Rufe, J.
Plaintiff AmQuip Crane Rental, LLC leased a crane to Defendant N.L. Carson Construction Co., Inc. for use at a construction project in Mississippi. While in Carson's control, the crane suffered a mishap and was irreparably damaged.
Many of the relevant facts are not in dispute. The parties agree that AmQuip leased the crane to Carson, that on September 16, 2014, the crane was damaged while in Carson's control, and that Carson's insurance policy with Travelers named AmQuip as an additional insured and loss-payee in the amount of $325,000, the agreed value of the crane. The parties now agree that the crane is beyond repair, but that was not always the case.
AmQuip's claims adjuster inspected the crane soon after it was damaged and declared it a total loss and AmQuip took the position that even if the crane could be repaired, the cost (estimated to be $372,948.28) would exceed its value. In contrast, the inspector initially hired by Travelers estimated the cost of repair at $65,403.75, based upon a visual inspection, and Travelers made partial payment to AmQuip. AmQuip objected to this estimate, and Travelers requested that the crane be disassembled to allow further investigation of the crane's internal components, and offered to pay $25,775 for the disassembly costs. AmQuip agreed (although it thought it unnecessary) to disassemble the crane if Travelers advanced $65,000 to cover the anticipated cost, with any funds not spent to be returned to Travelers. Travelers offered to advance $45,000 for this purpose. The parties could not reach agreement on this point, and AmQuip filed suit.
During a settlement conference before Magistrate Judge Carol Sandra Moore Wells, the parties agreed that Travelers would arrange for an outside crane equipment company to examine the crane. The new inspector, after reviewing documents and photographs, and without the crane being disassembled, concluded that the crane was a total loss. On March 16, 2016, Travelers delivered payment of $279,920.34 to AmQuip, representing the full amount due under the policy for the value of the crane, continuing rental payments, and inspection costs, less payments made earlier.
A court will award summary judgment on a claim or part of a claim where there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."
In evaluating a summary judgment motion, a court "must view the facts in the light most favorable to the non-moving party," and make every reasonable inference in that party's favor.
As an initial matter, the Court must determine which state's substantive law to apply. Plaintiff is a Pennsylvania company, Carson is a Mississippi company, the crane was shipped to, used, and damaged in Mississippi, and the relevant insurance policy was delivered in Mississippi. A federal court sitting in diversity applies the choice-of-law rules of the forum state, here Pennsylvania. Pennsylvania determines choice of law by first assessing whether there is a true conflict between the relevant laws of the states concerned, which occurs "[w]hen both states' interests would be harmed by the application of the other state's law...."
This case mostly involves a straightforward application of principles of contract interpretation, and it does not appear that there is a dispute between Pennsylvania and Mississippi law in that regard. However, there may be a conflict that bears on AmQuip's claim for prejudgment interest against Travelers. Under Pennsylvania law, prejudgment interest is mandatory, and awarded from the time performance becomes due.
AmQuip argues that pursuant to the rental agreement, Carson owes the following damages: $99,617 for rental payments from October 2014 through March 2016;
The agreement also provided in paragraph 12 that "Lessee shall maintain All Risk Physical Damage Insurance with Lessor named Loss Payee covering replacement value of the Equipment as set forth above for its theft, loss, damage or destruction from any cause, including, but not limited to, fire, theft, flood, explosion, overturn, accidents and Acts of God occurring during the lease term."
Under Mississippi law, a cause of action for breach of contract requires "(1) the existence of a valid and binding contract; (2) breach of the contract by the defendant; and (3) money damages suffered by the plaintiff."
AmQuip seeks from Carson rental payments in the amount of $99,617, for the period from October 17, 2014 (the last date for which rent was paid) to March 18, 2016. Carson argues that the agreement is ambiguous on a key point: when rent payments were meant to end if, as happened, the crane was destroyed instead of damaged. Carson contends that because Plaintiff's inspector declared the crane a total loss on October 31, 2014, no rent payments were due after that date.
The plain language of the agreement states in paragraph 5 that "[r]ental payment shall not abate but shall continue to be paid if any of the Equipment is stolen, lost, damaged or destroyed or while any of the Equipment is being serviced, repaired or is otherwise inoperable for any reason...." Paragraph 4 of the agreement similarly provides that Carson would be responsible for "additional rental for each day until the Equipment is rendered not inoperable." There is no dispute that the crane was destroyed, or that it was inoperable for the period until the loss was paid. The language is not ambiguous: the rental payments were owed until AmQuip was compensated for the destruction of the crane.
Plaintiff seeks reimbursement for costs associated with appraisal and inspections of the crane as costs of collection under paragraph 21 of the agreement, costs of repair under paragraph 4, or pursuant to the indemnification clause in paragraph 11. Carson does not dispute the amount of these costs, but argues that they do not constitute costs of collection, because AmQuip stated that the appraisals were ordered to determine the extent of damage to the crane.
Finally, as to Carson, AmQuip seeks its legal fees, in the amount of $56,843.93, pursuant to paragraph 21 of the agreement, which as quoted above provides that "Lessee shall pay all costs of collection of any sums due hereunder including, but not limited to, court costs and a reasonable attorney's fee not to exceed than [sic] 15%." Although AmQuip has not attached documentation of the legal fees, Carson does not challenge the reasonableness of the amount sought. Carson does argue that the provision in the agreement is ambiguous because it does not define to what amount the fifteen percent should be applied. Carson further argues that even if fees are warranted, the motion for summary judgment seeks $239,457.23, which would limit legal fees and costs to fifteen percent of that amount, or $35,918.58. The Court disagrees. The reasonable meaning of paragraph 21 is that legal fees shall not exceed fifteen percent of the amount collected through the efforts of counsel. In this case, Plaintiff has been paid, or established an entitlement to, at least $381,476.57 (the $279,920.34 paid on March 16, 2016, $89,834 in rental payments, and $11,722.23 in inspection and appraisal
Travelers undisputedly has paid the policy limits as to the value of crane, rental payments, and investigation and appraisal costs. AmQuip, however, seeks to hold Travelers liable for: (1) interest arising from the failure to timely pay the replacement value of the crane, in the amount of $90,181.07; (2) interest arising from the failure to timely pay the $15,000 policy limit on rental payments, in the amount of $4,479.94; and (3) interest arising from the failure to timely pay $4,920.34 for AmQuip's investigation and appraisal costs, in the amount of $759.80. AmQuip argues that either prejudgment interest is due or that Travelers is obligated to pay the rate of two percent per month for unpaid rentals, as set forth in the agreement between AmQuip and Carson.
Travelers opposes summary judgment, arguing that it has paid all amounts it was required to under the policy, that it cannot be held to any interest based on the agreement between AmQuip and Carson, and that prejudgment interest is unwarranted because AmQuip failed to cooperate in the inspection and evaluation process, citing provisions of the insurance policy that require the insured to permit Travelers "to inspect the property proving the loss or damage" and to "cooperate with [Travelers] in the investigation or settlement of the claim,"
First, there is no basis for an assertion of liability against Travelers based upon the agreement between AmQuip and Carson. Travelers has paid the full amount under the policy, and AmQuip has cited no basis by which it can assert a further claim.
Second, the Court concludes that a recent decision of the Mississippi Supreme Court precludes an award of prejudgment interest. In Sweet Valley Missionary Baptist Church v. Alfa Insurance Corp., the insured filed suit against its insurer, alleging that it had undervalued a claim for storm damage.
For the reasons set forth above, the Court will grant the motion as to Carson, except with regard to the sales tax, and