CRANMER et al v. HARLEYSVILLE INSURANCE COMPANY et al

Filing 39

OPINION & ORDER granting 23 Motion for Summary Judgment ***CIVIL CASE TERMINATED. Signed by Judge Esther Salas on 9/18/15. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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Plaintiffs,
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v.
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PHILADELPHIA INDEMNITY INSURANCE :
COMPANY & HARLEYSVILLE INSURANCE :
COMPANY,
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Defendants.
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ANNA CRANMER, as an individual,
BRIAN CRANMER, an individual, &
TINY TOTS DAYCARE PRESCHOOL, LLC,
a Limited Liability Company,

Civil Action No. 14-3206

OPINION AND ORDER

SALAS, DISTRICT JUDGE
Before the Court is Defendant Philadelphia Indemnity Insurance Company’s (“PIIC”)
motion for summary judgment pursuant to Federal Rule of Civil Procedure 56(a). (D.E. No. 23).
The Court has considered the parties’ submissions and decides this motion without oral argument
pursuant to Federal Rule of Civil Procedure 78(b). For the reasons below, the Court grants PIIC’s
motion for summary judgment and dismisses the claims against PIIC in their entirety.
I.

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FACTUAL AND PROCEDURAL BACKGROUND 1

The Court takes these facts from the following submissions: D.E. No. 23-1, PIIC’s Statement of Material
Facts (“Def. SMF.”); and D.E. No. 28, Plaintiffs’ Statement of Material Facts (“Pl. SMF”). The Court
further notes that Plaintiffs’ Statement of Material Facts does not comply with Local Civil Rule 56.1(a)
because it does not responsively address the paragraphs set forth in PIIC’s Statement of Material Facts. See
L. Civ. R. 56.1(a) (providing that summary judgment opponents must “furnish, with its opposition papers,
a responsive statement of material facts, addressing each paragraph of the movant’s statement, indicating
agreement or disagreement and, if not agreed, stating each material fact in dispute”). Accordingly, the facts
set forth in PIIC’s Statement are considered undisputed and accepted as true for purposes of this summary
judgment motion. See L. Civ. R. 56.1(a) (“[A]ny material fact not disputed shall be deemed undisputed for
purposes of the summary judgment motion.”); Schwartz v. Hilton Hotels Corp., 639 F. Supp. 2d 467, 469

Plaintiff Tiny Tots Day Care Preschool, LLC (“Tiny Tots”) is a day care business located
in Little Egg Harbor Township, Ocean County, New Jersey. (Def. SMF ¶ 2; Pl. SMF ¶ 5). On or
about October 29, 2012, Tiny Tots suffered windstorm damage caused by Superstorm Sandy.
(Def. SMF ¶ 2; Pl. SMF ¶ 7).
Defendant PIIC is an insurance company that issued Tiny Tots a commercial insurance
policy covering personal property and business interruption (the “Policy”). (Def. SMF ¶ 1; Pl.
SMF ¶¶ 3-4). The Policy was in effect from May 22, 2012 to May 22, 2013. (Def. SMF ¶ 1).
Following the damage, Plaintiff Tiny Tots filed claims against PIIC and Plaintiffs Anna
Cranmer and Brian Cranmer filed claims against Harleysville Insurance Company
(“Harleysville”), a separate insurance company that insured their real property. (Def. SMF ¶ 2;
Pl. SMF ¶ 3; see also D.E. No. 1, Complaint (“Compl.”)). 2
In response to the claims, PIIC retained Kim & Wright, P.C., Certified Public Accountants
(“Kim & Wright”) 3 to determine the value of the insured losses. (Def. SMF ¶ 4). On July 9, 2013,
Kim & Wright valued the insured loss at $28,542.84. (Id.; see also K & W Rpt.).
This action was initially referred to New Jersey’s Sandy Mediation program, but the parties
did not reach a resolution during their July 16, 2013 mediation. (Def. SMF ¶ 4). After the
unsuccessful mediation attempt, Plaintiffs retained their current counsel, The Rain Law Firm, who
advised PIIC of their representation by letter dated July 18, 2013. (Id. ¶ 5).

n.2 (D.N.J. 2009) (“The Court deems undisputed each statement that [the summary judgment opponent]
neither admitted nor denied . . . .”).
2
Plaintiffs Anna and Brian Cranmer “leased the subject property to Tiny Tots for use as a preschool and
day care for children.” (Compl. ¶ 10). Their claims against Harleysville are not at issue in this motion for
summary judgment. However, because the parties’ motions refer to “Plaintiffs” instead of “Plaintiff,” the
Court will do the same.
3
PIIC’s Statement of Material Facts refers to the firm as “Kim & Young,” but the letterhead of the firm’s
report indicates that its correct name is “Kim & Wright.” (Compare Def. SMF ¶ 3, with D.E. No. 23-8,
Kim & Wright Preliminary and Tentative Report (“K & W Rpt.”)).
2

On August 15, 2013, counsel for PIIC sent a letter to Plaintiffs’ counsel advising of Kim
& Wright’s loss evaluation and offering $28,542.84 as a settlement. (Def. SMF ¶ 6; see also D.E.
No. 23-9, 8/15/13 Ltr.). Specifically, the letter states as follows:
[S]hould I not hear from you within ten (10) days of your receipt of
this correspondence, I will instruct Philadelphia Insurance Company
to tender settlement in an amount of $28,542.84 payable to Tiny
Tots Daycare Preschool, LLC and The Rain Law Firm, its attorney.
We will deem the acceptance of this payment as a full and final
settlement of the claim as well as a release by your client of any
further demand for recovery as against Philadelphia Insurance
Companies.
(8/15/13 Ltr.). Plaintiffs’ counsel did not respond to the August 15, 2013 letter. (Def. SMF ¶ 7).
On September 23, 2015, counsel for PIIC sent a settlement draft for $28,542.84 to
Plaintiffs’ counsel, along with an accompanying letter. (Id. ¶ 8; Pl. SMF ¶ 11; see also D.E. No.
23-10, 9/23/13 Ltr.). The letter stated as follows:
Pursuant to my correspondence to you dated August 15, 2013,
enclosed please find Philadelphia Indemnity Insurance Company’s
check, number 1111429396, made payable to Tiny Tots Day Care
Preschool, LLC and The Rain Law Firm in the amount of
$28,542.84 which is being tendered to you in good faith for the
purposes of settlement. Upon your receipt of the enclosed, please
contact my office so that we may discuss this matter and the
positions of the parties moving forward.
(9/23/13 Ltr.). Plaintiffs’ counsel did not respond to the September 23, 2015 letter. (Def. SMF ¶
9; Pl. SMF ¶ 12).
The settlement draft was deposited on October 4, 2013. (Def. SMF ¶ 10). It was endorsed
by Tiny Tots and Gregg J. Anderson on behalf of The Rain Law Firm. (Id.).
On December 9, 2013, counsel for PIIC wrote to Plaintiffs’ counsel requesting a signed
release of claims against PIIC. (Id. ¶ 11). Counsel for PIIC did not receive signed release or any
other response to his request. (Id.).

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On May 19, 2014, Plaintiffs filed the Complaint in this action. (Compl.). In the Complaint,
Tiny Tots alleges breach of contract and breach of the implied covenant of good faith and fair
dealing against PIIC. (Id. at 4-9).
On January 12, 2015, the Court held a telephone conference to address PIIC’s letter
requesting to file an early summary judgment motion. (D.E. Nos. 20-22). The Court granted PIIC
leave to file a summary judgment motion, which it filed on January 26, 2015. (D.E. No. 23-1,
Brief in Support of PIIC’s Motion for Summary Judgment (“Def. Mov. Br.”)). Plaintiffs opposed
the motion on February 27, 2015, (D.E. No. 28, Brief in Opposition to PIIC’s Motion for Summary
Judgment (“Pl. Opp. Br.”)). In addition, with the Court’s permission, Plaintiffs filed a certification
in opposition to PIIC’s motion on March 20, 2015. (D.E. No. 35-1, Certification of Matthew
Kotzen, Esq. (“Kotzen Cert.”)). PIIC replied via letter brief on March 23, 2015. (D.E. No. 35).
The motion is now ripe for resolution.
II.

LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 56(a), a “court shall grant summary judgment

if the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In determining whether a genuine
issue of material fact exists, a court must consider all facts and their reasonable inferences in the
light most favorable to the nonmoving party. See Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d
Cir. 1995). The role of the court is not to “weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986).
A factual dispute is genuine if a reasonable jury could find in favor of the nonmoving party
and it is material only if it bears on an essential element of the plaintiff’s claim. Fakete v. Aetna,

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Inc., 308 F.3d 335, 337 (3d Cir. 2002). When deciding a summary judgment motion, a court must
view the record and draw all inferences in a light most favorable to the opposing party. Knopick
v. Connelly, 639 F.3d 600, 606 (3d Cir. 2011).
III.

DISCUSSION
PIIC argues that the doctrine of Accord and Satisfaction bars Plaintiffs’ claims against it.

(Def. Mov. Br. at 4). “An accord and satisfaction is an agreement which, upon its execution,
completely terminates a party’s existing rights and constitutes a defense to any action to enforce
pre-existing claims.

An accord is an agreement whereby one party agrees to make some

performance in exchange for extinguishment of a debt or other obligation; execution of an accord
constitutes a satisfaction and extinguishes the debt.” Nevets C.M., Inc. v. Nissho Iwai Am. Corp.,
726 F. Supp. 525, 536 (D.N.J. 1989) (internal citations omitted).
In New Jersey, an accord and satisfaction requires three elements: “(a) a bona fide dispute
as to the amount owed; (b) a clear manifestation of intent by the debtor to the creditor that payment
is in satisfaction of the disputed amount; and (c) acceptance of satisfaction by the creditor.” Id.
(citing Loizeaux Builders Supply Co. v. Donald B. Ludwig Co., 366 A.2d 721, 726 (N.J. Super. Ct.
App. Div. 1976)).
First, the Court considers whether there is a bona fide dispute as to the amount owed. See
id. The parties do not appear to dispute this element. PIIC asserts that a bona fide dispute exists.
(Def. Mov. Br. at 9). Plaintiffs’ brief does not directly address whether a bona fide dispute exists,
but it asserts that PIIC’s obligation is worth “nearly one million dollars.” This indicates a bona
fide dispute with PIIC, who valued the claim at $28,582.84. (See Pl. Opp. Br. at 6). Accordingly,
the Court determines that there was a bona fide dispute regarding the amount owed and therefore
the first element of an accord and satisfaction is met.

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Second, the Court considers whether there was a clear manifestation by PIIC to make a
payment in satisfaction of the dispute. See Loizeaux, 366 A.2d at 726. New Jersey courts have
held that a “check and [Offer Letter] can, and indeed must, be read together” when determining
whether there is a manifestation of intent to settle. See Perotta v. LG Elecs. USA, Inc., No. 12246, 2013 WL 4446975, at *5 (D.N.J. Aug. 15, 2013) (quoting A.G. King Tree Surgeon v. Deeb,
356 A.2d 87, 89 (N.J. Super. Ct. App. Div. 1976)); see also Sculthorpe v. N.Y. Life Ins. Co., No.
90-1474, 1991 WL 143454, at *3 (D.N.J. July 16, 1991). “The requisite manifestation of intent
‘may be expressed in the check itself, or in the letter or account, or receipt accompanying the
remittance, or even orally in conversation.’” Bayside Chrysler Plymouth Jeep Eagle, Inc. v. Ma,
No. DC-9699-02, 2006 WL 1449783, at *7 (N.J. Super. Ct. App. Div. May 26, 2006).
Accordingly, “references on the check ‘to the specific claims being paid’ and ‘language
constituting a release’ carry significant probative force when determining whether the debtor
clearly intended to satisfy the disputed amount.” Id.
Here, the Court determines that there was a clear manifestation of intent by PIIC to pay
$28,542.84 in satisfaction of the dispute. Plaintiffs argue that there was no clear manifestation of
intent because “[t]he haphazard action of writing the word ‘final’ on a check cannot be interpreted
as acceptance of settlement” given that “[m]ost first party insurance checks contain the word ‘final’
on them.” (Pl. Opp. Br. at 6). But this argument focuses on the check only, and ignores the fact
that PIIC clearly stated its intent in its letters dated August 15, 2013 and September 23, 2013. In
its August 15, 2013 letter, counsel for PIIC stated that it will “tender settlement in an amount of
$28,542.84” and that it will “deem the acceptance of this payment as a full and final settlement of
the claim as well as a release by your client of any further demand for recovery as against
Philadelphia Insurance Companies.” (Def. SMF ¶ 6; see also 8/15/13 Ltr.). Similarly, in its

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September 23, 2013 letter, counsel for PIIC stated “[p]ursuant to my correspondence to you dated
August 15, 2013,” a check “is being tendered to you in good faith for the purposes of settlement.”
(Def. SMF ¶ 7; 9/23/13 Ltr.). The language in these letters is sufficiently clear to establish a
manifestation of intent under the law. See Bayside Chrysler, 2006 WL 1449783, at *7; see also
A.G. King, 356 A.2d at 88 (holding that a “notation . . . to the effect that this $100 was in full and
final settlement of all claims” was sufficient to manifest intent). The fact that check accompanying
the September 23, 2013 letter was labeled “FINAL” lends further support to this conclusion. (See
Def. SMF ¶ 12). Reading the check and letters together, as the Court is required to do, there is no
doubt that PIIC manifested its intent to make a payment in satisfaction of the dispute.
Third, the Court considers whether Plaintiffs accepted the satisfaction offered by PIIC. See
Loizeaux, 366 A.2d at 726. “In New Jersey, the ‘rule has been that when a check is tendered as
payment for an unliquidated claim on the condition that it be accepted in full payment, the creditor
is deemed to have accepted this condition by depositing the check for collection not withstanding
any obliteration or alteration.’” Ameritemps, Inc. v. Hainesport Indus. R.R., LLC, No. DC-01078310, 2014 WL 684583, at *4 (N.J. Super. Ct. App. Div. Feb. 24, 2014) (internal citation omitted);
see also Perotta, 2013 WL 4446975, at *5 (“Plaintiffs do not contest that they received, endorsed,
and cashed each of the four checks they have received to date.”). Moreover, if a “check was
unacceptable as final settlement, [a Plaintiff’s] remedy [is] to return the check . . . and sue for the
full amount claimed due.” Perotta, 2013 WL 4446975, at *5 (internal citation omitted); see also
Bayside Chrysler, 2006 WL 1449783, at *8 (“Even if the creditor protests, there is acceptance the
moment the check cashing occurs. In other words, when a ‘check bears a notation indicating that
it is being tendered in full satisfaction of the disputed debt, we impute to the creditor an intent to
be bound by the amount of the check if the creditor deposits the check for collection’”) (internal

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citation omitted) (quoting Zeller v. Markson Rosenthal & Co., 691 A.2d 414, 415 (N.J. Super. Ct.
App. Div. 1997)).
Plaintiffs argue that PIIC cannot establish its acceptance because there was “no meeting of
the minds evidencing final settlement.” (Pl. Opp. Br. at 6). Plaintiffs rely on the fact of
“conversations between plaintiffs’ counsel, Matthew Kotzen, subsequent to tendering of a payment
in September 2013, wherein counsel encouraged Philadelphia to pay toward the overall claim, but
there was no acceptance of the sum as a final settlement.” (Id.). Plaintiffs further argue that,
“[i]ndeed, no settlement agreement was made between the parties, no consideration was provided,
and no release was executed by the insured/plaintiffs.” (Id.).
The Court disagrees. There is no dispute that the check sent by PIIC’s counsel was
deposited on October 4, 2013. (Def. SMF ¶ 10). In addition, the Court has already determined
that PIIC clearly indicated that the check was being tendered in full satisfaction of a disputed debt.
Accordingly, by depositing the check, Plaintiffs accepted the satisfaction. See Perotta, 2013 WL
4446975, at *5; Bayside Chrysler, 2006 WL 1449783, at *8.

Plaintiffs’ argument that there was

“no meeting of the minds” is without merit. (See Pl. Opp. Br. at 6). 4 Specifically, it ignores the
clear law in this state that “when ‘a check bears a notation indicating that it is being tendered in
full satisfaction of the disputed debt, we impute to the creditor an intent to be bound by the amount
of the check if the creditor deposits the check for collection.’” Bayside Chrysler, 2006 WL

4

Plaintiffs specifically argue that there were “conversations between plaintiffs’ counsel, Matthew Kotzen,
subsequent to the tendering of a payment in September of 2013, wherein counsel encouraged Philadelphia
to pay toward the overall claim, but there was no acceptance of the sum as a final settlement.” (Pl. Opp.
Br. at 6). Kotzen’s certification contains similar facts. (Kotzen Cert. ¶ 8). The Court notes that these facts
contradict facts that Plaintiffs did not dispute in PIIC’s Statement of Material Facts, including the fact that
Plaintiffs’ counsel did not contact PIIC following either the August 15, 2013 or September 23, 2015 letters.
(See Def. SMF ¶¶ 7, 9). Nevertheless, any dispute regarding these facts is immaterial because acceptance
occurs when a creditor deposits a check, regardless of whether it was done “in protest.” See Bayside
Chrysler, 2006 WL 1449783, at *8 (citing Zeller, 691 A.2d at 415).
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1449783, at *8 (citing Zeller, 691 A.2d at 415). Despite Plaintiffs’ arguments otherwise, the law
requires the Court to impute agreement to Plaintiffs because they deposited the check. 5 Finally,
the Court notes that Plaintiffs did not dispute PIIC’s statement that Plaintiffs did not respond to
either the August 15, 2013 or September 23, 2013 letters, which further supports a determination
that Plaintiffs accepted the satisfaction. (See Def. SMF ¶¶ 7, 9).
Plaintiffs raise several additional arguments in opposition to PIIC’s motions, but all are
without merit. First, Plaintiffs point out that “[c]ritical in the analysis is that with Accord and
Satisfaction, there is a requirement that consideration must be given as to the partial payment of
the original debt.” 6 (Pl. Opp. Br. at 6). Plaintiffs provide no further argument on this point, nor
do they explain why this requirement is not met. Plaintiffs are correct that an accord and
satisfaction requires consideration. Ameritemps, 2014 WL 684583, at *4 (“Additionally, a valid
accord and satisfaction requires consideration, which means ‘[t]here must be some advantage, or
presumed or assumed advantage, accruing to the party who yields his claim, or some detriment to
the other party.’” (quoting Decker, 88 N.J. at 632)). Here, there was consideration between the
parties because Plaintiffs received a sum of money and PIIC received a release of claims.
Accordingly, the consideration requirement does not bar a determination that accord and
satisfaction occurred.
Next, Plaintiffs argue that summary judgment should be denied as premature because there
is outstanding discovery. (Pl. Opp. Br. at 7). First, Plaintiffs argue that the Kim & Wright report

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For this reason, Plaintiffs’ argument that they did not sign a release of claims is also without merit. The
acceptance occurred upon depositing a check that was clearly offered as a settlement. See Bayside Chrysler,
2006 WL 1449783, at *8 (citing Zeller, 691 A.2d at 415). Moreover, Plaintiffs cite no authority to support
their argument that an accord and satisfaction cannot be valid without a release.
6
In support of this proposition, Plaintiffs cite Decor v. George W. Smith and Company, 88 N.J. 630 (1960).
The Court could not identify any such case, but did identify Decker v. George W. Smith & Co., 88 N.J. 630
(1916), which appears to be the case on which Plaintiffs intend to rely.
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“was provided to the defendants on January 15, 2015, although the report was clearly dated nearly
18 months before hand.” (Id.). However, Plaintiffs fail to explain why the purported delay
supports their argument that summary judgment is premature. “Second, and more significantly,”
Plaintiff argues that PIIC “has referenced in its brief, numerous discussions between the claims
adjuster and counsel regarding claims.” (Id.). Plaintiffs argue that this “information in the claim
files would be critical in any type of analysis with regard to the settlement of the claim.” (Id.).
Despite these arguments, Plaintiffs have not raised any genuine issue of material fact in dispute,
nor have they explained how any additional discovery could reveal any genuine issue of material
fact. Moreover, as Plaintiffs admit, the additional discovery they seek includes “an ongoing
discussion between defendant and counsel” which may be undiscoverable and protected by
attorney client privilege. (Id.). In sum, the Court determines that summary judgment is not
premature.
IV.

CONCLUSION
For the foregoing reasons, PIIC’s motion for summary judgment is granted in its entirety.
Accordingly, it is on this 18th day of September 2015 hereby
ORDERED that Defendant PIIC’s motion for summary judgment, (D.E. No. 23), is

granted; and it is further
ORDERED that Plaintiffs’ claims against PIIC, Counts II and IV of the Complaint, are
dismissed in their entirety.
SO ORDERED.

/s Esther Salas
Esther Salas, U.S.D.J.

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