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Zurich American Insurance Company of Illinois v. All County Employment Services Inc.

United States District Court, E.D. Pennsylvania

December 20, 2016

ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS, Plaintiff,
v.
ALL COUNTY EMPLOYMENT SERVICES, INC., Defendant.

          MEMORANDUM OPINION PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, ECF NO. 28 - GRANTED

          JOSEPH F. LEESON, JR. United States District Judge.

         I. Introduction

         Plaintiff Zurich American Insurance Company of Illinois issued Defendant All County Employment Services, Inc. a one-year workers' compensation insurance policy. Zurich claims that All County failed to pay the full amount of the insurance premium, and it has sued All County for breach of contract. Zurich now moves for summary judgment. All County did not respond. Because the undisputed facts show that All County breached its obligation to pay Zurich, summary judgment is granted in Zurich's favor.

         II. Background

         Zurich issued All County a one-year workers' compensation insurance policy in July 2014. At that time, it prepared an estimate of the cost of the policy based on All County's anticipated exposure to workers' compensation obligations over the coming year. See Totzke Aff. ¶ 7, ECF No. 28-4; Totzke Aff. Ex. B, at 4, [1] ECF No. 28-6 [hereinafter Policy]. Under the terms of the policy, All County was to make premium payments based on that estimate, and at the end of the term, Zurich would review All County's records and calculate the true cost of the policy based on All County's actual exposure over the prior year. Totzke Aff. ¶ 7; Policy § 5(E)-(G). If the final cost turned out to exceed the original estimate, All County owed Zurich the difference, and vice versa. Id.

         The one-year term ended on July 23, 2015. As contemplated by the policy, Zurich then performed an audit of All County's records and concluded that All County's exposure during the period had been higher than anticipated. Totzke Aff. ¶ 8. Accordingly, it issued All County an invoice for $160, 634, which represented the difference between Zurich's calculation of the final cost of the policy and the amount of premium payments that All County had made based on the policy's estimated cost. Id.; Totzke Aff. Ex. C, ECF No. 28-7. The invoice was dated January 11, 2016, and called for payment by January 29, 2016. Totzke Aff. Ex. C, at 5. Included with the invoice was an audit report that Zurich prepared, which explained how Zurich arrived at the final premium. Id. at 1-4.

         Between January 22 and February 18, the two sides exchanged a series of emails about the invoice; in one of them, All County stated that it had “some fundamental questions” about Zurich's calculation and had “engag[ed] an expert in these areas to help [it] validate or invalidate [Zurich's] claim, ” but All County did not further elaborate. Totzke Aff. Ex. D, at 2, ECF No. 28-8. Zurich asked All County to describe its concerns in greater detail, but it appears that All County did not respond. Id. at 1. Zurich filed this suit soon after.

         Discovery closed without All County either identifying any particular error in Zurich's audit report or submitting any expert reports to challenge Zurich's calculation of the final premium. Kadian Aff. ¶¶ 7-8, ECF No. 9. The $160, 634 invoice still has not been paid. Totzke Aff. ¶ 10.

         Zurich moved for summary judgment on this record. All County did not respond.

         III. Legal standard - Summary judgment

         Summary judgment is appropriate if the moving party “shows that there is no genuine dispute as to any material fact”-that is, that no reasonable jury could return a verdict for the nonmoving party-and that “the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “[A] party seeking summary judgment . . . bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where, as here, the moving party bears the burden of proof at trial, it “must show that it has produced enough evidence to support the findings of fact necessary to win.” El v. Se. Pa. Transp. Auth. (“SEPTA”), 479 F.3d 232, 237 (3d Cir. 2007) (citing Marzano v. Comput. Sci. Corp., 91 F.3d 497, 502 (3d Cir. 1996); Sorba v. Pa. Drilling Co., 821 F.2d 200, 202-03 (3d Cir. 1987)).

         All County has not responded to Zurich's motion, but that does not mean that it may be granted automatically. See Fed. R. Civ. P. 56(e)(3) advisory committee's note to 2010 amendment (recognizing that “summary judgment cannot be granted by default even if there is a complete failure to respond to the motion”). Instead, the court must still ensure that “the motion and supporting materials . . . show that the movant is entitled to it.” Fed.R.Civ.P. 56(e)(3). “Where the moving party has the burden of proof on the relevant issues, this means that the district court must determine that the facts specified in or in connection with the motion entitle the moving party to judgment as a matter of law.” Anchorage Assocs. v. V.I. Bd. of Tax Review, 922 F.2d 168, 175 (3d Cir. 1990).

         IV. Summary judgment is warranted in Zurich's favor.

         To make out its breach of contract claim, Zurich must prove that “there was a contract, [All County] breached it, and [Zurich] suffered damages from the breach.” McShea v. City of Phila., 995 A.2d 334, 340 (Pa. 2010).[2] All County has admitted that the policy was a valid contract between the parties and that it has not paid Zurich the additional $160, 634 that it demanded following its audit of All County's records. See Kadian Aff. Ex. B, ¶¶ 6, 18, ECF No. 28-11.[3] The only question, then, is whether All ...


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