The opinion of the court was delivered by: ACKERMAN
This matter comes before the court pursuant to 28 U.S.C. § 636(c)(4) on plaintiff's appeal of Magistrate Judge Stanley R. Chesler's decision to grant defendant's motion for summary judgment. For the reasons detailed below, this court affirms the Magistrate's grant of defendant's summary judgment motion.
Judge Chesler's opinion sets forth in detail the factual background of this case and it will not be repeated here. For the purposes of this appeal, it is sufficient to know that this action arose from a dispute regarding an insurance policy. Specifically, the plaintiffs allege that through Trans Elite, they rejected Policy GLP-002818 ("the new policy") which had been issued by the defendant, Investors Insurance Company of America ("Investors"). Investors issued this policy to Monarch Properties ("Monarch") in March 1993 after having canceled another policy, GLP-002321 ("the old policy"), in January due to Monarch's failure to pay its premiums. Monarch is a Texas real estate company with real estate in New York, Texas, Oklahoma, New Mexico and other locations. Monarch had secured the new policy through Trans Elite by using two intermediaries, Polar International Brokerage Corp. ("Polar"), the other plaintiff, and Mid-Atlantic Facilities, Inc. ("Mid-Atlantic"), one of the Third Party Defendants. Plaintiff claims that it was dissatisfied with the new policy because it contained a 100% Minimum Retained Premium ("MRP") clause -- an MRP percentage much higher than the old policy's 25% MRP. In an insurance policy, an MRP clause states the percentage of the premium that the insurer is entitled to retain in the event that the policy is cancelled. For example, the MRP clause of the original policy stated that:
In the event of cancellation by the Insured, the minimum premium retained by the Company for the policy is $ 75,000. or 25% of the total advanced premium, and that such minimum retained premium is not subject to short-rate or pro-rata adjustment.
As I have already indicated, the new policy contained a 100% MRP clause. Additionally, the new policy did not cover the period of time between the cancellation of the prior policy and the issuance of the new policy.
In May, 1993, Michael Bruzzi, Trans Elite's office manager, received the new policy back from Mid-Atlantic "indicating that the policy was unacceptable because of the 100% MRP clause." See Magistrate Opinion at 7. Trans Elite then wrote to Investors requesting changes, but it did not expressly reject the policy as is. See Id. at 8. In July, 1993, Monarch obtained insurance from somewhere else and through Trans Elite, asked that Investors delete 2,475 units from its policy. When Investors refused to return any premium on the grounds that the policy contained a 100% MRP clause, Monarch initiated suit. In April 1996 Investors moved for summary judgment against the plaintiffs.
In his opinion, Judge Chesler found that Monarch had failed to reject the policy in toto. In April, 1993, Polar did express its desire to reject the policy in toto when it returned the policy to Mid-Atlantic, who then forwarded it to Trans Elite, but, according to Judge Chesler, Polar did not "effectively" reject the policy. See Id. at 16. The court concluded that for purposes of negotiating the policy, Trans Elite served as Monarch's agent and not that of Investors. See Id. Therefore, Monarch's communication to Trans Elite, its agent, did not effectively reject the policy. It would only have been effective had Trans Elite conveyed Monarch's wish to reject the policy directly to Investors. See Id. at 16. Trans Elite did not do that and therefore, the court granted summary judgment in favor of the defendant. Alternatively, Judge Chesler concluded that even if Monarch had effectively rejected the policy, "both Monarch's and Trans Elite's subsequent actions . . . served to accept and ratify" the policy with the 100% MRP clause. Id.
Plaintiffs bring this appeal on the ground that Trans Elite was, in fact, Investor's agent and therefore, plaintiffs contend that they effectively rejected the policy with the 100% MRP clause -- the new policy. Additionally, the plaintiffs contend that Judge Chesler erred in his finding that the plaintiffs ratified the new policy.
In reviewing a decision of a Magistrate Judge, a district court should utilize the same standard of review utilized by the court of appeals in reviewing a decision of the district court. See 28 U.S.C. § 636(c)(4). Therefore, this court will view all facts in the light most favorable to the plaintiff and it will exercise plenary review of the legal issues underlying the Magistrates's order granting summary judgment. Carnegie Mellon University v. Schwartz, 105 F.3d 863, 865 (3rd Cir. 1997).
Federal Rule of Civil Procedure 56 provides that summary judgment may be granted only if the pleadings, supporting papers, affidavits, and admissions on file, when viewed with all inferences in favor of the nonmoving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). See also Todaro v. Bowman, 872 F.2d 43, 46 (3d Cir. 1989); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.), cert. dism'd, 483 U.S. 1052 (1987). In other words, "summary judgment may be granted if the movant shows that there exists no genuine issue of material fact that would permit a ...