On Appeal From the United States District Court For the District of New Jersey. (D.C. Civil Action No. 84-4067)
Before: Becker, Roth, and Higginbotham, Circuit Judges
This appeal requires us to interpret the indemnity period of a business interruption insurance policy. Appellees, Remington Rand Corporation, Delaware, and its wholly owned subsidiary Remington Rand Corporation, New Jersey, (collectively "Remington")*fn1 brought suit against appellant, the Insurance Company of North America ("INA"), for recovery of lost profits and royalties allegedly due and owing under a business interruption insurance policy procured from INA in December of 1979. The case was tried before a jury, and a verdict was rendered in favor of Remington. INA appeals the district court's denial of its pre-trial motion for summary judgment, arguing that as a matter of law Remington's alleged lost profits were not covered under the clear policy language.*fn2 We agree and will reverse the district court's summary judgment decision.
During 1980 and 1981 Remington Rand New Jersey was in the business of selling electromechanical typewriters, under the Remington Rand logo, to a network of dealers, government entities, and other customers. Remington Rand Delaware, as the parent company, collected royalties on the sale and production of these typewriters. The Remington companies also included two wholly owned subsidiaries: Remington Rand Business Systems B.V., in DenBosch, Holland, and Remington Systems Italiana, S.P.A., in Naples, Italy. All typewriters sold by Remington New Jersey were manufactured at these two sites: the Naples plant produced virtually all typewriters sold in Remington's North American market, while the DenBosch plant produced typewriters for sale in Remington's other markets.
The business interruption insurance policy at issue in this case was negotiated with INA on Remington's behalf by Remington's broker and insurance consultant. The parties agree that the goal of these negotiations was to create an insurance program covering all of the related Remington companies, including the Italian and Dutch subsidiaries. The negotiations culminated in Remington's purchase of a policy of business interruption insurance from INA for a one-year period ending December 1, 1980, with a liability limit of two million dollars. This policy was later renewed for one additional year, with an increased liability limit of six million dollars.
The relevant terms of that policy are as follows:
1. Subject to all of its provisions and stipulations, this policy covers only against loss resulting directly from necessary interruption of business conducted by/or through the insureds' U.S. sales operations caused by damage to or destruction of any of the real or personal property (including finished stock) hereinafter described and referred to as contributing properties (and/ or arising out of inability of one contributing property to produce due to destruction/damage/loss to or at another contributing property) by the perils insured against by the terms of this policy which wholly or partially prevents the delivery of materials (including finished stock) to the insured or to others for the account of the insured and results directly in the necessary interruption of the insureds' business.
2. The Company shall be liable for the ACTUAL LOSS SUSTAINED by the Insured resulting directly from such interruption of business, but not exceeding the reduction of Gross Earnings less charges and expenses which do not necessarily continue during the interruption of business, for only such time as would be required with the exercise of due diligence and dispatch to rebuild, repair or replace such contributing properties as has been damaged or destroyed, commencing with the dates of such interruption of the Insured's business and not limited by the expiration date of this policy. Due consideration shall be given to the continuation of normal charges and expenses, including payroll expense, to the extent necessary to resume operations of the Insured with the same quality of service which existed immediately preceding the loss.
IV. RESUMPTION OF OPERATIONS
It is a condition of this insurance that if the Insured could reduce the loss resulting from the interruption of business,
1. by complete or partial resumption of operations of the contributing operations or U.S. ...