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EMERSONS, LTD. v. MAX WOLMAN CO.

January 27, 1975

EMERSONS, LTD., and EMERSONS, LTD. OF CINNAMINSON, INC., Plaintiffs,
v.
MAX WOLMAN COMPANY and HOME INSURANCE COMPANY, Defendants and Cross-Claimants



The opinion of the court was delivered by: RICHEY

 CHARLES R. RICHEY, DISTRICT JUDGE.

 This matter came on for trial before the Court, sitting without a jury, on November 26, 1974. Plaintiffs Emersons, Ltd., et al. (hereinafter "Emersons"), seek to recover under an insurance policy a stipulated business interruption loss of $244,069.58 for its Cinnaminson, New Jersey, restaurant. The restaurant was destroyed by a fire which occurred on or about February 13, 1973. Defendants, Home Insurance Company (hereinafter "Home"), and its general agent, Max Wolman Company (hereinafter "Wolman"), cross-claimed against one another for indemnification or contribution for any damages awarded, and for other relief.

 The parties orally stipulated that the law of the District of Columbia would apply to all questions of law herein.

 I. INTRODUCTION.

 During the fall of 1972, Defendant Wolman undertook to procure for Plaintiff Emersons a "package" insurance policy which would include coverage for loss of business earnings, commonly referred to as "business interruption coverage". Emersons directed Wolman that the policy should extend to all of its operating restaurants as well as to certain designated proposed restaurants, including Emersons' restaurant in Cinnaminson, New Jersey.

 At all times, Wolman was a general agent for Defendant Home and Home authorized Wolman through a general agency agreement to bind Home orally to policy coverage.

 In October of 1972, Wolman and Home met twice at Home's Baltimore office to discuss Emersons' requested insurance coverage. At the first meeting, Wolman presented a list of approximately thirty-five existing and proposed Emersons restaurant locations, including Cinnaminson, to be covered under one business owners policy. At the second meeting, Home agreed to a special request by Wolman for complete business interruption coverage for all locations. Wolman then submitted another document, ordering from Home on behalf of Emersons the business owners insurance. The policy was to cover twenty-three specified Emersons restaurants, including Cinnaminson, and was to become effective November 1, 1972. On December 29, 1972, Home issued Emersons a package insurance policy, including business interruption coverage, for the twenty-three restaurant locations listed in the aforesaid order. The policy indicated that November 1, 1972, had been the effective date.

 On January 29, 1973, the Cinnaminson restaurant opened for business. Approximately two weeks later, on February 13, it was destroyed by fire.

 Shortly after the fire, Wolman notified Home of the amount of business interruption coverage claimed at Cinnaminson. It indicated that Home should cover the loss, regardless of the absence of a binder or specific dollar amounts, because it had orally agreed in October to provide business interruption coverage under the policy which became effective November 1, 1972, and because it had subsequently issued an endorsement to the policy showing Cinnaminson as a covered site.

 Following notification of the fire and prior to expiration of sixty days after the fire, Home denied business interruption coverage for the Emersons restaurant in Cinnaminson. Home did, however, acknowledge that there were both fire and contents coverages for the restaurant and immediately paid the amounts claimed under those coverages.

 Emersons filed this claim on June 27, 1974, for the stipulated sum of $244,069.58 for its business interruption loss.

 II. THE LIMITATION PROVISION OF THE INSURANCE POLICY IS NO BAR TO THIS SUIT.

 Defendant Home argues that Plaintiffs' failure to meet the requirements of the insurance policy's limitation provision bars the insured from recovering under the policy. That provision demands that suit be brought within twelve months after occurrence of a loss.

 The facts show that Home, through its attorneys, expressly requested Emersons to delay filing suit to recover under the policy so that settlement negotiations could continue. Undisputed testimony establishes that Home asked Emersons, approximately two weeks before the end of the twelve-month period, to "hold off the suit". Home told the insured, "If we can determine the amount of loss, we will pay." *fn1" Following this conversation, Emersons mailed a confirmatory letter to Home, *fn2" and in reliance on Home's request, delayed filing suit. Good faith negotiations continued up to and beyond the end of the twelve-month period.

 It is well-settled that a defendant is estopped from asserting a limitation as a bar to ...


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