Great Lakes Reinsurance (UK) PLC v. Stephens Garden Creations, Inc.

119 F. Supp. 3d 297, 2015 U.S. Dist. LEXIS 100827, 2015 WL 4610968
CourtDistrict Court, E.D. Pennsylvania
DecidedAugust 3, 2015
DocketCivil Action No. 14-539
StatusPublished
Cited by5 cases

This text of 119 F. Supp. 3d 297 (Great Lakes Reinsurance (UK) PLC v. Stephens Garden Creations, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Great Lakes Reinsurance (UK) PLC v. Stephens Garden Creations, Inc., 119 F. Supp. 3d 297, 2015 U.S. Dist. LEXIS 100827, 2015 WL 4610968 (E.D. Pa. 2015).

Opinion

[299]*299 MEMORANDUM

DuBOIS, District Judge.

I. INTRODUCTION

This insurance case arises out of a dispute over whether certain losses suffered by defendant and counterclaim-plaintiff Stephens Garden Creations, Inc. (“Stephens”) are covered by the insurance policy issued by plaintiff and counterclaim-defendant Great Lakes Reinsurance (UK) PLC (“Great Lakes”). Among other claims, Stephens avers that. Great Lakes acted in bad faith in denying coverage for several claims. Presently before the Court is Great Lakes’ Partial Motion for Summary Judgment as to Stephens’ claim of bad faith. For the reasons set forth below, the Court grants Great Lakes’ Partial Motion for Summary Judgment.

II. BACKGROUND1

A. Factual Background

1. The Parties

Stephens operates an “on site” retail establishment that sells aquatic plants, small fish, decorations, and products for fish, plants, and ponds. (PL’s Statement of Undisputed Facts (“PL SOF”) ¶2.) The company also constructs, designs, and renovates ponds, water gardens, and fountains at clients’ homes and businesses. (Id. ¶ 3.) Stephens is owned by Peter Schlett, the company’s president, and Pamela Schlett, the company’s general manager. (Id. ¶ 4.)

2. The Policy

Great Lakes issued a Commercial Property Policy to Stephens, with a policy period lasting from September 26, 2012 to September 28, 2013. (Id. ¶ 13.) Stephens’ Commercial Property Policy stated, inter alia:

We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
I. Covered Property
b. Your Business Personal Property located in or on the building described in the Declarations ... consisting of the following ...
(1) Furniture and fixtures;
(2) Machinery and equipment;
(3) ‘Stock’;
(4) All other personal property owned by you and used in your business;
‘Stock’means merchandise held in storage for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping.2
[300]*3002.Property Not Covered Covered Property does not include:
b. Animals, unless owned by others and boarded by you, or if owned by you, only as ‘stock’ while inside of buildings.
(Mot. for Summ. J., Business and Personal Property Form, Ex. E, 32, 45, 33.)
The policy’s Business Income and Extra Expense Endorsement stated, inter alia:
Business Income
... We will only pay for ordinary payroll expenses for 60 days following the date of direct physical loss or damage, unless a greater number of days is shown in the Declarations.
Extra Expense
(A) We will pay necessary Extra Expense you incur during the ‘period of restoration’ that you would not have incurred if there had been no direct physical loss or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.

(Mot. for Summ. J., Business Income and Extra Expense Endorsement, Ex. E, 67.) The policy’s Debris Removal Endorsement stated, inter alia:

This certificate also insures ... costs or expenses; (a) which are reasonably and necessarily incurred by the Assured in the removal, from the premises of the Assured at which the Damage or Destruction occurred, of debris which results from the Damage or Destruction; and (b) of which the Assured becomes aware and advises the amount thereof to Underwriters heron within one year of the commencement of such Damage or Destruction.

(Mot. for Summ. J., Debris Removal Endorsement, Ex. E, 71.)

3. The Property

Stephens’ property consisted of four separate buildings, identified as Buildings 1-4. (PI. SOF ¶ 5.) Stephens used Building 1 for the propagation of plants and storage of fish, displays, potting, and other products. (Id. ¶ 6; Mot. for Summ. J., EUO of Pamela Schlett (“Mrs. Schlett EUO”), Ex. A, 33:15-18.) Building 2 contained Stephens’ primary retail space and two fish selection systems that housed fish offered for sale to the public. (PI. SOF ¶8.) Stephens used Buildings 3 and 4— moveable wood sheds — for additional storage space. (Id. ¶ 11.)

4. The Loss and Subsequent Investigation

On November 6, 2012, an accidental fire destroyed Building 2 and caused damage to Buildings 1, 3, and 4. (Id. ¶¶ 33-34.) Great Lakes received notice of the loss on November 7, 2012. (Id. ¶¶ 36-37.) Vickie Pritchett was assigned by Great Lakes to adjust the loss and performed a preliminary investigation and inspection on November 9, 2012. (Id. ¶¶38, 39.) Great Lakes issued $50,000 advance payments to Stephens on November 20, 2012 and January 23, 2013. (Mot. for Summ. J., First Payment Advance, Ex. N; Mot. for Summ. J., Second Advance Payment, Ex. U.) As of March 2, 2015, the date on which Great Lakes filed its Partial Motion for Summary Judgment, Great Lakes had paid Stephens a total of $712,586.13 as to the claims detailed below. (PI. SOF ¶ 88.)

[301]*301a. Stephens’ Real Property Damage Claims

Both Great Lakes and Stephens hired contractors to submit property damage estimates for Buildings 1-4. In January 2013, Doozer Construction, which was retained by Stephens, and Puro-Tec, which was retained by Great Lakes, inspected the property and submitted property damage estimates. The two estimates were dramatically different, with a disparity of approximately $542,879.78 — Doozer’s estimate totaled $783,360.45, while Puro-Tec’s estimate totaled $239,625.24. (Mot. for Summ. J., Doozer Construction Estimate, Ex. Z, 2-13; Mot. for Summ. J., Puro-Tec Estimate, Ex. AA; Mot. for Summ. J., February 13, 2013 Status Report, Ex. W.) In her February 13, 2013 status report, Ms. Pritchett advised Stephens that Great Lakes, Puro-Tec, and Doozer were “sorting] out an agreed scope and estimate” which she needed before she could recommend payment by Great Lakes. (Mot. for Summ. J., February 13, 2013 Status Report, Ex. W.) Ms. Pritchett also stated that she would not recommend payment for property damage until Great Lakes was able to ascertain whether there were liens on the property. Id. Approximately two months later, on April 9, 2013, Great Lakes paid Stephens’ property damage claim for $239,630.14. (Mot. for Summ. J., Email from Christina Capobianeo to Jonathan Wheeler, dated April 9, 2013, Ex. DD.)

b. Stephens’ Business Personal Property Claims

Great Lakes paid Stephens’ Business Personal Property claim for Building 2 on January 31, 2013 and requested additional documentation to support Stephens’ Building Personal Property claim for Building 1. (Mot. for Summ.

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119 F. Supp. 3d 297, 2015 U.S. Dist. LEXIS 100827, 2015 WL 4610968, Counsel Stack Legal Research, https://law.counselstack.com/opinion/great-lakes-reinsurance-uk-plc-v-stephens-garden-creations-inc-paed-2015.