The opinion of the court was delivered by: O'neill, J.
Plaintiff Archway Insurance Services, LLC has sued defendant James River Insurance Company to recover unearned premium on an insurance policy that provided coverage for the Ashton Hall nursing home. Plaintiff was an insurance broker for the Ardsley Group, the company that ran Ashton Hall and entered into the policy with defendant. Plaintiff maintains that Ardsley canceled the policy before it expired, thereby obliging defendant to return unearned premium to Ardsley in accordance with the policy's terms. Plaintiff was assigned the right to any unearned premium and it now sues to enforce this right. Defendant responds by arguing that Ardsley never canceled the policy and that even if the policy were canceled Ardsley waived its right to any unearned premium.
Plaintiff initially asserted claims of breach of contract, unjust enrichment and conversion. I granted summary judgment in favor of defendant on the unjust enrichment and conversion claims. The breach of contract claim proceeded to a non-jury trial. The parties then submitted post-trial briefs and I held a post-trial hearing to receive additional evidence from plaintiff. This memorandum sets forth my findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). For the following reasons, I find that Ardsley canceled the policy but waived its right to any unearned premium. Accordingly, I will enter judgment in favor of defendant and against plaintiff.
Plaintiff is a specialty insurance wholesaler that specializes in property and casualty coverage for large corporate risks. Mar. 7, 2011 Tr. at 112:6-8. Plaintiff served as an insurance broker for Ardsley, id. at 113:1-16, the company that owned Ashton Hall. Id. at 4:18-23. Ardsley hired plaintiff to procure professional liability and general liability insurance coverage for Ashton Hall. Id. at 113:1-16. Plaintiff lacked access to the markets for the coverage that Ardsley needed, so in March of 2007 plaintiff enlisted the services of All Risks, another wholesale insurance broker that could help find the right policy for Ardsley. Id. at 153:1-13. Plaintiff provided All Risks with information regarding Ardsley's insurance needs and All Risks in turn shopped for policies that fit those needs. Mar. 8, 2011 Tr. at 131:16-24. Defendant and other insurers offered terms to All Risks, who relayed the offer information to plaintiff. Id. Plaintiff then provided the various offers to Ardsley, who selected the James River policy. Id. at 132:1-3.
The evidence establishes that plaintiff and All Risks both understood that All Risks was working for plaintiff. Plaintiff's employee James Agnew explained that All Risks broker Martin Sandos "ha[d] always been active in trying to solicit our business." Mar. 7, 2011 Tr. at 153:1-2. Sandos referred to plaintiff as All Risks' "client." Mar. 8, 2011 Tr. at 134:15.
After Ardsley chose the policy, defendant issued a binder providing "a summary of the coverage(s) you have ordered." Def.'s Ex. 32 at p. 1. Toward the top of the binder, the document states, "Attention: Michele Redick." Id. Redick was Sandos's assistant. Mar. 8, 2011 Tr. at 8:5-8. Immediately below, the binder states "Agency: All Risks, Ltd. (King of Prussia)." Def.'s Ex. 32 at p. 1 The binder also lists Ardsley as the "Applicant." Id. The rest of the binder outlines the terms of the policy. Additionally, a document issued by defendant entitled, "Revised Quote" is addressed to the attention of Michele Redick and immediately below states "Agency: All Risks, Ltd. (King of Prussia)." Pl.'s Ex. 22 at p. 4.*fn1
Plaintiff argues that the "Agency: All Risks" language in the James River binder and the "Revised Quote" document establishes that All Risks was defendant's agent. I disagree. These documents merely state that they are addressed to Michele Redick, an employee at All Risks.
All Risks issued a "Confirmation of Insurance" document stating that "[w]e confirm that acting upon your instructions and for your account we have procured insurance." Pl.'s Ex. 6 at p. 1. The Confirmation of Insurance is addressed to plaintiff. Mar. 8, 2011 Tr. at 133:24-25. In addition to providing basic information about the terms of the policy, the Confirmation of Insurance states that "[t]his insurance may be cancelled by written notice by either the insured or the insurer(s) through us. Notice of cancellation shall be deemed given by the insurer(s) when given by us to the insured or its representative." Pl.'s Ex. 6 at p. 2. The Confirmation of Insurance additionally states that "[t]his confirmation shall be automatically terminated and voided by delivery of the cover note, certificate of insurance or policy to the insured or its representative." Id.
Defendant subsequently issued the policy, which includes a "Common Policy Conditions" section stating that Ardsley "may cancel this policy by mailing or delivering to [James River] advance written notice of cancellation." Def.'s Ex. 3 at JRIC-UW-1-00211. This cancellation provision, however, is replaced by a "Pennsylvania Changes--Cancellation and Non-renewal" endorsement. Id. at JRIC-UW-1-00229. The endorsement states in pertinent part that Ardsley "may cancel this policy by writing or giving notice of cancellation." Id.
Even though Sandos referred to plaintiff as All Risks' client, he testified that he believes All Risks lacked authority to cancel the policy. Nov. 1, 2011 Tr. at 10:10-11.*fn2 Moreover, All Risks never told plaintiff that a notice of cancellation would have been immediately effective upon receipt by All Risks. Id. at 10:23-11:2.
The "Common Policy Conditions" and the "Pennsylvania Changes--Cancellation and Non-renewal" endorsement contain identical language regarding Ardsley's right to unearned premium in the event the policy is cancelled. Both sections state that "[i]f this policy is cancelled, [James River] will send [Ardsley] any premium refund due." Id. at JRIC-UW-1-00211 & JRIC-UW-1-00230.
II. The Policy Premium and the Bank Direct Loan
The policy's premium was $257,100. Pl.'s Ex. 6 at p. 2. Sandos explained that payment for the policy's premium was sent to All Risks, who deducted its commission before forwarding payment to defendant. Nov. 1, 2011 Tr. at 5:14-23. An All Risks invoice for the policy directed remittance of payment to All Risks. Pl.'s Ex. 22 at p. 3.
Ardsley financed the premium with a loan from Bank Direct. Mar. 7, 2011 Tr. at 8:17-20. The financing agreement called for ten monthly payments of $29,795.45 from Ardsley to Bank Direct beginning on April 28, 2007. Def.'s Ex. 4 at p. 1. The financing agreement empowered Bank Direct to cancel the policy in the event Ardsley failed to pay an installment. Id. at p. 2. It also stated that [t]he insured assigns to BANKDIRECT as security for payment of this Agreement, all sums payable to the insured with reference to the Policies listed above including . . . any gross return premiums and any payment on account of loss which results in reduction of unearned premium in accordance with the term(s) of said Policies.
Id. at p. 1. Stanley Segal, the owner of Ardsley, signed the financing agreement on ...