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Frederick Mutual Insurance Co. v. Hall

United States District Court, E.D. Pennsylvania

October 26, 2017

FREDERICK MUTUAL INSURANCE CO. Plaintiff
v.
DONALD HALL, Individually and trading as HALLSTONE, INC. and MARIE A. HALL, Individually and trading as HALLSTONE, INC. and HALLSTONE, INC. and R. LEE HULKO and BRADLEY B. FAIR Defendants

          DECISION

          JOYNER, J.

         This civil action for declaratory judgment was tried non-jury before the undersigned on April 24, 2017. The parties have filed their proposed factual findings, legal conclusions and briefing and the matter is now ripe for adjudication. We therefore now make the following:

         FINDINGS OF FACT

         1. Plaintiff, Frederick Mutual Insurance Company is a duly authorized and licensed Maryland insurance company which maintains its principal place of business at 57 Thomas Johnson Drive, Frederick, Maryland 21702.

         2. Defendants Donald Hall and Marie A. Hall are adult individuals, husband and wife who reside at 723 Telegraph Road, Perkasie, Bucks County, Pennsylvania 18944 and who regularly conduct business and/or trade as Hallstone, Inc.

         3. Defendant Hallstone, Inc. is a business entity of unknown type with a principal place of business at 723 Telegraph Road, Perkasie, Bucks County, Pennsylvania, 18944.

         4. The primary business of Hallstone and Donald Hall is stone masonry contracting.

         5. Frederick Mutual Insurance Co. is, and at all times relevant to this action was, licensed and/or authorized to sell insurance in Pennsylvania.

         6. Defendants R. Lee Hulko and Bradley B. Fair are adult individuals who reside at 4310 Tollgate Road, New Hope, Bucks County, Pennsylvania 18938.

         7. Beginning in or around March 2006, Defendants Hulko and Fair contracted with Defendants Hallstone and/or Donald Hall for the performance of certain custom stone work to be done in conjunction with a number of improvements which they were making to their home and property on Tollgate Road. Under the contract, “[a]ll material [was] guaranteed to be as specified and the above work [was] to be performed in accordance with the drawings and specifications submitted for the above work and completed in a substantial workmanlike manner”. By the time all of the stonework was completed in 2008, Hulko and Fair had paid Hall/Hallstone nearly $300, 000 for the work performed over a period of some three years.

         8. Sometime in 2005, Donald Hall had been told by a builder for whom he was working that he needed to obtain “maximum coverage” in the aggregate amount of $1 million/$2 million. In response, Mr. Hall contacted Andrew Rumbold at the Fraser Insurance Agency in Doylestown, PA and asked him for insurance in those amounts which would provide “soup to nuts” coverage.

         9. Mr. Rumbold submitted an application to and a down payment on Mr. Hall's behalf to Frederick Mutual and, in September 2005, Frederick Mutual wrote an “artisans” policy, Policy No. APP2050248, for Mr. Hall/Hallstone which purportedly provided coverage in the amounts requested and which remained in force for the period September 27, 2005 through September 27, 2006.

         10. In the 2005-2008 time frame, it was Frederick Mutual's policy to mail two copies of newly written/issued policies to the insurance agency - one for the insured and one for the agent with the expectation that it was the responsibility of the agent to review the policy with the insured and either hand deliver or mail the insured their copy. Thereafter, all billing and subsequent communications, such as policy renewal materials, were to be sent directly from Frederick Mutual to the insured. In this case, there is no evidence that Frederick Mutual ever mailed a full copy of the policy to the Fraser Agency or directly to Mr. Hall t/a Hallstone, Inc. Rather, the only thing received by the Fraser Agency and/or Mr. Hall/Hallstone was a copy of the declarations sheet showing what the coverages were.

         11. At the conclusion of the one-year policy term, Hallstone did not renew the existing policy. However, beginning on or about August 1, 2007, Frederick Mutual did issue another policy to Hallstone, identical to the one which was in force for the September, 2005 - September, 2006 time frame, which remained in place until February, 2008 when it was cancelled for non-payment of premium.

         12. The Fraser Agency is an independent insurance agency and as such can and will place insurance with any of the insurance companies for whom it is approved and/or with whom it has a relationship. Although by contract it represents and is an agent for the insurance companies, as an independent agency it can “shop” insurance for customers who come to it seeking the best rate for the most or specific coverage. According to the Fraser Agency's website:

As your independent insurance agent, we truly represent you, the insured, and not just the insurance companies. ... We put the best interests of our clients first from recommending coverages to claims counseling.”

         13. As was the case with most of the contractors who approached Mr. Rumbold seeking to obtain insurance, Mr. Hall did not make any specific requests for coverage, aside from stating his desire for “soup to nuts” coverage and did not ask any questions about exactly what would be covered under his policy with Frederick Mutual. Mr. Rumbold did not have any substantive discussions with Mr. Hall about what was and/or was not covered under the policy at issue and at no time did Mr. Rumbold sit down with Mr. Hall and explain the policy to him.

         14. Contrary to Frederick Mutual's purported policies and procedures, the Fraser Agency never received copies of the Frederick Mutual policies which were issued to Hallstone. Rather, it received only copies of the declarations page.

         15. The Fraser Agency never either mailed or hand-delivered a copy of the Hallstone policies to Mr. Hall nor did Mr. Rumbold ever sit down to review or explain what was or was not covered to Mr. Hall. Likewise, Mr. Hall never asked any questions or sought any information about what the Frederick Mutual policy(ies) did or did not cover.

         16. It was Mr. Hall's belief that “if something was done inadvertently, ” or if his business did something and someone made a claim against his business that he might be liable for, he would be covered for it.

         17. Mr. Hall recalls only receiving a declarations sheet (“dec sheet”) showing the type and amount of coverage from Frederick Mutual. While Mr. Hall never received a copy of the full policy from either the Fraser Agency or in the mail from Frederick Mutual, Mr. Rumbold never received any complaint or request from Mr. Hall that he hadn't received a copy of his policy and there is no evidence that Mr. Hall ever sought a full copy or complained to anyone about his not having received one.

         18. The “dec sheet” issued on Policy No. APP2050248 consisted of two pages at the top of which was the title “ARTISANS DECLARATIONS” and name and address of the Frederick Mutual Insurance Company and the additional notations that it was FORM: PA - Artisans and “Direct Bill - insured, PA - Annual.” The Insured was listed as “Hallstone Inc., 723 Telegraph Road, Perkasie, PA 18944" and the Agency 510, “Fraser Diversified, Inc., t/a R.A. Fraser Agency 33 Union Street, Suite #3, Doylestown, PA 18901, (215) 340-1888. The following language appeared on the first page:

In return for the payment of the premium, and subject to all the terms of the policy, we agree to provide you with the insurance as stated in this policy.
POLICY PERIOD: from 9/27/2005 to 9/27/2006, 12:01 AM standard time at the insured premises
Form of Business: Corporation Type of Business-P10195 Masons
The following forms and endorsements are made a part of this policy at time of issue.
AP-100 (Ed. 2.0) Contractors Special Policy
AP-0335 (Ed. 11/01) Amendatory Endorsement - Pennsylvania
ML-120 (Ed. 2.0) Insurance Consultation Services Exemption Act-Notice
GL-894 (Ed. 2.0) Punitive Damages Exclusion
AP-0690 (Ed. 6/02) Exclusion - Exterior Insulation and Finish Systems
AP-0689 (Ed. 6/02) Exclusion - Wet Rot, Dry Rot, Bacteria, Fungi, or Protists - Contracting Operations
AP-0643 (12 99) Known Injury or Damage Amendments
BP-336 (Ed. 1.0) Premium Payments
FMT (Ed. 2/03) Terrorist Disclosure Notice
GL-899 (Ed. 2.0) Cross Liability Exclusion
AP-0360 (Ed. 7/03) Limited Fungus and Related Perils Coverage
Property Coverages
LOCATION: Location Address: 723 Telegraph Road Perkasie, PA 18944 COUNTY: Bucks
Property Deductible Limit $250; Personal Property Off Premises Limit $0
STRUCTURE: Non-Sprinklered Frame Protective Device - None
COV A - Building Limit $0 Premium $0
COV B - Business Personal Property Limit $0 Premium $0
COV C - Loss of Income Limit $0 Premium $0
VALUATION: Actual Cash Value - Building Actual Cash Value - Business Personal Property
Auto Increase - None
STRUCTURE Endorsements:
Total Structure Premium - $0
Total Location Premium - $0

         19. The Second Page of the Artisans Declarations contained the following language:

Commercial liability Coverages Apply to All Locations
COMMERCIAL LIABILITY COVERAGE
Property Damage Liability Deductible $250
General Aggregate Limit $2, 000, 000 per policy period
Products/Completed Work Aggregate Limit $2, 000, 000 per policy period
Cov L - Bodily Injury/Property Damage $1, 000, 000 per occurrence
Cov M - Medical Payments $5, 000 per person
Cov N - Products/Completed Work $1, 000, 000 per ...

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