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HomeMy WebLinkAbout97-07187 VENUE 4. Cumbcrlnnd County is the appropriutc venue for this action, for the following relll!ons: a. At all times here applicable, Defendant, Utica Mutual Insurance Company transucted business in Cumberland County, Pennsylvania, including the administration of insurnnce policies and actions and failures to act with respect to matters underlying this action; b. 'i'he claims here at issue arise from transactions, communications, negotiations, and events within Cumberland County, Pennsylvania; c. The breaches here at issue or some of them took place and occurred in Cumberland County. BACKGROUND FACTS AND AGREEMENT TERMS 5. On or about March 26, 1995, Plaintiff purchased an Insurance Agents and Brokers En'ors and Omissions liability policy from Defendant covering Plaintiffs business located in Cumberland County, Pennsylvania and bearing Policy No. 1067506 EO ("Insurance Contract"), A true and correct copy of this policy is attached hereto, marked as Exhibit" A" and incorporated herein. 6. The Insurance Contract provides in pertinent part Ill! followll: "Coverage" On behalf of the insured, we will pay for loss up to the limits of liability, in excess of the deductible, that the insured becomes legally obligated to pay Ill! a result of a claim first made against 2 the insured during the policy period, or any extended reporting period provided, The 1088 must arise out of negligent acts, errors or omissions in the conduct of the inllured's business, wherever committed or alleged to have been committed, by the insured or any person for whose negligent lIcts, errors, or omissions the Insured is leglllly liable in rendering or failure to render professional services. . ." 7. Plaintiff is in the business of rendering professional services all a general insurance agent, insurance broker, insurance consultant and a manab.;ng general agent of various insurances. 8. Plaintiff employed an individual by the name of Raymond C. Grandon, Jr. as an agent for some years prior to December 1995, 9. He was employed with New Cumberland Agency from July 1, 1985 until December 1995. 10. Plaintiffs agent, Raymond C. Grandon, .Jr. was responsible for providing insurance consulting services and policy acquisition for a client business named, Nick's 114 Cafe, a restaurant in New Cumberland, Cumberland County, Pennsylvania. 11. Plaintiffs agent, Raymond C. Grandon, Jr. Will! responsibie for procuring flood insurance for Nick's 114 Cafe at a time when Defendant's policy for errors and omissions coverage Will! in effect. 12. Plaintiffs agent, Raymond C, Grandon, Jr. negiected to obtain needed certificates of elevation for flood insurance which was required from the company which was to cover Nick's 114 Cafe, Omaha Property and Casualty Company with 3 without prior written consent, 28. Defendllnt's reliance on this rutionale is in direct conflict with Pennsylvania clll!e law where an insurance company must show actual prejudice from an insured's actions. 29. Defendant Will! not prejudiced in any way by the payment of the $50,000 to Nick's 114 Cafe, 30. Plaintiffs payment of the $50,000 actually facilitated settlement of the $125,000 claim at the reduced of $75,000 total. 31. Plaintiff has repeatedly requested reimbursement from Defendllnt and Defendant has steadfastly refused. COUNT I . BREACH OF CONTRACT 32, Plaintiff incorporates herein by reference all allegations set forth in paragraphs 1 through 31. 33. Plaintiff has paid all premiums and materially satisfied all conditions and covenants and materially perfonned all things required of it under the insurance contract between Plaintiff and Defendant. 34. As a result of the claim of Nick's 114 Cafe, Plaintiff was required to pay $50,000 which is a loss within the meaning of the insurance contract. 35. Defendant is obligated by the terms of the inllurance contract to 6 Indemnify Plaintill's loss, See Exhibit "A". 36. Defendant's fllfusal to indemnify Pllllntiffs loss constitutes 11 breach of the insurance contract. WHEREFORE, Plaintiff demands judgment against Defendant in the amount of $47,500 together with costs, interest and attorney's fees, COUNT II - BAD FAITH 37. Plaintiff incorporates herein by reference all allegations set forth in paragraphs 1 through 36. 38. Defendant has failed to abide by Pennsylvania law regarding insurance contracts and has continued to deny Plaintiff's claim of indemnity. 39. Upon infomlation and belief, Defendant has no reasonable and sufficient basis for its conclusion that Pennsylvania caselaw requiring a sh<1wing of prejudice should not be applied in this matter. 40. Pennsylvania law requires the insurer to show actual prejudice by an action of the insured relating to making payments without approval. 41. Defendant acted in bad faith toward Plaintiff when it denied Plaintiffs claim for reimbursement. WHEREFORE, Plaintiff requests that the Court take the following actions pursuant to 42 .Pa.Cons.Stat. ~8371: 7 IxfIIbII II 1ft UTICA NATIONAL INSURAtICE GROUP Il"~ ISS~ED BY ~ UTICA MUTUAL INSURANCE COMPANY DECLARATIONS P.O. BOX 530, UTiCA, NEW YORK 13503 TELEPHONE: (315) 734-2000 NAMED INSURED AND MAILING ADDRESS NEW CUMBERLAND AGENCY INC T/A NEW CUMBERLAND INSURANCE 516 BRIDGE ST NEW CUMBERLAND PA 17070 INSURANCE AGENTS AND BROKERS ERRORS AND OMISSIONS LIABILITY POLICY CLAIMS-MADE BASIS RENEW AL POLICY LOCATION ADDRESS RECEtVED MAY 4 1995 AT 12,01 AM, STANDARD TIME AT THE ADDRESS OF THE INSURED AS STATED HEREIN, IN RETURN FOR PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF THIS POLICY WE AGREE WITH YOU TO ~ U AS STATED IN THIS PQLICY, POLICY NUMBER FROM POLICY PERIOD TO PRIOR POLICY N . 04/26/1 , BASIC POLICY COVERAGE LIMITS OF LIABILITY LEGAL LIABILITY S 1 .000,000" EACH LOSS S ~,OOO.OOO'/ AGGREGATE INSURED'S DEDUCTIBLE AMOUNT S___ 2. ;00 y' _EACH LOSS DEDUCTIBLE APPLIES TO: [iJ LOSS ONLY o LOSS AND LITIGATION EXPENSE PREMIUMS BASIC POLICY PREMIUM G REAL EST ATE AGENTS AND BROKERS PREMIUM G MUTUAL FUND AND VARIABLE ANNUITY PREMIUM G ,/ 5,166.00 Nfl (See attached endorsement' ior details) N/ A (See attached endorsement lor delo,'s) , ......~. ~.)i>' .'-' .1,' 5, 1 66 . 00 ~~ '.t: : TOTAL POLICY PREMIUM G ADDITIONAL INSURED(S) lsEE SECTION III. PARAGRAPH 4,) RAYMOND C GRANDON JR '~'j-j ; '.j,l:.. I"""~' '0:-'1' ~ '" '0"-' ,,' . ;:."_f;?7, RETROACTIVE DATE " . ," ,'... This insurance does not apply to loss, whenever occurring, from negligent IctS. errors, or omissions which took plac.!"::.. ' before the Retro,lctiY8 Dat8, If any, shown below: : ': ,,'. i" ,.' NONE "', ,'~ .~~, I . '.. " "I , '. '~I; -':', Enter Date or "Nontt" If no Retroac:tilJe Date applies .. '" ,.....",..,.. 'OPTIONAL EXTENDED REPORTING PERIOD PREMIUM ,. . - ." - In Section VI - eXTENDED REPORTING PERIODS, we agree to provide an Optional Extended Reporting Period under certlin conditions. The premlum 'or such an Option.1 Extended Reporting Perlod is determined IS shown in paragraph 3. ~. 0' Section VI. FORMS AND ENDORSEMENTS 14-P-EOA (01-91) It 'APPLYING TO AND MAOE PART OF THIS POLICY AT TIME OF ISSUE, 14-E-0014 106-9~ It 14-E-0059 (07-92) It COUNTERSIGNED AT: ME CHAN I CSBURG, P A DATE: 04/26/95 BY~~4'-- AUTHOR I ED REPRESENT A TIVE P.I.A. SERVICES, INC. THESE DECLARATIONS AND THE COVERAGE FORMls\ AND ENDORSEMENTS, IF ANV.~ISsUED TO FORM A PART THEREOF, COMPLETE THE ABOVE NU~ERED POLICV: ' 14-D-EOA ED.I-91 SeE OVER ~OR IMPORTANT CLAIMS-MADE COVERAGE NOTICE IC UNIBILL #100250715 PREMIUM AMOUNT TO BE REFLECTED ON NEXT BILLING NOTICE The polley which provides Insurance Agents and Brokers Errors and Omissions Liability Coverage applies on a claims-made basis. The following provldlls a general description of this coverage and Is slJbject to the terms and provisions of the actual polley, A. The policy, subject to Its terms and conditions, provides full prior acts coverage If no Retroactive Date Is entered In the Declarations. If a Retroactive Date Is entered In the Declarations, the policy will not apply to loss from negligent acts, errors, or omlsalons which took place before the Retroactive Date. The policy wlli not apply to loss from neglige"t acts, errors, or omissions which tske place after the expiration of the policy period. B, The policy will apply to losses from negligent acts, errors, or omissions which take place after the Retroactive Date, If any, but before the beginning of the policy period only If the Insured di.d not know of the negligent acts, errors, or omissions before the beginning of the policy period and If any claim Is made according to 0, below, C, '. I 1 0, 1 . 1 'I i 1 The policy will not apply to any loss for which claim Is first made after the expiration of the policy period or any Autqmatlc or Optional Extended Reporting Period described In the Extended Reporting Period Saction of the policy, The policy will apply only to claims which are: (il First made during the policy period; or (II) During the sixty day Automatic Extended Reporting Period dElscrlbed In the Extended Reporting Period Section of the policy; or 1ft " 11111 During the Optional Extended Reporting Periods of various durations described In the Extended Reporting Period Section of the policy, Such Optional Extended Reporting Period must be requested by the Insured In writing, within sixty days of the date of termination of coverage or thirty days from the date of mailing by us of notice to the named Insured advising of premiums for and provisions of Optional Extended Reporting Periods, In order to allow claims to be made against the policy coverage after the expiration of any Automatic Extended Reporting Period. E, For the first three years of claims-made coverage. premiums will be comparatively lower than for occurrence coverage, and will Increase for each renewal of those policies, Claims-made prices will still be somewhat lower Ihan occurrence prices for mature accounts (In their fourth or later years), The purchase of Optional Extended Reporting Periods, as described above, requires additional premium payments, UTICA NATIONAL INSURANCE GROUP Insurance that starts with you. .1 '.'-' THIS ENDORSEMENT CHANGES THE POLICY PLEASE READ IT CAREFULL Y PENNSYLVANIA CHANGES - AMENDATORY ENDORSEMENT This ondorsement modllles Insurance provided under the Insurance Agents and Brokers Errors and OmiSSions Liability Policy A, Condition 5, Cancellation, of SECTION V Is replaced by the following: 5. Cancellation, a, The Ilrst Named Insured sllOwn In the Declarations may cancel this policy by writing or giving notice of cancellation b, CANCELLATION OF POLICIES IN EFFECT FOR LESS THAN 60 DAYS We may cancal this policy by mailing or dallvarlng to the first Namad Insured written notice of cancallatlon at least 30 days before the effectlva date of cencellatlon. c, CANCELLATION OF POLICIES IN EFFECT FOR 60 DAYS OR MORE If this policy has been In effect for 60 deys or more or If this poll~y Is a renewal of a policy we Issued, we may cancel this policy only for one or more of the following reasons: (1) You have made a material mlsrepresen. tatlon which affects the Insurability of the risk, Notlcn of cancellation will be meiled or delivered at least 15 days before the effective date of cancellation, (2) You have failed to pay a premium when due, whether the premium Is peyable directly to us or our agents or Indirectly under a premium Ilnance plan or exten. sian of credit. Notice 01 cancellation will be mailed at least 15 days belore the ef. fectlve date of cancellation. (3) A condition, factor or loss experience material to Insurability has changed sub. stantlally or a substantial condlllon, lactor, or loss experience material to Insurability has bacome known during the policy period, Notice of cancellation will ba mailed or delivered at least 60 days before the effective date of cancellation. (4) Loss of reinsurance or a substantlel de. crease In reinsurance has occurred, which loss or decrease, at the time 01 cancella. tlon. shall be certffled to the Insurance Commissioner as directly affecting In.lorce policies. Notice of cancellation will be mailed or delivered at least 60 days befora t~e effective date 01 cancellation. (5) Material failure to comply with policy terms, conditions or contractual duties. Notice of cancellation will be mailed or delivered at least 60 days before the el. fectlve data of cancellation. (6) Other reasons that the Insurance Com. missioner may epprove, Notlca of cancel. lallon will be mailed or delivered at least 60 days before the effective date of can. cellatlon, This policy may also be cancelled from Inception upon discovery that the policy was obtalnad through fraudulent state. mants, omissions or concealment of facts material to the acceptance of the risk or to the hazard assumed by us, d, We will mall or deliver OIJr notice to the first Named Insured's last mailing address known 10 us, Notice of cancellation will state the specific reasons lor cancellation. e. Notice of cancellation will state the effective date of cancellation, The polley periOd will end on that date. , f, If this polley Is cancelled, we will sand the first Named Insured any premium refund due, If we cancel. the refund will be pro rata and will be returned within 10 business days alter the effective date 01 cancellation. If the first Named Insured cancels, the refund may ba less than pro rata and will be returned within 30 days alter the effective date of cancellation, The cancellation will be effective even If we have not made or offered a refund, g. If notice Is mailed, It will be by registered or first class mail. Proof of mailing will be sufflclant proof of notice, B, Condition 7, Nonrenewal, 01 SECTION V Is replaced by tha following: 7. Nonrenewal OR RENEWAL PREMIUM IN. CREASES. a. If we decide not to renew this policy, wa will mail or deliver written notice of nonrenewal. Slating the speCific raasons for nonrenewal. to the first Named Insured at leas~ 60 days before the expiration dale of tha policy, b. If we Increase your renewal premium. we will mail or deliver to lhe IIrst Named Insured: 14.E.0014 Ed. 6-94 Includes copyrlghled material 0' Insurance Sarvices Office. Inc. Page 1 01 2 . (1) WrlUen notice of our Inlenl to Increase lhe premium at least 60 days belore tile eHecllve date 01 the premium Increase; and (2) An esllmate of the Increase at least 30 days before tha eHecllva date 01 premium Increase. Any notice of nonrenewal or renewal premium Increase will be mailed or delivered to the IIrst Named Insured's last known address, If notice Is mailed, It will be by registered or IIrst class mall, Proof of mailing will be suHlclent proof of nollce, C, Condition e, Right to Claim and Negligent Act, Error, or Omission Inlormatlon, of SECTION V Is replaced by the following; e, Right to Clelm end Negligent Act, Error, or Omission Inlormetlon, a, When we cancel or nonrenew: Mldlerm cancellation or nonrenewal nollces shall state thet, at the Insured's request, we shall provide claim and negligent act, error, or omission Informallon to the Insured for the lesser of: (I) at least three years: or (2) the period of time during which we have provided coverage to the Insured. This Information shall conteln: (a) Informallon on closed claims, Includ. Ing the data and descrlpllon 01 negligent acts, errors, or omissions, end the amounts 01 payments, If any, (b) Information on open claims, Includ- Ing the date and description of negligent acls, errors, or omissions, and the amount of reserves, If any, (c) Inlormatlon on notices 01 negligent acts, errors, or omissions, Including the date 81d description of negligent acts, errors, or omissions and the amount 01 reserves, If any, The Insured's wrluen request for Informa- lion must be mede within 10 days of the Insureds receipt of the midterm cancella- tion or nonrenewal notice, We have 30 days Irom the date of receipt 01 Ihe 14.E.0014 Ed. 6.94 Insured. S wrllten reqllesl 10 provide the requested Informallon, b. In other circumstances: If we receive a wrlUen request from the flrSI Named Insured within 60 days after the end of the polley period we will pro. vide the IIrst Named Insured, within 45 days of the recelpl of the request, the fol- lowing Information relallng 10 this and any other I nsurance Agents and Brokers Errors and Omissions Liability claims. made polley we have Issued to you during the previous three years: (1) A list or other record of each negligent act, error, or omission, not previously reported to any other In- surer, of which we were notified In accordance with paragraph l,a, of this Section. We will Include the date and brief descrlpllon of the negligent act, error, or omission, If that Infor. mallon was In the notice we received, (2) A summary by polley year, of pay. menlS made and amounts reserved, stated separately, under tha ap. plicable Aggregale Limit. Amounts resarved are based on our Judgment. They Bre subject to change and should not be regd/ded as ultimate seUlement values. We compile claim and professional Incident Informallon for our own business purposes and exercise reasonable care In doing so, In providing this Information to the IIrst Named I nsured, we make no representations or warranties to Insureds, Insurers, or others to whom this Information Is furnished by or on behalf of any Insured. Cancellation or nonrenewal will be eHectlve even If we Inadvertently provide Inaccurate or Incomplete Information, D, Part 4.a. of SECTION VI - EXTENDED REPORTING PERIODS Is replaced by the following: a. We will notify you In writing within (30) days of the date of termination 01 coverage of the premium lor and provisions of the Extended Reporting Period, Includes copyrighted material of Insurance Services OHlce. Inc Page 2 of ~ POLICY NUMBER: THIS eNDORSeMeNT CHANGeS THe POLICY, PLeASe ReAD IT CAReFULL y, AMENDATORY ENDORSEMENT This endorsement modifies Insurance provided under the Insurance Agents and Brokers Errors and Omissions Liability Polley. I. The final sentence of definition 2, "Claims Expen- ses," of SECTION I - DEFINITIONS Is replaced by the following: However, claims expenses do not Include salaries of regular employees or of officials of the Insured. II. The first sentence of definition 3, "LItigation ex- pense," Is replaced by the following: 3. "LItigation expense" means fees and disburse. ments charged by any attorney retained by us, or hired by you with our written consent, to defend a suit against you or consult on such defense, III. Definition 10, "Retroactive date," 15 eliminated. The term, wherever used, will refer to the date 50 deslg. nated In the Declarations, IV. SECTION III . WHO IS AN INSURED Is replaced by the following: The unqualified word .'Insured" whenever used in this Polley means: 1. The Individual, partnership, or corporation designated as the Named Insured In the Decla. rations: 2. Any partner, executive officer, director, or employee of the Named Insured, while acting within the scope of his or her duties on behalf of the Named Insured; 3. Any licensed solicitor or office broker (who 15 not an employee) but only as respects: II. . Such persons who are named in the polley Declarations for Insurance handled through or placed with the Named In- sured: . b. Such persons who are named In the Real Estate Agents and Brokers Errors And Omissions Insurance Endorsement while acting on behalf of the Named Insured; or c. Such persons who are named In the Mutual Fund And Variable Annuity Coverage Endor- sement while acting on behalf of the Named Insured; 14.E.0059 Ed. 7.92 4. Any person who was formerly en' Insured' under parts 1,,2.. or 3. above, but only with respect to negligent acts, errors, or omissions committed prior to the termination of such relationship: G, Any merged entity for which coverage hes been added at any time by our Merged or Con. solldated Entity Endorsement, 14.E.0006. 6. You, for legal liability from negligent acts, errors, or omissions of any purchased or merged entity for which coverage has been added at any time by our Purchased Entity Endorsement, 14.E. 0005, or by our Merged or Consolidated Entity i:ndorsement, 14.E.0006, No coverage applies for claims arising out of any negligent act, error, or omission of such entity which you or any other Insured had knowledge of prior to thE! effective date of the original endorsement which added such coverage. 7. The heirs, executors, administrators, or legal representatives of each Insured In the event of death, Incapacity, or bankruptcy, but solely with respect to the liability of each Insured as other. wise Insured herein, V. The reference In the Declarations under ADDI'rION. AL INSURED(S) Is corrected to referto SECTION III. PARAGRAPH 3. VI. Item 8. Personal Injury, of SECTION IV - EX- CLUSIONS, Is replaced by the following: 8. Personal Injury arising out of: a. The oral or written pUblication of material, If done by or at the direction of the Insured with knowledge of Its falsity: b. The oral or written publication of material whose first publication took place before the Retroactive Date, If any, shown In the Declarations: or c. The willful violation of a penal statute or or. dlnance committed by or with the consent of the insured, Page 1 of 2 VII. The IIrstsentence of subsection 4, b, or SECTION VI . EXTENDED REPORTING PERIODS Is replaced by the following: You will have unUlthe latar of sixty (60) days from the date of termlnallon of coverage, or thirty (30) days from the dale of mailing of the Extended Reporting Period nollce provided for above, to reo quest the Opllonal ~xtended Reporting Period. 14.E.0059 Ed, 7-92 Page 2 of 2 I ~ ~ ro. F.; ~-' ,N e. ~'~ .. 11:- 6 - ,,;)..:: 'Q (,{; t, X" ~)~! ~("~ 0...: ~4: ~ f O,:i ~~ . ~, :,.. N-- }t ,'Y'J :]~a ~LIJ . t. ~ 'P~ r';a F1" L,,;:"J ?~p:J .~ -$ .- ~ c:J .., u.. ,Lg ~ ,... j ." U ~ ... <:> cB ~ 'rl ....g '<I 0(3 ~ " " I " , '" ir- <'I (~; -. (I';' I''.;. te, .. , '.; lIf> - - ~ ",' .,.r' J' , ~:~I' ,~' ,;'1 ,". '\~; .... "~I. ~" (', '\.',:' ,'J ' t' " . ~.I':' -' [tll,l.\ pl"'. .) .~'.~ ~l (, "") tJl " II, ,ro 0 U' r,) .:~ I ., ..:;" ..., V' ...., , ~ c..~ , \ , ( ,:, ~ I '&"iD ":'~~.. ~ <f:! '.1 , :i " " " , , ii , , ,'1' , , I' d '-, 11 " 'B: ..0,. .j;; ,; - ~'l' , .. :g'1: CO? 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