Authored by: Joseph Ciollo
U.S. District Court – Business Income Loss – Declaratory Judgment
In Theraplant, LLC v. National Fire & Marine Insurance Company, the plaintiff submitted several insurance claims to the defendant insurer after a fire caused property damage at the plaintiff’s facility where it cultivated marijuana and produced cannabis products. The defendant paid the plaintiff for damage caused to the building and equipment. The defendant denied coverage for lost marijuana plants citing certain policy exclusions, and also denied the plaintiff’s claim for business income loss. The plaintiff filed suit seeking a declaratory judgment and claiming breach of contract. The parties filed cross-motions for summary judgment. The defendant argued that the subject policy cannot cover the plaintiff’s business income loss because the loss was caused by a suspension of the company’s operations. The plaintiff contended that a causal link tied the suspension to the business income loss. The defendant argued that the plaintiff’s losses were outside the “period of restoration” and therefore ineligible for coverage. In response, the plaintiff argued that it was required to have sustained the loss during the period of restoration. The defendant argued that any liability for business income loss must be limited to $166,666.67 per month. In the plaintiff’s view, however, the policy’s upper limit of coverage was $1,000,000. The Court, upon conducting a detailed analysis of the plaintiff’s business operations after the fire, concluded that the undisputed evidence did not establish the requisite causal link between the suspension of operations and the business income loss, which was one of the necessary elements of the plaintiff’s claim. In light of the Court’s decision regarding the plaintiff’s business income loss claim, the Court did not reach the other issues regarding the interpretation of coverage exclusions, the effect of the “period of restoration,” and the applicable coverage limit for business income loss. The Court also observed that the plaintiff did not purchase crop insurance and therefore attempted to mold the claim into a business income loss. The Court granted the defendant’s motion for summary judgment and denied the plaintiff’s motion for summary judgment.
Superior Court – Special Defenses – Motion to Strike
In Tammy L. Newhall v. Anthony Martochcio, et al, the plaintiff was injured in a motor vehicle accident and filed suit against the operator and owner of the other vehicle involved in the accident. The plaintiff also asserted a claim against Amica Mutual Insurance Company (“Amica”) for Uninsured Motorist (“UM”) benefits. The tortfeasors’ vehicle was not covered by insurance. Amica’s UM coverage limit was $100,000. At a mediation, the plaintiff settled with Amica for $60,000. Following that settlement, the tortfeasor defendants filed multiple special defenses, all relating to the plaintiff’s settlement with Amica. The plaintiff moved to strike the special defenses which asserted the following: (1) the plaintiff failed to mitigate her damages by not collecting the full policy limit from Amica; (2) the plaintiff waived her right to recover any amount in excess of the $60,000 settlement; and (3) the defendants were entitled to a credit or offset for the $60,000 settlement amount or the full $100,000 policy limit. The Court observed that this case presented a somewhat unusual procedural posture where the plaintiff had settled with her own insurer for her UM claim, but the case remained pending against the tortfeasor defendants. Typically, special defenses raised in this context arise in the opposite scenario where a plaintiff has settled with the tortfeasor(s) and the insurer claims that it either owes nothing to the plaintiff as a result, or is entitled to a credit or offset for the amount paid by the tortfeasor(s). Ultimately, the Court decided that each of the special defenses were sufficiently pled and therefore denied the motion to strike.
Superior Court – Property Loss – Suit Limitations Period
In 94 Broad Street, LLC v. The Hartford Financial Service Group, Inc., et al, the defendant Hartford Casualty Insurance Company had insured the plaintiff’s mixed-used building for over twenty years. In late 2018, the plaintiff experienced issues related to a sewer backup at the rear of its location and made repairs. On October 6, 2020, the plaintiff filed an insurance claim with the defendant, and the defendant assigned a claim file with the date of loss as December 9, 2018. Around October 6, 2020, the plaintiff informed the defendant that the rear of its building was collapsing, the collapse was contemporaneous with the sewer line back up, and the plaintiff believed the collapse was because of the sewer line backup. The plaintiff also believed that the sewer line back up was the proximate cause of the collapse. The defendant denied coverage for the claim on August 18, 2021, due to its engineer’s report. The plaintiff’s civil engineer then investigated the collapse and opined that the collapse was caused by the sewer line back up and the soil compacting which weakened the rear of the building. The defendant still refused to cover the loss. On September 15, 2022, the plaintiff commenced an action against the incorrect entity, Hartford Financial Service Group. Then on April 21, 2023, the plaintiff commenced an action against Hartford Casualty Insurance Company as the correct entity. The defendant filed a motion for summary judgment and argued that the plaintiff commenced the action after the expiration of the applicable policy’s two year suit limitation period. The plaintiff argued that it did not file the claim until October 6, 2020, and therefore it brought the suit within the two year suit limitation period. The Court observed that that the date of loss refers to the date on which the insured sustains the damages that gives rise to a claim. In the plaintiff’s complaint, it was alleged that “in late 2018” the building collapse “was contemporaneous with the sewer line backing up…was caused by the same event [the sewer backup]…” and that “the sewer line failure/backup was the proximate cause of the collapse.” The complaint also alleged that the plaintiff’s engineer opined that the collapse was related to the sewer line back up. Yet, in its objection to the motion for summary judgment, the plaintiff claimed that its engineer’s report stated that the building had sustained additional sagging since 2019. The Court noted the plaintiff’s engineer’s report was an unauthenticated document and cannot be considered for summary judgment. However, even if the report was proper evidence, the plaintiff alleged that additional sagging had been happening since 2019, not that the sagging started in 2019. Hence, the Court determined the date of loss to be December 9, 2018. The Court held that regardless of which defendant was sued by the plaintiff, neither action complied with the policy’s two year suit limitation period. The defendant’s motion for summary judgment was granted.
