Verrill Farms, LLC v. Farm Family Casualty Insurance Company (Lawyers Weekly No. 11-141-14)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us   13-P-1747                                       Appeals Court   VERRILL FARMS, LLC  vs.  FARM FAMILY CASUALTY INSURANCE COMPANY. No. 13-P-1747. Middlesex.     May 2, 2014. – November 4, 2014.   Present:  Trainor, Fecteau, & Carhart, JJ.     Insurance, Business owner’s policy, Amount of recovery for loss, Construction of policy.  Contract, Insurance.       Civil action commenced in the Superior Court Department on September 17, 2010.   The case was heard by Kimberly S. Budd, J., on motions for summary judgment.     Barry P. Fogel for the plaintiff. William A. Schneider for the defendant.      TRAINOR, J.  The plaintiff, Verrill Farms, LLC (Verrill Farms), owns and operates a retail farm store in Concord.  The defendant, Farm Family Casualty Insurance Company (Farm Family), issued a “Businessowners Advantage Insurance Policy” (policy) effective August 4, 2008, to August 4, 2009, to Verrill Farms.  On September 20, 2008, Verrill Farms suffered a fire loss to its farm store.  Within two days of the fire, Verrill Farms reopened its business at alternate locations at reduced capacity.  Within another month, the business had resumed nearly full capacity in temporary facilities at nearby locations.  After the fire and during the process of restarting the business at the alternate locations, no employees were laid off.  All employees who remained on the payroll were involved in operations that allowed Verrill Farms to maintain its business and generate income. Verrill Farms submitted a claim under the policy for loss of business income, based on its loss of net income (net profit or loss) in the year after the fire, which it believed the policy covered under the loss of business income coverage.  Farm Family paid a sum considerably less than the claim made by Verrill Farms, based on its interpretation of what expenses can be included in a calculation of net profit or loss in order to determine loss of business income under the policy.[1]  Farm Family describes the question as whether it has to “pay” Verrill Farms for the cost of its ordinary payroll expense during the period of restoration, beyond the sixty-day limit contained in the policy.  See note 7, infra.  The Superior Court judge declared that Farm Family did not have to pay the cost of ordinary payroll beyond the sixty-day limit and granted summary judgment in Farm Family’s favor.  This, however, is not what Verrill Farms was seeking to recover and […]

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