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Indian Harbor Insurance Co. v. F&M Equipment Ltd.

United States District Court, E.D. Pennsylvania

July 17, 2017

INDIAN HARBOR INSURANCE COMPANY, Plaintiff,
v.
F&M EQUIPMENT LTD., f/k/a FURNIVAL MACHINERY COMPANY, Defendant.

          MEMORANDUM

          Tucker, C.J.

         Before the Court are the following:

1. Indian Harbor Insurance Company's Motion for Partial Summary Judgment (Doc. 62);
2. F&M Equipment, Ltd.'s Motion for Partial Summary Judgment (Doc. 64);
3. Indian Harbor Insurance Company's Brief in Opposition to F&M Equipment Ltd's Motion for Partial Summary Judgment (Doc. 65);
4. Counter-Plaintiff F&M Equipment Ltd's Memorandum of Law in Opposition to [Counter-]Defendant's Motion for [Partial] Summary Judgment (Doc. 66);
5. Counter-Plaintiff F&M Equipment, Ltd's Reply Memorandum of Law in Support of its Motion for [Partial] Summary Judgment (Doc. 67); and
6. Indian Harbor Insurance Company's Reply in Support of Motion for Partial Summary Judgment (Doc. 68).

         Upon consideration of the Parties' submissions, Defendant F&M Equipment Ltd.'s Motion for Partial Summary Judgment (Doc. 64) is GRANTED IN PART AND DENIED IN PART and Plaintiff Indian Harbor Insurance Company's Motion for Partial Summary Judgment (Doc. 62) is DENIED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         The Parties have filed cross-motions for summary judgment requesting, in essence, that the Court decide whether Indian Harbor Insurance Company (“Indian Harbor”) breached its obligation under an insurance policy it has with F&M Equipment, Ltd. (“Furnival”) by failing to offer Furnival a renewal policy that would meet the Third Circuit's definition of the term “renewal.” The Parties' disagreement centers on whether Indian Harbor's failure to incorporate language relating to the Parties' cancellation and non-renewal rights, as set forth in the original insurance policy, renders the new policy a nonrenewal, and constitutes a breach of Indian Harbor's obligation to offer a renewal.

         This Court and the United States Court of Appeals for the Third Circuit have extensively recounted the factual and procedural background of this case in earlier opinions.[1] For this reason, at this time, the Court will provide a concise summary of the factual and procedural background only to the extent necessary to resolve the single issue raised by the Parties' cross-motions for summary judgment.

         A. Initial Litigation and Third Circuit Appeal

         In December 2001, Furnival contracted with Indian Harbor for a ten-year Pollution and Remediation Legal Liability Policy (“Policy”). Pl.'s Br. in Supp. of Mot. for Partial Summ. J. Ex. A, at 1; Bartle Decl. Ex. 1, at 1. This Policy consisted of a form agreement and a number of separately negotiated endorsements that altered and/or supplemented the Policy's standard terms. See generally Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A; Bartle Decl. Ex 1.

         i. Endorsement No. 16: Cancellation and Non-Renewal Modification

         Among the endorsements that the Parties negotiated and ultimately executed was Endorsement No. 16 titled, “Cancellation and Non-Renewal Modification.” Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A, at 30; Bartle Decl. Ex. 1, at 30. By its own terms, Endorsement No. 16 “change[d] the policy.” Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A, at 30; Bartle Decl. Ex. 1, at 30. The first sentence of Endorsement No. 16, in fact, provided that “[t]his endorsement . . . forms a part of Policy No. PEC0010805.” Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A, at 30; Bartle Decl. Ex. 1, at 30. Endorsement No. 16 provided:

I. The INSURED and the Company agree that the Company may cancel at any time or refuse to offer a renewal extension of coverage for the following reasons:
a. the INSURED has made a material misrepresentation . . . [; or]
b. the INSURED materially breaches . . .; or
c. material failure on the part of the INSURED to comply with Policy terms, conditions, or contractual duties; or
d. a material change in the operations or lack of operations performed by the INSURED. . . .
II. Furthermore, the INSURED and the Company agree that the Company may refuse to offer a renewal extension of coverage to the INSURED for the following reason:
a. Loss of reinsurance or a substantial decrease in reinsurance has occurred . . . .

         The Company agrees that it shall not cancel nor non-renew this Policy except for the reasons stated above.

         All other terms and conditions remain the same.

         Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A, at 30 (emphasis added); Bartle Decl. Ex. 1, at 30. (emphasis added). Under Endorsement No. 16, therefore, Indian Harbor agreed to restrict the conditions under which it could cancel or decide not to offer a renewal of the Policy to Furnival. Pl.'s Br. in Supp. of Mot. for Part. Summ. J. Ex. A, at 30; Bartle Decl. Ex. 1, at 30. Indeed, the conditions outlined in Endorsement No. 16 represent the exclusive reasons that either Party could cancel or not renew the Policy.

         ii. Furnival Seeks to Renew the Policy on Identical Terms and Conditions

         In late 2011, as the Policy was set to expire, Furnival requested that Indian Harbor provide Furnival with a proposed renewal policy as required under Endorsement No. 16. Bartle Aff. Ex. 3, at 2; Pl.'s Br. in Supp. of Mot. for Part. Summ. J. 2. In response, Indian Harbor sent Furnival an “Indication of Coverage.” Bartle Aff. Ex. 4. The Indication of Coverage would renew the Policy, but with four differences. Id. at 2-19. These four differences were: “1) an updated price; 2) one year of coverage instead of ten; 3) $5 million coverage limit instead of $14 million; 4) exclusion of Elizabethtown [as a covered geographical site].” Id. Furnival rejected Indian Harbor's offer to renew on the altered ...


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