The opinion of the court was delivered by: Judge Caputo
Presently before the Court is Defendant Commonwealth Insurance Company's ("Commonwealth") Motion for Summary Judgment. (Doc. 9.) For the reasons discussed more fully below, Defendant's motion will be granted. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.
On February 8, 2008, a bridge collapsed on Hollow Road in Shawnee-on-Delaware, Pennsylvania. (Doc. 12 at ¶ 7.) Hollow Road is the main route for ingress to the Plaintiff's ski resort and feeds into the southern entrance of the resort. (Id.) As a result of the bridge collapse, the Pennsylvania Department of Transportation ("PENN DOT") closed Hollow Road to the public on February 9 and 10, 2008, during which time bridge repairs were completed. (Id.) Approximately seventy percent (70%) of Plaintiff's patrons access the resort by Hollow Road. (Doc. 9, Ex. C.)
At the time of this incident Plaintiff Ski Shawnee, Inc. ("Ski Shawnee") had a insurance policy with Commonwealth that included business income loss coverage. This coverage stated that:
We [Commonwealth] will pay you [Ski Shawnee] for the actual loss of Business Income you sustain due to the necessary "Suspension" of your "Operations" during the "Period of Restriction." The "Suspension" must be caused by direct physical loss of or damage to property at the covered premises at the named locations stated in either Coverage Part II or Coverage Part III Declarations and for which a Business Income Limit of Insurance is shown in the Declarations.*fn1 The "Covered Property" under the policy includes Buildings, Business Personal Property (such as furniture and equipment), and Personal Property of Others. The policy also includes coverage for:
[T]he actual loss of Business Income you [Ski Shawnee] sustain and necessary Extra Expenses you incur caused by action of civil authority that prohibits access to the covered premises at the named locations stated in either the Coverage Part II or Coverage Part III Declarations due to direct physical loss of or damage to property adjacent to the covered premises.
On February 20, 2008, Ski Shawnee filed a claim for loss with its insurance agent/broker The Richardson Group. (Doc. 9, Ex. B.) At some point after receiving notice of Plaintiff's insurance claim, Commonwealth retained McLarens Young International ("MYI") to assist with the investigation as claims adjusters; MYI, in turn, retained Michael A. Castillo, CPA, to assist with the loss of business income claim. (Doc. 12 at ¶ 10.) On February 22, 2008, Mr. Castillo contacted Ski Shawnee requesting information regarding the claim. (Doc. 12 at ¶ 11.) Ski Shawnee sent a letter to Mr. Castillo, on March 4, 2008, enclosing records of income loss and estimating that the business interruption loss totaled $118,500. (Doc. 9, Ex. C.) Mr. Castillo responded on March 18, 2008, seeking more documents of past income, in order to properly calculate the business income lost as a result of the bridge collapse and subsequent closing of Hollow Road. (Doc. 9, Ex. D.)
On March 21, 2008, MYI sent a letter to Ski Shawnee, explaining that "[t]he information thus far provided regarding your loss indicates possible involvement of questions of coverage and/or violations of the terms and conditions of the policy of insurance, which may have a material bearing on the insurer's liability in this matter. In order to fully resolve these questions, an investigation will be undertaken and a final decision by the insurer will be deferred." (Doc. 9, Ex. E.) On April 11, 2008, Castillo sent a letter to Ski Shawnee advising that he had not received the documents requested in the letter of March 18, 2008. (Doc. 9, Ex. G.) On April 17, 2008, Ski Shawnee sent Mr. Castillo a letter stating "[w]e enclose all of the information requested in your letter dated March 18, 2008." (Doc. 21.)
On July 8, 2008, MYI alerted Ski Shawnee that "there is no coverage under this policy of insurance for your loss of income that resulted from the closure of the bridge." (Doc. 9, EX. H.) Counsel for Ski Shawnee sent a letter to MYI on September 25, 2008, stating the "[w]hile some of Shawnee's customers were able to access the ski area by traversing roads that entered the ski area from the north, the northern route was neither the publicized nor generally recognized route of ingress to the ski area." (Doc. 9, Ex. I.) On October 2, 2008, MYI told Ski Shawnee that it had forwarded Ski Shawnee's counsel's letter to Commonwealth and would be providing a formal reply in due course. (Doc. 9, Ex. J.) Counsel for Commonwealth responded to Ski Shawnee on October 29, 2008, reiterating that Commonwealth would not provide coverage under the policy and citing applicable case law. (Doc. 9, Ex. K.) On June 24, 2009, Ski Shawnee's counsel sent a letter to Commonwealth, re-asserting the position that coverage was due under the policy. (Doc. 9, Ex. L.) On July 27, 2009, Commonwealth's counsel again stated that coverage was not owed under the policy. (Doc. 9, Ex. M.)
Plaintiff then filed the instant action in the Court of Common Pleas of Monroe County, bringing causes of action for breach of contract (Count I), breach of the Pennsylvania Unfair Insurance Practices Act (Count II), and bad faith pursuant to 42 PA. CONS. STAT. ANN. § 8371 (Count III). Commonwealth removed the case to federal court on December 4, 2009. On April 21, 2010, Commonwealth filed its Motion for Summary Judgment. (Doc. 9.) This motion has been fully briefed and is currently ripe for disposition.
Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A fact is material if proof of its existence or nonexistence might affect the outcome of the suit under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Where there is no material fact in dispute, the moving party need only establish that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c)(2). Where, however, there is a disputed issue of material fact, summary judgment is appropriate only if the factual dispute is not a genuine one. Anderson, 477 U.S. at 248. An issue of material fact is genuine if "a reasonable jury could return a verdict for the nonmoving party." Id. Where there is a material fact in dispute, the moving party has the initial burden of proving that: (1) there is no genuine issue of material fact; and (2) the moving party is entitled to judgment as a matter of law. See Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 2D § 2727 (2d ed. 1983). The moving party may present its own evidence or, where the nonmoving ...