Opinion
14-P-791
08-21-2015
30 MAGAZINER REALTY, LLC & another v. PEERLESS INSURANCE COMPANY.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
At issue is a dispute between an insurer and its insureds over the valuation of an insurance claim. A judge of the Superior Court allowed the defendant, Peerless Insurance Company's (Peerless) motion for summary judgment. The plaintiffs, 30 Magaziner Realty, LLC (Magaziner) and Osgood Textile Co.,Inc. (Osgood) appeal.
Background. We summarize the material facts from the record in the light most favorable to the plaintiffs. Pinti v. Emigrant Mtg. Co., 472 Mass. 226, 231 (2015). The plaintiffs operated a textile warehouse located at 333 Park Street in West Springfield. In 2005, the premises were insured pursuant to a policy issued by Ohio Casualty Group (2005 policy) which incorporated the language of the standard fire policy set forth in G. L. c. 175, § 99, Twelfth, and covered, inter alia, losses from structural collapses and the resulting damage from snow or rain. In February, 2010, the plaintiffs purchased a policy from Peerless for the period between February 12, 2010, and February 12, 2011 (2010 policy). Notwithstanding the plaintiffs' claim to the contrary, both parties treated this policy as a renewal of the coverage first provided in the earlier, 2005 policy.
Briefly, the plaintiffs assert that the 2010 policy, without certain material endorsement pages attached to it, was in effect as such, and governs the scope of their coverage. However, as the judge correctly noted, both parties considered the 2010 policy to be an extension of the 2005 policy, permissibly incorporating the pertinent endorsement pages of that policy without physically attaching them to the 2010 policy. In August, 2012, an insurance agent sent the renewal package to Mayer Kahan, manager and corporate secretary of the plaintiffs, whose official responsibilities included buying insurance for Osgood. By electronic mail message (email), Kahan asked for confirmation that "this is the policy that I received from you guys on renewal," to which the agent responded, "Yes, this would have been the policy you received from us upon renewal." Moreover, as the judge noted, "[t]he 2010 Policy cannot be read without reference to [the] forms and endorsements [attached to the 2005 policy]. In fact, without reference to these forms and endorsements there is, essentially, no policy of insurance, as these documents identify and explain the types of losses covered and the conditions that must be met in order to recover under the 2010 Policy."
On February 3, 2011, during the renewed policy term, the roof on the plaintiffs' textile warehouse collapsed because of an accumulation of snow. Peerless determined the "Actual Cash Value" of the plaintiffs' claim to be $904,766.10, and paid that amount to the plaintiffs. The plaintiffs, seeking much higher "Replacement Cost," disagreed with the valuation and, ultimately, invoked the reference procedure under the policy and G. L. c. 175, § 99, Twelfth. Unable to agree to a third disinterested person, the plaintiffs asked the Commissioner of Insurance to appoint the third referee, which was done. On November 6, 2012, the referees issued their award, finding, inter alia, that the "Actual Cash Value Building Loss" was $856,274.24, i.e., less than the amount Peerless already had paid.
As Peerless points out, the policy calls for value to be determined as Actual Cash Value. Under optional coverage, the policy allows for Replacement Cost to replace Actual Cash Value, but specifies that Peerless "will not pay on a replacement cost basis for any loss or damage: (1) Until the lost or damaged property is actually repaired or replaced; (a) On the described premises; or (b) At some other location in the Commonwealth of Massachusetts; and (2) Unless the repairs or replacement are made within a reasonable time, but no more than 2 years after the loss or damage." Not only had more than two years passed since the roof collapsed, but the property had not been repaired. See note 6, infra.
Thereafter, the plaintiffs claimed that two of the referees (appointed by Peerless and the Commissioner of Insurance) were not disinterested and that the award was tainted by bias solely on grounds that both men had served in reference proceedings on previous occasions for Peerless's parent corporation. A Superior Court judge denied the plaintiffs request for injunctive relief, as did a single justice of this court. Thereafter, a second Superior Court judge allowed motions to quash filed by the two referees challenged by the plaintiffs, and a single justice of this court again denied the plaintiffs' separate requests for injunctive relief and reconsideration, the latter twice.
The plaintiffs alleged in their amended complaint only that Peerless "is insisting that its nominated referees be an individual whose full time business is to work for insurers including a referee was previously employed [sic] and thus has a business relationship with Defendant's insurance group. Such person as a matter of law is not a 'disinterested person.'"
In rejecting the plaintiffs' claim of bias on the part of the referees, the single justice stated: "Remarkably, the papers here fail to specify any reliable indications or sources of information of genuine bias or prejudice on the part of the referees. . . . Nothing in the present papers from the petitioners' counsel elaborates upon, or substantiates, these conclusory broadsides. The papers present no verified specification of bias. They reflect merely an amorphous resentment of the figure produced by the referees, a figure never revealed to this court in the interlocutory papers. . . . An amorphous and conclusory allegation of bias is not a plausible and specific claim."
Ultimately, on the plaintiffs' motion for partial summary judgment and Peerless's motion for summary judgment, a third Superior Court judge denied the plaintiffs' motion, allowed Peerless's motion, and ordered judgment to enter for Peerless on all claims.
Discussion. The plaintiffs raise a variety of claims on appeal. They argue that the judge misunderstood the reference proceedings; that they protested those proceedings; that the judge erred in determining that they could not recover replacement costs, thus allowing Peerless to breach the implied covenant of good faith and fair dealing; that the reference panel consisted of biased referees, in part because of the alleged inadequacy of the referees' award, which was invalid because the process was unfair; and that the judge erred in treating the referees' award as final and conclusive.
Our review of a grant of summary judgment is de novo. Deutsche Bank Natl. Trust Co. v. Fitchburg Capital, LLC, 471 Mass. 248, 252-253 (2015). In this case however, we are guided by the judge's well-reasoned memorandum of decision. Substantially for the reasons discussed by the judge, we conclude that Peerless is entitled to judgment as a matter of law. We note as well that the plaintiffs' claims on appeal are nonspecific, lack support in the record, or are otherwise without merit. They assert, for example, that the amount of the referees' award is by itself prima facie evidence of bias, even though they provide no evidence of why the award amount was facially deficient. See Second Soc. of Universalists in Boston v. Royal Ins. Co., 221 Mass. 518, 523 (1915) ("[G]eneral allegations of . . . bias and prejudice, without stating definite acts which constitute a fraud or bias and prejudice, are not enough to require judicial inquiry"). Additionally, the claim that the 2010 policy was not a renewal policy is not a correct interpretation of the policy documents. The 2010 policy contained unambiguous references to documents which were provided to the plaintiffs as part of the original 2005 policy. See Hakim v. Massachusetts Insurers' Insolvency Fund, 424 Mass. 275, 281 (1997) (unambiguous provisions of an insurance policy are given their "usual and ordinary meaning"). See 2 Couch, Insurance § 29:40 (3d ed. 2010) ("[R]enewal of a policy continues the original stipulations"). Because that is so, the judge properly ruled that these documents were incorporated by reference into the 2010 policy and govern the scope of coverage.
It is also plain by a simple reading of the policy that the plaintiffs are not entitled to the replacement cost of the roof. As the judge ruled:
"According to the plain language of this provision, the Plaintiffs are not entitled to 'Replacement Cost' damages until the damaged property is actually repaired and these repairs must be completed within two years. Here, the Plaintiffs have not completed the repairs and the loss occurred almost three years ago on February 3, 2011. Consequently, the Plaintiffs' argument that they are entitled to 'Replacement Cost' damages fails."
As previously noted, see note 2, supra, the record shows that prior to commencing litigation, the plaintiffs acknowledged in writing that the 2010 policy was a renewal of the 2005 policy.
We also reject the plaintiffs' claim that Peerless was obligated to pay personal injury damages to two of the plaintiffs' employees. As the judge found, Peerless owed no duty to reimburse for personal injuries, and in any event, the cause of the injuries was caused by Magaziner's failure to prevent further damage (i.e., mold) to the building following its collapse.
Judgment affirmed.
By the Court (Vuono, Meade & Carhart, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: August 21, 2015.