Federal judge says insurance company did not breach contract with bar owners

By Nicholas Malfitano | Jan 11, 2016

Owners of a Philadelphia bar have been refused the ability to seek damages from their insurance provider after a business-related dispute with the establishment’s former manager.

U.S. District Court Judge Eduardo C. Robreno  

PHILADELPHIA – Owners of a Philadelphia bar have been refused the ability to seek damages from their insurance provider after a business-related dispute with the establishment’s former manager.

Authoring a Jan. 6 ruling for the U.S. District Court for the Eastern District of Pennsylvania, Judge Eduardo C. Robreno entered judgment for State National Insurance Company, ruling it did not breach a contract in declining to pay on an all-risk policy registered to Ezra and Sara Reuven, owners of the Easy Corner Bar in Philadelphia’s University City section.

In June 2012, the Reuvens entered into an agreement with Darius Mason for him to manage Easy Corner Bar through May 2013. However, the suit says Mason continued to operate in this capacity past the end date of the agreement – even going so far, according to the lawsuit, as to replace the Reuvens’ locks with his own. However, Mason and the Reuvens finally agreed he would cease his managerial duties on Aug. 18, 2013.

During his time as manager, Mason self-financed the installation of a number of improvements to Easy Corner Bar, including “speakers, mirrored ceiling tiles, a slushie machine, a DJ booth, a video game machine, new floor tiles, shelves, lights, a television, bar paneling, an air conditioning unit, and more.”

When the day arrived for Mason to vacate the bar, he informed Ezra Reuven he would remove the aforementioned items upon his departure, intending to use them elsewhere himself, but would also clean up and repair Easy Corner Bar after he was done. But in the process of Mason’s removal of the items, the Reuvens arrived at the bar and called the police.

Mason assured the Reuvens he intended to do as promised and repair the bar after removing his items, but he was arrested before being able to complete the work. Mason was briefly in custody, but not charged with any crime and released.

“Plaintiff claims that under its insurance policy, defendant is liable for any repairs needed after Mason removed his items from the bar,” Robreno said. “All losses are covered unless specifically excluded, so plaintiff need only show that a loss occurred to meet its burden.”

However, State National Insurance Company argued the “fortuity exclusion” would apply in this case, meaning “it precludes coverage under all-risk policies for losses arising from non-fortuitous events, even if a loss would be otherwise covered under the insurance policy.”

After examining the evidence, Robreno termed the losses incurred by the Reuvens in this situation as “not fortuitous” and “not outside the parties’ realm of control.”

“In effect, the Reuvens seek compensation from the insurance company because Mason did not leave his alterations in place – or, at the very least, because he did not remove them ‘professionally,’ as Ezra testified,” Robreno said.

Robreno said the entire incident “resulted from apparent miscommunication between Mason and the Reuvens, which the Reuvens had ample opportunity to correct or clarify throughout Mason’s tenure at the bar.”

“Accordingly, the loss claimed by plaintiff is not fortuitous, and defendant is not liable here,” Robreno said, also marking as moot a defense motion to exclude expert testimony.

The plaintiffs are represented by Jonathan Wheeler in Philadelphia.

The defendant is represented by Nancy Elizabeth Zangrilli of McDonnell & Associates in King of Prussia and Stanley W. Kallman of Gennet Kallman Antin & Robinson, in Parsippany, N.J.

U.S. District Court for the Eastern District of Pennsylvania case 2:14-cv-01053

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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