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April 5, 2012
UNITED STATES FIRE INSURANCE COMPANY,PLAINTIFF,v.KELMAN BOTTLES, KELMAN GLASS, LLC, DEFENDANTS/THIRD-PARTY PLAINTIFFS,v.CONTINENTAL CASUALTY COMPANY, THIRD-PARTY DEFENDANT.
This is a declaratory judgment action brought by Plaintiff, United States Fire Insurance Company ("U.S. Fire"), seeking a declaration that it does not have to provide insurance coverage to the Defendants, Kelman Bottles and Kelman Glass, LLC ("Kelman"). See doc. no. 1. Kelman filed counterclaims against U.S. Fire seeking damages for breach of contract and for bad faith. See doc. no. 10. Kelman also sued third-party Defendant Continental Casualty Company ("Continental") for breach of contract. See doc. no 29.
Presently before the Court are the parties' Cross-Motions for Summary Judgment. Continental filed a Motion for Summary Judgment against Kelman. See doc no. 91. U.S. Fire also filed a Motion for Summary Judgment against Kelman. See doc. no. 93. Kelman filed a Partial Motion for Summary Judgment against Continental (see doc. no. 98) and a Partial Motion for Summary Judgment against U.S. Fire. See doc. no. 103.
Each party filed a Response to the Motion(s) for Summary Judgment that was/were filed against each of them. See doc. nos. 107, 110, 114-115, and 116-117.
U.S. Fire also filed a Cross-Motion for Summary Judgment (doc. no. 112) and brief in support. Doc. no. 113. Although Kelman filed a Motion seeking time to respond to U.S. Fire's Cross-Motion (doc. no. 122) and this Court granted Kelman's Motion (doc. no. 123), no response was filed. However, Kelman filed a Reply Brief re Motion for Partial Summary Judgment Against U.S. Fire (doc. no. 131) and U.S. Fire filed a Reply Brief in support of its Original Motion for Summary Judgment (doc. no. 93). Doc. no. 127.
The Court has carefully considered all of the aforementioned submissions as well as the Statements of Material Facts (and Responses thereto) and finds that these Motions are now ripe for disposition. For the reasons that follow, this Court will grant U.S. Fire's Motion for Summary Judgment, will grant Continental's Motion for Summary Judgment, will deny Kelman's Motion for Partial Summary Judgment against U.S. Fire, and will deny Kelman's Motion for Partial Summary Judgment against Continental. Finally, the Court will deny U.S. Fire's Cross-Motion for Summary Judgment (doc. no. 122) as moot.
The following facts are undisputed and material.
A. The Incident and the Furnace
Kelman operates a glass manufacturing facility in Glenshaw, Pennsylvania, where it produces glass containers for the food industry. Doc. nos. 1 and 10 at ¶¶ 8-9. The facility contains several furnaces for melting glass. Doc. nos. 1 and 10 at ¶ 11. From 2007 to March 15, 2011, Kelman operated only one furnace at the facility. Doc. no. 121 at ¶ 6.
On March 15, 2011, molten glass escaped from "furnace no. 2" or "kiln #2" (hereinafter "the furnace") which resulted in physical damage to the furnace and other property. Doc. nos. 1 and 21 at ¶ 21 and doc. nos. 29 and 44 at ¶ 1.
The following is a summary of the relevant history of the furnace. The furnace had undergone "a rebuild" from December of 2003 through January of 2004. Doc. no. 108 at ¶ 18. A rebuild occurred approximately every nine years. Id. Between January of 2007 and March 15, 2011, the furnace leaked molten glass. Doc. No. 1 at ¶ 19. Specifically in April of 2009, the furnace leaked molten glass. Doc. no. 116 at ¶ 15. On June 4, 2010 the furnace leaked again. Doc. no. 116 at ¶ 29.
Following the April of 2009 leak, Doug Hilliard (Kelman's Furnace Manager) sent an email dated April 15, 2009 to William Kelman stating, in pertinent part, as follows:
As per your question on how long [the furnace] will last . Well as I told you no one can tell you that answer with any certainty. I am in here this morning at 12:30 am because of a leak on the Northside of the melter. We have it stopped but it is in a very serious spot in the furnace. It is about halfway down the block meaning there is a lot of pressure pushing the glass out. I have water and compressed air on it as of now but will have to chip it back and see what we have in the morning. If it were not for the quick thinking and action of my crew this could have gotten out of hand very easily and we could have lost well over half of the glass in the furnace into the basement. . ..
Doc. no. 97-7.
After the April 2009 leak, Glass Furnace Management, LLC ("GFM") conducted a "Hot Repair Scope Evaluation" at Kelman. Doc. no. 97-8. Under the "Repairs Needed" section of its written report, GFM indicated that Kelman needed to make the following repairs:
(1) replace the Left Front Checker; (2) "[o]vercoat 5 Sidewall Blocks 100% on Left Side of Furnace[;]" (3) "[o]vercoat the entire front wall metal line[;]" (4) "[o]vercoat 1 [e]lectrode block on the left side of ther furnace 100%[;]" (5) "[o]vercoat three sidewall blocks along metal line of [r]ight side of furnace." Id.
Under the "Repair Options" section of GFM's written report, GFM indicated that the "[o]vercoat work [items 2 though 5 immediately above] should be completed conventionally. . . . [L]owest risk option is to replace 100% of the checker pack including both settings including the rider arches, rider tiles, and transition course with HPC setting as previously installed." Id.
Under the "Recommendations" section of its report, GFM stated that if Kelman "desires to run the furnace longer than 2 years, then I would propose 100% replacement of the checker pack and rider arches in both settings." Id.
In early May of 2009, GFM sent several quotes to Doug Hilliard at Kelman for the recommended work. See doc. nos. 97-9, 97-10, 97-11. On May 15, 2009, Doug Hilliard sent an email to William Kelman (and others) regarding the cost of the work proposed by GFM. In the body of the email he wrote (in pertinent part) as follows:
At this time the known fact is the north regenerator front two zones have collapsed. This is causing a blockage of the combustion air coming in and the exhaust going out in these two ports. This in turn limits the daily tonnage . . . . cutting deeply in to the potential profit . . . .
The furnace inspection also showed that we are in direr [sic] need of overcoat block on mainly the north side of the melter. There is a great potential for us to get a dangerous glass leak that may or may not be stopped in this area.
My recommendation is that we replace the whole north checker pack and overcoat the side walls at the same time. This will be the most cost effective, least amount of down time and reliable way to do this repair. We do run a risk of the south failing under this extreme thermal shock of firing them continually during the repair, but I feel that is a risk we must take at this time. . . .
What I need is some guidance on which way to proceed with this. The most economical and fastest way of doing it would be to only replace the front part that has collapsed. . . . I do not recommend this type of repair but if it is all we can afford at this time then that is what we will have to deal with. . . .
Doc. no. 97-12.
Although Kelman ultimately replaced the checker pack in the north regenerator of the furnace sometime between December of 2009 and February of 2010, it only repaired the south side checker pack and regenerator during this same time frame. See doc. no. 101-3 at pp. 35-38. Kelman stated that it overcoated the entire metal line, not just portions of it, but admitted that it did not do some of the "other work" GFM recommended. Doc. no. 121 at ¶ 24. Kelman explained that it did not do some of the "other work" recommended by GFM because "it was not done in the industry, had never been done at the [f]acility and it could cause the block to wear out faster than it would without the work." Id.
Following the June 4, 2010 leak (which appears to have been two leaks, close in time on the same date), on June 4, 2010, Doug Hilliard wrote an email to Eleni Sotiriou (a Kelman employee), which stated in pertinent part:
The furnace is ok right now. We did have another leak, a fairly bad one, after I had talked to Bill. I was already here and was able to stop it fairly quickly. We are now in the process of cleaning both areas where the leaks occurred up and getting more air to them.
Doc. no. 97-17. On February 2, 2011, Doug Hilliard wrote the following in an email to Eleni Sotiriou:
As for how worried we should be, I think we should be extremely worried. In my opinion if this block falls into the throat and causes a blockage, we will have no other option than shutting the furnace down, draining it and do a full repair on the whole melting end. I do not feel that this furnace will take a drain, cool down, minor repair and restart.
Doc. no. 97-18. On February 6, 2011 Doug Hilliard again emailed Eleni Sotiriou, stating:
We have had some movement in the blocks on the front wall overnight. The block to the left, or to the north side of the wall, has remained stable, but the block on the right, or the south side has shown some additional slippage. The crack in the bridge-wall above this area seems to have become more prominent.
. . . Although we have had some slight movement I am confident we will be ok until tomorrows [sic] repair. I have my tank attendants watching it closely on reversals and they are to contact me as soon as they see any change. Doc. no. 97-20.
On March 15, 2011, molten glass leaked from one, if not two, locations on the north wall. Doc. no. 116 at ¶ 24.
Kelman had a written procedure in place to manage potential leaks from the furnace. Doc. no. 121 at ¶ 14. U.S. Fire's and Continental's expert conceded that glass plants typically have contingency plans in place to manage furnace leaks. Id. and doc. no. 108 at ¶ 23.
B. The Insurance Policies
U.S. Fire issued a commercial property insurance policy to "Kelman Bottles LLC" (the named insured set forth on the declarations page of the policy), and listed "Kelman Glass LLC" as an additional named insured pursuant to an endorsement. Doc. nos. 1 and 10 at ¶ 7, doc. no. 1-4, and doc. no. 121 ¶ 37. The policy declarations page indicates that the policy period ran from March 10, 2011 to March 10, 2012. Doc. no. 1-4.
Continental also issued an insurance policy to Kelman Glass LLC. Doc. no 97-1 at bates no. 02776. The declarations page of the policy indicates that the policy period ran from March 14, 2011 to March 14, 2012. Id. Continental's policy provides coverage for "equipment breakdown" as that term is defined by the policy. Id.
No party contests that Kelman provided timely notice of the March 15, 2011 event to its two insurers.
On June 14, 2011, Continental denied Kelman coverage for the claim arising out of the March 15, 2011 event indicating that no "breakdown" (as the policy defines that term) occurred. Doc. no. 29-1, ex. "B." On June 30, 2011, U.S. Fire denied Kelman coverage for the claim arising out of March 15, 2011 event based on the policy's: (1) inherent vice exclusion, (2) wear and tear exclusion, and (3) design defect exclusion. Doc. no. 121 at ¶ 60.
C. Procedural History
On July 6, 2011, U.S. Fire filed the instant declaratory judgment action seeking a judgment declaring that "the furnace is not 'Covered Property'" as defined by the U.S. Fire policy. Doc. no. 1.
On August 23, 2011, in response to U.S. Fire's Complaint, Kelman filed an Answer and Counterclaims asserting claims for breach of contract and bad faith. Doc. no. 10. U.S. Fire moved to dismiss Kelman's Counterclaims, which this Court denied. Doc. no. 23 and text order dated September 13, 2011. U.S. Fire filed an Answer to Kelman's Counterclaims on September 26, 2011.
On October 10, 2011, Kelman filed a Joinder Complaint against Continental asserting a claim for breach of contract. Doc. no. 29. After Continental was joined, U.S. Fire amended its Answer to Kelman's Counterclaims to assert an additional affirmative defense. Doc. no. 43. The additional affirmative defense referenced the portion of its own policy which excluded coverage for any property covered by another insurance policy, except for any excess amount due (whether collectible or not) from the other insurance policy. Id.
On November 30, 2011, Continental filed an Answer to Kelman's Joinder Complaint. Doc. no. 44.
Following the close of discovery, Kelman sought to amend its Third Party Complaint against Continental to assert a claim for bad faith. Doc. no 77. On March 1, 2012, the Court denied Kelman's Motion to amend its Third Party Complaint. Doc. no. 90.
As noted above, Continental filed a Motion for Summary Judgment against Kelman. See doc no. 91. U.S. Fire also filed a Motion for Summary Judgment against Kelman. See doc. no. 93. Kelman filed Partial Motions for Summary Judgment against Continental (see doc. no. 98) and U.S. Fire. See doc. no. 103.
In addition to filing Cross-Motions, the parties also filed Responsive Briefs to one another's Motions. Continental filed a Response to Kelman's Motion for Partial Summary Judgment (doc. no. 107), and U.S. Fire filed a Response to Kelman's Motion for Partial Judgment. Doc. no. 110. Kelman filed a Response to Continental's Motion for Summary Judgment (doc. nos. 114-115), and it also filed a Response to U.S. Fire's Motion for Summary Judgment (doc. nos. 116-117).
In addition, U.S. Fire filed (with the Court's permission) a Reply to Kelman's Response to U.S. Fire's Motion for Summary Judgment. Doc. no. 127.
Finally, Kelman filed a "Cross-Motion for Summary Judgment" and a Brief in Support of same. See doc. nos. 112-113. Kelman filed a Response to the same. Doc. no. 131.
Thus, the procedural posture is one of Cross-Motions for Summary Judgment in which there appears to be no dispute as to any material fact. Thus, as discussed below, the only issues before the Court are purely legal ones which may be decided upon Motion.
Summary judgment may be granted if, drawing all inferences in favor of the non-moving party, "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2).
When a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading; rather, its response must -- by affidavits or as otherwise provided in this rule -- set out specific facts showing a genuine issue for trial. If the opposing party does not so respond, summary judgment should, if appropriate, be entered against that party. Fed. R. Civ. P. 56(e)(2).
To demonstrate entitlement to summary judgment, the defendant, as the moving party, is not required to refute the essential elements of the plaintiff's cause of action. The defendant needs only point out the absence or insufficiency of the plaintiff's evidence offered in support of those essential elements. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Once that burden has been met, the plaintiff must identify affirmative evidence of record that supports each essential element of his cause of action. If the plaintiff fails to provide such evidence, then he is not entitled to a trial, and defendants are entitled to summary judgment as a matter of law. Id.
In summary, the inquiry under Rule 56 is whether the evidence of record presents a genuine dispute over material facts so as to require submission of the matter to a jury for resolution of that factual dispute or whether the evidence is so one-sided that the movant must prevail as a matter of law. It is on this standard that the Court has reviewed each of the Cross-Motions and Responses thereto.
A. Kelman's Breach of Contract Claims against Continental and U.S. Fire
The legal principles governing this Court's interpretation of the two insurance policies at issue, are well settled. Under Pennsylvania law, *fn1 the "'interpretation of an insurance contract regarding the existence or non-existence of coverage is generally performed by the court.'" Gardner v. State Farm Fire and Cas. Co., 544 F.3d 553, 558 (3d Cir. 2008) (citing Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 290 (Pa. 2007)). Since an insurance policy is a contract, the Court's duty is to ascertain the intent of the parties as manifested in the language of the agreement. Eastern Associated Coal Corp. v. Aetna Cas. & Sur. Co., 632 F.2d 1068, 1075 (3d Cir. 1980). A policy must be read as a whole and its meaning construed according to its plain language. Meyer v. CUNA Mut. Ins. Soc., 648 F.3d 154, 163 (3d Cir. 2011).
Whether an ambiguity exists is a question of law. Viera v. Life Ins. Co. of North America, 642 F.3d 407, 419 (3d Cir. 2011). The Court should read policy provisions so as to avoid ambiguities, if the plain language of the contract permits, and should not torture the language of the policy to create an ambiguity. Id. Under Pennsylvania law, an insurance contract is ambiguous where it: "(1) is reasonably susceptible to different constructions, (2) is obscure in meaning through indefiniteness of expression, or (3) has a double meaning." Lawson v. Fortis Ins. Co., 301 F.3d 159, 163 (3d Cir. 2002).
When policy language is clear and unambiguous, the Court is required to enforce that language. Medical Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999), citing Standard Venetian Blind Co. v. American Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983). When the policy language is ambiguous it must be construed against the insurer and in favor of the insured, and any reasonable interpretation offered by the insured must control. American Auto. Ins. Co. v. Murray, 658 F.3d 311, 320 (3d Cir. 2011).
Finally, the last-antecedent rule provides "that qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding and not to others more remote." Stepnowski v. C.I.R., 456 F.3d 320, 324 (3d Cir.2006) (quoting United States v. Hodge, 321 F.3d 429, 436 (3d Cir.2003)). In other words, if a sentence reads "A or B with respect to C," it should be interpreted as containing two items: (1) "A" and (2) "B with respect to C." Id. at 324 n. 7. However, the last-antecedent rule "is not an absolute and can assuredly be overcome by other indicia of meaning." Pilosi, 393 F.3d at 365.
1. Continental's Motion for Summary Judgment and Kelman's Motion for Partial Summary Judgment as to Continental Kelman's Joinder Complaint alleges that by denying insurance coverage, Continental breached its contract with Kelman. Although Continental admits that it denied coverage, it also denies that it breached its contract with Kelman.
In support of its argument that summary judgment should be entered in its favor, Continental primarily argues that "the leak," which Kelman sustained on March 15, 2011, was not "sudden and accidental" and therefore was not a "breakdown" as defined by the insurance policy. In support of this contention, Continental points to the prior leaks Kelman endured between April of 2009 and June 4, 2010. Continental seeks a declaration that the loss sustained by Kelman was not "sudden and accidental" as defined by Continental's policy and thus, Continental is not required to provide insurance coverage.*fn2
Kelman, in its Motion for Partial Summary Judgment, contends that "the loss" it sustained on March 15, 2011, must be "sudden and accidental" per the policy. Kelman argues that because the loss was sudden and accidental, Continental breached the terms of the insurance policy by failing to provide coverage and suggests that this Court enter such a declaration and allow a jury to determine the amount of damages to be awarded for this alleged breach.
Under the Pennsylvania case law discussed immediately above, the primary duty of this Court is to ascertain the parties' intent as manifested in the language of Continental's insurance policy, and the Court must do so by reading Continental's policy "as a whole" while construing its meaning according to the policy's plain language.
The insurance policy issued by Continental is described as an "Equipment Breakdown" policy. See doc. no. 97-1. Accordingly, this Court finds that, on the whole, Continental's insurance policy was designed to provide coverage to Kelman*fn3 when a breakdown in the insured's equipment occurred.*fn4 The Continental policy states that, "'Breakdown' . . . [m]eans sudden and accidental direct physical loss to 'Covered Equipment' . . . ."*fn5 Doc. no. 97-1 at Bates no. 02800.
Given the fact that the parties to the Continental insurance policy agree that the furnace at issue is "Covered Equipment," this Court must determine as a matter of law is whether an ambiguity exists with respect to the phrase "sudden and accidental."
a. Sudden and Accidental -- Defined
The phrase "sudden and accidental" has been defined by Pennsylvania courts in a pollution exclusion context -- not in the context of equipment breakdown. See Lower Paxton Twp. v. United States Fire and Guaranty Co., 557 A.2d 393, 397 (Pa. Super. 1989) ("[T]he plain meaning of ["sudden and accidental"] requires that damages resulting from gradual releases of pollution are excluded from coverage."); Northern Ins. Co. v. America Northern Aadrvark Assoc., Inc., 942 F.2d 189, 193 (3d Cir. 1991) ("We therefore hold, in accordance with the decisions of the Superior Court of Pennsylvania, that the exception for 'sudden and accidental' discharges applies only to discharges that are abrupt and last a short time."); Chemetron Invs., Inc. v. Fidelity & Cas. Co. of New York, 886 F.Supp. 1194, 1197 (W.D. Pa. 1994) (Under Pennsylvania law, "the exception for 'sudden and accidental' discharges applies only to discharges that are abrupt and last a short time."). In Sunbeam Corp. v. Liberty Mut. Ins. Co., 1997 WL 1073957 (Pa. Co. Pl. April 2, 1997), another pollution exclusion case, the Court of Common Pleas of Allegheny County, upon review of the Lower Paxton decision stated as follows:
[O]n several occasions the Pennsylvania Superior Court has rejected the argument that the pollution exclusion may be reasonably construed to exclude coverage only in cases where the damage was intended or expected. The court has said that any interpretation of the clause which defines "sudden" as meaning only unexpected or unintended is "blatantly unreasonable."
Id. at *7.*fn6
Continental contends that the phrase "sudden and accidental" -- found in the definition of "breakdown" in its own policy -- is not ambiguous and argues that this Court must enforce the plain meaning of the words "sudden and accidental." Although Kelman does not state whether it considers the phrase "sudden and accidental" to be ambiguous, it concurs with Continental that the Pennsylvania Superior Court in Lower Paxton defined "sudden" as "abrupt and only lasting a short time" and "accidental" as "unexpected or unintended." Thus, the parties concur on the definition of "sudden and accidental" as "abrupt and lasting a short time" (i.e. sudden), and "unexpected or unintended" (i.e. "accidental").
Both parties rely (to varying degrees) on Cyclops Corp. v. Home Ins. Co., 352 F.Supp. 931 (W.D. Pa. 1973), to support their respective positions concerning whether the leak or the resultant damage must be "sudden and accidental." The relevant portion of the Cyclops opinion regarding whether "sudden and accidental" refers to the cause or the damage reads as follows:
The parties are in dispute as to whether the "cause" of the damage is an essential element of proof. Plaintiff does not dispute defendant's evidence as to "cause", but asserts that under the policy provisions applicable "cause" is not an issue in this damage claim. Again we must examine all of the policy provisions. We do not find that the definition of "accident" requires any consideration of the term "cause." The term "accident" requires only "sudden and accidental damage" which "necessitates repair," and we find these conditions met.
Id. at 937.
Although Continental concedes that Cyclops ultimately concludes that the cause of the damage is not relevant, Continental essentially tries to distinguish the facts of this case from those in Cyclops by noting that in Cyclops, the piece of equipment at issue was only two years into its expected twenty-year life. Here, Continental argues, the insured possessed ample information that the furnace at issue would probably undergo a major glass leak. Continental contends that this distinction supports its position that the leak (which allowed molten glass to escape and thus, the "cause" of the resultant damage) is germane and is what must be "sudden and accidental."
In contrast, Kelman contends that Cyclops stands for the proposition that cause is never important and that the resultant damage (i.e. the loss) must be "sudden and accidental."
Taking direction from Cyclops, this Court, notes that the term "breakdown" is defined by Continental's policy as the "sudden and accidental direct physical loss to Covered Equipment . . . ." A plain reading of the policy language where "sudden and accidental" is referenced (i.e., "'Breakdown' . . . [m]eans sudden and accidental direct physical loss to 'Covered Equipment'") would suggest that "sudden and accidental" designates the nature of the loss sustained by Kelman, not the nature of the cause of the loss.
Moreover, under the last-antecedent rule, "loss" is the word in the policy which is impacted by the qualifying phrase "sudden and accidental." Thus, the loss Kelman sustained had to be sudden and accidental per Continental's policy.
Accordingly, the issue of whether Kelman's "loss" (i.e., its damage) was indeed "sudden and accidental" is the next issue for this Court to determine.
b. Sudden and Accidental -- As Applied
Based on the plain meaning of the phrase "sudden and accidental" as "abrupt" and "unexpected or unintended," if the loss was "abrupt" and "unexpected or unintended," Continental would be required to provide coverage to Kelman. Conversely, if the loss was "abrupt" but "expected or intended" by Kelman then the definition of breakdown would not be met and Continental would not be required to provide coverage. Put another way, if Kelman could have expected the loss at issue to occur, the loss would not be "sudden and accidental" as simply defined.
Although Continental concedes that Kelman did not intend for the furnace at issue to leak and that Kelman could not have known exactly when the next leak would occur, Continental argues that Kelman expected that a leak would happen, and thus, the current loss was not "unexpected." Doc. no. 96 at pp. 6-7. The Court is persuaded by evidence of record which supports Continental's argument in this regard.
The Court finds that, based on the uncontroverted and relevant evidence submitted by Kelman and the two insurers as discussed in the fact section above at subpart "I." of this Opinion, Kelman expected leaks to occur. Moreover, based upon the uncontroverted, material evidence of record, Kelman expected another leak to occur subsequent to the two, June 4, 2010 leaks. Perhaps the most convincing piece of evidence is the admissions set forth in the emails from Kelman's Furnace Manager, Doug Hilliard, to Eleni Soutiriou, approximately one month prior to the event at issue in this litigation. On February 2, 2011 Mr. Hilliard wrote:
I think we should be extremely worried. In my opinion if this block falls into the throat and causes a blockage, we will have no other option than shutting the furnace down, draining it and do a full repair on the whole melting end.
Doc. no. 97-18. Then, four days later, on February 6, 2011, Mr. Hilliard again wrote to Mr. Soutiriou stating:
We have had some movement in the blocks on the front wall overnight. The block to the left, or to the north side of the wall, has remained stable, but the block on the right, or the south side has shown some additional slippage. The crack in the bridge-wall above this area seems to have become more prominent. Doc. no. 97-20.
Given these emails which evidence knowledge possessed by Kelman just days before the leak which led to the loss occurred, it is clear that Kelman was concerned about the result if the block fell "into the throat and cause[d] a blockage," and Kelman even anticipated having to shut the furnace down to prevent a loss that could not be contained. Four days after these concerns are shared among Kelman employees, the block on the north side of the wall exhibits movement and the crack in the bridge wall appears to the furnace manager to become more prominent.
Moreover, the independent review performed by GFM in May of 2009 established that certain repairs needed to be made. Doc. no. 97-8. GFM's report specifically suggested which repairs needed to be done if Kelman intended to run the furnace for more than two years. Id. Kelman admitted that although it did "more overcoating" than was suggested by GFM, it did not make some of the "other repairs" that GFM recommended. Doc. no. 121 at ¶ 24.
Although Kelman did not know the exact date or time of the March 15, 2011 leak, nor the extent of the loss/damage that the leak would cause, there is no dispute of material fact to suggest that Kelman did not expect another leak to occur. Moreover, the evidence of record suggests that such a leak would lead to a loss, and that Kelman was aware of this. See, e.g. deposition testimony of Kelman's furnace manager Doug Hilliard, at doc no. 93-3, pp. 57-59.
Thus, the definition of "sudden and accidental" is not met and a "breakdown" as defined by Continental's policy did not occur. Accordingly, based on the foregoing law and authority as applied to facts present in this case, and viewing all material evidence in a light most favorable to Kelman, this Court will enter an Order consistent with this portion of the Opinion granting Continental's Motion for Summary Judgment and denying Kelman's Cross-Motion for Partial Summary Judgment as to Continental.
2. U.S. Fire's Motion for Summary Judgment and Kelman's Motion for Partial Summary Judgment as to U.S. Fire
Unlike Continental, which issued Kelman an equipment breakdown policy, U.S. Fire issued Kelman an "all risk" insurance policy. However, the principles and rules of contract interpretation under Pennsylvania law, as discussed in "III. A." above, also apply to U.S. Fire's insurance policy with Kelman.
Kelman's breach of contract Counterclaim against U.S. Fire alleges that by denying insurance coverage, U.S. Fire breached its contract with Kelman. Although U.S. Fire admits that it denied coverage to Kelman, it denies that in doing so it breached its contract with Kelman. In support of its argument that summary judgment should be entered in its favor, U.S. Fire primarily argues that coverage for the leak is excluded by its policy.
The Court begins its analysis by placing the burden of proof on U.S. Fire, to prove that no coverage is warranted, for the reasons stated in its Motion and Brief in Support of Summary Judgment. In doing so, the Court views all evidence in the light most favorable to Kelman. If the Court finds in favor of U.S. Fire (and it does for the reasons discussed below), then Kelman cannot sustain its burden of proof in its own Motion for Summary Judgment when all evidence is viewed in a light most favorable to U.S. Fire.
a. U.S. Fire's Policy -- Inherent Risk Exclusion
U.S. Fire concedes that its "all risk" policy provides coverage to Kelman for direct physical loss of, or damage to, "covered property" that is caused by or resulting from a "covered cause of loss." Doc. no. 1-4 at p. 49 (CP 10 06 07, p. 1). A "covered cause of loss" in its "all-risk" policy includes all direct physical loss unless specifically excluded or limited by the policy. Doc. no. 1-4 at CP 10 30 06 07, p. 1. Additionally, this U.S. Fire policy issued to Kelman contained additional coverage for loss or damage resulting from molten material. Doc. no. 1-4 at p. 81 (CP 10 30 06 07, p. 9).
In support of its position that summary judgment should be granted in its favor with respect to Kelman's breach of contract Counterclaim, U.S. Fire argues that its insurance policy specifically excludes coverage under what is referred to as an "inherent vice exclusion."
The purported "inherent vice exclusion" located within U.S. Fire's insurance policy reads in relevant part:
B. Exclusions
2. We will not pay for loss or damage caused by or resulting from any of the following:
d. (1) Wear and tear,
(2) Rust, corrosion, decay, deterioration, hidden or latent defect, or any quality in property that causes it to damage or destroy itself.
Doc. no. 1-4 at p. 75 (CP 10 30 06 07, p. 3).
In response to U.S. Fire's position, Kelman primarily argues that the "inherent vice" exclusion does not enable U.S. Fire to escape its duty to provide coverage because U.S. Fire cannot meet its burden of proving that the sole, proximate cause of the March 15, 2011 loss was due to either "inherent vice" or "wear and tear."
Kelman asserts in its brief that under Pennsylvania law, the insurer bears the burden of proving that any exclusion: is (1) unambiguous; (2) that the exclusion applies in the given instance; and (3) that that any exceptions to the exclusion do not apply. As to the first requirement, the parties do not contest that the language of the above exclusion is ambiguous, and the Court likewise finds that it is not ambiguous.
As to the second requirement, in Peters Twp. Sch. Dist. v. Hartford Acc. and Indem. Co., 833 F.2d 32 (3d Cir. 1987), the United States Court of Appeals for the Third Circuit held:
. . . The burden of proof of the insurance company that a loss comes within the scope of an exception or an exclusion is an affirmative one. It is only when the existence of facts constituting an affirmative defense is admitted by the insured, or is established by uncontradicted testimony in the insured's case, that such burden is removed from the insurance company.
Id. at 37. Thus, Kelman is correct that U.S. Fire bears the burden of proof with respect to the scope of an exclusion and/or exception; however, if Kelman admitted facts or provided uncontradicted testimony which supports U.S. Fire's position, the burden would then be satisfied.
In addition to the above, the Court of Appeals defined "inherent vice" as:
. . . [A] cause of loss . . . [that] does not relate to an extraneous cause but to a loss entirely from internal decomposition or some quality which brings about its own injury or destruction. . . . In other words, the question is whether the insured property . . . contain[s] its own seeds of destruction . . . [or] was threatened by an outside natural force.
GTE Corp. v. Allendale Mutual Ins. Co., 372 F.3d 598, 611 (3d Cir. 2004) (internal quotes and citations omitted).
Although Kelman contests the application of the "inherent vice" exclusion, it has admitted the following: (1) ". . . all glass furnaces experience minor leaks on occasion[,]" (see doc no. 121, p. 5); (2) on March 15, 2011, molten glass escaped from the furnace, (id.); (3) Kelman's furnace manager, Doug Hilliard, had been involved with "with 'devastating' and 'unstoppable' leaks during his thirty years of experience in the glass industry[,]" (id.); and (4) "Kelman, like the prior owner of the plant, Glenshaw Glass Company, had a written procedure in place to deal with the potential for leaks from any of the furnaces." Id. at p. 6.
Given the uncontradicted testimonial evidence provided by Kelman, this Court finds that under the Peters Twp. case, U.S. Fire met its the burden of proving that furnace leaks are an inherent risk in the glass making business.
Moreover, given the definition of "inherent risk" adopted by the United States Court of Appeals in GTE, combined with the admissions made by Kelman whereby it agreed that the furnace was expected to (and did) leak molten glass, the unambiguous language of U.S. Fire's insurance policy indicates that U.S. Fire will not provide coverage for such an inherent risk. The policy unambiguously states that U.S. Fire will not pay for any "loss or damage caused by or resulting from . . . any quality in property that causes it to damage or destroy itself." Here, as admitted by Kelman, the insured, there was an inherent risk of molten glass leaking from the furnace. Kelman admitted the furnace in question leaked molten glass in the past and further admitted the furnace leaked the molten glass that caused the loss at issue in this litigation. Accordingly, this Court finds that based on the foregoing law and the uncontroverted facts present here, because the loss sustained by Kelman occurred as result of molten glass escaping the furnace, and because Kelman admitted that molten glass was an inherent risk to operating the furnace, the loss falls within U.S. Fire's inherent risk exclusion.
The Court now turns to the issue raised by Kelman as to whether there is an applicable exception to the policy's exclusion.
b. U.S. Fire's Policy -- Molten Material Loss Exception
Kelman argues that even if U.S. Fire meets its burden of proof with respect to "inherent vice," Kelman's loss would still be covered by U.S. Fire's additional coverage provision for "molten material loss damage." The relevant portion of the U.S. Fire policy reads as follows:
F. Additional Coverage Extensions * * *
2. Water Damage, Other Liquids, Powder or Molten Material Damage
If loss or damage caused by or resulting from covered . . . molten material damage loss occurs, we will also pay the cost to tear out and replace any part of the building or structure to repair damage to the system or appliance from which the . . . substance escapes. . ..
Doc. no. 1-4 at p. 81, (CP 10 30 06 07, p. 9).
This unambiguous language raises the question of what is a "covered . . . molten material damage loss" as defined by the policy. The Court, again, looks to the policy language to see how the parties agreed to define a "covered loss." The policy states in pertinent part:
A. Covered Causes of Loss . . . Covered Cause of Loss means Risks of Direct Physical Loss unless the loss is:
1. Excluded in Section B. * * *
Id. at pp. 73 and 75 (CP 10 30 06 07, pp. 1 and 3).
As noted above, the second enumerated exclusion in "Section B." of the policy was the inherent risk exclusion discussed immediately above. Thus, the plain and unambiguous reading of U.S. Fire's policy is that it does not consider a loss caused by an inherent risk to be a covered loss. Accordingly, the damage resulting from the molten glass escaping the furnace is not considered to be a covered loss because the escape of molten glass from the furnace was an inherent risk.
Put another way, the policy's "molten material loss exception" is predicated upon the loss being a covered loss. In this case, because the escape of molten glass from the furnace was an inherent risk to operating a furnace containing molten glass, damage caused by the escape of the molten glass is excluded as a "covered" risk as the policy defines "covered . . . loss." If some other hot, molten material, i.e., something other than molten glass, had caused the loss at issue here, the "inherent risk" exclusion would not apply and (assuming no other exclusion were applicable) the "molten material loss exception" could have applied. Accordingly, Kelman's second argument opposing U.S. Fire's position is erroneous. The Court finds that the policy's exclusion applies and under the uncontested, relevant facts presented, the exception to the exclusion does not apply under the circumstances present in this case. c. Pennsylvania's Current Causation Doctrine
Kelman also contends that Pennsylvania has adopted the "concurrent causation doctrine" which, as applied here, means that if two or more causes concurrently caused Kelman's loss and one of the causes is covered under U.S. Fire's policy, U.S. Fire must provide coverage. Kelman cites to Colella v. State Farm Fire & Cas. Co., 407 Fed. Appx. 616, 662 (3d Cir. 2011), in support of its position.
In response, U.S. Fire argues that Jefferson Bank v. Progressive Cas. Ins. Co., 965 F.2d 1274 (1992), stands for the proposition that U.S. Fire only has to prove by a preponderance of the evidence that the inherent risk was the efficient proximate cause of the loss.
In the more recent, unpublished, Colella opinion, the insureds sued their insurer alleging breach of an "all risk" insurance policy. The Court of Appeals, affirming the decision of the district court to deny coverage, found that the unambiguous language of the "subsurface water exclusion" in the policy applied so as to exclude coverage for damage caused by water below the surface of the ground, regardless of the cause of the subsurface water. This policy language was deemed to be "more expansive" than the language in a different policy in a case relied on by the Colellas.
The Court does not find that the Collela case stands for the proposition that Pennsylvania adopted a concurrent causation doctrine. The United States Court of Appeals stated as follows (referencing the doctrine without applying it):
Finally, the Colellas argue that they are entitled to coverage under the "concurrent causation" or "efficient proximate cause" doctrine, which holds that "when there are two . . . or more causes of loss, the policyholder's claim is covered as long as the immediate or proximate cause of loss is covered by the policy." Appellants' Br. at 25 (citing, among other cases, Trexler Lumber Co. v. Allemannia Fire Ins. Co. of Pittsburgh, 289 Pa. 13, 136 A. 856, 858 (1927)). The District Court was correct in rejecting this argument because the lead-in clause of the State Farm policy ("[w]e do not insure for such loss regardless of: . . . (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss . . .") clearly negates the application of the doctrine.
Id. at 622. Thus, as is evident from the portion of the Opinion quoted above, the Court of Appeals never affirmatively stated that the concurrent causation doctrine would control the coverage question. Indeed, the Court of Appeals never had to consider the applicability because the exclusion at issue so clearly negated the application of such a doctrine.
However, Kelman further contends that the concurrent causation doctrine would apply here because there is no such "negating language" in the "inherent risk" exclusion at issue in this case. Kelman also contends that a "void" along with "wear and tear" and a "failure of the coolant line" were the concurrent causes of the loss it sustained on March 15, 2011. See doc. no. 117, pp. 3-10.
The Court need not (and does not) comment on whether Pennsylvania has adopted a "concurrent causation doctrine," because this Court finds that the guidance provided by the Court of Appeals in its Jefferson (supra.) decision, as well as in PECO Energy Co. v. Boden, 64 F.3d 852 (3d Cir. 1995), provide sufficient guidance to decide this issue.
In PECO, the insured sued to recover for a series of thefts of fuel oil under its "all-risk" cargo transit policies. The Court first affirmed the district court's holding that a series of thefts amounted to one "occurrence." Id. at 856. In reaching this conclusion, the Court of Appeals noted that in a prior case (Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56 (3d Cir. 1992)), it had held that "an occurrence" was determined by the cause or causes of the resulting injury. Id. The Court further reiterated that the district courts should determine if there was "but one proximate, uninterrupted and continuing cause which resulted in all of the injuries and damage." Id., citing Appalachian, 676 F.2d at 61. If a court were determine that there was "but one proximate, uninterrupted and continuing cause," then a single occurrence has taken place.
In Jefferson, the bank sued to recover on a banker's blanket bond when the morgatee defaulted. The Court of Appeals held that there was a question of material fact as to whether the forgery of a notary's signature was a substantial factor in the bank's decision to issue the mortgage, thereby reversing the district court's grant of summary judgment. The Court of Appeals noted:
. . . the policy's language makes clear by its terms that the Banker's Blanket Bond does not cover loan losses suffered by an insured bank unless (1) the loss resulted from the bank's having acted in good faith in reliance on a mortgage . . . that was defective because it bore a signature that had been obtained through fraud . . .
Id. at 1277-78. The district court had noted that under the provisions cited above, Jefferson had to demonstrate that its loss resulted directly from the its extension of credit in good faith reliance on a mortgage that bore a forged signature. The district court acknowledged that the mortgage contained a forgery (i.e. the signature of the notary), but declined to enforce coverage because, in the district court's view, the loss did not "result directly from" this defect.
The Court of Appeals in Jefferson then explored the definition "resulting directly from" under Pennsylvania law. In this regard, the Court analyzed the phrase and held in pertinent part:
. . . the phrase "resulting directly from" in the policy does suggest a stricter standard of causation than mere "proximate cause." Under Pennsylvania tort law, a cause is proximate if it is merely a "substantial cause" of the harm. See Whitner v. Von Hintz, 437 Pa. 448, 263 A.2d 889, 893-94 (1970). Arguably, the words "resulting directly from" suggest a requirement beyond that the cause be substantial, for the words imply that the loss must flow "immediately," either in time or space, from the forged signature. An analysis of Insuring Agreement E in light of Pennsylvania law persuades us, however, that conventional proximate cause is indeed the correct standard and that requiring "immediacy" is inappropriate.
Id. at 1281. The Court concluded that "an accurate prediction of Pennsylvania law is that 'resulting directly from' means 'proximately caused by.'" Id. Finally, the Court noted that "immediate cause" was "a nebulous and largely indeterminate concept" and one that was not favorably accepted under Pennsylvania law. Id. Based on this thorough analysis, the Court concluded that the language "resulting directly from" means "proximately caused by." Id. at 1282.
Turning to this case, Kelman argues that the absence of the word "directly" eliminates the possibility that this case is akin to Jefferson. Indeed the word is absent from the inherent defect exclusion relied upon by U.S. Fire:
Doc. no. 1-4 at p. 75 (CP 10 30 06 07, p. 3) (emphasis added).
However, as noted above, reading Jefferson in line with PECO, there can be little doubt that proximate cause provides the basis for determining whether a single occurrence took place as well as whether an occurrence causes the loss at issue. Thus, this Court finds that the absence of the word "directly" in the inherent risk exclusion does not open the door a concurrent causation analysis. Looking again at the unambiguous language of the inherent risk exclusion, the loss had to result -- arguably, directly or indirectly -- from the inherent risk of operating a furnace containing molten glass. Put this context, the inherent risk of operating a furnace containing molten glass had to be the proximate cause of the loss.
Importantly, the parties concur that the escape of the molten glass is what caused Kelman's loss on March 15, 2011. What caused the molten glass to escape from the furnace is another matter entirely, and not one that must be decided in order for the Court to determine that the escape of the molten glass was the proximate cause of Kelman's March 15, 2011 loss.
Accordingly, after placing all of the evidence in the light most favorable to Kelman, the Court finds none of Kelman's arguments persuasive, and thus, will grant U.S. Fire's Motion for Summary Judgment, and will issue a declaration of no coverage as requested by U.S. Fire in its Motion. Because this Court had to view the evidence in a light most favorable to Kelman when evaluating U.S. Fire's Motion, Kelman's Motion for Summary Judgment on its breach of contract Counterclaim will be denied.*fn7
B. Kelman's Bad Faith Claim Against U.S. Fire
The Pennsylvania statute governing bad faith insurance actions provides as follows:
In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
42 Pa.C.S.A. § 8371.
In order to recover on a bad faith claim, the insured must prove: (1) that the insurer did not have a reasonable basis for denying benefits under the policy; and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis in denying the claim. Northwestern Mut. Life Ins. Co. v. Babayan, 430 F.3d 121, 137 (3d Cir.2005); Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. 1994). "Although the insurer's conduct need not be fraudulent, 'mere negligence or bad judgment is not bad faith.'" Babayan, 430 F.3d at 137 (internal quotation omitted). Ultimately, the burden is on the insured to prove such "bad faith" by clear and convincing evidence. Polselli v. Nationwide Mut. Fire Ins. Co., 126 F.3d 524, 528 (3d Cir. 1997); Terletsky, 649 A.2d at 688. At the summary judgment stage, the insured's burden in opposing a summary judgment motion is "commensurately high because the court must view the evidence presented in light of the substantive evidentiary burden at trial." Babayan, 430 F.3d at 137 (quoting Kosierowski v. Allstate Ins. Co., 51 F.Supp.2d 583, 588 (E.D. Pa.1999)).
Although "bad faith" is not defined by Pennsylvania's statute, courts interpreting Pennsylvania law have held that a claim under 42 Pa.C.S.A. § 8371 contains two elements: (1) the insurer lacked a reasonable basis for denying benefits under the applicable policy, and (2) the insurer knew or recklessly disregarded the lack of a reasonable basis for refusing the claim. Employers Mut. Cas. Co. v. Loos, 476 F.Supp.2d 478, 490 (W.D. Pa. 2007) (citing Terletsky, 649 A.2d at 688).
The standard of proof required to establish a statutory bad faith claim against an insurer under Pennsylvania law is clear and convincing evidence. See Loos, 476 F.Supp.2d at 491 (citing Terletsky, 649 A.2d at 688) (footnote omitted); and Babayan, 430 F.3d at 137 (citing Terletsky, supra). "The 'clear and convincing' standard requires that the [insured] show 'that the evidence is so clear, direct, weighty and convincing as to enable a clear conviction, without hesitation, about whether or not the defendants acted in bad faith.'" J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir.2004) (quoting Bostick v. ITT Hartford Group, Inc., 56 F.Supp.2d 580, 587 (E.D.Pa.1999)).
In the case at bar, Kelman's bad faith claim is predicated (in large part) on U.S. Fire's denial of insurance coverage under the all-risk policy. Doc. no. 10, ¶¶ 100, 145. To the extent that Kelman's claim is predicated upon the denial of coverage without any reasonable basis, that claim is now foreclosed by this Court's Opinion finding that U.S Fire did not breach its contract with Kelman.
Under Pennsylvania law, there is some authority wherein circumstances existed so as to enable a bad faith claim to proceed even when a breach of contract claim was dismissed. In March v. Paradise Mut. Ins. Co., 646 A.2d 1254 (Pa. Super. 1994), the Pennsylvania Superior Court affirmed the trial court's dismissal of a breach of contract claim based on the expiration of the statute of limitations, but held that the bad faith claim could proceed because it was not subject to the one-year statute of limitations.
In Polselli v. Nationwide Mut. Fire Ins. Co., 126 F.3d 524 (3d Cir. 1997), the United States Court of Appeals for the Third Circuit acknowledged the March decision (among others) noting that, "a Pennsylvania intermediate appellate court [ ] held that claims brought under section 8371 are distinct from the underlying contractual insurance claims from which the dispute arose." Id. at 529 (internal quotes and citations omitted). The Court went on to state, "While not obvious from the language of section 8371, it is apparent that Pennsylvania courts have interpreted section 8371 to create a cause of action that exists separately and independently from a claim on the insurance contract itself." Id. (internal quote and citation omitted). Expanding on this comment the Court held:
Initially, we observe that under the plain language of the statute, it is reasonably clear that a section 8371 claim may not be the sole claim of an insured. Section 8371 provides that "[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions. . . ." 42 Pa. Cons. Stat. Ann. § 8371. This language implies that a determination of bad faith is merely an additional finding to be made in a predicate action arising under an insurance policy. Absent a predicate action to enforce some right under an insurance policy, an insured may not sue an insurer for bad faith conduct in the abstract.
Id. at p. 530.
In Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999), the insured (Frog) provided its insurance carriers (Travelers and U.S. Fire) with notice that it had been sued for (inter alia) false advertising and reverse passing off under the Lanham Act. Id. at 745. The insurers refused to defend Frog in the underlying litigation and Frog sued both companies for breach of contract and bad faith. Id. The district court granted U.S. Fire's Motion to Dismiss and Traveler's Motion for Summary Judgment. Id. On appeal, the Court of Appeals affirmed, noting that it need only review the issue surrounding the insurers' duty to defend, which is a broader duty than an insurer's duty to indemnify. Id. at 746. Given the allegations in the underlying Complaint and Second Amended Complaint filed against Frog and the language of the insurance policies, the Court held that Pennsylvania courts would not find that the allegations fell within a reasonable understanding of the policy's terms and conditions. Id. at 750. In a footnote, the Court also rejected Frog's bad faith claim stating that, " . . . where there was no duty to defend, there was no good cause to refuse to defend against a suit." Id. at 751, n.9.
In Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., 244 Fed. Appx. 424 (3d Cir. 2007), the Court of Appeals discussed both the March decision and the Frog decision. Affirming a bad faith verdict against the insurer, the Court concluded that Frog did not preclude the Court from allowing a bad faith claim (which led to a punitive damage award) to proceed in the absence of other successful claims. Id. at 435. However, in reaching this conclusion the Court noted:
. . .we find that this is one of the exceedingly rare cases in which an insurer can be liable for bad faith even after the insured cancels the policy. Here, the bad faith allegations were not based simply on the insurer's representations that there was not a valid policy. Indeed, both parties believed that a policy existed for a large part of the relevant time period, and acted accordingly. Based on the evidence in the record, a jury could have found -- and, indeed, did find -- that Westchester acted in bad faith given its working assumption that the policy had not been canceled. Therefore, we will affirm the bad faith verdict against Westchester.
Id. at 435-6.
Turning now to the case at bar, Kelman contends that the bases for the denial of coverage are as follows: "(1) [U.S. Fire] ignored facts that supported coverage under the Policy; (2) [U.S. Fire] made no effort to meaningfully reevaluate coverage once facts in contradiction of its position came to light; (3) [U.S. Fire] refused to evaluate coverage under appropriate provisions of the Policy; (4) [U.S. Fire] forced the policyholder to exhaust its limited financial resources with its litigation conduct, including raising the "kitchen sink" defense to coverage, including raising defenses upon which it did not deny coverage in its denial letter, and upon which it has no expert testimony." Doc. no. 117, p. 11.
Based on the case law established by the United States Court of Appeals for the Third Circuit, this Court does not find that any of the four grounds or bases alleged by Kelman can support its bad faith claim against U.S. Fire. Kelman's first and third arguments set forth above are directly dependent on its breach of contract claim and thus, the bad faith claim cannot survive based on those reasons. In addition, the Court does not find its fourth contention to be a valid basis upon which a bad faith claim may rest, and Kelman cites no law in support of its fourth proposition. This leaves the second basis, which the Court will address in greater detail.
Kelman alleges that U.S. Fire knew that the furnace underwent a rebuild in late 2003 through early 2004, but denied coverage based on the fact that the furnace had not undergone a rebuild since 1994 and thus, had outlived its ten-year useful life. See doc. no. 10, ¶¶ 108, 117-119 and doc. no. 1-10. However, Kelman proffers no substantive evidence in support its claim in this regard other than its own conjecture on this point. Even if U.S. Fire denied coverage (in whole or in part) based on its erroneous belief that the furnace had not been rebuilt since 1994, this is not enough to legally support a claim for bad faith. See Winner Int'l Corp. v. Continental Cas. Co., 889 F.Supp. 809 (W.D. Pa. 1994), aff'd without opinion, 54 F.3d 767 (3d Cir. 1995) (mere negligence or bad judgment does not constitute bad faith; knowledge or reckless disregard of a lack of a basis for denial of coverage is necessary).
In addition, all of the relevant evidence of record supports a finding that U.S. Fire denied coverage (at least in part) based on the inherent risk exclusion of the policy. See doc. no. 1-10. The parties agree that the denial letter was issued after U.S. Fire conducted an investigation, which included sending an investigator to examine the furnace, subsequent to the March 15, 2011 occurrence. The documentary evidence of record, specifically the denial of coverage letter issued by U.S. Fire in a section entitled "background facts," states in pertinent part that, "[t]he documents which [Kelman] provided indicate that the last rebuild of [the furnace] was in 1994." Doc. no. 1-10. The section of the letter quotes from the policy and specifically quotes the inherent risk exclusion. Id. Finally, in a section entitled, "Applicable Exclusions and Limitations[,]" U.S. Fire explains its position with respect to the applicability of the inherent risk exclusion to the March 15, 2011 loss and states there is no potential for coverage. Id. U.S Fire does not base its analysis in this portion of the letter on the (erroneous) fact that the furnace in question was last rebuilt in 1994. Id.
The inherent risk exclusion was U.S. Fire's first and primary reason for disclaiming coverage to Kelman under its policy, and as discussed above in subpart "A.2.," it is the reason that this Court found no viable claim for breach of contract, and found that U.S. Fire was entitled to a declaration of no coverage. Thus, even if U.S. Fire erroneously believed the most recent rebuild occurred in 1994, (a fact which it based on documentation Kelman provided), and even if U.S. Fire issued its denial of coverage letter based, in part, on the erroneous rebuild date, its denial predicated upon on the inherent risk exclusion did not rely on the date of the rebuild of the furnace. Thus, upon learning of the true date of the rebuild, the denial of coverage based on inherent risk remained unchanged.
Accordingly, this Court finds that the denial of coverage was not made in bad faith for any of the reasons asserted by Kelman and therefore, will grant U.S. Fire's request that the Counterclaim alleging bad faith be dismissed.
Based on the foregoing law and authority, U.S. Fire's Motion for Summary Judgment (doc. no. 93) will be granted. Kelman's Partial Motion for Summary Judgment against U.S. Fire (doc. no. 103) will be denied. In light of the foregoing, U.S. Fire's Cross-Motion for Summary Judgment (doc. no. 112) will be denied as moot.
Continental's Motion for Summary Judgment (doc. no. 91) will be granted. Kelman's Motion for Partial Summary Judgment against Continental (doc. no. 98) will be denied.
Arthur J. Schwab
cc: all ECF registered counsel
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Laus störf
Kafari í byggingariðnaði (Starfakynning Grand Hótel 19. sept.)
Svane Bemanning AS
Tempevegen 23
E-post: firstname.lastname@example.com
Work Place: The company headquarters are located in the city of Trondheim in South Trondelag County in Mid-Norway. The work locations are at various sites in Mid-Norway according to contract/project. You can find more general information about this area of Norway here: www.trondheim.kommune.no, www.trondelag.com/en/ and www.norway.no.
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Information about the positions: Svane Bemanning is looking for a professional construction diver for full-time work in a long-term engagement. There are also good possibilities for permanent work.
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Wages: According to collective wage agreement and documented experience/qualifications. Minimum hourly pay is currently 225 NOK/ 28 EUR, plus additional pay for diving times. Depending on work schedule, travel requirements etc., there may also be overtime pay, compensation for board and lodging and other expenses.
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Phone: +47 73 96 60 00
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Start date: As soon as agreed upon with the employer
Contact person: Mr. Johnny Svane tlf. +47 954 14 180
Fréttir og tilkynningar
26. Janúar 2016
Kynning á tækifærum og styrkjum í Evrópusamstarfi
Kynning á tækifærum og styrkjum í Evrópusamstarfi, fimmtudaginn 28. janúar 2016.
7. Maí 2015
Ertu að flytja til Noregs, Danmerkur eða Svíþjóðar ?
Norræna félagið í samstarfi við Halló Norðurlönd og EURES - evrópska vinnumiðlun standa fyrir upplýsingafundum um flutning til Noregs, Svíþjóðar og Danmerkur.


text:
Glyndebourne yesterday. You see? It's not all posh hampers, picnics with the sheep on the ha-ha, disputes about wind turbines, and (this year) galas celebrating 75 years of operatic history in the South Downs. Now there's football, too. It's tempting to imagine director David McVicar and conductor Vladimir Jurowski having a kickabout in their breaks from preparing Handel's Julius Caesar and Verdi's Falstaff, the two shows that open this year's festival on 21 May and 22. Or maybe it's one way the cast and chorus unwind after rehearsals, giving the illusion of an escape from so-called "Glynditz", that most intense and, potentially, claustrophobic place to spend your summer as a singer.
But Glyndebourne has another side: as I found out on a trip for a future edition of Music Matters, there's a long history of the opera house reaching out to different communities than those lucky enough to be there in the summer festival. The company put on excerpts from Fidelio in a local prison in 1957, and were among the first to set up an operatic education department in the mid-80s. Since then, there have been more successes at Glyndebourne with operas either written for, or involving, young people than most other opera companies in the UK. Not bad for an arts organisation almost entirely funded through the private sector.
Can the good times keep rolling in an era of financial nip and tuck? There's no lack of ambition, with plans for their first, hugely expensive production of Wagner's Meistersinger (directed by McVicar again) in 2011. And tickets are still available for some of this season's shows, too, starting at £10 for a standing place. Sure, they go up to £210 for the best seats in the house for this year's Tristan, but a tenner is good value (in my experience) for the best standing "seats" to watch opera in Britain. And as for Glyndebourne convention – there's no need to dress up. Honest. If they keep the goal posts up, I'd bring a football strip for a quick five-a-side.


text:
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January 9, 2012
KERR CORPORATION, PLAINTIFF,v.NORTH AMERICAN DENTAL WHOLESALERS, INC. AND NORTH AMERICAN DENTAL, INC., DEFENDANTS.
Complaint Filed: February 24, 2011
Proposed Bilateral Protective Order (post Dec 13 hearing).doc
A. Kerr Corporation, Danaher Corporation and Sybron Dental Specialties Inc. (collectively "Kerr") and North American Dental Wholesalers, Inc. and North American Dental, Inc. (collectively, "NAD") mutually agree that discovery served upon each of them and upon third parties requests the production of confidential, proprietary, or private information for which special protection from public disclosure and from use for any purpose other than prosecuting this litigation would be warranted. Accordingly, the parties jointly have moved the Court to enter the following Protective Order ("Order").
A. Litigation Material: all information, regardless of the medium or manner generated, stored, or maintained (including, testimony, transcripts, interrogatory responses, admissions, expert disclosures, initial disclosures, documents and tangible things) produced or generated in disclosures or responses to discovery in this matter.
B. Producing Party: Kerr, NAD or any third-party that produces Litigation Material in this action.
C. Receiving Party: a party that receives Litigation Material from a Producing Party.
D. "Confidential" Litigation Material: Litigation Material that a party believes in good faith constitutes matter used by it in or pertaining to its business that is not generally known and that the party would not normally reveal to third parties or would cause third parties to maintain in confidence. Such information may include, but shall not be limited to, technical information such as product formulations and analysis; research and development information; customer lists; sales, cost, pricing, and marketing information (whether actual or projected); information that a party has treated as confidential and not subject to public disclosure; information qualifying as a trade secret; and any other information that would qualify for protection under Fed. R. Civ. P. 26(c) or any other applicable legal standard.
E. "Confidential -- Attorneys' Eyes Only" Litigation Material: extremely sensitive Confidential Litigation Material, disclosure of which the Producing Party believes in good faith would create a substantial risk of serious injury, if disclosed to a Receiving Party in this action without limitation, that could not be avoided by less restrictive means.
F. Designating Party: a Producing Party, Kerr (if the Producing Party is not Kerr) or NAD (if the Producing Party is not NAD), that designates Litigation Material as "Confidential" or "Confidential -- Attorneys' Eyes Only." The Designating Party shall bear the ultimate burden of proving that any documents or information it has designated "Confidential" or "Confidential -- Attorneys' Eyes Only."
G. Protected Material: any Litigation Material that is designated as "Confidential" or as "Confidential -- Attorneys' Eyes Only," and also any information that is copied or extracted from Protected Material, as well as all copies, excerpts, summaries, or compilations thereof, plus testimony, conversations, or presentations by Parties or counsel to or in depositions, court, or other settings that might reveal Protected Material.
H. Counsel: attorneys who are retained to represent a party to this action and who have entered appearances in this action, and are not regularly employed by that party.
I. Expert: a person with specialized knowledge or experience in a matter pertinent to the litigation who has been retained by a party or its counsel to serve as an expert witness or as a consultant in this action. This definition includes a professional jury or trial consultant retained in connection with this litigation, and shall include consultants who have not been designated as testifying experts and whose identity is privileged or has not been revealed.
J. Professional Vendors: persons or entities that are not a part of, or employees of, a party and provide litigation support services (e.g., photocopying; videotaping; translating or interpreting; preparing exhibits or demonstrations; organizing, storing, destroying, retrieving data in any form or medium, etc.) and their employees and subcontractors.
A. Exercise of Restraint and Care in Designating Material for Protection. Each Designating Party under this Order must take care to limit any such designation to Litigation Material that qualifies under the appropriate standards. Mass or indiscriminate designations are prohibited. If it comes to a Designating Party's attention that Litigation Material designated for protection does not qualify for protection at all, or does not qualify for the level of protection initially asserted, that Designating Party must promptly notify all other parties that it is withdrawing the mistaken designation.
B. Manner and Timing of Designations. Except as otherwise provided in this Order, or as otherwise stipulated or ordered, Litigation Material that qualifies for protection under this Order must be clearly so designated before the material is disclosed or produced. Designation in conformity with this Order requires:
1. For Litigation Material in documentary form, designation in conformity with this Order requires (apart from transcripts of depositions or transcripts of other pretrial or trial proceedings), that the Designating Party affix a suitable notice such as, for example, the legend "CONFIDENTIAL" or "CONFIDENTIAL -- ATTORNEYS' EYES ONLY," at the top, bottom, or other prominent location on each page that contains Protected Material.
2. A Producing Party that makes original Litigation Material available for inspection need not designate it for protection until after the inspecting party has indicated which material it would like copied and produced. During the inspection and before the designation, all of the material made available for inspection shall be deemed "Confidential -- Attorneys' Eyes Only." After the inspecting party has identified the documents it wants copied and produced, the Designating Party must determine which documents qualify for protection under this Order, and, before the specified documents or things are produced, the Designating Party must affix the appropriate legend ("CONFIDENTIAL" or "CONFIDENTIAL-- ATTORNEYS' EYES ONLY") at the top, bottom, or other prominent location on each page that contains Protected Material.
3. For testimony given in deposition or in other pretrial or trial proceedings, designation in conformity with this Order requires that any party identify on the record, before the close of the deposition, hearing, or other proceeding, or in writing to counsel of record within seven calendar days of receiving the transcript of the relevant deposition or proceeding, all exhibits and testimony that are to be designated "Confidential" or "Confidential -- Attorneys' Eyes Only."
4. For Litigation Material produced in some form other than documentary form, and for any other tangible items, designation in conformity with this Order requires that the Designating Party affix in a prominent place on the item or on the exterior of the container or containers in which the information or item is stored the legend "CONFIDENTIAL" or "CONFIDENTIAL -- ATTORNEYS' EYES ONLY."
C. Inadvertent Failures to Designate. The inadvertent or unintentional disclosure of Litigation Material that should have been designated "Confidential" or "Confidential -- Attorneys' Eyes Only.", regardless of whether the Litigation Material was so designated at the time of disclosure, shall not be deemed a waiver in whole or in part of a party's claim of confidentiality, either as to the specific Litigation Material or as to any other material or information concerning the same or related subject matter. Such inadvertent or unintentional disclosure may be rectified by notifying in writing, within a reasonable time after disclosure, counsel for all Parties to whom the Litigation Material was disclosed that the material should have been designated as Protected Material. Such notice shall constitute a designation of the Litigation Material as Protected Material under this Order. The new designation applies to any person so notified effective as of the date and time of receipt of the notice by such person. Persons to whom such Litigation Material has been disclosed shall not be responsible for any disclosure otherwise permitted under this Order occurring before receipt of such notice, and persons to whom such Litigation Material has been disclosed must be provided with another copy of the information, document or thing by the Designating Party that bears the appropriate Protected Material designation.
A. The failure of any Receiving Party to object to the designation of Litigation Material as "Confidential" or "Confidential -- Attorneys' Eyes Only" shall not be deemed an admission that such information qualifies for such designation.
B. A Receiving Party may challenge a Designating Party's designation of Litigation Material as "Confidential" or "Confidential -- Attorneys' Eyes Only" by motion. Any such motion shall comply with all aspects of the Central District Local Civil Rule 37, including the meet and confer requirements described therein. The Designating Party shall have the burden of proving that the designation is proper under the terms of this Order. Until the Court rules on the challenge, all Parties shall continue to afford the material in question the level of protection to which it is entitled under the Designating Party's designation.
Notwithstanding a Designating Party's confidentiality designation, Litigation Material will not be considered Protected Material if it:
A. was known to the Receiving Party without obligation of confidentiality to the Designating Party prior to disclosure by the Designating Party;
B. is subsequently disclosed to the Receiving Party by a third party having no obligation of confidentiality under this Order with respect to such Litigation Material;
C. is independently developed by employee(s) of the Receiving Party who had no access to the Litigation Material before such development; or
D. is published or becomes generally known to the public through means not constituting a breach of this Order.
A. Basic Principles. A Receiving Party may use Protected Material only for prosecuting, defending, or attempting to settle this litigation. Protected Material may be disclosed only to the categories of persons and under the conditions described in this Order. When the litigation has been terminated, a Receiving Party must comply with the provisions of SectionXI below (FINAL DISPOSITION). Protected Material must be stored and maintained by a Receiving Party at a location and in a secure manner that ensures that access is limited to the persons authorized under this Order.
B. Ability to Render Legal Advice. Notwithstanding the restrictions set forth in this Order, Counsel qualified to receive Protected Material under this Order shall not be precluded from rendering legal advice to its client, making factual inquiries of its client, or discussing with its client the merits of any issue in this litigation, as long as the specific substance or content of the Protected Material is not revealed to a person not qualified to receive such material under the terms of this Order.
C. Additional Restrictions. In addition to the other restrictions imposed on it by this Protective Order, Kerr shall not take any adverse action against any distributor for selling Kerr products to NAD, if those sales are disclosed by NAD's Protected Material and those sales are not otherwise known to Kerr. For purposes of this Section VI.C and Section VI.D: (1) "distributor" includes any person or entity who sold or sells Kerr products to NAD and (2) "adverse action" shall include taking any of the following actions without leave of court: service of a deposition subpoena, service of a subpoena duces tecum, joining the distributor as a defendant in this action, or filing a separate action against the distributor. Kerr may seek leave of court by written motion, filed under seal to preserve the confidentiality of the distributor's identity.
D. Finding of Counterfeiting. Notwithstanding the restrictions of Section VI.C above, if a Court, jury or other fact-finder finds that NAD has purchased or sold counterfeit Kerr products, then immediately, automatically and without notice
(1) the terms of this Protective Order shall no longer apply to any Protected Material relating to any distributor and (2) Kerr will be free to take any adverse action against any distributor that is otherwise permitted by law.
A. Disclosure of Protected Material. Unless otherwise ordered by the Court or permitted in writing by the Designating Party, a Receiving Party may disclose Protected Material only to:
1. the Receiving Party's Counsel;
2. the officers, directors, and employees of the Receiving Party to whom disclosure is reasonably necessary for purposes of prosecuting, defending, or settling this litigation, provided that Protected Material designated "Confidential -- Attorneys' Eyes Only" shall only be disclosed to the Receiving Party's Counsel;
3. Experts and consultants to whom disclosure is reasonably necessary for this litigation and who have signed the "Agreement to Be Bound by Protective Order" (Exhibit A), as set forth in Section VII.B;
4. the Court, its personnel, and jurors in this action and anyone designated by the Court;
5. court reporters, their staffs, and Professional Vendors to whom disclosure is reasonably necessary;
6. during their depositions, party and nonparty witnesses in the action to whom disclosure is reasonably necessary to conduct the deposition and who have signed the "Agreement to Be Bound by Protective Order" (Exhibit A), provided that Protected Material designated "Confidential -- Attorneys' Eyes Only" shall not be disclosed to any witness pursuant to this paragraph unless that witness is otherwise qualified to receive that Protected Material under another provision of this Order. Any Protected Material provided to a witness in a deposition shall not be retained by that witness, unless the witness is otherwise qualified to retain a copy of that Protected Material under another provision of this Order. Pages of transcribed deposition testimony or exhibits to depositions that reveal Protected Material may not be disclosed to anyone except as permitted under this Order; and
7. the authors, senders, addressees and designated copy recipients of the Litigation Material, or the individual(s) designated by the Designating Party or Receiving Party as a Rule 30(b)(6) witness to testify on the subject matter contained within the Litigation Material.
B. Any person required to execute the "Agreement to Be Bound by Protective Order" (Exhibit A) under this Order shall return the executed agreement to the party requesting his or her signature. That party's counsel shall maintain a copy of the executed agreement in their files so that it is available in case of controversy.
If a Receiving Party is served with a subpoena or an order issued in other litigation that would compel disclosure of any Protected Material, the Receiving Party must so notify the Designating Party, in writing, immediately and in no event more than five (5) court days after receiving the subpoena or order. Such notification must include a copy of the subpoena or court order. The Receiving Party also must immediately inform in writing the party who caused the subpoena or order to issue in the other litigation that some or all the material covered by the subpoena or order is the subject of this Order.
If a Receiving Party learns that, by inadvertence or otherwise, it has disclosed Protected Material to any person or in any circumstance not authorized under this Order, the Receiving Party must immediately (a) notify in writing the Designating Party of the unauthorized disclosures; (b) use its best efforts to retrieve all copies of the Protected Material; (c) inform the person or persons to whom unauthorized disclosures were made of all the terms of this Order; and (d) request such person or persons to execute the "Agreement to Be Bound by Protective Order" that is attached as Exhibit A. This paragraph does not encompass the disclosure of Protected Material by the Receiving Party if the Protected Material had not been previously designated as such by the Designating Party.
The inadvertent disclosure by a Producing Party of information that is privileged or otherwise immune or protected from discovery by law will not be deemed a waiver in whole or in part of attorney-client privilege, work product protection, or other ground of immunity from discovery, either as to the specific information disclosed or as to any other information relating thereto or on the same or related subject matter. If a Producing Party has inadvertently produced information subject to a claim of immunity or privilege, upon request in writing, the document and all copies thereof shall be returned promptly, and in no event later than five (5) calendar days after a request is made by the Producing Party, as required by Rule 26(b)(5)(B). If the Receiving Party disagrees that the information is protected from disclosure by the attorney-client privilege, work product protection, or other immunity from discovery, it may move the Court for an order that such information be produced, in which case the Producing Party shall have the burden of proving that such privilege or immunity exists.
Unless otherwise ordered or agreed in writing by the Producing Party, within sixty (60) days after the final termination of this action, including all appeals, each Receiving Party must destroy or return all Protected Material to the Producing Party. As used in this paragraph, "all Protected Material" includes all copies, abstracts, compilations, summaries or any other form of reproducing or capturing any of the Protected Material. Whether the Protected Material is returned or destroyed, the Receiving Party must submit a written confirmation to the Designating Party that all Protected Material was returned or destroyed and that the Receiving Party has not retained any copies, abstracts, compilations, summaries or other forms of reproducing or capturing any of the Protected Material. Notwithstanding this provision, Counsel are entitled to retain an archival copy of all pleadings, motion papers, transcripts, legal memoranda, correspondence or work product, even if such materials contain Protected Material.
Even after the termination of this litigation, the confidentiality obligations imposed by this Order shall remain in effect until the Designating Party agrees otherwise in writing or the Court otherwise directs.
Except when the filing under seal is otherwise authorized by statute or federal rule, the Parties shall seek the Court's prior approval for the filing under seal of pleadings and other documents containing properly designated "Confidential" or "Confidential -- Attorneys' Eyes Only" Disclosures in accordance with the procedures set forth in Central District Local Civil Rule 79-5.1.
A. Right to Further Relief. Nothing in this Order abridges the right of any party to seek its modification by the Court or by agreement of the parties in the future.
B. Right to Assert Other Objections. By stipulating to the entry of this Order, no party waives any right it otherwise would have to object to disclosing or producing any information or item on any ground not addressed in this Order. Similarly, no party waives any right to object on any ground to use in evidence of any of the material covered by this Order.
C. A Party's Own Information: The restrictions on the use of Protected Material established by this Order are applicable only to the use of Protected Material received by a party from a Producing Party. A party is free to do whatever it desires with its own Protected Material. However, for purposes of disputing a party's designation of information or documents as Confidential or Confidential -- Attorneys' Eyes Only, and resolving any such dispute, a party's intentional disclosure of its own Protected Material to any third party with which it does not share a confidential relationship, or to the public, shall be taken into account by the Court in determining whether the Protected Material has been properly designated.
D. Third Party Discovery: A copy of this Order must be served with all discovery requests served on third parties to this litigation, including without limitation, subpoenas under Rule 45 of the Federal Rules of Civil Procedure.
Submitted by: SCHEPER KIM & HARRIS LLP MARC S. HARRIS ALEXANDER H. COTE LAW OFFICES OF ARNOLD I. KALMAN Arnold I. Kalman DAVID M. BASS AND ASSOCIATES David M. Bass By Alexander H. Cote By David M. Bass Attorneys for Plaintiff KERR CORPORATION, DANAHER CORPORATION Attorneys for Defendants NORTH AMERICAN DENTAL WHOLESALERS, INC. and NORTH AND SYBRON DENTAL AMERICAN DENTAL, INC. SPECIALTIES INC.
© 1992-2012 VersusLaw Inc.
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text:
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text:
There is no explanation for these animals made of frankfurters
However frank you are, you'll never be more frank than these unusual creations
Oh Japan, Japan you never fail to amaze and delight us with your funky ideas and broad imagination. Especially when you look at a humble pack of frankfurters and see art.
Behold an entire menagerie of meaty little statues and just in case you're in a weird mood, the instructions on how to build them. Enjoy!
A frog, a snail, a reindeer, a T-Rex
A dinosaur, a pterodactyl, another frog, some chicks
A dog, a peacock, a frog, a pig
An elephant, a koala, a swallow, a cat
And that's all we have to say about that, really.


text: Back To School Costco Laptops & Desktops With the new school year fast approaching, it's time to check out the desktops and laptops the warehouse giant Costco has to offer for the bargain-hunting shopper. OB Roundup With the new school year fast approaching, it's time to check out the desktops and laptops the warehouse giant Costco has to offer for the bargain-hunting shopper. If you live in suburbia, chances are you have more than a passing acquaintance with the wholesale warehouse chain known as Costco. The allure, of course, is in being able to buy almost anything dirt-cheap (assuming, of course, you're cool with buying in bulk). From bottles of shampoo bigger than your head to a box of coconut shrimp large enough to feed a small country, Costco is the place to go. But these days, this retail behemoth is also becoming known for offering electronics at lower prices than other stores. Chief among them are laptops and desktop PCs. The selection of desktops and laptops that Costco offers may seem familiar, but the model numbers and configurations are often unique to Costco. That means you probably can't find on the manufacturers' Websites or in other stores. Costco also offers customers some added benefits. For example, whereas most vendors provide just a one-year warranty, Costco bumps that up to two years. It also offers Costco's Concierge Services, which is a free service to Costco members who purchase electronics at the store. The service gives you access to technicians to walk you system setup, product use, and for troubleshooting. Lastly, the store accepts returns within 90 days (which takes care of buyers' remorse). But which system is right for you and your computing needs? Those little plaques in front of each PC only tell you so much. That's where we come in. We've reviewed and tested many of the systems available at Costco for back to school. So sit back, relax, and let us walk you through the different options. And maybe, just maybe, you may be picking up a new system when you stop by your local Costco for that 12-pack of toilet paper. DESKTOPS Gateway DX4320-01e Gateway's DX4320-01e delivers quad-core power and lots of storage for under $700. Gateway DX4840-02e The Gateway DX4840-02e is a capable desktop system that gives you everything you'll need to get up and running right out of the box. Gateway FX6840-01e The Gateway FX6840-01e handles multimedia tasks with aplomb but its graphics performance is less than stellar. HP Pavilion Elite HPE-367c-b The HP Pavilion Elite HPE-367c-b adds Blu-ray and a 27-inch monitor to an attractive and powerful multimedia desktop PC. HP Pavilion p6507c-b The entry-level HP Pavilion p6507c-b desktop, bundled with a 20-inch monitor, is a decent value. But based on older technology, it doesn't have all the features a system with more modern components will offer. HP Pavilion p6527c-b The HP Pavilion p6527c-b doesn't have the latest and greatest technology but this desktop and monitor bundle from HP will get the job done. HP Pavilion p6537c-b The HP Pavilion p6537c-b is a general-purpose desktop and monitor bundle that offers solid multimedia performance and leaves room to expand. HP Pavilion p6577c-b The HP Pavilion p6577c-b is a solid mid-priced desktop PC with room for expansion and a giant HD monitor. LAPTOPS AND NETBOOKS Dell Inspiron 14R-1898MRB The Dell Inspiron 14R-1898MRB gets a makeover and bumps up performance and battery life by simply putting in better parts. HP G42-243cl-b With the HP G42-243CL-B you get a relatively light, 14-inch laptop and a multi-function printer at an affordable price. HP G62-223CL The HP G62-223cl is an inexpensive mainstream laptop, but you can find a faster one for about the same price. HP Mini 210-1142CL The HP Mini 210-1142CL includes a high-capacity battery that delivered over 9 hours of battery life. HP Pavilion dm4-1063cl You wouldn't expect great battery life from a 17-inch laptop, but the HP dv7-4053cl delivers that and a whole bunch of other entertainment goodies. HP Pavilion dv6-3033cl The HP Pavilion dv6-3033cl includes a fast Core i5 processor and a Blu-Ray drive that only Costco can pull off for $900. HP Pavilion dv7-4053cl You wouldn't expect great battery life from a 17-inch laptop, but the HP dv7-4053cl delivers that and a whole bunch of other entertainment goodies. Sony VAIO VPC-F121GX The Sony VAIO VPC-F121GX is the fastest laptop in Sony's arsenal, but other brands will give you better bang for the buck.