The U.S. District Court for the Northern District of New York found that an insured did not show that it had submitted a claim, and thus the insurer did not deny the claim, in King's Gym Complex, Inc. v. Philadelphia Indemnity Ins. Co., No. 6:05-CV-1591, 2006 WL 1652455 (N.D.N.Y. June 16, 2006).

 

A windstorm caused damage to King's Athletic Club, which hired a professional loss consultant to assist in filing a claim with its insurer, Philadelphia Indemnity. Philadelphia paid the property loss claim.

 

Steven Barry, the insured's principal, “was concerned that the installation of the new roof would result in a loss of business income.” A meeting with Barry and accountants hired by Philadelphia to handle the business income loss was set up, but Barry cancelled it and never rescheduled. The accountants wrote to Barry ten times regarding the business income claim but never received a reply.

 

In June 2005, the accountants sent a final letter stating that they assumed the insured no longer wished to file a claim for business income loss. In November 2005, the insured filed action against Philadelphia for breach of the insurance policy. King's argued that it had met all of the terms and conditions of the policy. Philadelphia, though, disputed the contention that a claim for business income was ever made and filed for a dismissal of the complaint. Because it never received a business income claim, Philadelphia reasoned, it did not deny a claim, and the dispute was not ripe for adjudication.

 

The court noted that, to decide whether to dismiss the case, it must determine if a claim had actually been filed. King's said that the policy contained no requirements for presenting a claim except that it had to be filed within two years. The court called this argument “disingenuous,” stating, “Plaintiff clearly managed to submit claims and provide sufficient proof of loss of such claims pursuant to the defendant's policy. It has received payment as to property damage.” The court said King's provided evidence of filing the property loss claims only, not a business income claim.

 

Not only did the court say that the insured showed no evidence of filing a business income claim, it also stated that the insured's “conduct demonstrates a complete lack of interest in addressing a business loss claim…Indeed, plaintiff conducted itself as if it did not owe the defendant any explanation of a claim it had not yet filed.” Further, the court said that repairs on the roof have not even begun, so there has not yet been a suspension of operations or any loss of business income.

 

The action was dismissed because the court determined that no claim was filed, and therefore no claim was denied, so no justiciable controversy existed.