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Granite Penn Square, LLC v. United States Fire Insurance Co.

July 31, 2008

GRANITE PENN SQUARE, LLC, A LIMITED LIABILITY CORPORATION OF THE STATE OF DELAWARE, PLAINTIFF-APPELLANT,
v.
UNITED STATES FIRE INSURANCE COMPANY, A CORPORATION OF THE STATE OF NEW YORK, DEFENDANT-RESPONDENT, AND RC DOLNER, A LIMITED LIABILITY CORPORATION OF THE STATE OF NEW YORK, DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Morris County, No. L-1880-03.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 30, 2008

Before Judges Wefing, Parker and Koblitz.

Plaintiff Granite Penn Square, LLC ("Granite Penn") appeals from an order entered by the trial court in favor of defendant United States Fire Insurance Company ("United States Fire"). After reviewing the record in light of the contentions advanced on appeal, we affirm.

Granite Penn is the owner of a twenty-five story building located on Market Street in Philadelphia which it proposed to renovate and convert to a Residence Inn operated through Marriott. It retained RC Dolner to serve as the general contractor for the project. It also obtained a builders risk insurance policy issued by United States Fire. The policy contained an Extra Expenses and Rental Income Extension Endorsement, referred to by the parties as an "ERIE" endorsement. The endorsement had a coverage limit of one million dollars for extra expenses, and five million, one hundred thousand dollars for rental income.

The endorsement identified the extra expenses as construction loan interest, real estate and property taxes, architect, engineering and consultant fees, legal and accounting fees, advertising and promotional expenses and premiums for the builders' risk coverage form. The endorsement defined its coverage for such extra expenses in the following manner:

We will pay such necessary extra expenses you incur as the result of the project being delayed beyond the "scheduled date of completion." The delay must be directly caused by a Covered Cause of Loss under the Builders' Risk Coverage Form. Coverage is for those extra expenses incurred:

(1) During the period of time between the "scheduled date of completion" and the actual date the project is completed with reasonable speed and similar quality; and

(2) That are over and above what would have been incurred had there been no "loss."

The endorsement contained a similar definition of coverage for loss of rental income:

When a Limit of Insurance is shown above for "rental income," we will pay the actual loss of "rental income" sustained by you as the result of the project being delayed beyond the "scheduled date of completion." The delay must be directly caused by a Covered Cause of Loss under the Builders' Risk Coverage Form.

Coverage is for your actual loss of "rental income" incurred during the period of time between the "scheduled date of completion" and the actual date the project is completed with reasonable speed and similar quality. If you decide not to rebuild or repair the Covered Property, we will not pay you for loss of "rental income."

Demolition and abatement work commenced in May or June 2000; final completion was expected by September 1, 2001. That goal, however, was not attained. In fact, a temporary certificate of occupancy was not issued until July 2002, and the final ...


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