is intended to waive or modify the conditions and requirements of the policy or in any manner to change or modify the coverage afforded by the policy, nor shall this Agreement constitute or be construed to constitute a waiver or relinquishment of any of the rights of Factory and its member companies or Unijax under the policy.'

Subject to the payment by FIA pursuant to said agreement of $3,494,874.00, the suit giving rise to this appeal was commenced; followed by motions directed to the pleadings and extensive discovery, which was, among other things, directed to an attempt to determine the intertwining corporate relationships between the super-parent, IU, its...

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