ALLENTOWN, Pa. -- A federal judge decided this month to grant an insurance company’s summary judgment motion on the grounds its insured failed to pay a requisite additional premium amount of just over $160,000.

Judge Joseph F. Leeson Jr., for the U.S. District Court for the Eastern District of Pennsylvania, ruled Dec. 21 that plaintiff Zurich American Insurance Company of Illinois would receive summary judgment in its case against defendant All County Employment Services Inc., as the defendant did not pay the plaintiff the aforementioned six-figure amount in additional premium costs.

In July 2014, Zurich issued All County a one-year workers’ compensation insurance policy. At the time, Zurich prepared an estimate of the cost of the policy, based on All County’s anticipated exposure to workers’ compensation obligations over the coming year.

Per the policy’s terms, All County was to make premium payments based on that same estimate, and at the end of the term, Zurich would examine All County’s records and calculate the actual cost of the policy based on All County’s real exposure over the past year. If the final cost exceeded the original estimate, All County owed Zurich the difference, and vice-versa.

The one-year term in question ended on July 23, 2015. Per the policy, Zurich performed an audit of All County’s records and concluded All County’s exposure during the period had been higher than anticipated. Accordingly, Zurich issued All County an invoice for $160,634, which accounted for the difference between Zurich’s calculation of the final cost of the policy and the amount of premium payments that All County had made based on the policy’s estimated cost. The invoice was dated Jan. 11 of this year and mandated payment by Jan. 29. Attached along with the invoice was an audit report Zurich prepared, which explained in detail how Zurich arrived at the final premium.

Between Jan. 22 and Feb. 18, the two sides exchanged e-mails about the invoice; in one of them, All County stated it “had some fundamental questions about Zurich’s calculation” and “engaged an expert in these areas to help it validate or invalidate Zurich’s claim,” but All County did not elaborate.

Zurich requested All County to describe its concerns in greater detail, but All County did not respond and Zurich filed the instant litigation soon after.

Discovery ended without All County identifying errors in Zurich’s audit report or submitting any expert reports to challenge Zurich’s calculation of the final premium, and the $160,634 invoice still has not been paid.

On these grounds, Zurich moved for summary judgment, to which All County did not respond.

“To make out its breach of contract claim, Zurich must prove that ‘there was a contract, All County breached it, and Zurich suffered damages from the breach.’ All County has admitted that the policy was a valid contract between the parties and that it has not paid Zurich the additional $160,634 that it demanded following its audit of All County’s records. The only question, then, is whether All County’s failure to pay amounts to a breach of the policy such that Zurich ‘is entitled to judgment as a matter of law,” Leeson wrote.

Leeson explained the evidence Zurich produced shows “it audited All County’s records, determined the final premium based on All County’s actual exposure during the period, concluded that the final premium was greater than the premium that All County had paid, and billed All County for the difference.” Under the terms of the policy, that activated All County’s obligation to pay the difference by the date specified in the invoice.

“All County’s explanation for its failure to do so is that it disagrees with Zurich’s calculation of the final premium. But even assuming that the policy affords All County some right to dispute Zurich’s calculation, the record shows that All County failed to produce any evidence to call Zurich’s calculation into question or even identify any particular error that it believes that Zurich made,” Leeson wrote. “Accordingly, the undisputed facts show that All County was obligated to pay Zurich the amount it demanded and that All County did not do so. Zurich is therefore entitled to summary judgment on its breach of contract claim.

“Under the terms of the insurance policy that Zurich issued, All County was obligated to pay an additional premium to Zurich at the end of the policy term, if Zurich determined that the actual cost of the policy exceeded the payments that All County made during the life of the policy.”

Leeson added, “The undisputed facts show that Zurich determined, consistent with the policy, that the final premium was $160,634 higher than the payments All County had already made. They also show that All County has failed to pay that amount. Accordingly, Zurich is entitled to summary judgment on its breach of contract claim.”

The plaintiff is represented by Dennis E. Kadian and Samuel J. Thomas of Bressler Amery & Ross in Florham Park, N.J.

The defendant is represented by Edwin L. Stock of Roland Stock in Reading.

U.S. District Court for the Eastern District of Pennsylvania case 5:16-cv-01764

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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