THE CIRCUIT COURT OF THE CITY OF WINCHESTER Clifford L.
Athey, Jr., Judge
ARTHUR KELSEY JUSTICE
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.
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.
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
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.
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.
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
Cyrus Square owned a building located in Winchester,
90 days of EPC acquiring this membership interest in Cyrus
Square,  a fire damaged the building that Cyrus
Square owned in Winchester. EPC's counsel filed a demand
for coverage, identifying "EPC MD 1, 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.
appeal, Erie argues that the circuit court misread the policy
language and found an ambiguity where none
existed. 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.
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 ...