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ABNER, HERRMAN & BROCK v. GREAT NORTHERN INSURANCE

March 12, 2004.

ABNER, HERRMAN & BROCK, INC., Plaintiff, -against- GREAT NORTHERN INSURANCE CO., Defendant


The opinion of the court was delivered by: JOHN KOELTL, District Judge

OPINION AND ORDER

This case arises out of the denial of an insurance claim after the events of September 11, 2001. The defendant, Great Northern Insurance Co. ("Great Northern"), moves for summary judgment dismissing the complaint, arguing that there is no coverage under the policy for the losses claimed and that there is no evidence of actual damages suffered by the plaintiff. Great Northern also contends that the plaintiff did not file the claim in a timely manner. The plaintiff, Abner, Herrman & Brock, Inc. ("AHB"), cross-moves for partial summary judgment on its claim to recover continuing normal operating and payroll expenses for a thirty-day period beginning September 11, 2001.

I

  The following facts are undisputed except where specifically noted. The plaintiff, AHB, is an investment advisory firm and broker dealer incorporated in New York State Page 2 With its principal place of business also in New York. (Compl. ¶ 1; Def.'s R. 56.1 So. 5 3.) The Chairman of AHB described AHB's business as follows: "AHB provides professional portfolio management to high-net-worth individuals and their families, endowments, foundations and corporate retirement plans." (Aff. of Howard Abner dated July 1, 2003 ("Abner Aff.") ¶ 3.) The defendant, Great Northern, is incorporated in Minnesota with its principal place of business in New Jersey. (Answer ¶ 2.) Great Northern issued an insurance policy (the "Policy"), insuring AHB for business income loss and extra expense, subject to the Policy's various terms and conditions, up to a limit of liability of $500,000 for the period April 23, 2001, to April 23, 2002. (Ex. A to Decl. of Melissa Brill dated May 29, 2003 ("Brill Decl."))

  AHB claims it suffered a business income/extra expense loss covered by the Policy based upon the tragic events occurring on September 11, 2001. (Compl. ¶¶ 7-8.) While the plaintiff suffered no physical damage to its property as a result of the events, access to AHB's business premises in lower Manhattan was prohibited by civil authority through Friday, September 14, 2001. (Def.'s R. 56.1 St. ¶¶ 8-9; Tr. of Dep. of Howard J. Abner dated Apr. 10, 2003 attached as Ex. B to Brill Decl. at 29-31; Vehicular and Pedestrian Restrictions in Manhattan ("Restrictions") attached as Ex. C to Brill Decl.) AHB's office Page 3 was located in an area of lower Manhattan where, from September 17, 2001, vehicular traffic was restricted, but pedestrian access was permitted, and public transit was available. (Def.'s R. 56.1 St. ¶ 9; Restrictions.) The plaintiff alleges that the traffic restrictions made it difficult for the plaintiff's employees to get to the premises as well as attend meetings around the downtown area, which was AHB's usual business practice. (Abner Aff. ¶¶ 18-19.) More particularly, Howard Abner, the Chairman of AHB, points out that, "To best utilize my time outside of the office, AHB engages a full-time driver for my use to attend research, client, and prospective client meetings." (Id. ¶ 17.)

  The fair import of the plaintiff's position is that the emergency traffic restrictions put in place after the terrorist attack on September 11 put a crimp in the ability of its Chairman to use his car and driver, and walking and public transportation were not palatable alternatives. Mr. Abner also points out that "[w]hile my normal practice would involve leaving the office for meetings and returning later, security road blocks severely limited this activity." (Id. ¶ 18.) AHB apparently viewed the security restrictions as a hindrance to its business.

  The Civil Authority provision of the Policy provides in relevant part that Great Northern: Page 4

 
will pay for the actual business income loss you incur due to the actual impairment of your operations; and extra expense you incur due to the actual or potential impairment of your operations, when a civil authority prohibits access to your premises or a dependent business premises.
(Policy at Form 17-02-3063, at 4.) The Policy also provides that:
coverage will begin immediately after the time the civil authority prohibits access and will end 30 consecutive days after this coverage begins; or when your business income coverage ends, whichever occurs first.
(Id.)

  The Civil Authority provision of the insurance policy covers business income loss. (Id.) Determination of this loss includes consideration of the net income before damage, the likely net income if there had been no damage, and the continuing operating expenses necessary to resume operations at the level they were prior to the damage. (Id. at 8.) Losses attributable to the closure of the security, commodity, or currency exchanges are not covered under the Policy. (Policy at Form 17-02-3050, at 26.)

  The Policy's notice provision states that "in the event of loss or damage," the insured must notify Great Northern or one of its "authorized representatives, as soon as possible, as to what occurred." (Id. at 18.) The facts pertaining to timely notice in filing the claim are disputed. AHB alleges that on Page 5 November 28, 2001, Mr. Abner spoke to employees of Frank Crystal & Co.,("Crystal"), AHB's insurance broker, about the business interruption coverage. (Abner Aff. ¶ 30.) Mr. Abner claims that, on November 30, 2001, Crystal employees advised him that Great Northern had indicated that no coverage was afforded because the stock markets were closed. (Id. ¶ 31.) On January 18, 2002, an accountant who had reviewed AHB's policy advised Crystal that coverage was afforded and requested that Crystal begin the process of filing a claim under the Policy for AHB. (Id.; Ex. C to Abner Aff.) Great Northern alleges that it received the first notice of the plaintiff's new property insurance claim on January 21, 2002, from Crystal, AHB's broker. (Def.'s R. 56.1 St. ¶ 11.)

  II

  The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Gallo v. Prudential Residential Servs. Ltd. P'ship, 22 F.3d 1219, 1223 (2d Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully Page 6 limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224. The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

  In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994). If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific Page 7 facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The nonmoving party must produce evidence in the record and "may not rely simply on conclusory statements or on ...


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