Opinion
No. 02-CV-9217.
August 17, 2004
MEMORANDUM — ORDER
Presently pending before the Court is Defendant's Motion for Summary Judgment and Plaintiff's Answer thereto. For the reasons set forth below, Defendant's Motion for Summary Judgment will be denied.
BACKGROUND
Plaintiff is a chemical manufacturer of hydrocarbon resins used in construction chemicals, adhesives, and paints. This court has diversity jurisdiction in that the parties are citizens of different states, and the amount in controversy exceeds the sum of $75,000. See 28 U.S.C. § 1332 (2004). Plaintiff filed a Complaint alleging that on December 14, 2001 Plaintiff's hot oil boiler and hydrocarbon reactor failed in mid-reaction ("first incident"). The device is covered under a contract of insurance issued by Defendant. After the first incident, a new hot oil burner was installed. On March 20, 2002, when production started after the installation of the second boiler, the device suffered another mid-reaction failure ("second incident"). Plaintiff's engineers attributed the second incident to a malfunction of the modulator motor in the newly-installed hot oil unit. Def.'s Mot. Summ. J., Ex. "E", pp. 105-111. Defendant's engineer visited Plaintiff in April, and was notified of the problem with the modulator motor. Plaintiff claims industry practice dictates that when a new modulator motor malfunctions it is not repaired or opened for inspection, but is sent back to its manufacturer. Plaintiff allegedly complied with this industry practice on June 7, 2002, and sent the malfunctioning motor back to the manufacturer, Fulton Boiler. The motor was subsequently lost at Fulton Boiler. Plaintiff filed a formal claim pertaining to the second incident with the Defendant on September 5, 2002. Defendant denied the claim, and Plaintiff is now seeking coverage as to incidents one and two under the Travelers' Policy. Plaintiff seeks $30,004.08 for costs related to the second incident.
Defendant's motion for summary judgment pertains only to the second incident. Defendant asserts that the second incident is a separate occurrence according to the terms and conditions of the Travelers' Policy. Defendant moves for summary judgment as to Plaintiff's claim for damages stemming from the second incident allegedly for three specific reasons: (1) Plaintiff failed to give timely notice of its claim; (2) Plaintiff failed to preserve the damaged object for inspection by the Defendant; and (3) Plaintiff can not prove an "accident" to an "object" covered by the policy occurred under the terms of the Travelers Policy, because Plaintiff can not produce the malfunctioning modulator motor.
DISCUSSION
A motion for summary judgment is granted when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is authorized against a party who fails to sufficiently establish an essential element to that party's case. Celotex Corp. v. Catrett, 47 U.S. 317, 321 (1986). Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment. Medical Protective Co. v. Watkins, 198 F.3d 100, 103 (3rd Cir. 1999). In addition, summary judgment will not be granted if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. The interpretation of the scope of an insurance contract is a question of law properly decided by the court. Id. When the terms of a contract are clear and unambiguous, the court must interpret the contract in accordance with the terms. Peerless Dyeing v. Ind. Risk Insurers, 573 A.2d 541, 543 (Pa.Super. 1990). However, where the language of the contract is not clear and unambiguous, fact issues are for the jury. Id. at 544.
Defendant asserts that in order to prove an accident occurred, Plaintiff must perform certain obligations under the insurance contract. The Travelers policy contains the following relevant provisions:
COMPREHENSIVE EQUIPMENT COVERAGE
G. DEFINITIONS
FORM
"Accident" means a sudden and accidental breakdown of the "object" or part of the "object". At the time the breakdown occurs, it must become apparent by physical damage that requires repair or replacement."3. Duties in the Event of Loss or Damage
You must see that the following are done in the event of loss or damage:
a. Give us prompt notice of the loss or damage. Include a description of the property involved;
b. As soon as possible, give a description of how, when, and where the loss or damage occurred;
c. Allow us a reasonable time and opportunity to examine the property and premises before repairs are undertaken or physical evidence of the "accident" is removed. But you must take whatever means are necessary for protection from further damage;
d. Permit us to inspect the property and records. Also permit us to take samples of damaged and undamaged property for inspection, testing and analysis.
Defendant claims Plaintiff did not provide prompt notice of the second incident. Plaintiff asserts the two incidents are part of one accident, and as such, notice was not necessary after the second incident because it was given one month after the first incident. In addition, Plaintiff maintains that even if the incidents are considered two separate accidents, Defendant was notified promptly after the second incident. "Prompt notice" is not defined in the policy. The policy does not determine when notification is considered `prompt', or what type of notice is permitted. Plaintiff has produced evidence that it orally notified Defendant one month after the second incident. Defendant admits to knowing about the second incident before Plaintiff filed a written claim in September 2002. See Def.'s Mot. Summ. J. Ex. "J", p. 190. A reasonable fact finder could find that Defendant was given prompt notice of the second incident, either as part of the first incident or as notice given for the individual second incident. As such, I am unable to conclude as a matter of law that prompt notice was not provided to Defendant. Defendant's motion for summary judgment in reference to this argument will be denied.
Defendant also claims Plaintiff failed to adhere to the term of the contract requiring Plaintiff to permit Defendant to inspect and take samples of the damaged property. Specifically, Defendant asserts that because Plaintiff can not produce the damaged modulator motor for inspection by Defendant, Plaintiff can not prove an accident occurred. Plaintiff notified Defendant about the second incident in April 2002. Plaintiff did not send the broken modulator motor back to Fulton Boiler until June 2002, approximately six weeks after the notification. The insurance policy states Plaintiff must permit Defendant to inspect and take samples of the damaged property. However, the policy does not state how long Plaintiff is required to keep the damaged property available for Defendant to inspect. Whether Plaintiff afforded Defendant a reasonable opportunity to inspect the damaged modulator motor is a question of fact for a fact finder.
Moreover, even though Plaintiff no longer has the damaged motor, Plaintiff's engineers had the opportunity to inspect the motor before it was returned to Fulton Boiler. Plaintiff can offer its experts testimony to explain the damage to the modulator motor. Although the modulator motor is lost, and not available to either party, a reasonable fact finder could find an accident occurred under the terms of the insurance policy based upon inferences drawn from the totality of the circumstances. As such, Defendant's motion for summary judgment with regard to this defense will be denied. An appropriate order follows.