United States District Court, M.D. Pennsylvania
JOSEPH SUNDAY, JR. d/b/a SUNDAY TRUCKING, LLC, Plaintiff,
BERKSHIRE HATHAWAY HOMESTATE INSURANCE COMPANY and NATIONAL LIABILITY & FIRE INSURANCE COMPANY, Defendants.
Richard Caputo United States District Judge
before this Court is a Motion for Summary Judgment filed by
Defendants Berkshire Hathaway Homestate Insurance Company
(“BHHIC”) and National Liability & Fire
Insurance Company (“National Liability”)
(collectively “Defendants”). This Motion will be
granted in part and denied in part. Judgment will be entered
in favor of the Defendants on Count I because the National
Liability policy was void ab initio. However,
judgment will not be entered with respect to Count III
because (1) BHHIC failed to provide adequate notice of
cancellation and (2) there remains a genuine dispute of
material fact about whether cancellation was appropriate
under the Cancellation and Non-Renewal Endorsement to the
Joseph Sunday, Jr. (“Plaintiff”) owns and
operates a trucking company that hauls commercial trailers.
In order to operate this business in Pennsylvania Plaintiff
was required to possess commercial auto insurance. Between
December of 2014 and August of 2015, Plaintiff attempted to
secure commercial auto insurance from two insurance
providers: BHHIC and National Liability.
The BHHIC Policy
November 24, 2014, Plaintiff, through his agent, submitted an
application for commercial auto insurance to BHHIC.
(DSMF, Ex. B). This application listed
Plaintiff's address as 427 Cortez Road, Lake Ariel,
Pennsylvania. (Id.) BHHIC approved this application
and provided commercial auto coverage for Plaintiff's
Kenworth truck effective December 11, 2014. (DSMF,
at ¶ 7.) The policy was scheduled to run for one year
and end on December 11, 2015. (Id.)
BHHIC policy contained an endorsement specifying the possible
bases for cancellation. This endorsement, titled
“Pennsylvania Changes-Cancellation and Non-Renewal,
” specifically provided:
3. Cancellation Of Policies In Effect For 60 Days Or More If
this policy has been in effect for 60 days or more . . . we
may cancel this policy only for one or more of the following
. . .
b. [The insured] failed to pay a premium when due, whether
the premium is payable directly to [BHHIC] or our agents or
indirectly under a premium finance plan or extension of
credit, notice of cancellation will be mailed at least 15
days before the effective date of cancellation.
c. A condition, factor or loss experience material to
insurability has changed substantially or a substantial
condition, factor or loss experience material to insurability
has become known during the policy period. Notice of
cancellation will be mailed or delivered at least 60 days
before the effective date of cancellation.
(DSMF, Ex. C at 44.) Additionally, this endorsement
explained that any notice provided would be delivered to the
insured's last known mailing address and would
“state the specific reasons for cancellation.”
is no question that Plaintiff routinely made untimely premium
payments. In fact, on February 17, 2015, March 17, 2015,
April 23, 2015, and May 22, 2015 BHHIC issued Notices of
Cancellation to Plaintiff explaining that his policy was
pending cancellation due to the “nonpayment of
premium.” (DSMF, at ¶¶ 11, 14.)
However, after receiving each of these notices, Plaintiff
paid BHHIC the premium owed and the Notices of Cancellation
were rescinded. (DSMF, at ¶¶ 12, 15.) In
other words, none of these notices ultimately triggered
cancellation in accord with Section 3(b) of the Cancellation
and Non-Renewal Endorsement.
4, 2015, BHHIC sent another Notice of Cancellation to
Plaintiff. (DSMF, at ¶ 19.) But, this time, the
notice did not inform Plaintiff he failed to pay his monthly
premium. Instead, the notice detailed that cancellation was
pending because “a condition, factor or loss experience
material to insurability ha[d] changed substantially or
become known during the policy term.” (DSMF,
at ¶ 20; Ex. J.) This Notice of Cancellation resulted
from an audit of Plaintiff's policy that concluded
Plaintiff was operating “an unscheduled power unit
under [his] trucking authority.” (DSMF, Ex. N;
see also DSMF, Ex. J; Ex. K.) Put simply, following
the audit, BHHIC had reason to believe that Plaintiff was
operating equipment that was not insured by the BHHIC policy.
As stated in the policy, Plaintiff was prohibited from
operating such equipment.
unscheduled power unit was identified by BHHIC upon review of
the U.S. Department of Transportation Federal Motor Carrier
Safety Administration's (“FMCSA”) Safety and
Fitness Electronic Records (“SAFER”) System.
(DSMF, Ex. N; Ex. J.) Plaintiff claims that the
SAFER system erred when it reported his use of the
unscheduled unit. As of July 16, 2015, Plaintiff was in the
process of contacting FMCSA to correct its error.
(Id.) Unfortunately, even if the error was
corrected, BHHIC had indicated that it would not
“reconsider the cancellation, or rewrite the
policy.” (DSMF, Ex. K.) So, Plaintiff was
forced to look elsewhere for insurance.
August 6, 2015, the BHHIC policy cancelled. (DSMF,
The Nation Liability Policy
16, 2015, Plaintiff, through his agent, submitted an
application for commercial auto insurance to National
Liability. (DSMF, Ex. N.) National Liability issued