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Whitmoyer Ford, Inc. v. Republic Franklin Insurance Co.

April 1, 2010

WHITMOYER FORD, INC. AND WHITMOYER BUICK CHEVROLET, INC. PLAINTIFFS
v.
REPUBLIC FRANKLIN INSURANCE COMPANY DEFENDANT



The opinion of the court was delivered by: Golden, J.

MEMORANDUM OPINION AND ORDER

I. Introduction

Before the Court are the parties' cross-motions for summary judgment in this declaratory judgment action. Plaintiffs, a family of auto dealerships in Lancaster County, seek a declaratory judgment that the Defendant insurance company owes them an additional payment toward a loss suffered in 2009, as well as compensatory and punitive damages for bad faith. Defendant, a New York-based insurance company, seeks a declaratory judgment that it has satisfied its obligations under the insurance policy. Because the Court concludes that the insurance company properly applied the co-insurance provision of a clear and unambiguous policy in determining the amount of money owed to Plaintiffs following their losses, it grants summary judgment in favor of the insurance company.

II. Factual Background

The material facts of this case are not in dispute. Plaintiffs purchased a commercial insurance policy from Defendants, which took effect on March 19, 2009. (Pl.'s Statement of Undisputed Facts ¶ 1). On March 7, 2009, the inventory on Plaintiffs' auto lots did not exceed $3,952,000. (Id. ¶ 2). Between March 7 and March 29, 2009, Plaintiffs' inventory increased to $4,202,561. (Id. ¶ 3).

A hail storm swept through Lancaster County on March 29, 2009, causing significant damage on Plaintiffs' lots. (Id. ¶ 4). Plaintiffs reported losses of $1,331,805.17 to Defendant. (Id.) For the first time in the course of the parties' business relationship, Defendant applied a "co-insurance" penalty provision from Plaintiffs' insurance policy, declining to pay Plaintiffs $52,755.25 of their reported losses.*fn1 (Id. ¶¶ 10, 11). Defendant calculated the co-insurance penalty of 5.96 percent by dividing the limit of insurance amount shown in the declaration page of Plaintiffs' policy, $3,952,000, by the total value of the inventory on Plaintiffs' lots at the time of the loss, $4,202,561 (Def.'s Br. In Support of Mot. Exh. B).

III. The Language of the Policy*fn2

Plaintiffs highlight the following policy language, concerning "Owned Autos You Acquire After the Policy Begins," from page two of fifteen, found in Section I--Covered Autos:

1. If symbols 21, 22, 23, 24, 25, or 26 are entered next to a coverage in ITEM TWO of the Declarations, then you have coverage for "autos" that you acquire of the type described for the remainder of the policy period.

2. But, if symbol 27 is entered next to a coverage in ITEM TWO of the Declarations, an "auto" you acquire will be a covered "auto" for that coverage only if:

a. We already cover all "autos" that you own for that coverage or it replaces an "auto" you previously owned that had that coverage; and

b. You tell us within thirty (30) days after you acquire it that you want us to cover it for that coverage.

Plaintiffs' insurance policy includes the following "Limits of Insurance" language, found on page ten of fifteen, under ...


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