The insurer's and insured's intent as to which entities were to be insured prevented the insurer's motion for summary judgment. Chaus v. State Farm Fire & Cas. Co., 2015 U.S. Dist. LEXIS 136311 (E.D. La. Oct. 5, 2015).
Water damage from a broken pipe occurred at the insured's building. Blaze Chaus LLC owned the building.The building was occupied by two entities which provided health care services: Dr. Kelly G. Burkenstock, M.D. and Azure Spa, Inc. Dr. Burkenstock was the sole owner of all three entities.
The application for commercial insurance was submitted by "Dr. Kelly G. Burkenstock, d/b/a/ Blaze Chaus LLC." The application requested a "Physicians and Surgeons Endorsement" and reflected that the business activities of the applicant as "Internal Medicine Doctor."
As a result of the application, State Farm issued a Medical Office Policy in 2006, which was annually renewed through 2013. The only entity identified as a named insured was Blaze Chaus.
The water damaged the insured building and its insured contents. State Farm paid Blaze some amounts for structural damage, but not for business personal property or business income losses. Blaze Chaus LLC owned the insured building, but the contents were owned by Dr. Kelly G. Burkenstock, M.D. and Azure Spa, Inc. The only alleged business income losses were incurred by those entities and not Blaze.
Blaze sued and State Farm moved for summary judgment. The court found as a matter of law that the policy was not ambiguous as to the identity of the named insured. The language of the policy designating Blaze Chaus LLC as the named insured was clear and explicit, and subject to no other interpretation. Therefore, only Blaze could seek to enforce the policy as it was currently written.
Blaze argued, however, that there was a genuine issue of material fact regarding the intent of the parties as to the named insured(s). The court agreed. The information stated in the application supported a finding that Dr. Burkenstock and State Farm intended that the insurance policy cover Dr. Burkenstock's medical practice as well as the separate entity constituting her practice. There was a genuine issue of material fact regarding the intent of the parties to the insurance contract which could support reformation of the policy and the addition of another named insured.