Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Erie Insurance Exchange v. EPC MD 15, LLC

Supreme Court of Virginia

January 17, 2019

ERIE INSURANCE EXCHANGE
v.
EPC MD 15, LLC

          FROM THE CIRCUIT COURT OF THE CITY OF WINCHESTER Clifford L. Athey, Jr., Judge

          OPINION

          D. ARTHUR KELSEY JUSTICE

         EPC MD 15, LLC ("EPC") was a named insured on a commercial property policy issued by Erie Insurance Exchange ("Erie"). EPC sued Erie and claimed coverage for fire damage to a building owned by a subsidiary of EPC. The subsidiary, however, was not a named insured, and no provision of the policy identified the subsidiary as an additional insured. On cross-motions for summary judgment, the circuit court held that EPC's ability to control its subsidiary meant that, for insurance-coverage purposes, EPC thereby acquired all of the subsidiary's property under a coverage-extension provision in the policy.

         Having found that coverage existed for the loss, the court entered final judgment for EPC and awarded the agreed-upon damages. On appeal, Erie contends that the circuit court misinterpreted the coverage-extension provision and found coverage where there was none. We agree and reverse.

         I.

         EPC is a limited liability company organized under Maryland law. EPC purchased an insurance policy from Erie that was issued for one year beginning on June 15, 2013. At the time of the purchase, EPC owned real property in Maryland. The policy identified EPC as the named insured and covered fire damage among other losses. No policy provision defined the term "named insured" to include EPC's subsidiaries. The policy defined "'you' and 'your'" to "refer to the Named Insured shown in the 'Declarations.'" J.A. at 56. The Declarations pages identified EPC as the named insured and described the property interest that the policy covered as the "interest of named insured in such premises - owner." Id. at 39, 41 (omitting capitalization).

         The policy included various "Extensions of Coverage." Id. at 70. One such provision covered buildings newly "acquired" by EPC after the issuance of the policy. Id. at 78. The pertinent language read: "If this policy covers Building(s), you may extend that insurance . . . on . . . [n]ewly acquired buildings at other than the location(s) described in the 'Declarations'" as well as "[n]ew additions, new buildings and new structures when constructed on the insured premises." Id. (emphasis added). The policy did not define the term "acquired." See id. at 83-84.

         Another coverage-extension provision applied to "Business Personal Property" newly acquired by EPC and to "Personal Property of Others" located in a building newly "acquired or leased" by EPC. Id. at 78. The policy also extended coverage for loss of income associated with damage to, among other things, "[n]ewly acquired Buildings or Business Personal Property and Personal Property of Others in a newly leased building." Id. None of these provisions, however, expressly extended coverage to the buildings of others. Further, the policy included a provision that provided coverage for "[p]ersonal property of others that is in your [EPC's] care, custody, or control." Id. at 57. The policy also included a provision applicable to buildings, inter alia, that excluded coverage for any "[i]ntentional loss, meaning any 'loss' arising from an act committed by or at the direction of the insured with the intent to cause a 'loss.'" Id. at 60.

         The Declarations pages of the policy listed EPC's Maryland property and no other. Approximately nine months after Erie had issued the policy, EPC acquired the sole membership interest in Cyrus Square, LLC ("Cyrus Square"), a limited liability company organized under Virginia law.[1] Cyrus Square owned a building located in Winchester, Virginia.

         Within 90 days of EPC acquiring this membership interest in Cyrus Square, [2] a fire damaged the building that Cyrus Square owned in Winchester. EPC's counsel filed a demand for coverage, identifying "EPC MD 1[5], LLC, and/or Cyrus Square LLC" as the "Insureds." Id. at 18, 165. After Erie denied coverage, EPC filed suit and claimed that, while Cyrus Square was not a named insured, EPC clearly was - and EPC had "acquired" the fire-damaged property when EPC became the sole member of Cyrus Square. Upon this basis, EPC sought to trigger the policy's coverage-extension provision for newly acquired buildings of the named insured. On cross-motions for summary judgment based upon stipulated facts, the circuit court agreed with EPC by holding that the word "acquired" is ambiguous and hence should be construed against Erie as the drafter. The court entered final judgment in favor of EPC against Erie.

         II.

         On appeal, Erie argues that the circuit court misread the policy language and found an ambiguity where none existed.[3] In context, Erie contends, the coverage-extension provision for newly acquired buildings cannot be fairly read to apply to property of a newly acquired subsidiary that is neither a named nor an additional insured on the parent company's policy. Nor can this provision be reasonably read to mean that a parent company "acquires" the real property of a subsidiary merely by virtue of the creation of a parent-subsidiary relationship after issuance of the policy at issue. We agree.

         A.

         "In an appeal from a circuit court's decision to grant or deny summary judgment, this Court reviews the application of law to undisputed facts de novo." St. Joe Co. v. Norfolk Redev. & Hous. Auth., 283 Va. 403, 407 (2012). "At the center of this appeal is the construction and application of the terms of an insurance contract, which are issues of law that we ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.