2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 6-20-2005 

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w . vi l l a nova . e du/thir dc ir c uit_2005/990NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 04- 2282 A D A M B R O WN d/b/ a I l i ad A nt i k, A ppel l ant v. Z UR I CH - AM E RI CA N I NS UR ANC E CO M P ANY O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . C i v. N o. 02- 07838) H onor abl e J ames M cG i r rK el l y , D i s t r i ctJ udge

A r gued J une 2, 2005 B E FO R E : FU E N T E S, G R E E N B E R G , and C O W E N , C i r cui tJ udges ( Fi l ed: J une 20, 2005) A l an C . M i l s t ei n ( ar gued) S h e rm a n , S ilv e rste in , K o h l, R os e & Podol s ky 4300 H addonfi el d R oad Sui t e 311 Penns auken, N . J . 08109 A t t or ney s forA ppel l ant R o b ert B . W h it e, Jr.2

1515 M arketSt r eet Sui t e 1800 Phi l adel phi a, PA 19102 J ohn J . H es s i on ( ar gued) 1225 Fr ankl i n A venue Sui t e 325 G ar den C i t y , N Y 11530 A t t or ney s forA ppel l ee OPI NI ON O F THE COURT G R E E N B E R G , C i r cui tJ udge. T hi s m at t ercomes on be for e thi s cour ton t he appe al of pl ai nt i ff A dam B r ow n, d/b/ a I l i ad A nt i k, fr om an or derent er ed i n t he di s t r i ctcour ton A pr i l 29, 2004, di s m i s s i ng t hi s act i on. W e fi r s ts etfor t h t he unus ual pr ocedur al and fa ctual hi s t or yof thi s cas e. B r ow n i ni t i at ed thi s di ver s i t yof ci t i zens hi p act i on governed byPenns y l vani a l aw agai ns tZ ur i ch- A m er i can I ns ur ance C om panys eeki ng t o r ecove rundera pol i cyZ ur i ch
w r ot e cove r i ng pr oper t ydamage l os s es , al l egi ng t haton oraboutA ugus t12, 2002, he had s uffe r ed fl ood damage t o B i ederm ei erfurni tur e thathe had a cqui r ed and thatw as i n a fac i l i t yi n Pr ague, i n t he C zec h R epubl i c, att he t i m e of the fl ood. B r ow n had ac qui r ed t he furni tur e fr om i t s ow ner s i n and ar ound Pr ague w i t h t he i nt entof i m por t i ng i ti nt o t he U ni t ed St at es and t o s el l i ti n a r es t or ed condi t i on. W hi l e ther e i s no ques t i on t hatZ ur i ch wr o t e t h e p o l i c ya n d t h a ti twa s i n e f f e c ta tt h e t i me o f

t h e l o s s a n d , i n s o me3

ci r cumst ance s , w oul d have c over ed hi s l os s , w hen B r ow n m ade hi s cl ai m Z ur i ch deni ed cover age. Z ur i ch deni ed the cl ai m beca us e w hi l e the pol i cypr ovi ded thati t s “t err i t or i al l i m i t s ” w er e “a nyw her e i n t he W or l d, ” i tfur t herpr ovi ded thatt he t err i t or i al l i m i t s of the pol i cy“exc l ud[ed] t he form erI r on C ur t ai n countr i es , ” and thus excl uded the C zec h R epubl i c. B r ow n m oved fors um m aryj udgm enton t he theoryt hatatt he t i m e of the l os s t he pr oper t yhad notbeen i n a “f orm erI r on C ur t ai n” countr yas t he C zec h R epubl i c di d not exi s tas a pol i t i cal ent i t yunt i l J anuary1, 1993, w hi ch w as aft ert he di s s ol ut i on of the I r on C u rta in . T h u s, in B ro w n ’s v iew , the p ro p e rtyh a d n o t b e e n in a f o rm e r Iro n C u rta in countr ydur i ng t he t i m e he ow ned i toratt he t i m e of the l os s , and, acc or di ngl y , t he excl us i on t o t he w or l d- w i de cove r age a r ea c oul d notappl y . O f cour s e, Z ur i ch oppos ed t he mot i on. N evert hel es s , even though i t s ar gum ent , i f ac cept ed, i . e. t hatt he C zec h R ep u b li c sh o u ld b e re g ard ed as a fo rm er Iron C u rt ain c o u n tryfo r pu rpo ses o f B row n ’s pol i cy , w oul d have e nt i t l ed i tt o a s um m aryj udgm ent , i tdi d notfi l e a c r os s - m ot i on se e k in g su c h a ju d g m e n t. T he di s t r i ctcour trul ed on B r ow n’ s m ot i on bya mem or andum and or derdat ed M ar ch 31, 2004. A ft ers et t i ng for t h t he fa ctual hi s t or yof the ca s e and the cr i t er i a for d isp o sitio n o f

th e m o tio n u n d e r F e d . R . C iv . P . 5 6 (c ), th e c o u rt c o n tin u e d w ith its d iscu ssion , d esc ri b ing the h ist o ryo f th e Iro n C u rt ain a n d B row n ’s arg u m en t. T h e c o u rt p o in ted o u t th a t d u rin g th e tim e o f th e Iro n C u rta in th e C z e c h R e p u b lic a n d S lo v a k ia4

to g e th e r c o n stitu ted C z e c h o slo v a k ia w h ich u n d o u b ted lyh a d b e e n a n Iro n C u rta in countr y . I tt hen conc l uded thata form erI r on C ur t ai n countr y“i ncl ude[d] anypol i t i cal s t at e thatw as pr evi ous l yan I r on C ur t ai n countr y , w i t houtr egar d forw hatfor m t hat pol i t i cal s t at e i s i n now . ” I tcont i nued thatt he C zec h R epubl i c “w as notfas hi oned fr om w hol e cl ot h, butder i ved fr om t he di vor ce of t he C zec hs and the Sl ovaks t hatm ade up C zec hos l ovaki a [a nd t hus ] w as pr evi ous l yorata t i m e i n t he pas t , C zec hos l ovaki a, an I r on C ur t ai n countr y . ” C ons equent l y , i tconcl uded thatw hether“exa m i ned geo graphical l yor gram m at i cal l y , t here i s onlyon e reas on able i nterpret at i on of the ph ras e ‘f o rm e r I ro n C u rt a in c o u n tr ie s ’” a n d th a t th e C z e c h R e p u b lic is o n e s u c h c o u n tr y . T h e re f o re , itd e n ied B ro w n ’s m o tio n f o r su m m a ryju d g m e n t. T h e c o u rt’s d isp o sitio n lef t th e c a se in a p e c u liar p o stu re . C lea rly , u n d e r its op i nion Z uri ch w as ent i t l ed to a sum m aryj ud gm ent tho ug h ithad no tsoug ht one. T hu s, n o tw ith sta n d in g th e M a rc h 3 1 , 2 0 0 4 o p in io n a n d o rd e r th e c a se w o u ld g o o n to its i nevi t abl e demi s e. B r ow n, of cour s e, r ecogni zed thatt he court ’ s deci s i on “had the pr act i cal eff

ectof gr ant i ng [Zuri ch] s um m aryj udgm ent , ” appe l l ant ’ s br . at3, and he accordingl yfi l ed a m oti on t o co nv ertt he o rderof M arch 31 , 20 04 , i nto a fi nal or der so t hatt he ca s e w oul d be overand he c oul d appea l . T he di s t r i ctcour ton A pr i l 29, 2004, gr ant ed B r ow n’ s m ot i on and i n i t s or der“s um m ar i l ydi s m i s s ed [the compl ai nt ] fort he re a so n s s tate d in th e M e m o ra n d u m a n d O rd e r o f M a rc h 3 1 , 2 0 0 4 .” T h is o rd e r, in e f f e c t, gr ant ed Zuri ch a s um m aryj udgm enton t he mer i t s . B r ow n t hen appe al ed fr om t he or der5

of A pr i l 29, 2004. O r di nar i l yw e w oul d nothave j ur i s di ct i on overan appe al fr om an or derdeny i ng s um m aryj udgm ent . T hatpr i nci pl e, how ever , i s i nappl i cabl e her e as B r ow n appea l s fr om a n o r d e re f

f e c t i v e l y g r a n t i n g s u m m a r y j u d g m e n ta g a i n s th i m . F u r t h e r m o r e , u s u a l l y a par t ycannotappea l fr om an or deri ts ought . H er e, how ever , i ti s cl eart hatB r ow n s ought th e o rd e r o f

A p ri l 2 9 , 2 0 0 4 , o n ly as a lo g ic a l c o ro lla ry to th e o rd e r o f M a rc h 3 1 , 2 0 0 4 . C er t ai nl y , B r ow n di d notbr i ng t hi s act i on i n t he hope i tw oul d be di s m i s s ed. R ather , he
w ant ed t o r ecove ra j udgm entagai ns tZ ur i ch. Fi nal l y , w e ar e notbarr ed fr om ent er t ai ni ng t hi s appea l on t he theoryt hats om e as pectof the ca s e r emai ns open i n t he dis t ri ctcou rtor that the case w as di sm i ssed w i t ho ut pr ej ud i ce. T o the con t rary , t he case
w as r es ol ved compl et el yi n t he di s t r i ctcour tand, i nas m uch as t he di s m i s s al w as on t he m e ri ts , B ro w n c a n n o t r e in s titu te it w ith o u t b e in g b a rr e d b yp ri n c ip le s o f c la im p re c lu s io n . T hus , w e have j ur i s di ct i on under28 U . S. C . § 1291. O n th is a p p e a l w e e x e rc is e p le n a ry re v ie w . S e e U S X C o rp . v . A d ri a tic In s . C o ., 34 5 F . 3d 19 0, 19 9 (3d C i r. 20 03 ), cert . den i ed, 54 1 U . S . 90 3 (200 4). T herefore, w e use t he s ame st andar d as t he di s t r i ctcour tdi d i n or i gi nal l ygr ant i ng s um m aryj udgm entand can a ffi r m onl y“i f the pl eadi ngs , depos i t i ons , ans w er s t o t he i nt err ogat or i es , and admi s s i ons on fi l e, t ogetherw i t h t he af fi davi t s , i f any , s how t hatt her e i s no genui ne i s s ue a s t o a n yma t e r i a l f

a c ta n d [ Zu r i c h ] i s e n t i t l e d t o j u d g me n ta s a ma t t e ro f l a w. ” F e d . R. C iv. P. 56 (c).6

A ft erourr evi ew of thi s m at t er , w e have concl uded thatt he pol i cyi s not ambi guous w i t h r es pectt o i t s appl i cat i on t o B r ow n’ s pr oper t y . T he t err i t or i al l i m i t at i on pr ovi s i on does notr el at e t o pol i t i cal ent i t i es . T hus , i ti s notcapt i oned, e. g. , “Pol i t i cal E nt i t yL i m i t s . ” R ather , i ti s capt i oned “Terr i t or i al L i m i t s , ” i . e. , t her efor e r el at i ng t o l and m as s . A ccor di ngl y , t he r efe r ence t o I r on C ur t ai n countr i es w as fort he purpos e of defi ni ng ar eas . T her efor e, i nas m uch as Pr ague undoubt edl yw as behi nd t he I r on C ur t ai n, t he ex cl usi on app l i es. W e re a lize , as B ro w n p o in ts o u t, th a t th e re p o ss ib lyc o u ld b e a d if f e re n t re su lt i n cases i nv olvi ng l osses atl ocati on s w i t hin the fo rm er G erm an D em ocrat i c R epu bli c (East G erm any ), w hich w as an Ir on C urt ai n co un t ry . T o reunifyG erm any , t he fo rm er East G erm an yb ec am e a p art of the F ed era l R ep u b li c o f G erm an y(fo rm erlyW est G erm an y ), an ent i t yt hatneverw as an I r on C ur t ai n countr y . B utt he C zec h R epubl i c i s di ffe r ent fr om t he Feder al R epubl i c of G erm any , as i tdi d noti n pol i t i cal t erm s exi s tbefor e the di s s ol ut i on of the I r on C ur t ai n. M or eover , the C zec h R epubl i c and Sl ovaki a ar e the s u c c e s s o rs to C z e c h o s lo v a k ia w h ic h u n d o u b te d ly w a s b e h in d th e Ir o n C u rt a in . C o n se q u e n tly , P ra g u e a n d th e e n tire C z e c h R e p u b lic, u n lik e th e G e rm a n D e m o c ra tic R e p u b lic , d id n o t b e c o m e p a rt o f a c o u n tr yth a t n e v e r w a s b e h in d th e Ir o n C u rt a in . T h e re f o re , th e F e d e ra l R e p u b lic o f G e rm a n yis n o t, u n lik e th e C z e c h R e p u b lic , a r e p l a c e m e n to f

a n I r o n C u r t a i n c o u n t r y. In re a c h in g o u r re su lt w e a lso p o in t o u t th a t if th e lo ss h e re h a d b e e n p rio r to7

Ja n u a ry1 , 1 9 9 3 , the re c lea rlyc o u ld n o t h a v e b e e n a re c o v e ryo n th e p o licyh a d it b e e n in eff ectatt hatt i m e. A ft eral l , every one agr ees thatbefor e thatdat e the pr oper t yw as i n an I r on C ur t ai n countr y . I ti s di ffi cul tt o under s t and w hythe r es ul ts houl d be anydi ffe r ent fora l os s on oraft ert hatdat e mer el ybeca us e C zec hos l ovaki a w as par t i oned att hatt i m e, as w e see no reas on t o b el i eve thatt he p art i on i ng som eho w cou l d h ave les sened the ri sk t hatZ ur i ch w as t aki ng. I n anyevent , B r ow n does notcont end thatt he pol i t i cal d iss o lu tio n o f

C z e c h o slo v a k ia d e c re a se d th e risk to p ro p e rtyin P ra g u e f ro m th e risk to it i m m edi at el ypr i ort o t he part i on. I n r eac hi ng ourr es ul tw e have notover l ooked B r ow n’ s ar gum entt hatt he di s t r i ct c o u rt’s d e c isio n (a n d th u s b ye x ten sio n o u r o p in io n ) a c h iev e s “ a re su lt th a t is re sp e c tf u lly c a lled a b su rd .” A p p e llan t’s b r. at 2 4 . H e m a k e s th is s tate m e n t b e c a u se h e c o rre c tly poi nt s outt hatt he exc l us i on does notappl yi n countr i es t hatneverw er e behi nd t he I r on C u rt a in b u t in w h ic h , in h is v ie w , “ c h a o s h a s re p la c e d th e ru le o f la w .” Id . H e s uppor t s hi s ar gum entw i t h t he pr i nci pl e that“the pr operi nt erpr et at i on of a contr act‘ i s t he one w hi ch appe ar s t o be i n acc or d w i t h j us t i ce a nd comm on s ens e and the pr obabl e i nt ent i on of the part i es , ’ ” quot i ng K eat i ng v. St adi um M gm t . C orp. 508 N . E . 2d 121, 124- 25 ( M as s . A pp. C t . 1987) . A ppel l ant ’ s br . at24. B utt hi s pr i nci pl e does not al l ow us t o r ew r i t e the pol i cy . T hus , w e ca nnotdel et e the Ter r i t or i al L i m i t s pr ovi s i on f r o m th e p o l i c yo rd e l e t e t h e I r o n Cu r t a i n e x c l u s i o n f r o m th e p r o v i s i o n . M o r e o v e r , we cannotbor r ow pr i nci pl es of underi ncl us i on fr om Fi r s tA m endmentcons t i tut i onal l aw and8

app l yt hem i n a co ntr actl aw set t i ng so as t o eli m i nate the Ir on C urt ai n ex cl usi on . T hu s, w h ile w e a g re e th a t risk to p ro p e rtyis p ro b a b lyf a r g re a ter in c e rta in a re a s o f th e w o rld t hatneverw er e behi nd t he I r on C ur t ai n t han the r i s k i n Pr ague, w hi ch w e know has r edeve l oped i nt o a magni fi centci t y , s t i l l w e ca nnotel i m i nat e the I r on C ur t ai n excl us i on o n th e g ro u n d s th a t it is f o o lis h f o r Z u ri c h to in c lu d e it in its p o lic ie s . Fur t herm or e, i ti s di ffi cul tforB r ow n t o ar gue coge nt l yt hatt he “pr obabl e i nt ent i on of the part i es ” w as t o pr ovi de forcover age he r e. A ft eral l , B r ow n obt ai ned the pol i cyon oraboutD ece m ber26, 2000, fora one- y eart erm ( i tw as r enew ed i n D ece m ber2001) and d id n o t lea se h is f

a c ili tyin P ra g u e u n til Ja n u a ry2 0 0 2 . M o re o v e r, h e tes tifie d a t h is di s pos i t i on t hatw hi l e he “ r evi ew ed the pol i cy ” w hen he obt ai ned i the w as notaw ar e of th e T e rrito ria l L im its p ro v isio n a n d d id n o t b e c o m e so “ u n til a f ter [ h e ] h a d th e lo ss e s” in th e f lo o d . A p p . at 4 7 . It i s u n f o rtu n a te th a t w h e n B ro w n lea se d h is P ra g u e f a c ili tyh e d id n o t re v iew h is in su ra n c e f o r if h e h a d re a d th e T e rrito ria l L im its p ro v isio n it su re lyw o u ld h a v e a le rt e d h im to h is p o te n tia l in s u ra n c e c o v e ra g e p ro b le m . T he or derof A pr i l 29, 2004, w i l l be af fi r m ed.