This action arises from a dispute as to the amount of insurance coverage that was in effect when a fire destroyed the plaintiff's principal place of business. Two proceedings were commenced in state court to establish the amount of the insurance coverage. These two cases were removed to federal court
and then consolidated. The defendant filed a motion to dismiss and both parties filed motions for partial summary judgment. After reviewing all of the documents in this case, I conclude that summary judgment should be granted in favor of the defendant insurance company in Count I, which involves the interpretation of the insurance policy. Also, the punitive damages claim in Count III (bad faith settlement of claim) and all of Count V (RICO) of the complaint will be dismissed.
The plaintiff, Rich Maid Kitchens, Inc. ("Rich Maid")
is a Pennsylvania corporation and, prior to August, 1984, manufactured, sold and distributed kitchen cabinets. Rich Maid conducted their operations at five different locations, with their principal place of business at Route 422 in Wernersville, Berks County.
In the normal course of their business, Rich Maid obtained many types of insurance coverage. Mr. Russel Klotz handled most of Rich Maid's insurance needs, including its casualty and property insurance. When he died in 1972, his son, Richard Klotz, became Rich Maid's insurance agent. Depos. of C. Strickler at p.4. Initially, Rich Maid's fire insurance had to be brokered out to between 12 and 15 companies because of a capacity problem. As of 1977, the defendant Pennsylvania Lumbermens Mutual Insurance Company ("Lumbermens") began to write a portion of the plaintiff's fire insurance policy. In 1981, Mr. Klotz consolidated the fire insurance coverage into one policy, which was written entirely by Lumbermens. Depos. of R. Klotz at p.24.
When the plaintiff's fire insurance policy was first written, it provided for coverage based on a scheduled policy. Every insured item was given a monetary value and each item was only insured up to that specific amount. In June of 1981, the coverage was changed to a blanket insurance policy. This type of policy provided complete coverage for any losses on items included in the policy at one or several locations up to the amount of the policy. On May 20, 1983, Rich Maid renewed this insurance policy for another three year period.
Lumbermens wrote this blanket insurance policy with the words "PA. BLANKET" in the upper right hand corner of one of the pages of the policy. On the same page was a space for the identification of all property covered by the policy. n3 The words "as per attached" were typed into this space. Stapled to this page of the policy was a small piece of paper with the following written on it:
LOCATION NO. AMOUNT
1. $ 2,000,000 S/S Route 422, East of Wernersville, Berks Co.,
2. 400,000 N/S of Fort Zeller Rd., Newmanstown, Lebanon
3. 50,000 Rear of 890 Columbia Ave., Sinking Springs,
Berks Co., Pa.
4. 500,000 N/S Route 422 K/A 633 W. Lincoln Ave., Myerstown,
Lebanon Co., Pa.
5. 2,500 On the Double-faced sign, approx. 15' x 15' with
eight (8) spot or flood lights, located S/S of
Route 422, Wernersville, Berks Co., Pa.
Average Fire Rate: .927
E.C. Rate: .077
VMM Rate: .009
All Risk Rate: .067
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