Opinion
C.A. No. 01C-06-021 WCC.
Submitted: February 2, 2004.
Decided: May 28, 2004.
Upon Defendant, Hartford Fire Insurance's Motion for Summary Judgment Related to Defendant, Philly Style Pizza's Cross-claim. GRANTED.
Upon Defendant, Mellon Bank's Motion for Summary Judgment on Count IV of the Complaint. DENIED.Upon Defendant, Philly Style Pizza's Renewed Motion for Leave to File a Second Amended Answer, Counter-claim and Cross-claim. DENIED.
Theodore F. Sandstrom, Wilmington, Delaware, Attorney for Defendants, Elsayed and Rebecca Abounabet, d/b/a Philly Style Pizza.
William L. Doerler, Wilmington, Delaware, Attorney for Defendant, Hartford Fire Insurance.
Brian E. Lutness, Wilmington, Delaware, Attorney for Plaintiff, Al Smith.
Sean J. Bellew, Cozen O' Connor, Wilmington, Delaware, Attorney for Defendant, Mellon Bank.
ORDER ARBITRATION CASE TRIAL BY JURY OF 12 DEMANDED
This 28th day of May, 2004, after consideration of Defendant Hartford Fire Insurance's Motion for Summary Judgment Related to Defendant Philly Style Pizza's Cross-claim, Defendant Mellon Bank's Motion for Summary Judgment on Count IV of the Complaint and Defendant Philly Style Pizza's Renewed Motion for Leave to File a Second Amended Answer, Counter-claim and Cross-claim, it appears that:
1. This case was initiated by Plaintiff Al Smith ("Smith"), a general contractor, against Defendants Elsayed and Rebecca Abounabet, d/b/a Philly Style Pizza ("Philly Style Pizza") over the performance of a contract to relocate Philly Style Pizza's business to a new location following a March 28, 1999 fire.
2. The contract between Philly Style Pizza and Smith was for $52,229.00, to be paid in three installments of $17,410.00. When the fire occurred, Philly Style Pizza held an insurance policy with Hartford Fire Insurance ("Hartford") and thereafter, Philly Style Pizza submitted a claim to Hartford for the fire damage. Consistent with the insurance policy, Hartford made three payments of $17,410.00 for the relocation work performed by Smith. Before Smith commenced the work, Hartford issued the first check directly to him. Hartford issued the second check to both Philly Style Pizza and Smith and the parties endorsed the check and Smith received the proceeds. The final payment was again issued to both Philly Style Pizza and Smith. However, without endorsement, Philly Style Pizza deposited the check into an escrow account at Mellon Bank and thereafter used the proceeds from the check to complete the unfinished relocation project.
3. On May 3, 2001, Smith filed a Complaint against Elsayed and Rebecca Abounabet, d/b/a Philly Style Pizza, Hartford Fire Insurance and Mellon Bank. Smith alleged breach of contract against Philly Style Pizza and Hartford for failing to tender the final payment of $17,410.00 to him. Subsequently, Philly Style Pizza filed an Amended Answer on October 9, 2002 including a cross-claim against Hartford.
4. In the cross-claim, Philly Style Pizza alleged two theories of liability against Hartford. First, Philly Style Pizza alleged that Hartford breached its contract with Philly Style Pizza because Hartford failed to re-issue a check made payable solely to them. Second, Philly Style Pizza alleged that Hartford acted in bad faith by failing to appropriately resolve the insurance claim with Philly Style Pizza by issuing a new check made payable solely to Philly Style Pizza. Hartford has moved for summary judgment on both theories.
See Amended Answer of Elsayed and Rebecca Abounabet, d/b/a Philly Style Pizza, Defendants, Counter-claim of Elsayed Abounabet d/b/a Philly Style Pizza and Cross-claim of Elsayed Abounabet d/b/a Philly Style Pizza at 8.
5. Summary judgment is appropriate when the moving party has shown there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. In considering such a motion, the Court must evaluate the facts in the light most favorable to the non-moving party. Summary judgment will not be granted when the record reasonably indicates that a material fact is in dispute or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances.
See Moore v. Sizemore, 405 A.2d 679 (Del. 1979).
See id.
See Ebersole v. Lowengrub, 180 A.2d 467 (Del. 1962).
6. With regard to the claim for breach of contract, Philly Style Pizza contends that Hartford breached its contract by failing to re-issue the third check made payable solely to Philly Style Pizza. In viewing the facts in the light most favorable to the non-moving party, here, Philly Style Pizza, the undisputed facts are that Philly Style Pizza received the third check and deposited it. As such, Hartford has no duty to reissue a check until the proceeds of the original check are tendered back to Hartford. Philly Style Pizza has failed to create an issue of material fact with respect to contractual damages because it is undisputed that Philly Style Pizza has received all of the money to which it was entitled under the insurance policy with Hartford. As such, summary judgment is granted on the breach of contract claim.
7. Philly Style Pizza alleged that Hartford acted in bad faith by failing to negotiate a settlement with Philly Style Pizza related to issuing a new check solely in Philly Style Pizza's name. However, Philly Style Pizza has failed to come forth with any evidence to establish bad faith on the part of Hartford. For a claim of bad faith in the context of a insured-insurer contractual relationship, a plaintiff must establish that the "insurer lacked reasonable justification in delaying or refusing payment of a claim." Moreover, "[m]ere delay is not evidence of bad faith provided that a reasonable justification exists for refusing to make payment upon submission of proof of loss." In the case at bar, Philly Style Pizza failed to tender the proceeds from the third check to Hartford. Not only would issuing a fourth check be detrimental to the interest of Hartford, it would have caused them to overpay Philly Style Pizza for the claim that had been submitted. This clearly provides reasonable justification for Hartford's failure to re-issue the third check made payable solely to Philly Style Pizza. Simply put, Philly Style Pizza has received everything they are entitled to from Hartford and Hartford has no further obligation to them regardless of Philly Style Pizza's dispute with Smith.
Tackett v. St. Farm Fire Cas. Ins. Co., 653 A.2d 254, 262 (Del. 1995).
See id. at 266.
In its Motion, Hartford argued that summary judgment should be granted because Philly Style Pizza failed to identify an expert to establish its claim for bad faith. The Court will not address this argument, as the Court has granted summary judgment on Philly Style Pizza's claim for bad faith.
The facts when viewed in the light most favorable to Philly Style Pizza do not establish a claim for bad faith and summary judgment is warranted under the circumstances. Moreover, not reaching a threshold of bad faith it follows that Hartford has not acted in a willful or malicious manner and summary judgment must be granted on the punitive damages claim as well.
8. In the Complaint, Smith alleged that Defendant Mellon Bank was negligent in that it accepted the third check without Smith's endorsement. Defendant Mellon Bank filed a Motion for Summary Judgment on this theory of liability claiming that since the proceeds from the third check are in an escrow account with Mellon Bank there is no harm to Smith, as the funds are still available to him. However, during the argument on this Motion, it appeared that Philly Style Pizza had withdrawn those proceeds to complete the unfinished relocation project. Since Mellon Bank's Motion was premised on the existence of the funds in the escrow account and this fact is now clearly in dispute, the Court denies Mellon Bank's Motion for Summary Judgment on Count IV of the Complaint.
See Complaint, Count IV. The Court notes that the Complaint reflects Count IV as Count III, but this is a typographical error by Plaintiff Smith.
9. In addition to the motions for summary judgment, the Court also has before it Philly Style Pizza's Renewed Motion for Leave to File a Second Amended Answer, Counter-claim and Cross-claim. Pursuant to Superior Court Civil Rule 15(a), "a party may amend the party's pleading only by leave of court . . . and leave shall be freely given when justice so requires." The Court finds that Philly Style Pizza has not shown good cause that the amendment should be permitted. The Court notes that on May 15, 2003 Judge Alford denied Philly Style Pizza's initial Motion for Leave to File a Second Amended Answer, Counter-claim and Cross-claim as being untimely. The Court finds that Philly Style Pizza has failed to provide justification for reversing Judge Alford's previous Order and therefore, the Court denies without prejudice Philly Style Pizza's Renewed Motion for Leave to File a Second Amended Answer, Counter-claim and Cross-claim.
Sup.Ct. Civ. R. 15(a) (2004).
10. For the above stated reasons Hartford's Motion for Summary Judgment Related to Philly Style Pizza's Cross-claim is GRANTED, Mellon Bank's Motion for Summary Judgment on Count IV of the Complaint is DENIED and Philly Style Pizza's Renewed Motion for Leave to File a Second Amended Answer, Counterclaim and Cross-claim is DENIED. I have also requested that this case be transferred to my caseload and have also issued today a new scheduling order. All future correspondence should note "WCC" at the end of the civil action number and the case should proceed consistent with the new scheduling order.
The Court also has before it Hartford's Motion to Strike Philly Style Pizza's Expert Identification filed on May 16, 2003. The Court finds that Hartford's Motion is moot, as the Court granted Hartford's Motion for Summary Judgment Related to Philly Style Pizza's Cross-claim. In addition, the Court has before it Defendant Philly Style Pizza's Motion to Extend Time for Completion of Discovery, allow for Dispositive Motions and to re-schedule the Trial on September 8, 2003 filed on July 30, 2003. The Court finds that Philly Style Pizza's Motion is moot, as the Court issued a new scheduling order creating new deadlines.
IT IS SO ORDERED.