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Great Lakes Reinsurance (UK) PLC v. Stephens Garden Creations, Inc.

United States District Court, E.D. Pennsylvania

August 3, 2015

GREAT LAKES REINSURANCE (UK) PLC, Plaintiff,
v.
STEPHENS GARDEN CREATIONS, Inc. doing business as " STEPHENS AQUATIC SERVICES, INC." , Defendant

Decided July 31, 2015.

Page 298

For STEPHENS GARDEN CREATIONS, INC., Counter Claimant: JONATHAN WHEELER, LAW OFFICES OF JONATHAN WHEELER PC, PHILADELPHIA, PA.

For GREAT LAKES REINSURANCE (UK) PLC, Counter Defendant: CHRISTINA CAPOBIANCO, LEAD ATTORNEY, FINEMAN KREKSTEIN & HARRIS, PC, PHILADELPHIA, PA; JAY BARRY HARRIS, FINEMAN KREKSTEIN & HARRIS, PHILADELPHIA, PA.

Page 299

MEMORANDUM

Hon. Jan E. DuBois, J.

I. INTRODUCTION

This insurance case arises out of a dispute over whether certain losses suffered by defendant and counterclaim-plaintiff Stephens Garden Creations, Inc. (" Stephens" ) are covered by the insurance policy issued by plaintiff and counterclaim-defendant Great Lakes Reinsurance (UK) PLC (" Great Lakes" ). Among other claims, Stephens avers that Great Lakes acted in bad faith in denying coverage for several claims. Presently before the Court is Great Lakes' Partial Motion for Summary Judgment as to Stephens' claim of bad faith. For the reasons set forth below, the Court grants Great Lakes' Partial Motion for Summary Judgment.

II. BACKGROUND[1]

A. Factual Background

1. The Parties

Stephens operates an " on site" retail establishment that sells aquatic plants, small fish, decorations, and products for fish, plants, and ponds. (Pl.'s Statement of Undisputed Facts (" Pl. SOF" ) ¶ 2.) The company also constructs, designs, and renovates ponds, water gardens, and fountains at clients' homes and businesses. ( Id. ¶ 3.) Stephens is owned by Peter Schlett, the company's president, and Pamela Schlett, the company's general manager. ( Id. ¶ 4.)

2. The Policy

Great Lakes issued a Commercial Property Policy to Stephens, with a policy period lasting from September 26, 2012 to September 28, 2013. ( Id. ¶ 13.) Stephens' Commercial Property Policy stated, inter alia :

We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

...

1. Covered Property
...
b. Your Business Personal Property located in or on the building described in the Declarations... consisting of the following...
(1) Furniture and fixtures;
(2) Machinery and equipment;
(3) 'Stock';
(4) All other personal property owned by you and used in your business;
...

'Stock' means merchandise held in storage for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping.[2]

Page 300

2. Property Not Covered
Covered Property does not include:

...

b. Animals, unless owned by others and boarded by you, or if owned by you, only as 'stock' while inside of buildings.

(Mot. for Summ. J., Business and Personal Property Form, Ex. E, 32, 45, 33.) The policy's Business Income and Extra Expense Endorsement stated, inter alia :

Business Income
...We will only pay for ordinary payroll expenses for 60 days following the date of direct physical loss or damage, unless a greater number ...

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