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Berko Investments, LLC v. State National Insurance Co.

July 21, 2010

BERKO INVESTMENTS, LLC, ROBERT BERKOWITZ, BERK-LIN, INC., AND 255 VENTURE INN, INC. PLAINTIFFS,
v.
STATE NATIONAL INSURANCE COMPANY, INC. DEFENDANT.



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

MEMORANDUM

I. INTRODUCTION

This case arises out of storm damage to the roof of the Venture Inn, a bar and restaurant in Philadelphia, PA, on April 15, 2007. Plaintiffs-Berko Investments, LLC, Robert Berkowitz, BerkLin, Inc., and 255 Venture Inn, Inc. (hereinafter referred to collectively as "Berko")-proceeded with repairs to the roof before reporting the claim to defendant State National Insurance Company ("State National") and thereby prevented State National from inspecting the damaged roof in order to determine the cause and origin of the damage, and the type of repair required. Berko claims that State National breached its insurance contract and violated Pennsylvania's bad faith statute, 42 Pa.C.S.A. § 8371, when it denied Berko's insurance claim.

Plaintiffs filed suit in the Court of Common Pleas, Philadelphia County. The case was removed to this Court on June 4, 2008 under 28 U.S.C. § 1441. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.

A bench trial was held on June 1, 2010 and June 2, 2010. After considering the testimony of the witnesses, the exhibits received in evidence, and the arguments of counsel, the Court finds in favor of defendant and makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rule of Civil Procedure 52(a):

II. FINDINGS OF FACT

1. Berko owns and operates the Venture Inn located at 255 S. Camac Street, Philadelphia, PA 19107. (Stipulation of Uncontested Facts (hereinafter "St.") ¶¶ 1-4); (Transcript of Non-Jury Trial Before the Honorable Jan E. DuBois, 68 (June 1, 2010) (hereinafter "Tr. June 1")).

2. The Venture Inn is a three-story brick building with a "step down" one-story lower roof over the bar and dining room area. The building contains both apartments and a restaurant. (Tr. June 1 at 19-20).

3. Berko purchased commercial property insurance covering the Venture Inn through the Carmen Group, an insurance broker for State National, in January 2007. (Tr. June 1 at 71); (Trial Ex. P-1).

4. State National issued an insurance policy ("Policy") on the property to Berko-Policy Number RCA004325-07- covering the period January 31, 2007 to January 31, 2008. (St. ¶4); (Trial Ex. P-1).

5. The "Declarations Commercial Package Policy" page of the Policy provides that the building is covered up to $450,000 and the section entitled "covered causes" references "special incl. theft." (Trial Ex. P-1).

6. The "Causes of Loss - Special Form," as referenced in the declarations page, states:

A. Covered Causes of Loss

When Special is shown in the Declarations, Covered Causes of Loss means Risk Of Direct Physical Loss unless the loss is:

1. Excluded in Section B., Exclusions; or

2. Limited in Section C., Limitations...

(Trial Ex. P-1).

7. Plaintiffs claim that the roof was damaged by wind. The Court finds that wind damage is neither excluded under Section B nor limited under Section C. Accordingly, wind damage is a covered loss under the Policy. (Tr. June 1 at 21); (Trial Ex. P-1, SN-6).

8. The Policy states the following as "Duties In The Event of Loss Or Damage":

a. You must see that the following are done in the event of loss or damage to Covered Property...

(2) Give us prompt notice of the loss or damage. Include a description of the property involved.

(3) As soon as possible, give us a description of how, when and where the loss or damage occurred.

(4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.

(5) At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, ...


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