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Arch Insurance Co. v. Carol & Dave's Roadhouse, Inc.

United States District Court, Third Circuit

May 7, 2013

ARCH INSURANCE COMPANY as Subrogee of FAIRFIELD TOWNSHIP VOLUNTEER FIRE COMPANY NO. 1, Plaintiff,
v.
CAROL & DAVE'S ROADHOUSE, INC., Defendant.

MEMORANDUM OPINION AND ORDER OF COURT

TERRENCE F. McVERRY, District Judge.

Pending before the Court are: the MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF No. 94) filed by Defendant Carol & Dave's Roadhouse, Inc. ("Carol & Dave's"), which the Court took under advisement in its Memorandum Opinion and Order of April 16, 2013 ("April 16 Opinion"); the CROSS MOTION TO ALLOW PRESENTATION OF REPAIR COSTS AS A MEASURE OF DAMAGES (ECF No. 100) filed by Plaintiff Arch Insurance Company ("Arch"), as subrogee of Fairfield Township Volunteer Fire Company No. 1 ("Fairfield"), which the Court took under advisement in its April 16 Opinion on one narrow issue; and PLAINTIFF'S MOTION FOR RECONSIDERATION OF THE MEMORANDUM OPINION AND COURT ORDER OF APRIL 16, 2013 (ECF No. 104), with Concise Statement of Material Facts ("CSMF"), Affidavit of attorney Jeffrey Sotland and Memorandum of Law in support. Defendant has filed a brief and response to the motion for reconsideration.

Also filed of record and relevant to these motions are Plaintiff's Proffer of the evidence it seeks to present at trial to prove damages to the Fairfield fire company building (ECF No. 107); and Defendant's response in opposition thereto (ECF No. 111).

Factual and Procedural History

The facts of this subrogation case have been set forth at length in prior opinions and will not be repeated here. Very briefly, the Fairfield fire company building was destroyed by fire and Arch seeks to recover the amounts it paid to Fairfield under its fire insurance policy. There have been repeated disputes regarding the proper measure of damages and the evidence that may be presented to the jury to prove the alleged damages.

In a Memorandum Opinion and Order dated February 19, 2013 ("February 19 Opinion"), the Court reviewed Pennsylvania law regarding subrogation damages as follows:

In a subrogation action, an insurance company stands in the shoes of its insured after it has paid an amount which represents the tortfeasor's debt to the insured. The subrogee is subject to all defenses that could be raised against its insured. Allstate Indemnity Co. v. Martin, 2011 WL 2790265 (E.D. Pa. July 15, 2011). The insurance company may not recover more than it paid to its insured. Penn Natl. Ins. v. HNI Corp., 2007 WL 2907542 at *3 (M.D. Pa. 2007). As explained in Public Service Mut. Ins. Co. v. Kidder-Friedman, 743 A.2d 485, 488 (Pa. Super. 1999):
as the subrogee stands in the precise position of the subrogor the subrogee should be limited to recovering in subrogation the amount received by the subrogor relative to the claim paid by the subrogee, for equity will not allow the subrogee's claim to be placed ahead of the subrogor's.

The Court noted that because Arch had claimed several categories of damages (i.e., building, personal property, cleanup, etc.) and the insured did not collect in full, the subrogee's recovery on each category must also be proportionately limited, as explained in Allstate Ins. Co. v. Clarke, 527 A.2d 1021, 1025-26 (Pa. Super. 1987). The Court expressed its concern that: "the parties have not yet provided sufficient information to the Court regarding the claim of Arch for subrogation damages."

The February 19 Opinion is relevant to the pending motions in two other respects: (1) it rejected Arch's "replacement cost/intrinsic value" argument and held that "Arch will be limited to recovery of the reduction in fair market value of the Fairfield VFD building"; and (2) it denied Arch's motion in limine for an adverse inference instruction regarding the whereabouts of Ryan Gielecki, an ex-employee of Carol & Dave's (the "Adverse Inference Issue"), and chastised counsel for engaging in "gamesmanship." Arch did not seek reconsideration or clarification of the February 19 Opinion.

Jury selection and trial was originally scheduled to start on Monday, March 11, 2013, but was postponed when counsel informed the Court - that morning - of significant unresolved issues regarding damages. The Court dismissed the potential jurors and established a briefing schedule to provide an opportunity for both sides to be fully heard on the damages evidentiary issue, but ruled that the evidentiary record is and would remain closed.

Defendant then filed a Partial Summary Judgment motion in which it contended that Arch should be completely barred from recovering for damages to the building because it can present no admissible evidence in support of a FMV claim. In response, Arch contended, somewhat vaguely, that its representative is qualified to testify as to FMV. In the exercise of caution, the Court gave Arch an opportunity to: (1) submit a proffer of all evidence that it intends to present regarding the reduction in FMV of the building; and (2) either a proffer of Fire Chief Stiffler's qualifications to testify as to FMV or a declaration that it will not present Stiffler as a witness on that topic.

The outstanding issues are now ripe and will be finally resolved in advance of trial in order to avoid further inconvenience to the Court and potential jurors. Jury selection and trial ...


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