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PLAZA 61 v. NORTH RIVER INS. CO.

March 24, 1978

PLAZA 61 and CRESSONA PLAZA, INC., Plaintiffs
v.
THE NORTH RIVER INSURANCE COMPANY, Defendants


Herman.


The opinion of the court was delivered by: HERMAN

This is a diversity action brought by the insured against the insurer on a builder's "all risk" policy. Both parties have moved for summary judgment. There is no dispute as to the following facts:

 On October 19, 1972, Cressona Plaza, Inc., Plaintiff in this action, entered into a contract with Majo Corporation (hereafter Majo) *fn1" for construction of a shopping center in Pottsville, Pennsylvania, which was to be known as "Plaza 61".

 In connection with the construction of Plaza 61, Plaintiff secured from Defendant a builder's "all risk" insurance policy, providing for coverage as follows:

 
2. PROPERTY INSURED
 
This policy covers the property of the Insured, or the liability of the Insured for the property of others, consisting of all buildings in the course of construction, alteration or repair by the insured, including temporary structures, and materials used in construction, alteration and repair of such buildings, while in transit to the job site and while there awaiting installation.
 
6. THIS POLICY INSURES AGAINST
 
All risks of direct physical loss or damage to the insured property from any external cause except as hereinafter provided.

 During October and November of 1973 disputes arose between Plaintiff and Majo which culminated with Plaintiff terminating the contract. A letter advising Majo of the termination and giving it, pursuant to the terms of the contract, seven days to vacate the site was sent on November 21, 1973.

 On December 5, 1973, fifteen days after receipt of the termination notice, Majo employees vacated the site, taking, in addition to their own tools and equipment, a substantial amount of building material which had been delivered to the site but not yet incorporated in the structure. At some time on December 5 counsel for Plaintiff complained to the State Police that Majo employees were committing theft and vandalism at the construction site. The police visited the site, but no arrests were made nor charges filed, and the removal of material and equipment proceeded uninterrupted.

 On January 22, 1975 Plaintiff filed a claim under its policy with Defendant, claiming losses in the amount of $885,555.00 as a result of theft and vandalism by Majo employees on December 5, 1973. Defendant denied coverage, and on June 5, 1975, this suit was commenced, by issuance of summons, in the Court of Common Pleas of Lackawanna County. The suit was subsequently removed to this Court. After discovery, Plaintiff conceded that no vandalism occurred on December 5, 1973, and that certain other elements of loss previously claimed were not covered by the policy. Accordingly, in its motion for summary judgment, it has reduced its claim to $110,520.14 for lost material.

 Meanwhile, Plaintiff has been sued by Majo in the Court of Common Pleas of Luzerne County. That suit alleges wrongful termination of the contract and claims amounts due for work done prior to termination, and lost profits. Plaintiff has asserted a counterclaim in the Luzerne County suit, charging, inter alia, wrongful removal of material and equipment from the job site. See Answer and Counterclaim, Defendant's Exhibit 10, at 11. Majo's defense to this charge is that removal of the material was proper under the contract and consented to by Plaintiff. See Answer to Counterclaim, Defendant's Exhibit 11, at 10.

 There is nothing in the record before us to indicate whether the Luzerne County suit has reached an adjudication. It is apparent, however, that there is considerable dispute as to who had the right to the materials stored on the site. *fn2" The resolution of that dispute is not necessary in deciding the matters now before us. For our purposes it is sufficient to note that there was clearly no theft of insured property, but rather a taking by Majo in the belief, whether or not justified, that the material not yet incorporated in the structure remained Majo's property. Thus Defendant is correct when it points out that it has a good defense to any claim predicated on ...


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