The opinion of the court was delivered by: Stengel, J.
This case involves the coverage to which plaintiffs are entitled under a business loss insurance policy administered by defendant State Farm Fire & Casualty Company ("State Farm"). Following a conference pursuant to Rule 16 of the Federal Rules of Civil Procedure, this Court issued a scheduling order requiring plaintiffs to file a motion for judgment on the pleadings. Plaintiffs, despite having conducted no discovery in this matter and admitting that the issue before the Court is purely a matter of contractual interpretation, have filed a motion for summary judgment with a supporting affidavit from plaintiff Edward Eidelman. State Farm filed both a response to plaintiffs' motion for summary judgment and a separate motion for judgment on the pleadings. I will deny the plaintiffs' motion for summary judgment and grant State Farm's motion for judgment on the pleadings.
Plaintiffs filed a declaratory judgment complaint in the Lehigh
County Court of
Common Pleas on April 29, 2010. State Farm properly removed the action
to this court on the basis of diversity jurisdiction.*fn2
Plaintiffs are three attorneys acting as partners
in 1248 Hamilton Street Realty Partnership, which owns the building
located at the same address in Allentown, Pennsylvania. All three are
also partners in Eidelman Crossley, LLC. Following its purchase of the
building located at 1248 Hamilton Street, the Realty Partnership
leased the building to two law firm tenants, Eidelman Crossley, LLC,
and Eidelman & Associates. Eidelman Crossley, LLC pays professional
fees to Edward Eidelman P.C. and Mark D. Crossley P.C., and each of
these P.C.'s pays a salary to Edward R. Eidelman, Esq., and Mark D.
The Realty Partnership entered into an insurance contract with State Farm in July of 2008. Prior to moving its offices to 1248 Hamilton Street, Eidelman Crossley, LLC, Edward Eidelman, P.C., and Mark D. Crossley, P.C. entered into an identical business insurance policy with State Farm. At some point during the evening between November 9 and November 10, 2009, a fire was started at 1248 Hamilton Street which destroyed the interior of the building and the vast majority of the contents of the building, which were owned by Eidelman Crossley, LLC, and Eidelman & Associates. On or about December 1, 2009, Eidelman Crossley, P.C. and Eidelman & Associates entered into a lease for temporary space at 1132 Hamilton Street, Suite 301. At issue here is the construction of plaintiffs' business insurance policy with State Farm. The parties have no disagreement over the language of the policy in effect at the time of the fire, and rather dispute the extent to which State Farm is required to insure losses arising from the destruction of the building and resulting business losses to plaintiffs.
The policy provides that State Farm will insure the plaintiffs for "actual loss" of income for twelve months from the date of the physical loss to the insured property. See Policy, "Declarations Page." The nature of the loss of income coverage is set forth in the body of the policy, in which State Farm agrees to pay:
1. for the actual loss of "business income" you sustain due to the necessary suspension of your "operations" during the "period of restoration." The suspension must be caused by accidental direct physical loss to property at the described premises . . . caused by an insured loss;
2. any necessary "extra expense" to avoid or minimize the suspension of business and to continue "operations":
a. at the described premises; or
b. at replacement premises or at temporary locations, including relocation expenses and costs to equip and operate the replacement or temporary locations;
to the extent it reduces the amount of the "business income" loss that otherwise would have been payable under this coverage caused by an insurance loss.
3. any necessary "extra expense" to minimize the suspension of business if you cannot continue "operations" to the extent it reduces the amount of the "business income" loss that otherwise would have been payable under this coverage caused by an insured loss; . . .
Policy, 4. The policy defines the terms used in the income loss portion of the policy.
* "Business income" is defined as "the net income (net profit or loss before income taxes) that would have been earned or incurred and continuing normal operating expenses, including payroll, ...