United States District Court, S.D. New York
For Granite Ridge Energy, LLC, Plaintiff: John Peter McConnell, LEAD ATTORNEY, Stephanie Helen Dersch, Hargraves McConnell & Costigan, P.C, New York, NY.
For Allianz Global Risk U.S. Insurance Company, Associated Electric & Gas Insurance Services, The Hartford Steam Boiler Inspection and Insurance Company, Liberty Mutual Insurance Company, Ace American Insurance Company, Defendants: Charles J. Rocco, LEAD ATTORNEY, Malcolm James Reilly, Paul Christopher Ferland, Foran Glennon Palandech Ponzi & Rudloff, P.C., New York, NY; Tracey Anne Jordan, PRO HAC VICE, Paul Christopher Ferland, Foran Glennon Palandech Ponzi & Rudloff, P.C., New York, NY.
For Westport Insurance Corporation, Defendant: David Leichtman, Robins, Kaplan, Miller & Ciresi, LLP (NYC), New York, NY; John N. Love, PRO HAC VICE, Robins, Kaplan, Miller & Ciresi, LLP (MA), Boston, MA; Tracey Anne Jordan, PRO HAC VICE, Foran Glennon Palandech Ponzi & Rudloff, P.C., New York, NY.
For Industrial Risk Insurers, Defendant: David Leichtman, Robins, Kaplan, Miller & Ciresi, LLP (NYC), New York, NY; John N. Love, PRO HAC VICE, Robins, Kaplan, Miller & Ciresi, LLP (MA), Boston, MA;
Tracey Anne Jordan, PRO HAC VICE, Malcolm James Reilly, Paul Christopher Ferland, Foran Glennon Palandech Ponzi & Rudloff, P.C., New York, NY.
For Continental Casualty Company, Defendant: Charles J. Rocco, Malcolm James Reilly, Paul Christopher Ferland, Foran Glennon Palandech Ponzi & Rudloff, P.C., New York, NY.
OPINION & ORDER
HONORABLE PAUL A. CROTTY, United States District Judge.
This is an insurance coverage dispute brought by Plaintiff Granite Ridge Energy, LLC pursuant to several " all risk" policies issued by the Defendant insurers. Plaintiff's claims arise out of damages to its electrical generator and transformer at its power plant in Londonderry, New Hampshire. The Court presumes familiarity with the facts as set forth in its prior opinion granting Plaintiff summary judgment on liability for damages to the generator and granting Defendants' cross-motion on liability for damages to the transformer. ( See ECF No. 105.)
Thereafter, the parties submitted opposing memoranda on damage calculations. The Court construes these submissions under the same summary judgment standard. As set forth below, the Court GRANTS summary judgment to Plaintiff for damages in the amount of $3,404,347.91, plus pre-judgment interest to be calculated pursuant to N.Y. C.P.L.R. § § 5001-02, starting on July 24, 2007, at the rate of nine percent per annum. That amount includes $53,242.91 in damages to the generator and $3,351,105 in business interruption losses.
It is undisputed that Defendants are liable for $53,242.91 in unindemnified repair costs for Plaintiff's generator. (Def.'s Br. 1.) What is in dispute is the amount of Defendants' liability for (1) Plaintiff's business interruption loss for the period of July 7 through July 19, 2006 (" Disputed Period" ) and (2) prejudgment interest for these amounts.
With respect to the business interruption loss, Plaintiff claims $3,351,105 in damages, while Defendants calculate their liability to be only $3,298,819. The $52,286 difference represents a dispute over (a) a " variance" of $40,301 in Plaintiff's damages model as calculated by the Defendants' expert, Buchanan Clarke Schlader LLP (" BCS" ); and (b) an additional reduction of $11,985 that Defendants propose on the basis that " BCS realized" at its deposition on July 26, 2011 that there had been a mistake in the model regarding " water and chemicals" data. (Defs.' Br. 7-8.) Nevertheless, on October 28, 2011, Defendants asserted in their counterstatement of undisputed material facts that Plaintiff's business interruption loss was $3,310,804, which did not account for the purported error regarding " water and chemicals" that previously had been discovered. (Defs.' R. 56.1 Counterstatement ¶ 85.)
As for the disputed " variance" in the damages model, BCS's report asserts that a reduction to the model's projected loss amount was justified in light of a comparison between " the model results [and] actual results during the period January
through March 2006." (Buchanan Decl. Ex. A at 3.) BCS concluded that the difference between the model's projected income figures and the actual amount for that period should be used to calculate a " variance" to be deducted from the model's projected amount for the Disputed Period. ( Id.) Defendants characterize this analysis as " a very simple, common sense test" of the model. (Defs.' Br. 8.)
BCS's report itself does not explain the rationale for selecting those three months as the basis for comparison. Defendants' brief, however, avers that BCS chose that time period essentially by process of elimination: Plaintiff objected to using data from prior months in 2005 because Plaintiff " had been using a different model" then, and Plaintiff objected to using data from subsequent months in 2006 due to problems with its transformer that affected the plant's output. (Defs.' Br. 8.) Thus, BCS was left with only data from the months of January through March 2006 to test the model. Notwithstanding the variance that it calculated from this test, BCS concluded that " it appears reasonable to utilize" the model to calculate Plaintiff's business interruption loss. (Buchanan Decl. Ex. A at 3.)
A far more significant dispute exists with regard to the calculation of prejudgment interest. The parties differ on which state's law applies and when interest started to accrue, and the resolution of these two issues has a substantial monetary impact. Plaintiff contends that New York law applies because the insurance policies provide that they " shall be interpreted solely according to the laws of New York." Defendants do not dispute that the policies so provide, but they counter that those provisions specify only which law governs the interpretation of the policies' terms, not which law would govern an award of prejudgment interest. ( See Defs.' Br. 12.) Instead, Defendants argue that New York's general conflict-of-laws analysis indicates that ...