CRANE OWNER IS ENTITLED TO RENTAL PAYMENTS UNTIL COMPENSATED FOR THE VALUE OF DESTROYED CRANE

In the business litigation case of AmQuip Crane Rental, LLC. V. N.L. Carson Constr. Co., Inc. PICS Case No. 17-0453 (E.D. Pa. March 13, 2017) the Honorable Cynthia M. Rufe ruled that the Plaintiff’s equipment rental company could not assert a claim of liability for prejudgment interest against defendant’s insurer where insurer had tendered full amount of its policy. Motion for summary judgment denied in part and granted in part.

Plaintiff AmQuip Crane Rental moved for summary judgment against defendants N.L. Carson Construction Co., Inc. and Travelers Property Casualty Company of America, seeking damages in the form of rental payments, interests, costs, and collection fees. Plaintiff leased a crane to Carson, and while in Carson’s control the crane was irreparably damaged. Although Carson and its insurer, Travelers, initially contested whether the crane was irreparably damaged, an independent inspection confirmed the same and Travelers, pursuant to its policy with Carson that listed plaintiff as additional insured, paid plaintiff the replacement value of the crane. Plaintiff’s motion for summary judgment against defendants sought payment of rental payments, interest, costs, and counsel fees, pursuant to the lease agreement between plaintiff and Carson.

In resolving plaintiff’s motion, the court initially noted a conflict of law issue, as plaintiff was a Pennsylvania company, while Carson was a Mississippi company, Travelers delivered its policy in Mississippi, and the crane at issue was used and damaged in Mississippi. The court held that Pennsylvania and Mississippi law were substantially similar in all aspects with exception to Mississippi’s bar on prejudgment interest on matters settled prior to judgment or decree. Accordingly, the court concluded that Mississippi had the greater interest in the case, and ruled that it would apply Mississippi law to the case.

The court first granted summary judgment to plaintiff with respect to its claim for continuing rental payments. Carson contended that the parties’ lease agreement was ambiguous with respect to when continuing rental payments would be due, and argued that since plaintiff’s inspector deemed the crane a total loss in October 2014 any obligation to continue making rental payments ceased at that point. However, the court held that the plain language of the lease obligated Carson to continue making rental payments until plaintiff was compensated for the value of the destroyed crane, which occurred in March 2016. But the court agreed with Carson that plaintiff was not entitled to Mississippi sales tax on those rental payments since the crane was returned to plaintiff’s facility in Tennessee soon after the accident no Mississippi sales tax could be due on a crane not located in that state.

The court further granted plaintiff summary judgment in its claim for costs of inspection and appraisal of the crane, ruling that since they were integral to determining whether the crane could be repaired or needed to be replaced, they constituted costs of collection that plaintiff was entitled to under the lease agreement. The court further ruled that plaintiff was entitled to its counsel fees, finding that the fees sought were less than 15% of the total amount collected by plaintiff’s counsel, which exceeded $381,000 and included the amounts paid by Travelers, rather than simply the approximately $239,000 sought by plaintiff in its motion for summary judgment.

Finally, the court denied plaintiff’s motion with respect to Travelers, finding that it had tendered the full policy limit to plaintiff, and therefore ruling that it could not be held liable to pay any prejudgment interest exceeding the policy limit. The court further held that plaintiff was not entitled to prejudgment interest because Mississippi law precluded awards of prejudgment interest where, as in this case, the matter was resolved by the parties prior to entry of judgment or decree by the court.

Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 40 PLW 321, (April 4, 2017)

Filed Under: Business Litigation; Commercial Litigation; Entitlement to Continuing Rental Payments;

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