# DUBOIS COUNTRY CLUB, LTD v. DEPOSITORS INSURANCE COMPANY

> District Court, W.D. Pennsylvania · October 10, 2023

URL: https://www.frixlaw.com/law-library/cases/10668000

## Case

- **Court:** District Court, W.D. Pennsylvania
- **Decided:** October 10, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10668000

## How later opinions describe it (automated extraction)

- explaining that the “objection that a federal court lacks subject-matter jurisdiction ... may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment. Rule 12(h)(3
- explaining that a limited liability company is a citizen of all the states of its members
- noting that the “citizenship of a corporation is both its state of incorporation and its principal place of business”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
DUBOIS COUNTRY CLUB, LTD and ) Case No. 3:19-cv-190
JUNIATA LAKE PROPERTIES, LLC, )
)
Plaintiffs, ) JUDGE KIM R. GIBSON
)
v. )
)
DEPOSITORS INSURANCE COMPANY, )
ALLIED PROPERTY & CASUALTY )
INSURANCE COMPANY, and )
NATIONWIDE MUTUAL INSURANCE )
COMPANY & AFFILIATED COMPANIES, _ )
)
Defendants. )

MEMORANDUM OPINION
I. Introduction
This matter comes before the Court following a bench trial held from October 24, 2022,
until October 26, 2022. (ECF Nos. 86, 87, 88). That trial centered on one issue: whether the
Defendants, Depositors Insurance Company (“Depositors”), Allied Property and Casualty
Insurance Company (“Allied”), and Nationwide Mutual Insurance Company and Affiliated
Companies (“Nationwide”)! are liable to the Plaintiffs Dubois Country Club, LTD (the “Country
Club”) and Juniata Lake Properties, LLC (“Juniata”) (collectively, the “Plaintiffs”) for Breach of
Contract. More specifically, the issue before the Court is whether the Defendants failed to make

1 The Plaintiffs’ Complaint indicates that Nationwide Mutual Insurance Company and Affiliated
Companies is a single entity. (See ECF No. 1-2 at { 7) (stating “[t]hat NATIONWIDE MUTUAL
INSURANCE COMPANY and all of its affiliated companies is an insurance company ...”) (emphasis
added).
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sufficient payments under an insurance policy that covered various types of property that were
owned by the Plaintiffs and that were destroyed or damaged in a fire.
The parties filed their Proposed Findings of Fact and Conclusions of Law and briefs in
support on January 18, 2023, (ECF Nos. 96-98), and they filed additional briefing thereafter.
(ECF Nos. 103, 104, 107, 109). The matter is now ripe for disposition. For the reasons explained
below, the Court denies the Plaintiffs’ request for relief and enters judgment in favor of the.
Defendants.
Il. Jurisdiction and Venue
The Court has subject-matter jurisdiction over this dispute under 28 U.S.C. Section 1332.
On the one hand, Depositors is a citizen of Iowa, Allied is a citizen of Iowa, and Nationwide is a
citizen of Ohio. (ECF No. 1 at { 5). See GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888 F.3d 29,
34 (3d Cir. 2018) (noting that the “citizenship of a corporation is both its state of incorporation
and its principal place of business”). On the other hand, the Country Club is a citizen of
Pennsylvania, and the Court lacks any information indicating that Juniata is a citizen of either
Iowa or Ohio. (ECF No. 1-2 at I] 1-2). See GBForefront, L.P., 888 F.3d at 34 (explaining that a
limited liability company is a citizen of all the states of its members).2 Therefore, there is

2 As the Court noted in its summary judgment opinion, (ECF No. 50 at 2), it may raise the issue of subject-
matter jurisdiction on its own initiative at any stage in the litigation. Arbaugh v. Y&H Corp., 546 U.S. 500,
506 (2006) (explaining that the “objection that a federal court lacks subject-matter jurisdiction ... may be
raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the
entry of judgment. Rule 12(h)(3) instructs: ‘Whenever it appears by suggestion of the parties or otherwise
that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.’”). Here, the
parties have not provided the Court with any indication that any member of Juniata is a citizen of Iowa or
Ohio, and the Court is not aware of any information that would indicate the same. Therefore, the Court
continues to proceed with the understanding that Juniata, which is based in Pennsylvania, (ECF No. 1-2
at {| 2), is neither a citizen of Iowa nor Ohio.
>.

complete diversity among the parties. Additionally, the amount in controversy exceeds $75,000.
(ECF No. 1-2 at 30).
Venue is proper under 28 U.S.C. Section 1391(b)(2) because a substantial part of the
events giving rise to the Plaintiffs’ claims occurred in the Western District of Pennsylvania.
Procedural Background
On October 15, 2019, the Plaintiffs filed a Complaint against the Defendants in the Court
of Common Pleas of Clearfield County, Pennsylvania. (ECF No. 1-2 at 1, 14). At Count One
(“Count I’), the Plaintiffs brought a claim for Breach of Contract. (Id. at 11-12). At Count Two
(“Count II”), the Plaintiffs brought a claim for Bad Faith. (Id. at 12-13).
On November 5, 2019, the Defendants filed a Notice of Removal, indicating that they
were removing the case to this Court pursuant to 28 U.S.C. Sections 1441 and 1446. (ECF No. 1
at 2).
On February 5, 2021, the Defendants filed a Motion for Partial Summary Judgment,
requesting that the Court dismiss the Plaintiffs’ Bad Faith claims at Count I. (ECF No. 45). On
October 29, 2021, the Court issued a Memorandum Opinion and Order granting the
Defendants’ Motion for Partial Summary Judgment and dismissing the Plaintiffs’ Bad Faith
Claims at Count IT with prejudice. (ECF No. 50 at 21).
Accordingly, it was the Plaintiffs’ Breach of Contract claim at Count I that went to trial
in October 2022, and it is that claim that the Court now resolves.
IV. Legal Standard
Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the Court may enter
judgment following a trial without a jury. See FED. R. Civ. P. 52(a). In making a decision

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following a bench trial, “the court must find the facts specially and state its conclusions of law
separately.” Id.; see also In re Frescati Shipping Co., Ltd., 718 F.3d 184, 196 (3d Cir. 2013).
Accordingly, the Court will discuss its factual findings and then proceed to its conclusions of
law.
V. Factual Background
The factual background of the case with regard to the remaining issue in this case,
namely whether the Defendants’ are liable to the Plaintiffs for Breach of Contract, is the
following.
A. Background Regarding the Country Club and the Fire That Occurred There on
February 24, 2014
The Country Club‘ consists of two buildings that are relevant to the Court’s verdict—a
clubhouse and a pro shop. (ECF No. 91 at 24:10-25). Further, the Country Club includes a golf
course consisting of twenty greens. (Id. at 54:24—25).
On February 24, 2014, there was a fire at the Country Club. (ECF No. 84 at 1; ECF No. 91
at 20:1-6). John “Herm” Suplizio (“Mr. Suplizio”) was both the City Manager of the City of
Dubois and a firefighter at the time of the fire. (ECF No. 91 at 18-20). In describing his
3 The Court notes that: (1) Depositors is a subsidiary of Nationwide and Allied and (2) it was Depositors
that issued the insurance policy in this case. (ECF No. 93 at 168:19-169:3). In other words, the Plaintiffs’
Breach of Contract claim is primarily centered on the actions (or inaction) of Depositors—no other named
Defendant played any significant role in the factual events that form the basis of the Plaintiffs’ claim.
Therefore, the Court will use “Depositors” and the “Defendant” (or the “Defendants”) as interchangeable
terms throughout this Memorandum Opinion. In doing so, the Court stresses that it finds that the
Plaintiffs’ have failed to prove their Breach of Contract claim against any of the Defendants in this case.
4 The Court notes that the Country Club, a Plaintiff in this matter, is a corporation. (ECF No. 1-2 at □ 1).
However, the parties agree that the Country Club operates a physical Country Club at 10 Lakeside
Avenue, DuBois, Pennsylvania. (ECF No. 1-2 at J 4; ECF No. 96 at 1; ECF No. 98 at 1). Therefore,
throughout this Memorandum Opinion, the Court uses the term “Country Club” to refer to both the
Country Club that is a Plaintiff in this matter and the physical buildings and land at 10 Lakeside Avenue,
DuBois, Pennsylvania.
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recollection of what occurred during the night of February 24, 2014, Mr. Suplizio testified to the
following:
So that night I was on a water break for the city, so I happened to be one of the
first ones to arrive at the fire. And once we got there, you could tell that [the
Country Club] was fully engulfed. We tried to make an interior attack, but at that
point in time it was just too ... engulfed. So ... we backed out and went to an
exterior operation|.]
(Id. at 20:8-13). Mr. Suplizio stated that the fire started in the clubhouse and moved into the pro
shop. (Id. at 24:21-25). All told, the firemen fought the fire for approximately three-and-a-half
hours, using approximately 152,000 gallons of water in an effort to stop or control the fire. (Id. at
23:8-24:9),
On March 25, 2014, Mr. Suplizio, in his capacity as City Manager, wrote a letter to Ron
Lykens (“Mr. Lykens”), who was the president of the Country Club at that time. (Id. at 25:21—
26:6; Plaintiffs’ Exhibit 4). In that letter, Mr. Suplizio wrote the following:
Let me first start by saying, how sorry I am for your fire loss on Monday,
February 24, 2014. I have always considered the ... Country Club a very
significant part of the City of DuBois not to mention the entire community.
That being said, we consider the remaining structure to be in very poor condition
and a hazard to all the residents in this area. We are asking you to demolition the
remaining structure and have all the debris removed immediately.
(Plaintiffs’ Exhibit 4; ECF No. 89 at 1) (emphasis in original). When asked at trial whether the
directive that he gave to the Country Club was “specifically limited to removing everything
above ground|[,]” Mr. Suplizio responded “[t]hat’s correct.” (ECF No. 91 at 33:16—34:6).
Zachary Lawhead (“Mr. Lawhead”), the code and zoning enforcement officer for the
City of DuBois as of the date of the fire at the Country Club, also testified at trial. (Id. at 36:25—-
37:6). Mr. Lawhead stated that, at the time of the fire in 2014, there were no sprinklers in the

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clubhouse at the Country Club, and he did not believe that there was an elevator from the
basement of the clubhouse to the first floor of the clubhouse. (Id. at 44:14—45:2).
With respect to the sprinkler systems, Mr. Lawhead explained that when the Country
Club was renovated in 2003 or 2004, the International Building Code did not require buildings
to have a sprinkler system unless the occupant load was at least 300 people. (Id. at 43:1-10;
Plaintiffs’ Exhibit 15; ECF No. 89 at 1). Therefore, Mr. Lawhead indicated that, because the
occupant load of the Country Club was 250 people at the time of the renovation, the
International Building Code did not mandate that the clubhouse contain a sprinkler system at
that point. (ECF No. 91 at 43:7—-10; Plaintiffs’ Exhibit 15). However, according to Mr. Lawhead,
in 2009, the International Building Code changed, and buildings with an occupancy load greater
than 100 people had to have sprinkler systems. (ECF No. 91 at 43:10-12; Plaintiffs’ Exhibit 15).
Finally, there was testimony at trial indicating that, given its condition prior to the fire,
the basement of the clubhouse was not handicapped accessible and therefore was not compliant
with the Americans with Disabilities Act (the “ADA”). (See ECF No. 92 at 71:20-72:4; ECF No.
98 at J 10).
Following the fire, the Country Club built the clubhouse in a new location on the
property, resulting in: (1) a clubhouse with more usable space than the pre-fire clubhouse and
(2) a clubhouse that is completely handicapped accessible. (See ECF No. 93 at 21:21—-22:16).
B. The Insurance Policy
Dale W. Sobol (“Mr. Sobol”), a commercial insurance producer for Evergreen Insurance,
wrote the Insurance Policy (the “Policy”) that covered the properties in question in this action.
(ECF No. 91 at 72:2-73:2). The Policy was in effect from December 23, 2013, until December 23,

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2014, and therefore was effective at the time of the fire at the Country Club. (ECF No. 89 at 1;
Plaintiffs’ Exhibit 16). When asked to describe the Policy, Mr. Sobol testified that it was a
“varied commercial package policy, actually what Nationwide called it—or [what] Depositors
called it was a golf course package. And they changed some of the coverages to include things
like tees and greens, which you wouldn’t normally see in a package.” (ECF No. 91 at 72:13-18).
There are four portions of the Policy that are especially relevant to the Court’s verdict in
this case: (1) provisions pertaining to coverage on the buildings at the Country Club, (2)
provisions pertaining to coverage for Business Income Loss and Extra Expense, (3) provisions
pertaining to coverage for Business Personal Property, and (4) provisions pertaining to
Replacement Cost. The Court now outlines those four portions of the Policy in turn.
1. Coverage on the Buildings at the Country Club
The Policy covers both the clubhouse and the pro shop at the Country Club. (Plaintiffs’
Exhibit 16). In the portion of the Policy entitled “Building and Personal Property Coverage
Form[,]” there is a provision entitled “Loss Payment[.]” (Plaintiffs’ Exhibit 16; “Building and
Personal Property Coverage Form];]” page 10 of 15). In relevant part, that provision provides as
follows:
a. In the event of loss or damage covered by this Coverage Form, at our option,
we will either
(1) Pay the value of lost or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property,
subject to b. below;
(3) Take all or any part of the property at an agreed or appraised value, or
(4) Repair, rebuild or replace the property with other property of like
kind and quality, subject to b. below

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We will determine the value of lost or damaged property, or the cost of its repair
or replacement in accordance with the applicable terms of the Valuation
Condition in this Coverage Form or any applicable provision which amends or
supersedes the valuation condition.
b. The cost to repair, rebuild or replace does not include the increased cost
attributable to enforcement of any ordinance or law regulating the construction,
use or repair of any property.
(Id.).
Further, with respect to the coverage on the buildings at the Country Club, both parties
have referred the Court to the provisions in the Policy governing Replacement Cost. (ECF No.
96 at 4; ECF No. 98 at 28-29). Critically, the Policy indicates that the Plaintiffs paid for
Replacement Cost coverage. (Plaintiffs’ Exhibit 16).
The Policy states that “Replacement Cost (without deduction for appreciation) replaces
Actual Cash Value in the Valuation Loss Condition of this Coverage Form[.]” (Plaintiffs’ Exhibit
16; “Building and Personal Property Coverage Form[;]” page 14 of 15). The Policy also provides
certain limitations on Replacement Cost, including the following:
e. We will not pay more for loss or damage on a replacement cost basis than the
least of (1), (2), or (3), subject to f. below
(1) The Limit of Insurance applicable to the lost or damaged property;
(2) The cost to replace the lost or damaged property with other property
(a) Of comparable material and quality and
(b) Used for the same purpose, or
(3) The amount actually spent that is necessary to repair or replace the
lost or damaged property.
If a building is built at a new premises, the cost described in e.(2) above is limited
to the cost which would have been incurred if the building had been rebuilt at
the original premises

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f. The cost of repair or replacement does not include the increased cost
attributable to enforcement of any ordinance or law regulating the construction,
use or repair of any property
(Id. at 14-15) (emphasis in original).
In short, under the Policy, when paying out Replacement Cost for loss or damages to the
buildings at the Country Club, Depositors was permitted to pay the least of the following: (1)
the limit of insurance applicable to the lost or damaged property, (2) the cost to replace the lost

or damaged property with other property of comparable material and quality and used for the

same purpose (and, in the event of a building being built at a new premises, the cost which
would have been incurred if the building had been rebuilt at the original premises), or (3) the
amount actually spent that is necessary to repair or replace the lost or damaged property. (Id.).
The Policy also excludes the “increased cost attributable to enforcement of any ordinance or law
regulating the construction, use or repair of any property” from the scope of monies to be paid
out under the Replacement Cost provisions. (Id.).
However, another portion of the Policy provides a measure of coverage for increased
costs of construction due to an ordinance or law. Indeed, the “Increased Cost of Construction”
provision in the Policy applies only to “buildings to which the Replacement Cost Optional
Coverage applies” and provides that in the “event of damage by a Covered Cause of Loss to a
building that is Covered Property[,] we will pay the increased costs incurred to comply with
enforcement of an ordinance or law in the course of repair, rebuilding or replacement of
damaged parts of that property,” subject to certain limitations. (Id. at 4). One of those limitations

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indicates that if a damaged building is “covered under a blanket Limit’ of insurance which
applies to more than one building or item of property, then the most we will pay under this
Additional Coverage, for that damaged building is the lesser of $10,000 or 5 times the value of
the damaged building ...” (Id. at 5).
Finally, a later provision of the Policy raises the cap on Increased Cost of Construction. □
Specifically, the “Golf Course Property Endorsement” portion of the Policy “raised the
[I]ncreased [C]ost of Construction coverage from $10,000 to $25,000.” (ECF No. 96 at 5); (see also
ECF No. 98 at 22). Indeed, that provision provides that the aforementioned “$10,000 amount or
5%” is “replaced by $25,000 or 10%.” (Plaintiffs’ Exhibit 16; “Golf Course Property
Endorsement[;]” page 1 of 13).
In short, as Mr. Sobol testified, the Policy limited what Depositors would pay for
Increased Costs of Construction to $25,000. (ECF No. 91 at 88:15—18; ECF No. 98 at 7).
2. Business Income Loss and Extra Expense
The Court now turns its attention to two additional provisions of the Policy that are
relevant to the Plaintiffs’ claims in this case.
The first is the “Business Income with Ordinary Payroll Limitation” provision. In
relevant part, that provision provides as follows:
1) We will pay for the actual loss of Business Income, including “rental value”,
you sustain due to the necessary “suspension” of your “operations” during the
“period of restoration”. The “suspension” must be caused by direct physical loss
or damage to property at premises which are described in the Declarations ...
2) We will only pay for loss of Business Income that you sustain during the
“period of restoration” and that occurs within 12 consecutive months after the
5 Mr. Sobol testified that the clubhouse and the pro shop were covered by blanketed coverage. (ECF No.
91 at 73:3-18).
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date of direct physical loss or damage. We will only pay for “ordinary Payroll
expenses” for 60 days following the date of direct physical loss or damage ...
4) Business income means the
a) Net Income (New Profit or Loss before income taxes) that would have
been earned or incurred, but not including any Net Income that would
likely have been earned as a result of an increase in the volume of
business due to favorable business conditions caused by the impact of the
Covered Cause of Loss on customers or on other businesses; and
b) Continuing normal operating expenses incurred, including payroll
(Plaintiffs’ Exhibit 16; “Golf Course Property Endorsement[;]” page 3 of 13).
The second is the “Extra Expense” provision. In relevant part, that portion of the Policy
provides as follows:
1) Extra Expense coverage is provided at the premises described in the
Declarations
2) We will pay the actual and necessary Extra Expense (other than the expense to
repair or replace property) to:
a) Avoid or minimize the “suspension” of business and to continue
“operations” at the described premises or at replacement premises or
temporary locations, including relocation expenses and costs to equip and
operate the replacement location or temporary location
b) Minimize the “suspension” of business if you cannot continue
“operations”
We will also pay Extra Expenses to repair or replace property to the extent it
reduces the amount of loss that otherwise would have been payable under this
Additional Coverage
3) We will only pay for Extra Expense that occurs within 12 consecutive months
after the date of direct physical loss or damage ...
5) Extra Expense means necessary expenses you incur during the “period of
restoration” that you would not have incurred if there had been no direct
physical loss or damage to property caused by or resulting from a Covered
Cause of Loss.

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(Id. at 3-4).
3. Business Personal Property
There is one provision in the Policy pertaining to Business Personal Property that is
especially relevant to the Court’s verdict. That provision provides that certain “Business
Personal Property located in or on the building described in the Declarations or in the open (or
in a vehicle) within 100 feet of the described premises” is “Covered Property” under the Policy.
(Plaintiffs’ Exhibit 16; “Building and Personal Property Coverage Form[;]” page 1 of 15)
(emphasis in original).
4, Replacement Cost
Finally, there is one additional portion of the Replacement Cost provision that is
relevant to the Court’s verdict. That provision provides that Replacement Cost basis will not be
paid “[uJntil the lost or damaged property is actually repaired or replaced[.]” (Plaintiffs’ Exhibit
16; “Building and Personal Property Coverage Form[;]” page 14 of 15).
C. The Meeting on February 25, 2014
During trial, several individuals testified regarding a meeting that occurred on February
25, 2014, the day after the fire at the Country Club. That meeting involved: (1) a representative
of the Defendants and (2) the board and mortgage holders of the Country Club. (ECF No. 91 at
51:20-52:2). The meeting on February 25, 2014, the statements made by the representative of the
Defendants during and after that meeting, and the Plaintiffs’ actions following the meeting have
significant bearing on the Plaintiffs’ claims in this case. Accordingly, the Court now turns its
attention to testimony by five individuals regarding the meeting on February 25, 2014, and the
events following it: (1) Don Howard Erickson, IIL (“Mr. Erickson”), (2) Mr. Sobol, (3) Mr.

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Lykens, (4) Attorney Toni M. Cherry (“Attorney Cherry”), and (5) Edward J. Perko, UI (“Mr.
Perko”).
J. Testimony of Mr. Erickson
At the time of the fire, Mr. Erickson was on the board of the Country Club and was the
Chairmen of the Grounds Committee. (ECF No. 91 at 47:9-16). Mr. Erickson testified that he

was at a meeting on February 25, 2014. (Id. at 51:20-22). Present at that meeting were (1) a
representative of the insurance company, Mr. Tuttle, and (2) the board and mortgage holders of
the Country Club. (Id. at 51:20-52:5). During the meeting, Mr. Tuttle handed a check for
$500,000 to Mr. Lykens, who was the president of the board of the Country Club at that time.
(Id. at 51:25-52:9; ECF No. 93 at 6:12-14). Mr. Tuttle also said, “We're here to make you whole.”
(ECF No. 91 at 52:6-9).
When asked whether there was a discussion as to what the $500,000 was to be used for,
Mr. Erickson testified that he did not “think there was any specific designation for the money,
other than they knew that we had to keep the business going, and we were going to have to
clean up[.]” (Id. at 52:10-15).
Finally, Mr. Erickson testified that the Country Club used insurance money to operate
the Country Club during the summer of 2014. (Id. at 61:3-6). However, Mr. Erickson could not

say whether the Country Club used the money for that purpose with the understanding that it
had the authorization from the insurance carrier to do so. (Id. at 61:7-9). Still, the Defendants
did not object to the continued operation of the Country Club. (Id. at 61:10-12).
2. Testimony of Mr. Sobol

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With respect to the $500,000 check, Mr. Sobol testified that he was aware that that check

was “used to operate the [Country C]lub that summer (2014), that season, and also to make
repairs to the pro shop[.]” (ECF No. 91 at 81:18-21). Further, Mr. Sobol stated that he heard Mr.
Tuttle tell the representatives of the Country Club that “there had to be very detailed specific
accounting as to how” the $500,000 check was used. (Id. at 90:22~91:1). However, Mr. Sobol
testified that the detailed accounting that the Plaintiffs were to keep of the $500,000 “wasn’t
specifically limited to the building.” (Id. at 91:9-13). Indeed, Mr. Sobol “did not hear” Mr. Tuttle
tell the representatives of the Country Club that the $500,000 was going to be “reconciled in the
estimate and payments on the structure.” (Id. at 91:14-19).
3. Testimony of Mr. Lykens
With respect to the $500,000 check that Mr. Tuttle gave to the representatives of the
Plaintiffs on February 25, 2014, Mr. Lykens testified that portions of the $500,000 were used to
repair the pro shop. (ECF No. 93 at 11:23-12:13). Mr. Lykens also stated that the Plaintiffs used
“the first $500,000 that was given to [them] by Mr. Tuttle ... to operate the [Country Club] and
maintain the employees as directed.” (Id. at 25:7-10). However, when Mr. Lykens was asked
whether the Plaintiffs used every “dollar of the $500,000 advance payment ... on business

expenses to keep the golf course in operation[,]” he responded that he could not “honestly
answer that ... We had to have used some of that for the building, also.” (Id. at 25:24—26:4) (emphasis
added). Mr. Lykens also stated that he did not “make any moves or decisions without first
consulting Mr. Tuttle[.]” (Id. at 14:25-15:2). Finally, Mr. Lykens testified that he understood that
the $500,000 check that Mr. Tuttle gave to the representatives of the Plaintiffs during the

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meeting on February 25, 2014, “would have to be reconciled ultimately out of the total
insurance claim payments made for the fire[.]” (Id. at 29:23-30:2).6
4, Testimony of Attorney Cherry
Attorney Cherry testified that, as of the date of the fire at the Country Club, she and her
husband were shareholders in Juniata and the mortgage holders for the Country Club. (ECF No.
93 at 43:6—22).
With respect to the meeting on February 25, 2014, and the $500,000 check, Attorney
Cherry was asked the following question: “what was your overall understanding of how the ...
Country Club, its board, and its members were to proceed?” (Id. at 49:10-12). In response,
Attorney Cherry testified that it was not “just the understanding. It was stated: You are to use
this $500,000 to take care of the expenses, return monies that you need to return, that you need

to begin making repairs so that you can set up shop again in the pro shop and otherwise

6 Mr. Lykens had two additional interactions with Mr. Tuttle that are relevant to the Plaintiffs’ claims.
First, Mr. Lykens informed Mr. Tuttle that certain individuals associated with the Country Club were
considering relocating the clubhouse to a different location on the property at 10 Lakeside Avenue. (ECF
No. 93 at 21:1-22:2). According to Mr. Lykens, Mr. Tuttle responded in the following manner: “I don’t
care where you put the building. We’re going to—we’re going to take care of it.” (Id. at 21:14-15).
Second, according to Mr. Lykens, when workers conducted the temporary repair of the pro shop
following the fire, they used the same color of shingles that had previously been on the roof. (Id. at 10:20—
11:16). However, because there were also older shingles on the roof, and because those older shingles had
aged for approximately ten years, the older shingles did not match the newer shingles. (Id. at 11:13-17).
Mr. Lykens testified that he discussed that fact with Mr. Tuttle, and Mr. Tuttle said: “[y]ou need to
replace the—all the shingles; we'll take care of the shingles.” (Id. at 11:18-22). Although Mr. Lykens
appeared to initially indicate that the Defendants did not in fact take care of those shingles, (id. at 11:22),
he also testified that he had no reason to doubt that the Defendants included a payment in their final
building estimate to remove and replace the “entire roof surface area of the pro shop].]” (Id. at 35:15—25).
And indeed, the Defendants included a payment for the roof of the pro shop in their Final Building
Repair Estimate. (Defendants’ Exhibit 19).
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conduct business.” (Id. at 49:13-17). Finally, Attorney Cherry testified that the Country Club did
in fact proceed in that manner. (Id. at 49:18-20).
5. Testimony of Mr. Perko
Mr. Perko explained that, as of the date of the trial in this matter, he was employed by
Nationwide. (ECF No. 93 at 168:15-18). Further, Mr. Perko testified that he was involved, to an
extent, in the surance claims submitted by the Country Club, as well as the claim investigation
and valuation relative to the fire at the Country Club. (Id. at 169:13~-170:5). Finally, Mr. Perko
testified that, as of trial, he was “knowledgeable ... to testify regarding all of the Depositors
repair estimates[.]” (Id. at 170:6-8).
When Mr. Perko was asked to outline his understanding of the phrase “make you
whole” in the context of the insurance business, he responded that he looks at it “as the same
term as indemnification. I think sometimes it’s more of a layperson specific term, but it’s
basically bringing you back to the same condition you would have been [in] should the fire

never have occurred.” (Id. at 195:22-196:2).
Finally, with respect to the $500,000 check, Mr. Perko was asked whether, in Depositors’
“custom and practice in 2014 and 2015, would that advance payment, used however the insured
wants to use it, ... have to be reconciled somewhere in the final claim dates?” (Id. at 204:5-8).
Mr. Perko responded: “absolutely. And the way we issue payment is we would issue it off of
the building coverage because it’s easy to get lost if you apply it to all different coverages.” (Id.
at 204:9-11). Indeed, Mr. Perko averred that the file for the Plaintiffs’ claims indicates that they
were told that the $500,000 would be reconciled against what Depositors would pay for the
rebuilding of the building at 10 Lakeside Avenue. (Id. at 204:25-205:10). However, Mr. Perko

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was not present when that information was purportedly relayed to the Plaintiffs. (Id. at 205:10—
12).
D. Amounts the Defendants Paid to the Plaintiffs Under the Policy
At trial, Mr. Perko testified regarding Defendants’ Exhibit 15, which is a “spreadsheet of
all the payments that had been issued [by Depositors] on the claim and the date that they had
been issued and for which coverages.” (ECF No. 93 at 182:22-183:6).
According to Defendants’ Exhibit 15, Depositors paid a total of $2,396,082.15 to the
Country Club under the Policy. (Defendants’ Exhibit 15; ECF No. 89 at 2). More specifically,
Depositors paid to the Country Club: $1,573,092.72 for the “Building”; $315,638.01 for “Business
Personal Property”; $261,823.00 for “Business Income”; $116,653.63 for “Extra Expense”;
$67,977.83 for “Temporary Repairs”; $31,491.75 for “Debris Removal”; $25,000.00 for “Increased
[C]ost of [C]onstruction”; and $4,405.21 for “Personal Property of [O]thers”. (Id.).
Mr. Perko stated that he had reviewed Defendants’ Exhibit 15 prior to trial, and he
believes that it “accurately reflects the total amount of claim payment dollars paid by
Depositors to the [CJountry [C]lub following the fire[.]” (ECF No. 93 at 183:14-19). Further, with
respect to the various types of claim payments set forth within Defendants’ Exhibit 15, Mr.
Perko testified that they are “accurate in terms of what was actually paid by Depositors” to the
Country Club. (id. at 184:4-10).
For her part, Attorney Cherry, who is counsel for the Plaintiffs in this matter, was asked
at trial whether she has any basis to dispute the notion that the $2,396,082.15 “is the total claim
payments, insurance claim payments, made to the [C]ountry [C]lub by Depositors[.]” (Id. at
80:16-20). In response, Attorney Cherry stated that she does not “dispute that.” (Id. at 80:21).

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At this juncture, the Court will delve into additional information regarding two
categories of claim payments represented on Defendants’ Exhibit 15—the payments for
Business Personal Property and the payments for Business Income.
1. Payments for Business Personal Property
a. Compiling Information for the Business Personal Property Payout
Dr. Paul Joseph Valigorsky, IL, (“Dr. Valigorsky”), a member of the board of the Country
Club, testified at trial. (ECF No. 91 at 94:1-18). Relative to the Business Personal Property
payment, Dr. Valigorsky indicated that certain employees of the Country Club did in fact
compile a list(s) of the business personal property that burned in the fire. (Id. at 123:16~124:4).’
Specifically, Dr. Valigorsky stated that “two Vickies, one was the accountant and one was the
event planner, and another lady who worked in the kitchen” would have been the individuals
who worked to compile the list of business personal property that burned in the fire and then
submitted that list to Depositors. (Id.).
Indeed, Mr. Sobol testified that he instructed the Country Club “that they were required,
in order to secure payment under the [P]olicy, to put together a detailed content list.” (Id. at
85:21-24). Mr. Sobol also stated that he believed he was aware of the fact that “based upon the
content lists that were compiled by representatives of the [C]Jountry [C]lub, that a claim
payment for [B]usiness [P]ersonal [P]roperty was made by Depositors.” (Id. at 86:18-22).

7 This line of questioning noted that it was an allegation that this list(s) was completed and submitted to
Depositors. (ECF No. 91 at 132:16-124:4). However, the Court finds, based on the substance of Dr.
Valigorsky’s testimony and its observations of Dr. Valigorsky as he offered that testimony, that his
testimony indicated that the list was in fact compiled by the above-mentioned employees of the Country
Club and submitted to Depositors.

-18-

Finally, Mr. Perko explained that the $315,638.01 Business Personal Property payment
was based on “the inventory that was submitted, the pricing of that inventory, and as—well, the
CEIPS[.]”* (ECF No. 93 at 201:7-17).
b. Replacement Cost Holdback
One issue that arose at trial pertained to the Replacement Cost holdback for the Business
Personal Property payment. Mr. Perko testified that per Depositors’ own Replacement Cost
Business Personal Property evaluation, the Replacement Cost for the Business Personal
Property destroyed in the fire was $365,660.41. (ECF No. 93 at 205:19-22; Defendants’ Exhibit 14;
ECF No. 89 at 4). However, Mr. Perko also stated that Depositors only paid out $315,638.01 for
Business Personal Property. (ECF No. 93 at 205:23-25; Defendants’ Exhibit 15).
In explaining why Depositors have not paid this approximately $50,000 difference to the
Country Club, Mr. Perko testified that Depositors “paid the actual cash value of the contents
that were lost. Replacement cost is supported by the receipts and the amount of money you
paid. So if all that money isn’t paid to replace the contents, then not all of that money would be
recoverable.” (ECF No. 93 at 206:7-14).
Indeed, Mr. Perko offered the following explanation of the Policy’s Replacement Cost
holdback provision:
So let’s just assume that you have a table that’s lost, one item, just to make it
simple. That table, to purchase it today, may be a thousand dollars. But it’s five
years old. So the value of the table—the actual cash value would be $750.

8 According to Mr. Perko, CEIPS stands for “commercial equipment inventory and pricing specialists[.]”
(ECF No. 93 at 200:12-14). This company would have been brought in to “evaluate, and they would work
with the insured. When there’s no contents left, we rely on the insureds to create their inventory for us;
and then we would work with them to make sure we get as much detail as possible to assume —ensure
that we're pricing it appropriately.” (Id. at 200:14-19).
-19-

If you have a replacement cost policy, once you replace the item and submit a
receipt, and show that you spent at least a thousand dollars, you would get the
250 [dollars] back. If you would spend 900 [dollars], you’d get $150 back.
So the replacement cost holdback would be the difference between the actual
cash value, the used value of the product, and the replacement cost would be
what it would cost on the day of the loss to buy it new.
(Id. at 185:3-19).
Along these lines, Mr. Perko testified regarding certain invoices that Plaintiffs submitted
to Depositors for payments made by Dr. Valigorsky. Specifically, Mr. Perko was asked whether
“every one of the invoices submitted by Dr. Valigorsky that was payable under the [P]olicy was
paid and the replacement cost holdback was released[.]” (Id. at 186:1-3). Mr. Perko responded:
“Yes—especially related to contents. When it came to the building, we did release all the
holdback on the building as well.” (Id. at 186:4-6). Indeed, with respect to the invoices
submitted by Dr. Valigorsky, Mr. Perko stated that, given the documentation that Depositors
have received, there is nothing left to pay under the Policy. (Id. at 186:10-16).? However, there

may be Business Personal Property items for which the Plaintiffs have paid, but for which they
have not submitted receipts to Depositors. (Id.).1°

9 Mr. Perko also testified that, after Attorney Cherry submitted Dr. Valigorsky’s invoices to Depositors,
Depositors responded with three letters requesting additional information from the Country Club. (ECF
No. 93 at 173-81). Mr. Perko further stated that, to his knowledge, Depositors never received a response
from Attorney Cherry or the Country Club in general. (Id.).
10 Relative to the Business Personal Property payment, the Plaintiffs contend that Depositors included
$116,470.64 worth of kitchen equipment that was not permanently installed in the money that Depositors
paid to the Plaintiffs on the “Building” claim. (ECF No. 107 at 3; Defendants’ Exhibit 19; ECF No. 89 at 4).
The Plaintiffs argue that this money is properly categorized as a Business Personal Property payment
rather than a payment on the “Building” claim. (ECF No. 107 at 2). In response, the Defendants generally
assert, among other things, that as “long as the items are listed on the estimates and the [P]olicy limits are
not implicated, the final legal classification of a particular piece of equipment is not a relevant issue.”
(ECF No. 109 at 4).

-20-

2. Payments for Business Income Loss
As the Court previously noted, Depositors contends that it paid $261,823.00 on the
Business Income Loss claim. (Defendants’ Exhibit 15). Attorney Cherry indicated that she does

not dispute that Depositors made that payment on that claim. (ECF No. 93 at 82:11-14).
With that fact established, the Court now outlines the testimony at trial regarding how
Depositors reached the conclusion that it needed to pay the Country Club $261,823.00 for the
Business Income Loss claim.
At trial, Mr. Lykens was asked whether he was “familiar ... with the fact that
submissions were made by the [C]ountry [C]lub to an accounting firm, Meaden & Moore, to

assess the [B]usiness [IJncome [L]oss claim under the [P]olicy[.]” (id. at 33:21—24). In response,
Mr. Lykens stated: “I believe Mark Freemer would have talked to them. That’s the only—I
never—I can’t really say I ever talked to them.” (Id. at 33:25-34:1).
Further, the Defendants offered testimony by Tyler Hawkins (“Mr. Hawkins”) a
Certified Public Account (“CPA”) at Meaden & Moore. (Id. at 96:18-971). After Mr. Hawkins
testified regarding his educational background and experience, the Court ruled that Mr.
Hawkins would be permitted to “offer expert testimony in the field of accounting —CPA and
forensic accounting.” (Id. at 97-100).
Mr. Hawkins stated that his company was asked to perform “a business income
evaluation for the ... Country Club[.]” (See id. at 100:24-101:1). Mr. Hawkins testified that he

Insofar as the Plaintiffs are correct that this $116,470.64 worth of kitchen equipment is properly classified
as money paid out for Business Personal Property rather than the “Building” claim, the Court notes that
that fact would reduce the amount that the Defendants paid the Plaintiffs for the “Building” claim to
$1,456,622.08 (the $1,573,092.72 listed on Defendants’ Exhibit 15 minus the $116,470.64 for the kitchen
equipment that was not permanently installed).
-21-

had concluded, “to a reasonable degree of accounting certainty[,]” that the Business Income
Loss claim in this case is $261,823. (Id. at 107:4-16). Mr. Hawkins also outlined the process by
which he reached that conclusion. (See id. at 101-16). Among other things, Mr. Hawkins testified
that he received various pieces of information from the Country Club in reaching his conclusion
regarding the proper payment for the Business Income Loss claim. (Id. at 105-09).
Finally, Mr. Lykens testified that he has no reason to disagree with the assertion that the
Country Club’s 2013 tax return shows an ordinary income loss of $136,804, and the Country
Club’s 2014 tax return shows an ordinary income business loss of $145,014. (Id. at 40:8-18)."
With respect to the similarities between these numbers, Mr. Hawkins testified that it “gives you
a good sense that—and I don’t have all the details on the insurance payment in terms of how
that relates to our overall measurement, but it should represent that the amount of payment is
sufficient to offset any losses they had due to the claim incident.” (Id. at 119:6-22) (emphasis added).
Indeed, it is “expected that whatever profit was or whatever the loss is would be the same from
both years after factoring in the [B]usiness [I]Income payment[.]” (Id. at 119:23-120:1).
E. Building Estimates
One of the central issues in this case is whether Depositors paid the Plaintiffs a sufficient
amount of money under the Policy to rectify the damage to the clubhouse and the pro shop.
Relative to that issue, there was testimony at trial regarding the following five categories of
estimates: (1) the estimate prepared by Depositors itself; (2) the estimates prepared by Anthony
Michael Komarnicki (“Mr. Komarnicki”); (3) the estimate prepared by Richard T. Hughes (“Mr.

11 Indeed, the Country Club’s 2013 income tax return reports an ordinary business income (loss) of
$136,804, and the Country Club’s 2014 income tax return reports and ordinary business income (loss) of
$145,014. (Plaintiffs’ Exhibits 18-19; ECF No. 89 at 1).
-22-

Hughes”); (4) the estimate prepared by CBF Contracting Company (“CBF”); and (5) the
estimates prepared by Kevin Leisenring (“Mr. Leisenring”) of FranJo Restoration Services
(“FranJo Restoration”). The Court examines those five categories of estimates in turn.
1. The Estimate Prepared by Depositors Itself

a. Depositors’ Estimate and the Source of Their Disagreement with the
Plaintiffs
Defendants’ Exhibit 19, which is Depositors’ “final building repair estimate[,]” was
admitted into evidence during trial. (ECF No. 93 at 94:25-95:4; Defendants’ Exhibit 19; ECF No.
ECF No. 89 at 4). Depositors’ sixty-five-page repair estimate (the “Defendants’ Final Building
Repair Estimate”) concludes that the cost of repairing the damage to the clubhouse and the pro
shop was $1,573,092.72. (Defendants’ Exhibit 19).
According to Mr. Sobol, a significant point of disagreement between Depositors and the
Plaintiffs in terms of the payment to rectify the issues with the clubhouse was “whether or not
the basement was salvageable and whether or not the steel was salvageable.” (ECF No. 91 at
81:8-17). Indeed, Mr. Komarnicki, a licensed registered architect in the State of Pennsylvania,
(ECF No. 92 at 2:17-24), testified that he observed issues with the steel in the clubhouse. (Id. at
5:23-6:17). Further, he averred the following with respect to the conditions in the basement:
The floor had heaved in a couple of areas. That would be the basement concrete
floor, the lower level concrete floor. There [were] horizontal flectional cracks or
bowing cracks in the masonry walls. We kind of knew that those were newer
because there was no dirt there, there was no soot, there was nothing that was
actually in that horizontal crack, so it was happening, it was a live crack.
(Id. at 7:4~11).

-23-

Because issues pertaining to the steel and the conditions in the basement are relevant to
whether Depositors made appropriate payments to the Plaintiffs under the Policy, the Court

now shifts its attention to those issues and how they relate to Depositors’ repair estimate.
b. The Interplay Between: (1) the Steel and the Conditions in the
Basement and (2) Depositors’ Repair Estimate
Mr. Komarnicki testified that he recommended Providence Engineering Corporation
(“Providence”) “to do the engineering services for the [C]ountry [C]lub.” (ECF No. 92 at 62:8—
11).2 According to Mr. Komarnicki, David W. Bernhardt (“Mr. Bernhardt”) of Providence is a
good engineer, and Providence in general has highly qualified engineers. (Id. at 62:12-25).
Mr. Komarnicki also testified regarding two letters that Mr. Bernhardt wrote to Mr.
Lykens.
Mr. Bernhardt wrote his first letter to Mr. Lykens on May 2, 2014. (Id. at 13:8~-17;
Defendants’ Exhibit 10; ECF No. 89 at 2). In that letter, Mr. Bernhardt indicated that, at the
request of Mr. Lykens, Providence had performed a “visual review of the remaining structure at
the site of the previous ... Country Club.” (Defendants’ Exhibit 10 at 1). Mr. Bernhardt further
stated that the purpose of Providence’s visit to the Country Club was to “provide a written
structural due-diligence report of the remaining structure ... and to provide comment on the
feasibility of re-using the remaining structural steel[.]” (Id.).
With respect to the top level of the clubhouse, Mr. Bernhardt wrote the following:
The structural steel from the first floor that has not be[en] adversely affected by
the fire (this issue has been addressed previously) can theoretically be re-
22 Indeed, Mr. Komarnicki requested that Mr. Bernhardt conduct “an evaluation.” (ECF No. 92 at 28:19-
23). Specifically, Mr. Komarnicki recommended that the Country Club hire Mr. Bernhardt and
Providence to “come up with an evaluation, to see what was good, what was not good as far as the
structure, could it be saved, and so on and so forth.” (id. at 4:16-20).
-24-

purposed for use in the design and construction of the new country club. The
steel columns may need to be lengthened to accommodate a higher eave
elevation and spans (and therefore column placement) in the new floor plan
would be affected by the length and strength of the existing steel. These
considerations would need to be given thought and attention in both the
architecture and structure of the new building, to the extent the steel is
determined to be reused.
(Id. at 2).
With respect to the lower level of the clubhouse, Mr. Bernhardt wrote the following:
The lower level, below the hollow core slab, was used primarily as locker room
space in the former country club. These spaces appeared somewhat dated with
regard to their size, layout and functionality, but could be reused if determined
to be building code compliant and satisfactory to the owner. Some of the below
grade walls and pilasters in this area have a horizontal crack in the mortar joint
at approximately the mid-point of the wall. Horizontal cracking at the midpoint
of the masonry walls often suggests flexural failure of the wall.
The location of the cracks in the below grade masonry walls coordinate with the
locations where the walls are retaining the maximum amount of earth load,
further suggesting that the walls are overstressed. We would recommend that
these walls be repaired prior to, or as part of, the rebuilding of the country club.
The walls in question could be reinforced with carbon fiber sheets applied to the interior
face of masonry or by adding vertical posts elements at +/- 5’0”0.c. that would span from
slab on grade to floor diaphragm above.
(Id.) (emphasis added).
In closing, Mr. Bernhardt stated that, in Providence’s “professional opinion, the existing
structure that remains can be incorporated into the design of anew country club.” (Id.).
Mr. Bernhardt wrote a second letter, this one addressed to the attention of Mr.
Komarnicki, on September 10, 2015. (ECF No. 92 at 65:15-20; Defendants’ Exhibit 11; ECF No. 89
at 2). In relevant part, that letter provides as follows:
The following is written to provide you with some additional clarity with respect
to the letter we penned to Mr. ... Lykens of the ... Country Club on May 2"4 of
2014. Based on our limited visual review and understanding of the conditions at

~25-

the time of that letter, we stand by the opinions offered at that time, in that letter.
Based on conversations that have occurred following the submission of the letter,
and information that we have learned since that time (contained in your letter of
June 4, 2015) we offer the following clarifying comments.
Although as pointed out in our letter, the basement structure could be repaired
and reused from a structural point of view, there are other considerations,
beyond the scope of structural engineering or our structural evaluation, that are
associated with non-structural portions of the building code, budgetary realities
and/or the owner’s needs that would also have bearing on the practicality of
reuse of the remaining building. These items would have been beyond the scope
of a structural due diligence report, and beyond our expertise to provide an
exhaustive list, but could have included items such as ADA requirements, the
presence of mold or other potentially harmful elements, undersized spaces, non
(architectural) building code compliant portions of the remaining building, or
undersized and/or damaged mechanical/electrical systems ...
Although, with unlimited construction budget, the basement structure could be
repaired and reused from a structural point of view, that is not the same as
stating that reuse would be the most cost effective or practical way to move
forward when looking at the project as a whole.
(Defendants’ Exhibit 11 at 1).
Notably, on page forty-one of Depositors’ estimate for the repairs to the clubhouse and
the pro shop, the company allotted $7,318.91 for “vertical posts figured for basement walls as
explained in the Providence ... report. This was figured for areas to have damage on wall facing
the lake side of the basement.” (Defendants’ Exhibit 19 at 41). Further, Depositors’ estimate
indicates that the company allotted: (1) $15,562.50 for “Concrete & Asphalt[,]” (2) $7,542.20 for
“Steel Components[,]” and (3) $9,212.58 for “Temporary Repairs[.]” (Id. at 64-65).
Finally, for his part, Mr. Komarnicki was asked whether the “reuse of steel that has been
in a fire [is] recommended ... from a design standpoint[.]” (ECF No. 92 at 22:13-14). In response,
Mr. Komarnicki stated, in essence, that you “can do anything and make anything work
depending on where the dollars and cents comes down to.” (Id. at 24:23~25).

-26-

2. Mr. Komarnicki’s Estimates
During trial, Mr. Komarnicki testified regarding two estimates that he personally
prepared—Plaintiffs’ Exhibit 25 and Plaintiffs’ Exhibit 26. (Plaintiffs’ Exhibit 25; Plaintiffs’
Exhibit 26; ECF No. 89 at 2).
In Plaintiffs’ Exhibit 25, which Mr. Komarnicki provided to Mr. Lykens on February 17,
2015, Mr. Komarnicki set forth his opinion of the probable cost to reconstruct the former
Country Club. (ECF No. 92 at 30:12-15, 485-11; Plaintiffs’ Exhibit 25 at 1). Indeed, relative to
this estimate, Mr. Komarnicki testified that it was going to be the “least cost method ... to
demolish and build anew.” (ECF No. 92 at 31:12-15). All told, and using RS Means (an industry
standard) to complete his estimate, Mr. Komarnicki opined that the reconstruction of the
Country Club would cost $3,889,145.05. (Id. at 33:11-34:21; Plaintiffs’ Exhibit 25 at 3). Mr.
Komarnicki stated that he rendered that opinion “within a reasonable degree of architectural,
design and construction certainty[.]” (ECF No. 92 at 35:23-36:6). Finally, Mr. Komarnicki
clarified that $3,889,145.05 was the estimated cost, not of “incorporating the basement that ...

was in place at the time of the fire; but, rather, excavating, yanking that out of the ground and
building a completely new structure.” (Id. at 51:15-52:2).
On cross-examination, Mr. Komarnicki affirmed that an opinion of probable cost “is a
[high-level] overview of the project, including pricing that is likely to change during
construction.” (Id. at 52:8-11). Further, Mr. Komarnicki testified that the new clubhouse that the
Country Club built cost less than $100 per square foot to build and was designed as an
approximately 17,900 square foot building. (Id. at 53:3-11, 58:6-13). However, in Mr.
Komarnicki’s opinion of probable cost, which indicated that a new, approximately 17,905

-27-

square foot clubhouse would cost $3,889,145.05 to build, he estimated a cost of approximately
$217 per square foot. (Id. at 56:58; Plaintiffs’ Exhibit 25).
In Plaintiffs’ Exhibit 26, which Mr. Komarnicki provided to Dr. Valigorsky on June 4,
2015, Mr. Komarnicki offered an evaluation of what it would cost to re-use the existing
basement at the clubhouse. (ECF No. 92 at 36:14-19; Plaintiffs’ Exhibit 26). Mr. Komarnicki
issued this report because the Country Club was “still looking [at whether] it was possible ... to

reuse the basement[.]” (ECF No. 92 at 36:20-25). In crafting this evaluation, Mr. Komarnicki
considered three categories of information and related expenses: (1) “the structural damage to
the walls with the bowing,” (2) the “black mold that was growing on the walls,” and (3) the
“ADA accessibility egress code application to see what would need to be done to that building
to bring it up to current codes.” (ECF No. 92 at 37:3-11).
For the first category, Mr. Komarnicki stated that the way to rectify the issues with the
walls and the cement floor was “either using the structural metal panels on the interior walls
and/or putting up pilasters on the inside[,]” which was the methodology suggested by Mr.
Bernhardt. (Id. at 37:12-23). According to Mr. Komarnicki, the cost of the structural panels was
almost $61,000, and the cost of the pilasters was $8,400. (Id. at 38:6-8).
For the second category, Mr. Komarnicki testified that he was not given a definite total
cost for the mold remediation. (Id. at 40:6-8).
Finally, after estimating at least $99,000 in costs to make the basement ADA compliant,
Mr. Komarnicki’s evaluation indicated that the total “structural/mold/ADA/build out costs for
[the] lower level” would cost approximately $782,375.00. (Plaintiffs’ Exhibit 26 at 2-3). And,
accounting for “like/similar & build out costs[,]” the total estimate was for $891,006.00. (Id. at 3).

-28-

Given the foregoing, Mr. Komarnicki opined that the “existing basement, which is
unusable in its current condition post-fire, without excessive costs being allocated to the
remediation of the existing basement should be removed in its entiret[y]. The monies would be
best utilized and should be reallocated towards new construction[.]” (Id. at 44:1-9).
On cross-examination, Mr. Komarnicki confirmed that Mr. Bernhardt’s letter indicated
that the basement walls could be repaired using either the “carbon fiber on the walls or the
pilasters.” (Id. at 68:14-23). And Mr. Komarnicki estimated that the pilasters would cost $8,400.
(Id. at 69:1-3).
3. Mr. Hughes’s Estimates
Mr. Hughes, a consulting engineer, was permitted to offer “opinion testimony in the
field of civil engineering” during trial. (ECF No. 92 at 80:23-83:2). Mr. Hughes explained that he
had been “contacted to perform an investigation as to the integrity of the steel and the basement
structure of the ... Country Club building (the clubhouse) subsequent to a fire that it sustained

on February 24th, 2014[.]” (Id. at 87:20-24). Ultimately, he prepared two reports regarding those

issues. (Id. at 88:24-89:12).
In authoring his first report, which is dated July 31, 2020, Mr. Hughes addressed two
issues: (1) whether “the super structure steel that survived the fire[] could ... be reused” and (2)
whether “the foundation including the basement floor and the walls of the building, the
foundation|] could ... be reused[.]” (Id. at 89:18—25; Plaintiffs’ Exhibit 27; ECF No. 89 at 2).
With respect to super structure steel, Mr. Hughes testified that it had “lost so much of its
strength, that it wouldn’t be safe to reuse.” (Id. at 101:16-25). However, in his report, Mr. Hughes
wrote that the “existing super structure steel framing could not be reused unless extensive

-29-

structural analysis calculations were developed which never occurred.” (Plaintiffs’ Exhibit 27 at
7). Mr. Hughes also testified regarding the process by which he reached these opinions. (Id. at
90-101). And he asserted that you cannot visually determine whether steel can safely be reused.
(Id. at 96:19~97:4).
With respect to the basement, and specifically the repairs suggested by Mr. Bernhardt,
Mr. Hughes opined as follows:
So what I’m saying is that when you combine that with the floor slabs—there
was no testing done. I never saw anybody run analysis calculations to prove. But,
typically, when I see a wall that’s bowed like that—you can see it in the
photographs—and it’s obviously cracked, you could see the cracks—no. You
know what I mean, it’s—it’s not worth it.
(Id. at 109:19-112:24) (emphasis added).
Turning to Mr. Hughes’s second report, which is dated August 15, 2022, he noted that
the “steel was exposed for several hours in the fire, but not every beam and column would have
had the same exposure.” (Plaintiffs’ Exhibit 33 at 1; ECF No. 89 at 2). Ultimately, Mr. Hughes
opined that the “prudent course of action during reconstruction was to scrap the small amount
of untrustworthy superstructure steel and replace it with new.” (Plaintiffs’ Exhibit 33 at 2). He
stated that the “estimated cost of the superstructure steel ... combined with the cost of further
destructive testing, [and] the results of the calculated estimate of heat exposure led me to this
decision.” (Id.).
Mr. Hughes also prepared his own estimate to “rebuild a 17,905 square foot building
consisting of a 10,000 square foot first floor and 7,905 square foot basement[.]” (Id. at 115:20-
13 Mr. Hughes also indicated that there were issues with the basement floor in addition to the issues with
the basement walls. (ECF No. 92 at 109). In his July 31, 2020, letter, Mr. Hughes opined that given the
cracks in the basement floor slab, combined with the “wall integrity issue[,]” it would be “cost effective to
rebuild the entire basement.” (Plaintiffs’ Exhibit 27 at 5).
-30-

116:9; Plaintiffs’ Exhibit 35; ECF No. 89 at 2). Ultimately, Mr. Hughes estimated that the project
would cost $2,284,596.00. (ECF No. 92 at 119:8-11; Plaintiffs’ Exhibit 35). Mr. Hughes testified
that his estimate was for the “construction of an entirely new building[.]” (Id. at 130:14~21).
Finally, Mr. Hughes’s estimate: (1) has a line item for steel for brand new construction in the

amount of $12,000; (2) takes into account the fact that the building must be compliant “with
existing building codes and ADA and other federal regulations[;]” and (3) includes
approximately $50,000 for a sprinkler system that was not present in the clubhouse that was
damaged in the fire in February 2014. (Id. at 134:7-135:21).
4. CBF’s Estimate
At trial, Mr. Lykens testified that he received a proposal “to build the [clubhouse] on the
existing basement and assuming that the steel was reusable from [CBF] for ... approximately
[$1.8 million].” (ECE No. 93 at 22:20-24). On cross-examination, Mr. Lykens noted that this two-

page estimate was to use the existing basement and “construct an entirely new 10,000 square
foot [clubhouse] in exactly the same measurements as it existed at the time of the fire[.]” (Id. at
28:2-22; Plaintiffs’ Exhibit 32; ECF No. 89 at 2). Finally, Mr. Lykens testified that he noticed that
the estimate from CBF included $231,121 for plumbing. (Id. at 29:13-15). When he was asked
whether he “understood that the majority of that plumbing allowance was for a sprinkler
system|[,]” he responded “I can’t—no. No, I didn’t, didn’t think about that.” (Id. at 29:16-18).
5. Mr. Leisenring’s Estimates
Mr. Lykens testified that the Country Club received two estimates from Mr. Leisenring
of FranJo Restoration for the cost to replace the clubhouse on the existing basement. (ECF No. 93

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at 23:15~21; 131:2-4).* The first estimate was for $2,320,717.31, and the second estimate was for
$1,384,330.51. (Id. at 23:15-21). When asked whether he had “any idea what caused that drop in
price[,]” Mr. Lykens testified that he had “[nJo idea.” (Id. at 23:22-24:2).
Regarding the first estimate that Mr. Leisenring and FranJo Restoration submitted to the
Country Club, Mr. Leisenring stated that he included $332,348.14 for the restoration of the
basement. (Id. at 155:8-11). Further, Mr. Leisenring testified that, when he submitted this first

estimate to the Country Club, he “had the conversation that this estimate will be high, this is
what we're submitting to Nationwide to start with, to start discussions of an agreed scope[.]”
(Id. at 142:20-143:1) (See also ECF No. 93 at 148:23-149:8).
With respect to the second estimate that Mr. Leisenring and FranJo Restoration
submitted to the Country Club, FranJo Restoration represented to the Country Club that the

cost to “rebuild the [C]ountry [C]lub from where it was at this point in time to use again” was
$1,384,330.51. (ECF No. 93 at 135:3-9, 143:20-144:2). In this estimate, Mr. Leisenring allotted
$144,317.51 to restore the basement to its pre-fire condition. (Id. at 163:8-16). This estimated cost

to restore the basement did not “contain any cost to make it ADA complaint,” and it did not
contain any additional monies to install a sprinkler system: (Id. at 163:17—24). Further, Mr.
Leisenring was asked whether, when he was constructing this estimate, he had “any thoughts
or hopes that FranJo Construction® would be awarded the job to build the [CJountry [C]lub[.]”
(Id. at 144:3-5). In response, Mr. Leisenring stated: “yeah, we were hoping FranJo Restoration

14 These estimates entailed “a pricing for what it would cost to reconstruct the first floor that had been
completely destroyed and to restore the basement area[.]” (ECF No. 93 at 146:5-9).
18 According to Mr. Leisenring, FranJo Construction is owned by the same individual as FranJo
Restoration, but they are two separate entities. (ECF No. 93 at 131:10-14).
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would have been awarded the project and then FranJo Construction was going to build the
project.” (Id. at 144:6-8). Indeed, Mr. Leisenring testified that he was one “hundred percent”
comfortable with this “final repair estimate in terms of whether the job could be done to
completion for that number[.]” (Id. at 144:14-18).
On cross-examination, Mr. Leisenring was asked whether it was typical for him to
“overestimate by close to a million dollars[.]” (Id. at 149:17-18). In response, Mr. Leisenring
testified as follows:
Um, it depends on—on percentage wise for a project, it may be exactly that. It’s
almost, what, 40 percent (difference between the two estimates)? And it’s as
simple as sometimes as when we go in [and the difference is caused by] those
two settings on the Xactimate system for commercial and for homeowner. And to
work on behalf of the [C]ountry [C]lub, we left it on homeowner, which figures
the rates on a different schedule than what it does for commercial repairs.
And if Nationwide catches that, we have to take it out. So we tried on the
[C]lub’s behalf to—and our behalf, too, actually, because we’re being paid by a
percentage, to see what we can get approved for repairs.
(Id. at 149:19-150:4). Later in his testimony, Mr. Leisenring stated that switching the “toggle”
from residential to commercial construction takes approximately “15 percent or so [off of the
price] automatically[.]’ (Id. at 156:2-9). Finally, Mr. Leisenring testified that, in the course of
compiling his second estimate, he spoke with Nationwide regarding the scope of the project—
namely, what “was allowable and what was not” under the Policy. (Id. at 150:24-151:25).
In short, Mr. Leisenring testified that the second estimate “was a more fair
representation of what we could do the project for; and we felt that ... we could do it for that ...

amount of money.” (Id. at 150:13-16).
FE, The Invoices in Plaintiffs’ Exhibits 21 Through 24

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During trial, the Plaintiffs produced four exhibits containing invoices paid (at least
primarily) by Dr. Valigorsky. (Plaintiffs’ Exhibits 21-24; ECF No. 89 at 2). Because those invoices
form part of the basis of the Plaintiffs’ claims in this case, the Court reviews each of them in
turn.
1. Plaintiffs’ Exhibit 21
As Dr. Valigorsky testified at trial, Plaintiffs’ Exhibit 21 consists of “costs that [he]
advanced to Tod Brunetti [(“Mr. Brunetti”)], the builder” of the new clubhouse, in the total
amount of $437,854.25. (ECF No. 91 at 101:14-102:9; Plaintiffs’ Exhibit 21 at 1). All told, the
Exhibit contains ten bills submitted by Mr. Brunetti, and photocopies of several checks that Dr.
Valigorsky issued paying most of those bills. (Plaintiffs’ Exhibit 21).
The first bill was for: “[c]leaning floors, installing fire tape, finish[ing] drywall,
locksmith fees, [Mr. Brunetti’s] labor and cost, electric company, and paint.” (ECF No. 91 at
103:3-10). Dr. Valigorsky paid that bill in the amount of $16,016.12. (Id. at 103:11-12).
The second bill was for: “[mJaterial cost ending 8/1/15, remaining balance of exterior
siding, fiberboard, drywall, thin set, grout, ceiling tile, Jewell Electric, Bloom Plumbing and
Heating, labor, and drywall labor.” (Id. at 103:13-25). Dr. Valigorsky paid that bill in the amount
of $75,785.48. (Id.).
The third bill was for: “final payment insulation, labor and material, labor ending 8/21,
interior trim, drop ceilings, install framing room, labor and material[.]” (Id. at 104:3-6). Dr.
Valigorsky paid that bill in the amount of $26,195.00. (Id.).

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The fourth bill was for: “labor and material, final exterior concrete work, stamp crete,
wire and color additives[.]” (Id. at 104:7-10). Dr. Valigorsky paid that bill in the amount of
$21,987.00. (Id.).
The fifth bill was for “labor and material cost, tile kitchen, hallway, small rooms, install
carpet, cost of final for drop ceilings, ceiling tile, interior aluminum door for entrance to bar,
final payment fire protection completed and. certified, labor and material, drywall finishing,
locker rooms and hallway[.]” (Id. at 104:15-21). Dr. Valigorsky paid that bill in the amount of
$57,696.32. (Id.). Relative to this bill, Dr. Valigorsky testified that: (1) the old Country Club had
locker rooms, (2) the banquet room was carpeted in the original Country Club, and (3) there

were bathrooms in the old Country Club. (Id. at 104:22-105:5).
The sixth bill was for: (1) labor; (2) final interior painting, material and labor; (3) labor,
Initial Solutions, cooler installation; (4) Kohlhepp granite material cost; (5) ADA brackets; (6)
material costs, grout, trim, marble window sills; (7) a Jewell Electric bill; (8) a payment to Mike’s
Locksmith; (9) a payment to GM Equipment Lift Rental; (10) a payment to Probuilt Building
Supplies; (11) a payment to Advanced Disposal; (12) a Payment to Bloom Heating and
Plumbing (gas lines); and (13) a payment to Bloom Plumbing and Heating. (Id. at 105:6-19;
Plaintiffs’ Exhibit 21 at 7). Dr. Valigorsky paid that bill in the amount of $75,814.54. (ECF No. 91
at 105:6-19; Plaintiffs’ Exhibit 21 at 7).
The seventh bill was for: “labor ... remaining balance, paint and sand wall—sand
drywall in locker rooms ... kitchen plumbing and gas connectors, prep sink[s] ... material costs,
storage room, five-eighths fire code shower walls[.]” (ECF No. 91 at 105:22-106:2). Dr.
Valigorsky paid that bill in the amount of $9,929.54. (Id.).

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The eighth bill was for a “fire protection system|[.]” (Id. at 106:8-14). Dr. Valigorsky paid
that bill in the amount of $125,000.00. (Id.). Dr. Valigorsky also testified that he was aware that
he paid this $125,000 for sprinklers that the Country Club did not have on the date of the fire.
(Id. at 139:13-15).
The ninth bill was for: “labor and material cost, ceiling grid, both locker rooms, install
shelves in the kitchen ... final Bloom [H]eating[.]” (Id. at 106:15-18). Dr. Valigorsky paid that bill

in the amount of $23,739.00. (Id.).
The tenth and final bill was for: “four shower stalls, ADA approved, for the locker

rooms ... framing material, treated plates, tap cons and studs ... [and] labor cost].]” (Id. at 106:3—

7). Dr. Valigorsky paid that bill in the amount of $5,691.25. (Id.).
2. Plaintiffs’ Exhibit 22
Plaintiffs’ Exhibit 22 contains fourteen payments that Dr. Valigorsky made to various

entities. (Plaintiffs’ Exhibit 22).
The first payment that Dr. Valigorsky made was for $21,834.92 to TAFCO for a walk-in
cooler and walk-in freezer. (ECF No. 91 at 109:3-8; Plaintiffs’ Exhibit 22 at 1). Dr. Valigorsky
testified that the old Country Club had a walk-in cooler and a walk-in freezer. (ECF No. 91 at
109:9-11). With respect to these items, Dr. Valigorsky stated that he had no reason to disagree
with Defense counsel’s assertion that they were paid for completely in line 69 of Depositors’
building repair estimate. (Id. at 139:23-140:19).16
The second payment that Dr. Valigorsky made was for $2,392.20 to National Fuel for
fuel lines to the new clubhouse at 10 Lakeside Drive. (Id. at 109:19-110:1; Plaintiffs’ Exhibit 22 at
16 Indeed, on page seven of Depositors’ building repair estimate, there is a $26,040.00 allotment for a
walk-in refrigerator, and there is a $13,800 allotment for a walk-in freezer. (Defendants’ Exhibit 19 at 7).
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1). Dr. Valigorsky testified that this new gas line was “necessitated by the fact that the
[clubhouse] was moved from its location at the time of the fire to a new location.” (ECF No. 91
at 139:19-22).
The third and fourth payments that Dr. Valigorsky made were for $110,000.00 and
$64,333.00, respectively, and they were made to Dave Roman Excavating, Inc. (“Dave Roman”)
for the cost of site preparation for the new clubhouse. (Id. at 110:2-14; Plaintiffs’ Exhibit 22 at 1).
The fifth payment that Dr. Valigorsky made was for $9,593.73 to Argo Mosaic, LLC for
the cost of ceramic tile. (ECF No. 91 at.110:15-20). Dr. Valigorsky testified that the old Country
Club had similar types of flooring for the bar and the bathrooms. (Id. at 110:24—-111:4).
The sixth payment that Dr. Valigorsky made was for $15,015.50 to Phoenix Group for an
Irish bar. (Id. at 111:5-16). Dr. Valigorsky testified that the old Country Club had a big bar. (Id.
at 111:23-25).
The seventh payment that Dr. Valigorsky made was for $1,260.00 to Bill Ray to take the
bar apart and put it in the hallway of the clubhouse. (Id. at 111:18~-22; Plaintiffs’ Exhibit 22 at 1).
The eighth payment that Dr. Valigorsky made was for $9,749.00 to United Transportation to
have the bar shipped from the state of Washington or Oregon to the new clubhouse. (ECF No.
91 at 111:8-18; Plaintiffs’ Exhibit 22 at 1).
The ninth payment that Dr. Valigorsky made was for $3,389.21 to Golden Dragon for a
used skillet to be used in the kitchen. (ECF No. 91 at 112:3-9).
The tenth payment that Dr. Valigorsky made was for $8,750.00 to Dubick for a cooler,
freezer, refrigerator, and cabinet. (Id. at 112:10-17).

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The eleventh payment that Dr. Valigorsky made was for $15,242.80 to Tri-State
Detergent for a dish machine. (Id. at 112:18-22). Dr. Valgiorsky testified that the old Country
Club had a dishwashing machine. (Id. at 112:23—24).
The twelfth payment that Dr. Valigorsky made was for $16,616.19 for kitchen supplies to
NPS equipment. (Id. at 112:25~113:4).
The thirteenth payment that Dr. Valigorsky made was for $4,350.35 to A City
Discount/Peach Trader, Inc. for a stainless steel ice well, a tilting kettle for making soups, and a
five-well hot table. (Id. at 113:5-10; Plaintiffs’ Exhibit 22 at 1). Dr. Valigorsky testified that all of
those items were in the original Country Club. (ECF No. 91 at 113:11-14).
The fourteenth and final payment that Dr. Valigorsky made was for $59,653.60 to JAW
Company, Fire, Inc., for “ventilation hoods, convection hoods over the cooking area, and the
subsequent fire extinguisher system that goes with it.” (Id. at 113:15-19). Dr. Valigorsky testified
that the original Country Club had those items. (Id. at 113:20-21). Finally, Dr. Valigorsky
testified that he had no reason to disagree with Defense counsel’s assertion that the restaurant
hood was listed on line 71 of Depositors’ building repair estimate. (Id. at 141:23-142:12).”
3. Plaintiffs’ Exhibit 23
Plaintiffs’ Exhibit 23 indicates that it consists of bills and payments in the amount of
$25,958.40. (Plaintiffs’ Exhibit 23 at 1). According to Dr. Valigorsky, this exhibit consists of bills
“from the GeoTech Engineering Company in Morrisdale, Pennsylvania, for site evaluation and
water testing and land development on the property for [the] Country Club.” (ECF No. 91 at
114:19-25). Further, one of the bills in Plaintiffs’ Exhibit 23 is “for delivery of the deed to the
7 Indeed, page 7 of Depositors’ building repair estimate includes an allotment of $27,360.00 for a
commercial hood system. (Defendants’ Exhibit 19 at 7).
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Office of the Recorder and for a basic ... recording [of] the same” and was paid in the amount of
$107.80. (Id. at 115:3-116:1; Plaintiffs’ Exhibit 23 at 2). Finally, Dr. Valigorsky testified that the
“sole reason that [GeoTech Engineering Company was] hired was that ... the type of work they
were doing [was] required because [the Country Club was] building the [clubhouse] in a new
location.” (Id. at 142:13—23).
4, Plaintiffs’ Exhibit 24
Plaintiffs’ Exhibit 24 contains several bills and photocopies of checks issued by Dr.
Valigorsky for “miscellaneous expenses to finish interior, purchase kitchen equipment,
carpeting and furnishings[.]” (Plaintiffs’ Exhibit 24 at 1; ECF No. 91 at 120:12-121:18).
According to Dr. Valigorsky, the first bill “could have been [for] bathrooms [the Country
Club was] finishing [in November 2015] because [he] didn’t have the money to finish
everything at one time[.]” (ECF No. 91 at 116:19-117:1). Dr. Valigorsky paid that bill in the
amount of $2,066.62. (Plaintiffs’ Exhibit 24 at 2).
The second bill was for the Country Club’s “communications system and for hooking up
the pro shop to the [clubhouse] for audio and visual counters and telephones[.]” (ECF No. 91 at
117:2-8). Dr. Valigorsky paid that bill in the amount of $5,213.74. (Id. at 117:2-12). He also
testified that the old Country Club had “audio visual and telephonesf.]” (Id. at 117:9-10).
The third bill was for additional kitchen equipment. (Id. at 117:13-21). Dr. Valigorsky
paid for these items in the amounts of $15,000.00 and $10,000.00. (Id.). Further, he testified that
this was not “any more than what was in the original [C]lub].]” (Id. at 117:22-23).

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The fourth bill was for “dinner forks, salad forks, dinner forks, bouillon spoons,
teaspoons, and steak knives[.]” (Id. at 117:24-118:16). Dr. Valigorsky paid $7,665.47 for those
items. (Id.). He also testified that the old Country Club had silverware. (Id.).
The fifth bill was for “[t]ablecloths, skirts around the tables[.]” (Id. at 118:17-119:2). Dr.
Valigorsky paid $4,540.73 for those items, and he testified that the old Country Club had these
items. (Id.). Dr. Valigorsky also stated that he had no reason to dispute that Depositors
estimated and paid $4,504.93 for these same items “in Lines 958, encompassing all the way up to
Lines 1930 of their business personal property estimate[.]” (Id. at 143:20-144:2)."8
The sixth bill was for a “fire alarm system monitor.” (Id. at 119:3-9). Dr. Valigorsky paid
$420 for that item, and he testified that the old Country Club had a fire alarm system monitor.
(Id.; Plaintiffs’ Exhibit 24 at 7).
The seventh bill was for chairs. (ECF No. 91 at 119:10-16). Dr. Valigorsky paid $9,419.00
for these chairs, and he testified that the old Country Club likewise had chairs. (Id.; Plaintiffs’
Exhibit 24 at 8). Dr. Valigorsky also testified that he had no reason to dispute that banquet
chairs were “covered specifically in Line 834 of Depositors’ building personal property estimate
and paid[.]” (Id. at 144:3-8). Dr. Valigorsky also testified that he has never reviewed an
estimate prepared by Depositors. (Id. at 140:9-11).

18 The Court has verified that allotments for these types of items are in fact included in Depositors’
Building Personal Property estimate. (Defendants’ Exhibit 14; ECF No. 89 at 4).
19 Line 834 of Despositors’ Building Personal Property estimate indicates a Replacement Cost Value of
$28,359.24 for banquet chairs. (Defendants’ Exhibit 14 at 5).
□ -40-

The eighth bill was for a sound system. (Id. at 120:4-9). $19,892.80 was paid for that
sound system, and Dr. Valigorsky testified that the old Country Club likewise had a sound

system. (Id.; Plaintiffs’ Exhibit 24 at 9).
The ninth bill was for carpeting for the banquet room in the new clubhouse. (ECF No. 91

at 120:10-11). Attorney Cherry paid that bill in the amount of $12,220.75. (ECF No. 93 at 64:23-

65:1; Plaintiffs’ Exhibit 24 at 10).
In closing, Dr. Valigorsky testified that Plaintiffs’ Exhibit 24 also contains a bill that was
paid by his wife rather than him. (ECF No. 91 at 120:12-121:10). And Dr. Valigorsky stated that
Plaintiffs’ Exhibit 24 totals $92,438.67. (Id. at 121:16-18). □

Finally, Attorney Cherry testified that it is in meeting “minutes that the [Country C]lub
acknowledged that they owed [Dr. Valigorsky] this money” for the invoices that he paid. (ECF
No. 93 at 63:3-10).
VI. Conclusions of Law
At this stage in this case, one broad issue remains: whether the Defendants are liable to
the Plaintiffs for breach of contract. Based on the Court’s Findings of Fact and Conclusions of
Law, the Court finds that the Plaintiffs have failed to prove that the Defendants breached the
Policy in any respect. The Court now explains its reasons for reaching that conclusion.
A. Applicable Law”
In order to “succeed on a breach of contract claim under Pennsylvania law, a plaintiff
must establish, by a preponderance of the evidence, ‘(1) the existence of a contract, including its

2” A “federal court sitting in diversity must apply state substantive law and federal procedural law.”
Chamerlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000). Therefore, as the parties recognize, (ECF No. 96 at
28-31; ECF No. 98 at 21-24), Pennsylvania contract law governs the resolution of this case.
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essential terms, (2) a breach of a duty imposed by the contract[,] and (3) resultant damages.”
Moore’s Home Improvement, Inc. v. Nationwide Prop. & Cas. Ins. Co., No. 10-CV-0161, 2011 WL
3803587, at *5 (E.D. Pa. Aug. 25, 2011) (quoting Ware v. Rodale Press, Inc., 322 F.3d 218, 225-26
(3d Cir. 2003) (affirming dismissal of a breach of contract claim where the plaintiff “failed to

present evidence from which a factfinder could determine damages with reasonable certainty”
and where the plaintiff made no argument that the district court’s “statements of law [were]
incorrect”)).
In “Pennsylvania, the insured bears the burden of proving facts that bring its claim
within the policy’s affirmative grant of coverage.” Koppers Co., Inc. v. Aetna Cas. & Sur. Co., 98
F.3d 1440, 1446 (3d Cir. 1996). By contrast, “the insurer bears the burden of proving the
applicability of any exclusions or limitations on coverage, since disclaiming coverage on the
basis of an exclusion is an affirmative defense.” Id.
Further, in breach of contract actions involving an insurance policy, the “analysis begins
with the language of the policy.” Gen. Refractories Co. v. First State Ins. Co., 94 F. Supp. 3d 649,
657 (E.D. Pa. 2015). The “mutual intention of the parties at the time they formed the contract
‘governs its interpretation’ and ‘is to be inferred from the written provisions of the contract.’
Id. (quoting Post v. St. Paul Travelers Ins. Co., 691 F.3d 500, 517 (3d Cir. 2012) (citations and
internal quotation marks omitted)). Indeed, courts applying Pennsylvania law “must give plain
meaning to a clear and unambiguous contract provision.” Id. (quoting Heller v. Pa. League of
Cities and Municipalities, 32 A.3d 1213, 1220 (Pa. 2011)). However, ambiguous insurance policy
provisions are to be construed in favor of the insured. Nationwide Mut. Ins. Co. v. CPB Int'l, Inc.,
562 F.3d 591, 595 (3d Cir. 2009).
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B. The Plaintiffs’ Arguments
The Plaintiffs contend that the Court should afford them relief on their Breach of
Contract claim for several reasons. First, the Plaintiffs allege that, due to Mr. Tuttle’s statements
at the meeting on February 25, 2014, as well as the terms of the Policy, they are entitled to
consider the entirety of the initial $500,000 check an “Extra Expense” payment under the Policy.
Second, the Plaintiffs argue that the Defendants have made insufficient payments under the
Policy to rectify the damage to the pro shop and the clubhouse. Third, the Plaintiffs contend
that the Defendants have not sufficiently reimbursed the Country Club for the monies that Dr.
Valigorsky and others paid out to various entities. Fourth, the Plaintiffs assert that they are
entitled to outstanding Replacement Cost Holdback in the amount of approximately $50,000.
Fifth, the Plaintiffs argue that they are entitled to additional payments for certain kitchen
equipment.
The Court examines these claims by the Plaintiffs in turn.
Cc. The Court Finds Unavailing the Plaintiffs’ Claims Relative to the $500,000
Check and the Meeting on February 25, 2014
1. The Parties’ Arguments
Generally speaking, the Plaintiffs argue that the $500,000 check that Mr. Tuttle gave
them during the meeting on February 25, 2014, was “authorized by [the] Defendants to be used
by [the] Plaintiffs to avoid or minimize the ‘suspension’ of business and to continue ‘operations’
at the [g]olf [clourse ... and, as a result, must be counted as an [E]xtra [E]xpense rather than
toward the reconstruction/restoration of the building destroyed by fire.” (ECF No. 98 at 23).
Indeed, the Plaintiffs assert that the Defendants assured them that this money was “to be used.

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to operate [their] golf course after the fire in 2014 and [the] Plaintiffs used the money for that

exact purpose in reliance upon the assurance of [the] Defendants, through their agents and
employees, as well as on their reasonable reliance of the clear and unambiguous language” of
the Extra Expense provision in the Policy. (Id. at 28).
In response, the Defendants contend that Mr. Tuttle’s statement about making the
Plaintiffs “whole” did not alter the terms of the Policy. (ECF No. 97 at 19). Further, the
Defendants argue that the Plaintiffs were instructed to keep a detailed accounting of how they
spent the insurance monies, an instruction that they failed to follow. (ECF No. 104 at 1). The
Defendants also note that Mr. Lykens testified that the Country Club had to have used some of
the $500,000 on the building. (Id.). Therefore, for these and other reasons, the Defendants assert
that the Plaintiffs have failed to prove that the “Extra Expenses” that they actually incurred
approached the amount of $500,000. (Id. at 2).
2. Analysis
In order to address the Plaintiffs’ arguments relative to the meeting on February 25,
2014, and the $500,000 check that Depositors provided to the Country Club on that date, the
Court first outlines its findings of fact?! relative to that meeting and that check.
With respect to the February 25, 2014, meeting and the $500,000 check, the Court finds as
follows: first, based on the testimony of both Mr. Lykens and Mr. Perko, Mr. Tuttle told the
Plaintiffs that the $500,000 check would have to be reconciled out of the “total insurance claim

payments made for the fire.” See supra Sections V.C.3, V.C.5.
21 In the portion of this Memorandum Opinion entitled “Factual Background[,]” the Court outlined the
testimony that was offered at trial and the like. In this portion of this Memorandum Opinion, the Court
will clarify whose testimony it believed, etc., and use its Findings of Fact, coupled with its Conclusions of
Law, to reach its verdict.
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Second, as Mr. Sobol testified, Mr. Tuttle told the Plaintiffs to keep a precise accounting
of how they used the $500,000, see Supra Section V.C.2, a fact that very much bolsters the notion
that the $500,000 check was issued pursuant to the written Policy and would have to be
reconciled against that Policy. However, the Plaintiffs did not produce any evidence of any such
accounting for their use of the $500,000 at trial.
Finally, as Attorney Cherry testified, Mr. Tuttle instructed the Plaintiffs to begin using
the $500,000 “to take care of the expenses, return monies that [they needed] to return, that [they
needed] to begin making repairs so that [they could] set up shop again in the pro shop and
otherwise conduct business.” See supra Section V.C.4. The Court stresses that it does find that Mr.
Tuttle instructed the Plaintiffs to begin using the $500,000 for these purposes, but the Court also

stresses that it cannot find that Mr. Tuttle instructed the Plaintiffs to use the entire $500,000 for
those purposes. The Court so limits its finding because there was no testimony expressly
indicating that Mr. Tuttle told the Plaintiffs that the entire $500,000 was to be used for
conducting business and the like. Even if there had been such testimony, in order to find that

Mr. Tuttle instructed the Plaintiffs to use the entire $500,000 to conduct business and the like, the
Court would have to disregard the following: (1) the fact that Mr. Lykens testified that the
Plaintiffs had to have used some of the $500,000 on the building,” an action that, by Mr.
Lykens’s own testimony, he would not have taken without first consulting with Mr. Tuttle, see

supra Section V.C.3, all of which would contradict the notion that Mr. Tuttle directed the
Plaintiffs to use the entire $500,000 to conduct business and the like; (2) the fact that Mr. Tuttle

22 Having heard and considered Mr. Lykens’s testimony on this issue, the Court finds that he was
indicating that the Plaintiffs used some of the $500,000 for the building of the new clubhouse and/or the
work on the pro shop.
AB

told the Plaintiffs to keep a detailed accounting of how they spent the $500,000, which would be
strange if he gave them specific instructions as to how they were to spend the entirety of those
funds; and (3) the fact that such a finding would mean that Mr. Tuttle, on behalf of the
Defendants, concluded with certainty the day after the fire that the Plaintiffs were entitled to a
payment of $500,000 as an “Extra Expense” under the Policy. The Court declines to disregard
this strong evidence, and the Court therefore finds that Mr. Tuttle directed the Plaintiffs to begin
using the funds to conduct business and the like, but he did not instruct them to use the entire
$500,000 check for those expenses alone.
With those factual findings in place, the Court holds that the Plaintiffs have failed to
show that the entire $500,000 check was an “Extra Expense” payment under the Policy.
Relatedly, the Court holds that the Plaintiffs have failed to show a breach of the Policy relative
to the $500,000 check or Mr. Tuttle’s comments (or the two in combination), The Court reaches
that holding for the following reasons.

a. There Was No Oral Modification to the Policy
The Court first finds that because Mr. Tuttle told the Plaintiffs: (1) that the $500,000
check would have to be reconciled out of the “total insurance claim payments made for the
fire[,]” (2) that they were to keep a detailed accounting of how they spent the $500,000, which
further connected the check to the payments under the written Policy, and (3) that they were to
begin using the $500,000 for expenses like conducting business and making repairs, expenses
which were covered under the Policy, see supra Section V.D, Mr. Tuttle’s statements to the
Plaintiffs did not constitute an oral modification of the Policy. Hampben Real Estate, Inc. v. Metro.
Mgmt. Grp., Inc., 142 F. App’x 600, 603 (3d Cir. 2005) (noting that: (1) it is “well-settled law in

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Pennsylvania that a written contract which is not for the sale of goods may be modified orally,
even when the contract provides that modifications may only be made in writing. The
modification may be accomplished either by words or conduct ...” and (2) an “oral modification
of a written contract must be proven by clear, precise and convincing evidence”) (internal
quotation marks and citations omitted). It would be strange indeed if Mr. Tuttle’s statements,
which firmly rooted the issuance of the $500,000 check in the written insurance Policy, and
which contained no hint of any oral alteration of that Policy, constituted an oral modification of
that document.”

23 At this point, the Court addresses three additional statements by Mr. Tuttle and explains why none of
those statements lead the Court to the conclusion that the Plaintiffs have proven a breach of the Policy.
First, the Court considers Mr. Tuttle’s comment that the Defendants were going to make the Plaintiffs
“whole.” See supra Section V.C.1. Having heard all of the testimony in this case, and having considered
the evidence produced at trial, the Court credits the testimony of Mr. Perko and finds that Mr. Tuttle was
simply telling the Plaintiffs that the Defendants intended to put them back into the same position that
they were in prior to the fire by paying out the monies required under the Policy. See supra Section V.C.5.
The Court's finding on this score is bolstered by the fact that Mr. Tuttle rooted his comments firmly in the
Policy, as the discussion in the text above indicates. Therefore, the Court finds that Mr. Tuttle’s “made
whole” comments did not alter the Policy, and they do not support a finding that the Defendants were
agreeing to pay for any and every expenditure that the Plaintiffs submitted, regardless of whether that
expenditure was covered under the Policy.
Second, the Court considers Mr. Tuttle’s alleged response when Mr. Lykens informed him that certain
individuals associated with the Country Club were considering relocating the clubhouse to a different
location on the property at 10 Lakeside Avenue. See supra Section V.C.3. According to Mr. Lykens, Mr.
Tuttle responded in the following manner: “I don’t care where you put the building. We're going to—
we're going to take care of it.” See supra Section V.C.3. At the outset, the Court notes that, under the
Policy, the Defendants were not required to pay, in full, for a total rebuild of the clubhouse in a new
location on the premises (the Policy permitted the Defendants to limit their payout for such a rebuild to
the cost of rebuilding at the old location). See Supra Section V.B.1. Therefore, insofar as the Plaintiffs argue
that Mr. Tuttle’s comments indicated the Defendants’ willingness to pay, in full, for a total rebuild of the
clubhouse in a new location on the premises, the Plaintiffs must show that Mr. Tuttle’s comments equaled
an oral modification to the contract. Indeed, the burden of proving “modification of a contract is carried
by the party asserting the modification[,}” and a “contract can be modified with the assent of both
contracting parties if the modification is supported by consideration[.]” Trombetia v. Raymond James Fin.
Services, Inc., 907 A.2d 550, 558 (Pa. Super. Ct. 2006). For two reasons, the Court finds that the Plaintiffs
have not met their burden of proof on this issue. First, the Plaintiffs have not referred the Court to any
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possible consideration that they would have extended to the Defendants in exchange for the Defendants’
agreement (via Mr. Tuttle) to pay a potentially significant amount of additional money to rebuild the
clubhouse in a new location on the premises. Second, given Mr. Tuttle’s other comments in this case, such
as his comments about the $500,000 check being reconciled against the payments under the Policy (which
indicated that he was consistently looking to the terms of the Policy), the Court finds that the Plaintiffs
have failed to show that this comment by Mr. Tuttle was anything other than an indication that the
Defendants would make all appropriate payments under the Policy (i.e., the Defendants would “take care
of” the damage to the buildings), and the Country Club could elect to use that money to rebuild wherever
it saw fit (i.e., Mr. Tuttle did not “care where [the Plaintiffs] put the building”). Finally, as further support
for its holding on this issue, the Court notes that there was testimony at trial tending to indicate that the
new clubhouse was built for less than $1.8 million. See supra Section V.E.2. And the Depositors paid out
approximately $1.45 million for the repair of the clubhouse and the pro shop (at the least). See supra
Section V.D.1.b. Therefore, the difference between what the Defendants paid for the repair of the
clubhouse and what the Plaintiffs paid for erection of the new clubhouse is in the order of hundreds of
thousands of dollars. That is critical because the new clubhouse has features that the original clubhouse
did not have and that make the new clubhouse ADA compliant, see supra Section V.A, but there is
absolutely no indication that Mr. Tuttle’s statement altered the portion of the Policy that only required
the Defendants to pay out a total of $25,000 for things like making the repaired/rebuilt clubhouse ADA
compliant. See supra Section V.B.1. Accordingly, even if Mr. Tuttle’s statement was an indication that the
Defendants would agree to orally modify the Policy and pay in full for an entirely new clubhouse in a
new location on the premises, the Court would still be left without a basis upon which to award damages
in this case. Indeed, the Court would not know how much of the difference between what the Defendants
paid out for the clubhouse and the pro shop and what the Plaintiffs paid for the new clubhouse was due
to ADA compliance issues, meaning that the Plaintiffs have not given the Court evidence from which it
could calculate damages to a “reasonable certainty.” Ware, 322 F.3d at 225-26 (affirming the district
court’s dismissal of a breach of contract claim where the plaintiff “failed to present evidence from which a
factfinder could determine damages with reasonable certainty” and where the plaintiff did not argue that
the District Court’s “statements of law [were] incorrect”); see also Ins. Co. of Greater New York v. Fire Fighter
Sales & Serv. Co., 120 F. Supp. 3d 449, 461 (W.D. Pa. 2015) (“Under Pennsylvania law, if a party is able to
prove breach of contract but can show no damages flowing from the breach, the party is entitled to
recover nominal damages.”) (internal quotation marks and citation omitted); Thorsen v. Iron & Glass Bank,
476 A.2d 928, 931 (Pa. Super. Ct. 1984) (“However, we will not ... reverse on the ground [that a plaintiff
proving breach but no damages is entitled to nominal damages] alone where no request was made for
[nominal damages] ... and no establishment of a property right is involved.”) (internal quotation marks
and citation omitted)).
Finally, according to Mr. Lykens, when workers conducted the temporary repair of the pro shop
following the fire, they used the same color of shingles that had previously been on the roof. See supra
Section V.C.3. However, because there were also older shingles on the roof, and because those older
shingles had aged for approximately ten years, the older shingles did not match the newer shingles. See
supra Section V.C.3. Mr. Lykens testified that he discussed that fact with Mr. Tuttle, and Mr. Tuttle said:
“[y]ou need to replace the—all the shingles; we'll take care of the shingles.” See supra Section V.C.3.
Although Mr. Lykens appeared to initially indicate that the Defendants did not in fact take care of those
shingles, he also testified that he had no reason to doubt that the Defendants included a payment in their
Final Building Repair Estimate to remove and replace the “entire roof surface area of the pro shop[.]” See
supra Section V.C.3. And indeed, the Defendants included a payment for the roof of the pro shop in their
Final Building Repair Estimate. See supra Section V.C.3. Therefore, because Mr. Lykens’ testimony relates
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Therefore, because Mr. Tuttle’s statements did not constitute an oral modification of the
Policy, the Plaintiffs’ claims relative to the $500,000 are only meritorious if they can prove: (1)
that Mr. Tuttle earmarked the $500,000 payment (or a portion thereof) for a particular category
of expenditures under the Policy and (2) that that $500,000 payment (or a portion thereof) was
in excess of what Depositors actually paid for that category of expenditures under the Policy.
Because the Court finds that the Plaintiffs have failed to meet their burden of proof on these
issues, the Court finds that their claims on this score are meritless.
b. The Plaintiffs Have Failed to Show That the Entire $500,000 Check was
an “Extra Expense” Payment Under the Policy
The Court next finds that, because Mr. Tuttle plainly instructed the Plaintiffs to begin
using the $500,000 check for both things that can be deemed “Extra Expense” payments under
the Policy and things that cannot be deemed “Extra Expense” payments under the Policy, the
Plaintiffs have failed to show that the entire $500,000 check was an “Extra Expense” payment
under the Policy. Indeed, the “Extra Expense” provision excludes from its scope the “expense to
repair or replace property” (at least in certain circumstances). See supra Section V.B.2. Further,
the definition of “Extra Expense” under the Policy indicates that it covers “necessary expenses
[the Country Club incurred] during the ‘period of restoration’ that [it] would not have incurred
if there had been no direct physical loss or damage to the property].]” See supra Section V.B.2.

to the condition of the roof as temporary repairs were being conducted, it does not go to proving whether
the Defendants’ ultimate payment for the repair of the roof on the pro shop was proper. Accordingly, the
Court finds that this testimony is an insufficient basis upon which to find that the Plaintiffs have proven
that the Defendants breached the Policy.
4 Specifically, the Plaintiffs argue that the $500,000 check was for “Extra Expenses[.]” If the Plaintiffs are
correct, then Mr. Tuttle told the Plaintiffs that the “Extra Expense” payment would be $500,000, but
Depositors only indicated that that payment was made in the amount of approximately $116,000. See
supra Section V.D.
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In other words, expenses that the Country Club would have incurred absent the fire, like
paying employees, are not “xtra Expenses” under the Policy. Instead, paying employees falls
under the ambit of the “Business Income with Ordinary Payroll” provision, subject to the
limitations therein. See supra Section V.B.2. Therefore, insofar as Mr. Tuttle instructed the
Plaintiffs to begin using the $500,000 to do things like taking care of expenses and conducting
business, it appears viable to consider certain of the $500,000 payment an “Extra Expense”
payment under the Policy. However, insofar as Mr. Tuttle instructed the Plaintiffs to begin using
the $500,000 to do things like paying employees, the Plaintiffs have failed to show that those
monies were part of an “Extra Expense” payment under the Policy.
Finally, the Court stresses that the Plaintiffs have not provided the Court with an
accounting of the manner in which they spent the $500,000, leaving the Court without any
evidence from the Plaintiffs as to how much of the $500,000 they did in fact spend on “Extra
Expenses[.]” On these facts, the Court finds that the Plaintiffs have failed to show that the entire
$500,000 payment was (or should have been) for “Extra Expenses[.]”
c. The Plaintiffs Have Failed to Show That Anything Related to the
Issuance of the $500,000 Check or Mr. Tuttle’s Comments Constituted a
Breach by the Defendants
Lastly, and relatedly, the Court finds that the Plaintiffs have failed to show that anything
related to the $500,000 check or Mr. Tuttle’s comments in giving that check to the Country Club
(or the combination of the two) constitutes a breach of the Policy by the Defendants. The Court

so finds for three interrelated reasons.

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First, the Court reiterates that Mr. Tuttle instructed the Plaintiffs to begin using the
$500,000 for things like: taking care of expenses, making repairs, conducting business, and
paying employees. See supra Section VI.C.2.
Second, when the Court compares the expenditures that Mr. Tuttle instructed the
Plaintiffs to begin making using the $500,000 check, the Court finds a symmetry with the

payments that the Defendants issued under the Policy. Indeed, Depositors paid the Plaintiffs:
$261,823.00 for “Business Income”; $116,653.63 for “Extra Expense”; $67,977.83 for “Temporary
Repairs”; and $31,491.75 for “Debris Removal”. See supra Section V.D. When the Court adds
these amounts together, it arrives at a total of $477,946.21, an amount strikingly close to the
$500,000 check. Critically, because the Plaintiffs have failed to produce any credible and specific
evidence of their expenses in the realms of “Business Income”; “Extra Expenses”; or
“Temporary Repairs”; the Court has no basis upon which to find that the approximately
$477,946 payment that Depositors paid for these items (and “Debris Removal”)* was a breach
of the Policy.
Finally, as the testimony of Mr. Lykens indicates, Mr. Tuttle’s comments left the
Plaintiffs free to use some the $500,000 in other ways, such as for “the building[,]” which the
Court understands to be work on the new clubhouse and/or the pro shop. See supra Section
VI.C.2. Therefore, since Depositors paid the Plaintiffs well over $1 million for the damage to the
clubhouse and the pro shop, the approximately $22,500 balance of the $500,000 check may

25 There was discussion at trial indicating that the cost of the debris removal was approximately $30,000.
(ECF No. 93 at 12:14-13:3; 202:4-11). Therefore, because the Defendants paid out approximately $31,000
for debris removal, the Plaintiffs have failed to show that the Defendants breached the Policy on this
score.
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plainly be said to be part of the payment that Depositors made for the damage to the clubhouse
and the pro shop.
In summary, relative to the $500,000 check and Mr. Tuttle’s comments, the Court finds
that the Plaintiffs have failed to prove that there was any oral modification to the written Policy.
Further, the Court finds that the Plaintiffs’ own statements about the $500,000 preclude a
finding that Mr. Tuttle directed them to use all of that money for “Extra Expenses|.]” Finally,
the Court finds that the $500,000 payment can be broken down as advance payments under the
following categories of the Policy: (1) a $261,823.00 payment for “Business Income”; (2) a
$116,653.63 payment for “Extra Expense”; (3) a $67,977.83 payment for “Temporary Repairs”;
and (4) a $31,491.75 payment for “Debris Removal”. Relatedly, in light of all of the evidence
produced at trial, the Plaintiffs have wholly failed to show that they are entitled to any more
than these amounts for any of these categories of payments under the Policy. And the Court
finds that, given the nature of Mr. Tuttle’s comments and the Plaintiffs’ use of certain of the
$500,000, the remaining balance of the $500,000 check ($22,503.76) can plainly constitute an
advance on the “Building” payment under the Policy. In other words, the Court has no
indication that the $500,000 check was anything other than an appropriate payment for certain
categories of expenses under the Policy that the Defendants directed the Plaintiffs to begin
using in order to pay for those covered expenses. The Plaintiffs have failed to prove that the
directions the Defendants gave the Plaintiffs in issuing that $500,000 were out of step with the
required payments under the Policy.

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Therefore, the Court holds that the Plaintiffs have failed to show that anything related to
the issuance of the $500,000 check or Mr. Tuttle’s comments constituted a breach of the Policy
by the Defendants.”
D. The Court Finds That the Plaintiffs Have Failed to Show That the Amount the
Defendants Paid to Rectify the Damage to the Buildings at the Country Club
Constitutes a Breach of the Policy
The Court now turns its attention to the Plaintiffs’ arguments relative to the payments
that the Defendants issued for the damage to the clubhouse and the pro shop.
1. The Parties’ Arguments
The Plaintiffs state that the Policy “allowed them to add up the individual coverage
amounts provided for each of the separate six buildings on the golf course to a blanket sum of
$2,228,700.00.” (ECF No. 98 at 28). In support of their assertion that they are entitled to the full
26 Although (1) the Plaintiffs do not explicitly cite the “reasonable expectations” doctrine and (2) it is not
clear whether that doctrine applies in this case, the Court notes that “Pennsylvania case law ... dictates
that the proper focus for determining issues of insurance coverage is the reasonable expectation of the
insured.” Liberty Mut. Ins. Co. v. Treesdale, Inc., 418 F.3d 330, 344 (3d Cir. 2005) (internal quotation marks
and citation omitted). The “reasonable expectations” doctrine provides as follows:
In most cases, the language of the insurance policy will provide the best indication of the
content of the parties’ reasonable expectations. Courts, however, must examine the
totality of the insurance transaction involved to ascertain the reasonable expectations of
the insured. As a result, even the most clearly written exclusion will not bind the insured
where the insurer or its agent has created in the insured a reasonable expectation of
coverage. However, this aspect of the doctrine is only applied in very limited
circumstances to protect non-commercial insureds from policy terms not readily
apparent and from insurer deception. [And a]bsent special justification ... an insured
may not complain that his or her reasonable expectations were frustrated by policy
limitations that are clear and unambiguous.
Id. (internal quotation marks and citations omitted).
Here, in accordance with the discussion in the text above, the Plaintiffs have failed to prove that the initial
$500,000 check was anything other than an advance under the Policy, and they have likewise failed to □
prove that the directions the Defendants gave the Plaintiffs in issuing that $500,000 were out of step with
the required payments under the Policy. Therefore, the Court finds that, even if the “reasonable
expectations” doctrine does apply in this case, that doctrine does not afford the Plaintiffs relief.
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$2,228,700.00 available under the Policy for damage to the buildings, the Plaintiffs refer to: (1)
CBF’s estimate, (2) Mr. Leisenring of FranJo Restoration’s first estimate, (3) the testimony and
estimates offered by Mr. Hughes, and (4) Mr. Komarnicki’s estimates. (See id. at 30-32). Further,
the Plaintiffs argue that the $500,000 check that Mr. Tuttle gave them constituted an “Extra
Expense” payment, not a payment to rectify the damage to the clubhouse and the pro shop,
meaning that the Defendants have only paid out slightly over $1 million to rectify the damage
to the clubhouse and the pro shop. (Id. at 32). Therefore, the Plaintiffs contend that they are
entitled to “$1,155,607.28?” as replacement value under the ... [P]olicy to replace the Country
Club[.]” (d.).
In response, the Defendants argue that: (1) their payment of “$1,573,092.72 for the
structural damage satisfied [their] obligations under the” Policy; (2) their “building estimate

was reasonable and in accordance with the terms of the” Policy; and (3) the Plaintiffs have not
“met their burden of proof that additional money was owed on the structural damage claim.”
(ECF No. 96 at 29). Indeed, with respect to the estimates offered by the Plaintiffs, the Defendants
contend that the “rebuild costs testified to by [the] Plaintiffs’ witnesses are unreliable and
should not be considered” because those estimates include “code and regulatory compliance
upgrades and features which are not covered by the Policy[,]” and because the estimates were
based on “demolition of the existing basement and construction of an entirely new basement[,]”
among, other things. (ECF No. 97 at 11-12). Finally, the Defendants assert that “no expert

27 In a later submission to the Court, the Plaintiffs seek a slightly different amount of money relative to
this claim. (See ECF No. 107). However, because the Court finds that the Plaintiffs have wholly failed to
carry their burden of proof in this case, the Court need not further concern itself with the exact amount of
money that the Plaintiffs are seeking.
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provided the opinion that the basement could not be repaired and reused by the Plaintiffs.” (Id.
at 11).
2. Analysis
In addressing the Plaintiffs’ arguments, the Court again begins by clarifying certain of its
Findings of Fact and Conclusions of Law on this issue.
First, the Court finds that, under the Replacement Cost provisions of the Policy, the
Defendants were permitted to pay the least of the following: (1) the limit of insurance applicable
to the lost or damaged property, (2) the cost to replace the lost or damaged property with other

property of comparable material and quality and used for the same purpose (and, in the event
of a building being built at a new premises, the cost which would have been incurred if the

building had been rebuilt at the original premises), or (3) the amount actually spent that is

necessary to repair or replace the lost or damaged property. See supra Section V.B.1.
Second, for the reasons outlined above, see supra Section VI.C, the Court has found that
the $500,000 check cannot be counted, in its entirety, as an “Extra Expense.” Rather, as the Court
has explained, it was a payment that the Defendants instructed the Plaintiffs to begin using on
certain expenditures that were covered under the Policy. And, because the Plaintiffs have not
shown that the Defendants’ payments for those expenditures were inappropriate under the
Policy, see Supra Section VLC, the Court has no basis upon which to deduct any of the $500,000
check from the “Building” payment that the Defendants made.”* Therefore, the Court finds that

28 Of course, the portion of the $500,000 check that Mr. Lykens testified that the Plaintiffs spent on the
building is properly considered as part of the “Building” payment. But at most, that fact means that that
portion of the $500,000 was simply an advance on the overall “Building” payment—it would not lead the
Court to conclude that any payment made by the Defendants was inappropriate under the Policy.

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the Defendants paid, at the least, $1,456,622.08 for the cost of repairing the damage to the
clubhouse and the pro shop. See Supra Sections V.D.1.b, V.E.1.a.”
Third, the Policy limited the amount of money that the Defendants had to pay for “the
increased costs incurred to comply with enforcement of an ordinance or law in the course of

repair, rebuilding or replacement of damaged parts of [the buildings]” to $25,000. See supra
Section V.B.1. And the Defendants have paid the Plaintiffs this $25,000 in full. See supra Section
V.D; (ECF No. 98 at 22) (stating that the “provisions of the policy found at page 4 as modified
by ... the Golf Course Property Endorsement increases the limit of increased cost of

construction to $25,000.00 and clearly limits the amount incurred to comply with enforcement of

any ordinance or law regulating construction, repair of buildings or land use in force at the time
of loss to the maximum sum of $25,000.00 which has been paid by [the] Defendants.”).
Fourth, the basement of the clubhouse located at 10 Lakeside Avenue prior to the fire

was not compliant with the ADA. See supra Section V.A. In making this finding, the Court

stresses that the Plaintiffs do not dispute the fact that the basement of the clubhouse was not
compliant with the ADA prior to or at the time of the fire. (ECF No. 98 at 10) (noting that “Mr.
Komarnicki opined that the cost of repairing the basement together with the additional cost of
having to make it ADA and code compliant mitigated ...”); (id. at 31-32) (stating that Mr.
Hughes and Mr. Komarnicki “determined that the steel was unusable and the basement should

29 As the Court explained above, see supra Section V.D.1.b, the Plaintiffs assert that a portion of the monies
that the Defendants paid out for the “Building” claim is properly categorized as a payment for Business
Personal Property. If the Plaintiffs are correct, then the Defendants paid out $1,456,622.08 as the
“Building” payment. However, the Court need not definitively resolve the issue of exactly how much the
Defendants paid out on the “Building” claim because, even if that payment was only approximately $1.45
million, the Plaintiffs have still failed to meet their burden of proof on this issue. Therefore, the Court
assumes without deciding that the Defendants only paid out approximately $1.45 million on the
“Building” claim.
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not be reused because of the expense of trying to make it ADA compliant, which expense would
not be covered by the Policy because of the $25,000.00 limitation ...”).
Fifth, the clubhouse did not have a sprinkler system at the time of the fire, but given
changes in the law, the clubhouse was required to have a sprinkler system following the fire. See

supra Section V.A. Once again, in reaching these conclusions, the Court stresses that the
Plaintiffs do not disagree with either of these two findings. (See ECF No. 98 at 3).
With those findings in place, the Court turns its attention to the two broad categories of
evidence that the Plaintiffs contend demonstrate that the Defendants’ $1.45 million “Building”
payment was insufficient under the Policy. The first such category of evidence is comprised of
the estimates prepared by Mr. Komarnicki, Mr. Hughes, CBF, and Mr. Leisenring. The second
such category of evidence is comprised of the testimony and reports that Mr. Hughes and Mr.
Komarnicki offered regarding the steel and the basement at the old clubhouse.
Upon consideration of all of this evidence, the Court finds that the Plaintiffs have failed
to show that the Defendants breached the Policy relative to their “Building” payment, as the
Court now explains.
a. None of the Estimates Offered by the Plaintiffs Lead the Court to
Conclude That the Defendants Breached the Policy Relative to the
“Building” Payment
The Court will review the estimates offered by the Plaintiffs in the following order: (1)
Mr. Komarnicki’s estimates, (2) Mr. Hughes’s estimate, (3) CBF’s estimate, and (4) Mr.
Leisenring’s estimates.
i. Mr. Komarnicki’s Estimates

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As the Court explained above, Mr. Komamicki provided two estimates. See supra Section
V.E.2. In the first estimate, he opined that it would cost approximately $3,889,145.05 to remove
the old basement that existed at the time of the fire and “build[] a completely new structure.”
See supra Section V.E.2. In his second estimate, Mr. Komarnicki opined that it would cost at least
$99,000 to make the basement of the old clubhouse ADA compliant, and, partially due to that
cost, he opined that it would be more cost-effective to construct a new building. See supra
Section V.E.2.
For two reasons, the Court finds that neither of Mr. Komarnicki’s estimates is a sufficient
basis upon which to find that the Defendants breached the Policy relative to the “Building”
payment.
First, the Court reiterates that, by Mr. Komarnicki’s own testimony, the new clubhouse
that the Country Club built ultimately cost under $100 per square foot to build. See supra Section
V.E.2. However, Mr. Komarnicki’s estimated cost to build a new clubhouse at the old location

on the property at 10 Lakeside Avenue resulted in a cost of approximately $217 per square foot.
See supra Section V.E.2. Therefore, because Mr. Komarnicki’s first estimate was so drastically out
of step with the actual cost to build the new clubhouse, the Court finds that both of his
estimates are insufficient bases upon which to find that the Defendants breached the Policy. In
other words, the Court discounts completely the monetary figures in both of Mr. Komarnicki’s
estimates, meaning that, even if the Policy required the Defendants to pay for a complete
rebuild at the old location, neither of Mr. Komarnicki’s estimates provides a sufficient basis to
find that the Defendants’ “Building” payment was insufficient under the Policy.

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Second, the Court reiterates that Mr. Komarnicki’s second estimate (for the reuse of the
basement that existed at the time of the fire) included at least $99,000 in expenses to make that
basement ADA compliant. See supra Section V.E.2. Because Mr. Komarnicki’s second estimate
manifested significant concern with ADA compliance issues, the Court finds it likely that Mr.
Komanrnicki’s first estimate (for the construction of a new clubhouse at the old location) also
contained costs to make the clubhouse fully ADA complaint. When the Court accounts for the
fact that Mr. Komarnicki’s first estimate was predicated on RS Means, which is an industry
standard for calculating building costs, See supra Section V.E.2, the Court affirmatively finds
that Mr. Komarnicki’s first estimate also accounted for ADA compliance issues. Indeed, the
Court rejects the notion that RS Means would not account for constructing a building in a

manner that is ADA compliant. Therefore, the Court finds that both of Mr. Komarnicki’s
estimates included costs to make the relevant building ADA compliant.
With that finding in place, the Court stresses that the basement of the clubhouse that
existed prior to the fire was not ADA compliant. See supra Section VI.D.2. Further, the
Defendants paid out the entire amount of money ($25,000.00) that the Policy required them to

pay for increased costs of construction, such as the cost of rectifying the fact that the basement
of the old clubhouse was not ADA compliant. See supra Section VI.D.2. Therefore, because Mr.
Komarnicki’s estimates both contain significant considerations for ADA compliance issues,”
and because the Policy does not require the Defendants to pay anything beyond the $25,000.00
that they have already paid for such issues, the Court further discredits Mr. Komarnicki’s
30 In the case of the first estimate, the Court is unaware exactly how much money is included in order to
make the new clubhouse ADA compliant. However, because the second estimate includes an allotment of
at least $99,000 to make the basement ADA compliant, the Court infers that the first estimate would
include at least that much money to make the new clubhouse ADA compliant.
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estimates as methods by which to prove that the Defendants breached the Policy relative to the
“Building” payment.
Therefore, for all of the foregoing reasons, the Court entirely discredits Mr. Komarnicki’s
estimates as methods of proving that the Defendants breached the Policy relative to the
“Building” payment.*!
ii. Mr. Hughes’s Estimate
Turning to Mr. Hughes’s estimate for a rebuild of the entire clubhouse, he opined that
the project would cost $2,284,596.00. See supra Section V

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10668000. Public record. Not legal advice.