Beazley Underwriting, LTD v. Max & Mia Realty, LLCBeazley Underwriting, LTD v. Max & Mia Realty, LLC
Presently before the Court are three motions for summary judgment, each raising similar issues. (Doc. 52; Doc. 55; Doc. 58). Doc. 58). This matter stems from an insurance dispute arising from a fire (“the Fire“) damaging a commercial building (“the Building“). According to Plaintiff Beazley Underwriting, LTD (“Beazley“), Beazley issued an insurance policy (“the Policy“) to Defendant Max & Mia Realty, LLC (“MMR“) which provided for scheduled coverage with limits on an item-by-item basis by location. (Doc. 59, at 1-2). MMR and its retail insurance broker, Third-Party Defendant E.K. McConkey & Co. (“McConkey“) (together, “Defendants“), argue that the Policy provides blanket coverage and requires Beazley to pay MMR significantly more than if the policy provided scheduled coverage. (Doc. 54, at 3-9; Doc. 56, at 7-15). For the following reasons, Beazley‘s motion for summary judgment will be GRANTED in part and DENIED in part. (Doc. 58). McConkey and MMR‘s motions for summary judgment will be DENIED as moot. (Doc. 52; Doc. 55).
I. BACKGROUND AND PROCEDURAL HISTORY
Unless otherwise indicated, the following factual summary is taken from the parties’ filings relevant to the instant motions for summary judgment. Beazley initiated this action by filing a complaint seeking declaratory relief and asks this Court to declare “that the Policy is
Beazley is a United Kingdom corporation that is the sole member of Syndicate 2623.1 (Doc. 1, ¶ 11; Doc. 60, ¶ 1; Doc. 67, ¶ 1; Doc. 60-1, at 11; Doc. 57, ¶ 9). Syndicates 623 and 2623 subscribed to the Policy, No. W25073D210501, issued to MMR, a real estate limited liability company with its principal place of business in Pennsylvania, for the period of October 11, 2021 to October 11, 2022. (Doc. 1, at 1-3; Doc. 60, ¶ 2; Doc. 67, ¶ 2; Doc. 72, ¶ 2). Syndicate 2623 subscribed to 82% of the risk and Syndicate 623 subscribed to 18% of the risk.2 (Doc. 60, ¶ 3; Doc. 60-1, at 24; Doc. 67, ¶ 3; Doc. 72, ¶ 3). McConkey is an insurance agency that served as MMR‘s insurance broker to “act as [MMR‘s] exclusive representative in the marketplace to locate. . . insurance coverage.” (Doc. 60, ¶ 5; Doc. 60-1, at 89, 221-224; Doc. 67, ¶ 5; Doc. 72, ¶ 5). McConkey used broker Ryan Turner Specialty (“RT Specialty“) to obtain insurance on behalf of McConkey‘s clients. (Doc. 60, ¶ 7; Doc. 67, ¶ 7; Doc. 72, ¶ 7).
Prior to the issuance of the Policy, Beazley had issued MMR commercial property insurance policies since 2017.3 (Doc. 60, ¶ 14; Doc. 60-1, at 93; Doc. 67, ¶ 14). On November 4, 2021, Beazley sent an email enclosing a copy of the Policy and Statement of Values
On March 5, 2022, the Fire engulfed the Building, causing significant damage. (Doc. 60, ¶ 51; Doc. 60-1, at 315; Doc. 67, ¶ 51; Doc. 72, ¶ 51). On the same day, McConkey submitted a “Property Loss Notice” on behalf of MMR, seeking coverage for the damage from the Fire. (Doc. 60; ¶ 52; Doc. 60-1, at 315-321; Doc. 72, ¶ 52; Doc. 72, ¶ 52). Sedgwick, an independent adjuster firm appointed by Beazley, investigated the fire and sent MMR a reservation of rights letter, dated April 15, 2022, which noted that “the Policy reflects a value of $3,413,330 for the fire-damaged building and $440,740 for business personal property[, and b]ased on the Policy language above, in particular paragraph 2.B. of the Schedule Limit of Liability Clause, this would be the maximum recoverable amount under the Policy.” (Doc.
II. LEGAL STANDARDS
A. MOTION FOR SUMMARY JUDGMENT
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
A federal court should grant summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir. 2000). In deciding a motion for summary judgment, the court‘s function is not to make credibility determinations, weigh evidence, or draw inferences from the facts. Anderson, 477 U.S. at 249. Rather, the court must simply “determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.
The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion,” and demonstrating the absence of a genuine dispute of any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant makes such a showing, the non-movant must go beyond the pleadings with affidavits or declarations, answers to interrogatories or the like in order to demonstrate specific material facts which give rise to a genuine issue.
B. INSURANCE CONTRACT INTERPRETATION
Under Pennsylvania law, “the interpretation of the scope of coverage of an insurance contract is a question of law properly decided by the court.” Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999). The Supreme Court of Pennsylvania has instructed that:
Where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement. Where, however, the language of the contract is clear and unambiguous, a court is required to give effect to that language.
Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (1983) (citations omitted). “In interpreting an insurance policy, a court must ascertain the intent of the parties as manifested by the language of the written agreement.” Stevens Painton Corp. v. First State Ins. Co., 746 A.2d 649, 657 (Pa. Super. Ct. 2000).
Moreover, “[c]ourts interpret coverage clauses broadly ‘to afford the greatest possible protection to the insured,’ and, accordingly, they interpret exceptions to an insurer‘s general liability narrowly against the insurer.” Verticalnet, Inc. v. U.S. Specialty Ins. Co., 492 F. Supp. 2d 452, 456 (E.D. Pa. 2007) (quoting Westport Ins. Corp. v. Bayer, 284 F.3d 489, 498 n.7 (3d Cir. 2002)). The “insurance policy must be read as a whole and construed according to the plain meaning of its terms.” C.H. Heist Caribe Corp. v. Am. Home Assurance Co., 640 F.2d 479, 481 (3d Cir. 1981). Furthermore, the court must enforce the plain language of the policy if its terms are clear and unambiguous. Standard Venetian Blind, 469 A.2d at 566 (citation omitted).
III. DISCUSSION
A. THIS COURT HAS SUBJECT MATTER JURISDICTION
Federal courts have struggled to determine issues of subject matter jurisdiction in cases involving Lloyd‘s insurance policies, due to the unique structure of the Lloyd‘s business model. See CNX Gas CO. L.L.C. v. Lloyd‘s of London, 410 F. Supp. 3d 746, 748 (W.D. Pa. 2019). Lloyd‘s acts merely as a forum for potentially thousands of underwriters to buy shares of risks, which “makes it difficult to execute the citizenship analysis required to determine diversity jurisdiction.” CNX Gas, 410 F. Supp. 3d at 748. The Western District of Pennsylvania has described the Lloyd‘s insurance model in a detailed manner as follows:
Lloyd‘s neither issues insurance policies nor subscribes to them. It merely provides a marketplace where its members can underwrite them. Lloyd‘s members who subscribe to shares of risk by underwriting insurance policies are referred to interchangeably as “underwriters” or “Names.” The identities of Names are kept confidential. Names increase the efficiency of the market and combine resources by forming groups called “syndicates,” unincorporated groups of investors who appoint Names on their behalf Syndicates exist for one year, dissolve, and then reconstitute. Each is identified by a number. Syndicates
do not manage their own investments as a collective. Rather, the Names of each syndicate appoint one from among them to serve as the managing agent of the syndicate. The appointed Name is referred to interchangeably as “lead underwriter” or “active underwriter.” The lead underwriter represents the collective interest of the Names comprising that syndicate. The lead underwriter buys and sells insurance risks. If successful, it brings profit to its syndicate. Similarly, a Name profits from premiums it receives.
CNX Gas, 410 F. Supp. 3d at 748-49.
To obtain an insurance policy, an individual contacts a broker, who insures the risk “through lead underwriters acting on behalf of their syndicates.” CNX Gas, 410 F. Supp. 3d at 749. A contractual relationship is not formed between the Syndicate or Lloyd‘s, but rather between the insured and the individual Names comprising the Syndicate. CNX Gas, 410 F. Supp. 3d at 749. Thus, only the Names, not Syndicates, may be sued under an insurance policy. CNX Gas, 410 F. Supp. 3d at 749.
When posed with the question of how to characterize the citizenship of Syndicates for the purposes of establishing diversity jurisdiction, the majority view among the circuits is that when a Syndicate is sued, the citizenship of every Name comprising the Syndicate is relevant for diversity purposes, not merely that of the Name serving as lead underwriter. CNX Gas, 410 F. Supp. 3d at 754 (“The United States Courts of Appeals for the Second, Seventh, and Eleventh Circuits [. . .] form the majority regime. They take the view that when a syndicate is sued, the citizenship of every Name comprising the syndicate counts, not merely that of the Name serving as lead underwriter.“). Within the Third Circuit, courts have taken the majority view and require complete diversity to exist between all of the Lloyd‘s Names underwriting the policy and the opposing party. See CNX Gas, 410 F. Supp. 3d at 755-56 (holding that complete diversity did not exist because “[o]nly the identity of the Names comprising Syndicates 1084, 9223, 4141 and 72.6 percent of Syndicate 33 are established. The Names
The Eastern District of Pennsylvania considered a named plaintiff‘s argument that the court need only consider the citizenship of Brit UW Limited, the sole member of one of the four Syndicates that subscribed to the policy in question, because that was the only Name identified in the complaint. Sophisticated Invs., 2022 WL 507437, at *3. That court rejected this argument, reasoning that the named plaintiff did not argue they brought suit on behalf of the named Syndicate alone, and “even if they had, the plain language of the Complaint shows that Plaintiffs brought suit on behalf of every Name that subscribes to [the policy], not just [the named syndicate]” Sophisticated Invs., 2022 WL 507437, at *3. To justify this conclusion, the court noted that the case‘s caption identified plaintiffs as “Those Certain Underwriters at Lloyd‘s, London who Subscribe to [the policy]” Sophisticated Invs., 2022 WL 507437, at *3. It relied on other courts which “have held that nearly identical captions indicate that every single Name that underwrote the policy was party to the lawsuit and relevant to the diversity
Courts’ inquiries into the role that unknown citizenship of a Syndicate plays in a diversity analysis has turned on the caption, as a reflection of the intent of the parties. See Sophisticated Invs., 2022 WL 507437, at *3 (finding that when a case‘s caption identifies plaintiffs as “Those Certain Underwriters at Lloyd‘s,” the citizenship of all Syndicates insuring the Policy is relevant for diversity purposes because that language implies that the suit relates to “every Name that subscribes to [the policy], not just [the named syndicate]“); CMGK, LLC, 2021 WL 2587997 (finding “[b]ecause the instant Complaint has been brought against “Certain Underwriters at Lloyd‘s London Subscribing to Policy Number ME100504,” the citizenship of all names within Syndicates 510, 1880, and 4141 must be considered for purposes of diversity jurisdiction“); CNX Gas Co., 410 F. Supp. 3d at 755-56 (collecting cases and stating “[g]iven that Plaintiff‘s Complaint pleaded all the Names who underwrote the COW Policy, it follows that Defendants must identify the citizenship of all the Names to permit this Court to exercise diversity jurisdiction“). However, this Court was unable to locate
Here, Beazley acknowledges that the Policy was insured by both Syndicate 2623 and 623 but avers that it only identified Beazley in the complaint as the sole Name of Syndicate 2623 and has provided no information about the identity of Names of Syndicate 623. (Doc. 75, at 4). Beazley further admits that Syndicate 623 insured 18% of the Policy but nonetheless asserts that Syndicate 623 is not a party to the lawsuit and thus citizenship is irrelevant. (Doc. 75, at 4). Beazley brought this suit on behalf of only itself and in the absence of any claim against or brought by “Certain Underwriters at Lloyd‘s,” the only citizenship relevant for diversity purposes is that of Beazley. See Chemical Leaman, 177 F.3d at 223. It is of no significance that the Policy states that “in any suit instituted against any one of [the underwriters] upon this contract,” all underwriters “will abide by the final decision.” (Doc. 1-
B. THE POLICY UNAMBIGUOUSLY PROVIDES SCHEDULED COVERAGE
The parties next disagree about whether the Policy provides for scheduled coverage or blanket coverage.8 (Doc. 54; Doc. 56; Doc. 59). According to Beazley, it is entitled to summary judgment on the issue that the Policy unambiguously provides scheduled coverage for the Building limited to its value in the SOV “because the Scheduled Limit of Liability Clause Endorsement expressly limited liability to ‘100% of the individually stated value for each scheduled item of property [. . .] at the location which had the loss as shown on the latest
Applying Pennsylvania‘s contract interpretive principles, the Court holds that the Policy, when read as a whole, is clearly and unambiguously a scheduled policy. The crux of this issue turns on this Court‘s interpretation of the Scheduled Limit of Liability Clause Endorsement, the portion of the Policy that the parties focused on during oral argument. The Policy‘s Scheduled Limit of Liability Clause Endorsement states, in relevant part:
It is hereby understood and agreed that the following Special Terms and Conditions apply to this policy:
(1) The Limit of Liability or Amount of Insurance shown on the Supplemental Declarations Page of this policy is a Limit or Amount per occurrence. Notwithstanding anything to the contrary contained herein, in no event shall the Liability of this Company exceed this Limit or Amount in one occurrence, irrespective of the number of Locations listed on the Statement of Values which are involved. If no value is shown for a scheduled item then there is no coverage for that item.
(2) The premium for this policy is based upon the Statement of Values on file with the Company, or attached to this policy. In the event of each individual loss hereunder, and subject to any Co-Insurance provisions if
stated within this Policy, the liability of the Company shall be limited to the least of the following for each individual loss: A. The actual adjustment amount for each individual loss; or
B. 100% of the individually stated value for each scheduled item of property, time element or other coverages at the location which had the loss as shown on the latest Statement of Values on file with the Company; or
C. The Limit of Liability or Amount of Insurance shown on the Supplemental Declarations Page of this Policy or endorsed onto this policy less applicable deductible(s).
This Policy shall not cover for more than any aggregate amount separately stated in respect of specified causes.
(Doc. 60-1, at 56).
The Third Circuit has not yet considered a case determining whether a similar Scheduled Limit of Liability Clause Endorsement provides for blanket or scheduled coverage in the context of an insurance dispute. However, this Court finds several federal matters outside of this Circuit helpful in interpreting the Policy at issue here. In Forest Oaks Shreveport Apartments, LLC v. W. World Ins. Co., the Western District of Louisiana found that “similar references to an SOV on file coupled with a limit of liability endorsement signal that the insurance contract is a scheduled policy.” No. CV 20-286, 2021 WL 2534112, at *4 (W.D. La. June 21, 2021). In RSUI Indem. Co. v. Benderson Dev. Co., the Middle District of Florida considered nearly identical language in a limit of liability clause. No. 2:09-CV-88-FTM-29DNF, 2011 WL 32318, at *5 (M.D. Fla. Jan. 5, 2011). The Benderson Dev. Co court noted that when a scheduled limit of liability clause “clearly states that it covers ‘each scheduled item of property’ which has an ‘individually stated value[,]‘” such “specific language establishes a scheduled policy, rather than a blanket policy.” Benderson Dev. Co., 2011 WL 32318, at *5. The Southern District of Mississippi, relying on cases in jurisdictions outside of
While not binding upon this Court, the Court finds these cases persuasive. Further, Defendants have not been able to point to any cases where a similar Scheduled Limit of Liability Clause Endorsement which states that the limit of insurance is “the individually stated value for each scheduled item of property” was found to provide blanket coverage. The Court is unpersuaded by Defendants’ reliance on Abraxas Grp., Inc. v. Guar. Nat. Ins. Co., which found a policy provided blanket coverage even where the policy included referenced to a “schedule of values.” 648 F. Supp. at 307. Abraxas is immediately distinguishable because the policy at issue there listed on page one that the amount of insurance to be provided would be “$3,709,267, and this is listed without qualification or reference to any separately valued items,” and the “schedule of values” “arrive[d] at a ‘Blanket Agreed Amount.‘” Abraxas Grp., Inc., 648 F. Supp. at 307. Additionally, the Abraxas court was not convinced that the schedule of values was ever incorporated into the policy at all. Abraxas Grp., Inc., 648 F. Supp. at 307. Here, it is undisputed that the Scheduled Limit of Liability Clause Endorsement is included in the Policy, and on the first page, where the limit of insurance is stated as $8,190,598, the
Related, bolstering the argument that the parties did not intend the Policy to provide blanket coverage for buildings or properties, is that MMR, through McConkey and RT Specialty, requested that Item (2).B. of the Scheduled Limit of Liability Clause Endorsement be deleted with respects to Business Income & Rental Income, in order to allow business income and rental income to not be limited to a scheduled amount. (Doc. 60, ¶ 47; Doc. 67, ¶ 47; Doc. 60-1, at 241; Doc. 72, ¶ 47). This request was granted, and the Supplemental Declarations Page indeed notes that Item (2).B. of the Scheduled Limit of Liability Clause Endorsement is deleted with respects to Business Income & Rental Income. (Doc. 1-1, at 12-13; Doc. 60-1, at 27). The implication of such a request being made with respect to business and rental income, but not to property or buildings, is that the Scheduled Limit of Liability Clause Endorsement does apply to buildings and property, including the Building damaged in the Fire.
The Court is again unpersuaded by Defendants’ arguments to the contrary. Defendants rely primarily on one line in the Supplemental Declarations Page for their contention that blanket coverage is provided by the Policy. (Doc. 54, at 4; Doc. 56, at 14). The Supplemental Declarations Page states under “Coverages Provided” that “Insurance at the Described Premises applies for which a Limit of Insurance is shown,” and then states that there is a “Limit of Insurance” of “$8,190,598 Per Occurrence” for “All/All” Premises/Buildings. (Doc. 1-1, at 11; Doc. 54, at 4; Doc. 56, at 8-9; Doc. 60-1, at 26). Directly below the chart that includes this limit of insurance quote, there is a bolded box that states: ”Total LIMIT OF INSURANCE in any one occurrence for all above coverages combined:
To summarize, the Supplemental Declarations Page, on which Defendants rely, clearly references the Scheduled Limit of Liability Clause, which unambiguously limits Beazley‘s liability in the Scheduled Limit of Liability endorsement to “100% of the individually stated value for each scheduled item of property, time element or other coverages at the location which had the loss as shown on the latest Statement of Values on file with the Company.” (Doc. 60-1, at 56). Accordingly, the Court finds that the Policy unambiguously supports Beazley‘s position that the Policy provides scheduled coverage. Beazley‘s motion for summary judgment thus is GRANTED.9 (Doc. 58). Defendants’ motions for partial summary judgment are DENIED as moot. (Doc. 52; Doc. 55).
C. THE AMOUNT OF COVERAGE OWED UNDER THE SOV IS LIMITED TO THE VALUE OF LOCATION 1-1
First, according to the Policy, the term “the Company” refers to Beazley, as the entity providing this insurance. (Doc. 60-1, at 29). The Court next notes that Defendants claim that the correct statement of values to use for calculating the value of the Building is the statement of values on file with MMR (“MMR SOV“). (Doc. 54, at 4). However, the MMR SOV was never provided to Beazley when MMR applied for coverage for the Policy term or when Beazley approved such coverage, and in fact Beazley and RT Specialty did not receive the
The Court finds that the contract language supports the finding that recovery should be limited not on a per location basis but on a per-premise basis. In other words, liability is limited only to the Building damaged, or the limit of recovery listed for Location 1-1 in the SOV. It would be unreasonable to expect that in a scheduled policy, recovery would include damages for properties or buildings not damaged in a fire. See Geraczynski v. Nat‘l R.R. Passenger Corp., No. CIV.A. 11-6385 SRC, 2015 WL 4623466, at *5 (D.N.J. July 31, 2015) (stating “[i]n construing an insurance contract, a court must ‘search broadly for the probable common intent of the parties to find a reasonable meaning in keeping with the express general purposes thereof.‘“) (citations omitted). Further, the parties clearly differentiated values, and thus recovery, for two different buildings located at the same address, 1020 Chestnut Road. (Doc. 60-1, at 16). Had the parties intended to combine values, and thus combine recovery limits,
IV. CONCLUSION
For the foregoing reasons, Beazley‘s motion for summary judgment will be GRANTED. (Doc. 58). Defendants’ motions for summary judgment will be DENIED as moot. (Doc. 52; Doc. 55).
An appropriate Order follows.
BY THE COURT:
Dated: June 18, 2025 s/ Karoline Mehalchick
KAROLINE MEHALCHICK
United States District Judge