Sherwin-Williams Co. v. Ins. Co. of Pa.

Sherwin-Williams Co. v. Ins. Co. of Pa.

Opinion

 [*548]  REPORT AND RECOMMENDATION

This matter is before the magistrate judge pursuant to an order of reference issued by Chief Judge Lambros on May 12, 1993. Plaintiff's cause of action is a complaint for declaratory judgment on an insurance contract. Pending are cross motions for summary judgment. Jurisdiction over the action is based on diversity of citizenship. 28 U.S.C. § 1332 (a) and 28 U.S.C § 2201. For the reasons set forth below, the magistrate judge recommends that plaintiff's motion for summary judgment be granted and that defendant's motion for summary judgment be denied.

I. FACTUAL BACKGROUND

Plaintiff, the Sherwin-Williams Company ("Sherwin-Williams"),  [**2] purchased an "all risk" insurance policy with worldwide territorial coverage (SP No. IF-7520499) ("the policy") from defendant, The Insurance Company of the State of Pennsylvania ("ISOP"). The policy contains three components, the "policy jacket," the manuscript policy and Endorsement 1. The effective date of the policy was January 1, 1988. The policy was renewed on its anniversary date in 1989 and was in effect during the period of the alleged covered loss, December 22 - 24, 1989. The policy was written to cover all risks of loss and physical damage unless specifically excluded.

Military forces of the United States invaded the Republic of Panama during the early morning hours of December 20, 1989.¹ Chaos reigned throughout Panama during the days following the initial military operation. During this period of time, the Sherwin-Williams plant in Panama, as well a number of its retail outlets in residential areas of Panama City, were ransacked, plundered and partially destroyed by civilian looters. The plant and stores were owned by Sherwin-Williams de Panama, S.A., a wholly-owned subsidiary of the Sherwin-Williams Company and a named insured under the ISOP policy.

Sherwin-Williams suffered damage and loss to its real and personal property as a result of the aforementioned incidents. Plaintiff also suffered loss due to business interruption resulting from damage to and loss of property. Plaintiff filed a written notice of property loss on December 28, 1989. Shortly thereafter, and with supplements that followed, plaintiff provided defendant with proof of loss documentation. The defendant "conditionally rejected" plaintiff's claim on April 20, 1990 and did so "finally" on January 30, 1991.

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