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Wugnet Publications, Inc. v. Peerless Indemnity Insurance Co.

United States District Court, E.D. Pennsylvania

June 27, 2017

PEERLESS INDEMNITY INSURANCE COMPANY, a division of OHIO CASUALTY, a member of the Liberty Mutual Group


          O'NEILL, J.

         In the present case, plaintiff Wugnet Publications, Inc. alleges both breach of contract and bad faith arising out of the denial of insurance coverage by defendant Peerless Indemnity Insurance Company. The parties have filed cross-motions for summary judgment. For the following reasons, I will deny plaintiff's motion for summary judgment, grant defendant's motion for summary judgment and enter judgment in favor of defendant on the entire complaint.


         Plaintiff Wugnet Publications is a Pennsylvania corporation that formerly conducted business at 104 Gayley Street, Media, Pennsylvania 19063. Def.'s Mot. Summ. J., ECF No. 10, Ex. A, ¶ 1. Plaintiff's co-tenant, and the principal occupant at that property, was the Democratic Committee of Delaware County (“DCDC”). During the relevant time period in this case, the property was covered by a commercial protector business owner's policy issued to DCDC by defendant Peerless Indemnity Insurance Company. Id., Ex. C.

         In September 2007, plaintiff decided to cease doing day-to-day business at 104 Gayley Street. In a new lease executed by DCDC and its landlord, Field House Properties, DCDC agreed to lease the premises for $800 per month. Id., Ex. A, ¶ 3; Pl.'s Mot. Summ. J., ECF No. 11, Ex. 4. In an addendum to the lease agreement, signed only by DCDC and Field House Properties, DCDC was to reduce its rent by $100 per month in exchange for allowing plaintiff to continue receiving mail and other correspondence at the property. Pl.'s Mot. Summ. J., ECF No. 11, Ex. 1. In addition, DCDC would permit plaintiff to store its corporate documents and related assets in a secured four-drawer filing cabinet on the premises and would keep the cabinet and its contents safe and secure for plaintiff. Id.; Def.'s Mot. Summ. J., ECF No. 10, Ex. A, ¶ 4.

         In June 2010, the chairman of DCDC was replaced by David Landau, Esquire, who directed that DCDC's headquarters at 104 Gayley Street be cleaned and reorganized. Def.'s Mot. Summ. J., ECF No. 10, Ex. A, ¶ 5. As part of this reorganization, agents and employees of DCDC, unaware of the importance of the contents of plaintiff's four-drawer filing cabinet, disposed of those items in the public trash. Id. Plaintiff discovered DCDC's mistaken disposal of the filing cabinet contents in January 2011 and immediately reported it to Mike Powers, treasurer of DCDC. Id. ¶ 6; Pl.'s Mot. Summ. J., ECF No. 11, Ex. 8. Plaintiff's accountant reconstructed the contents of the four-drawer filing cabinet and prepared a report valuing the intrinsic value of the cabinet's contents at $262, 045. Pl.'s Mot. Summ. J., ECF No. 11, Ex. 9.

         Because defendant had issued an insurance policy covering the property, plaintiff made several informal attempts to discuss settlement of the claim with Judith Kraut, defendant's claim specialist. Def.'s Mot. Summ. J., ECF No. 10, Ex. 11. Ms. Kraut told its insured, DCDC, that plaintiff had refused to submit the necessary documentation for a first-party claim. Id. In addition, she noted that the assigned adjuster, Chris Pare, had already found that the policy provided no coverage for the loss under the third-party liability provisions. Id. Indeed, Mr. Pare had previously explained to DCDC, in an August 16, 2011 letter, that the policy did not cover plaintiff's loss as third-party liability due to a provision excluding from coverage any damage to a third-party's property in the “care, custody or control” of the insured. Def.'s Mot. Summ. J., ECF No. 10, Ex. D.

         Thereafter, on January 31, 2012, plaintiff made a claim of $262, 045 to defendant, as DCDC's insurer. Id., Ex. H. When defendant stated that the policy had a $100, 000 limit on first-party coverage, id., Ex. I, plaintiff's counsel sent a letter on February 22, 2012 explaining that it brought its claim under the policy's third-party, or liability, coverage rather than first-party coverage. Pl.'s Mot. Summ. J., ECF No. 11, Ex. 12. Plaintiff's attorney went on to assert that he was preparing suit papers against DCDC and, when he obtained judgment in excess of the $100, 000 coverage, he would ask DCDC to assign to plaintiff the right to sue defendant for insurance bad faith. Id. Defendant then promptly contacted DCDC and noted that plaintiff does “not wish to comply with the requirements set forth under your first party property coverage and intend[s] to pursue this as a third party liability claim. It is my understanding our liability department previously reviewed the third party liability matter . . . and issued a denial letter on that claim.” Def.'s Mot. Summ. J., ECF No. 10, Ex. K.

         In a July 8, 2013 letter to DCDC, Mr. Pare acknowledged receipt of a lawsuit filed by plaintiff against the DCDC in the Court of Common Pleas of Delaware County, Pennsylvania. Id., Ex. D. Mr. Pare again reiterated that DCDC's failure to safely and securely keep plaintiff's property was excluded from third-party liability coverage under the policy. Id. Mr. Pare declined to respond to the lawsuit, but requested any additional documentation that DCDC deemed germane to the claim. Id.

         On December 28, 2015, DCDC assigned to plaintiff the right to bring legal action against defendant for both indemnity on plaintiff's claim and insurance bad faith based on defendant's failure to defend or indemnify DCDC under the terms of the policy of insurance. Pl.'s Mot. Summ. J., ECF No. 11, Ex. 14. Thereafter, on June 16, 2016, plaintiff filed the instant action against defendant in the Court of Common Pleas of Delaware County. Def.'s Mot. Summ. J., ECF No. 10, Ex. A. Defendant removed the case to this Court and filed an answer and affirmative defenses on August 12, 2016. Id., Ex. B.

         On May 15, 2017, both parties filed motions for summary judgment. Dkt. Nos. 10, 11. Responses were filed on May 30, 2017, Dkt Nos. 12, 13, defendant filed a reply brief on June 6, 2017, Dkt No. 14, and plaintiff filed a reply brief on June 13, 2017. Dkt. No. 15.


         Summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2). A factual dispute is “material” only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be “genuine, ” a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id. To establish “that a fact cannot be or is genuinely disputed, ” a party must:

(A) cit[e] to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(B) show[ ] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(c) (1).

         On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). It is not the court's role to weigh the disputed evidence and decide which is more probative or to make credibility determinations. Boyle v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998), citing Petruzzi's IGA Supermkts., Inc. v. Darling-Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993). Rather, the court must consider the evidence, and all reasonable inferences that may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986), citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987).

         Although the moving party must establish an absence of a genuine issue of material fact, it need not “support its motion with affidavits or other similar materials negating the opponent's claim.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by “pointing out . . . that there is an absence of evidence to support the nonmoving party's claims.” Id. at 325. If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial, ” summary judgment is appropriate. Id. at 322. The adverse party must raise “more than a mere scintilla of evidence in its favor” and cannot survive by relying on unsupported assertions, conclusory allegations, or mere suspicions. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989). The existence of some evidence in support of the non-movant will not be adequate to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson, 477 U.S. at 249- 50.

         Notably, these summary judgment rules apply no differently where there are cross-motions pending. Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). As stated by the Court of Appeals, “‘[c]ross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist.'” Id., quoting Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968).


         I. Breach of Contract Claim

         Plaintiff's first cause of action alleges that defendant's denial of insurance coverage under the third-party provisions of the policy constitute a breach of contract. Both parties seek summary judgment on that claim. As I find that the insurance policy unequivocally excludes plaintiff's coverage request, I will ...

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