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Midwest Reg'l Allergy, Asthma, Arthritis & Osteoporosis Ctr., P.C. v. Cincinnati Ins. Co.

United States Court of Appeals, Eighth Circuit

July 31, 2015

Midwest Regional Allergy, Asthma, Arthritis & Osteoporosis Center, P.C., a Missouri Corporation; Dr. Michael Joseph, Individually, Plaintiffs - Appellees, Sooner Three, LLC, Plaintiff
v.
The Cincinnati Insurance Company, Defendant - Appellant

Submitted April 16, 2015

Appeal from United States District Court for the Western District of Missouri - Joplin.

For Midwest Regional Allergy, Asthma, Arthritis & Osteoporosis Center, P.C., a Missouri Corporation, Dr. Michael Joseph, Individually, Plaintiff - Appellee: Philip R. Quinn, Brett W. Roubal, Baird & Lightner, Springfield, MO.

For Sooner Three, LLC, Plaintiff: Philip R. Quinn, Brett W. Roubal, Baird & Lightner, Springfield, MO.

For The Cincinnati Insurance Company, Defendant - Appellant: Nicholas D. Butovich, Daniel G. Litchfield, Litchfield & Cavo, Chicago, IL; J. Philip Davidson, Paul Jay Skolaut, Hinkle Law Firm, Wichita, KS.

Before WOLLMAN and GRUENDER, Circuit Judges, and GRITZNER,[1] District Judge.

OPINION

GRITZNER, District Judge.

The Cincinnati Insurance Company (Cincinnati Insurance) appeals the order of the district court[2] granting summary judgment in favor of Midwest Regional Allergy, Asthma, Arthritis & Osteoporosis Center, P.C. (Midwest Regional), and Dr. Michael Joseph. Having jurisdiction under 28 U.S.C. § 1291, we affirm.

I.

Dr. Joseph operates Midwest Regional in Joplin, Missouri. Since at least 2009, Midwest Regional used specialized medical equipment as part of its normal business operations, including a magnetic resonance imaging (MRI) machine, an X-ray machine, a bone density scanner, laboratory analysis equipment, and specialty infusion equipment. On May 22, 2011, a tornado struck Midwest Regional's medical practice located at 1727 W. 26th Street in Joplin (the Premises). The tornado substantially damaged the building and its contents, rendering it inoperable for medical practice. The tornado damaged Midwest Regional's MRI machine and destroyed the other specialized medical equipment.

After the tornado, Dr. Joseph decided to permanently relocate his medical practice to the Gryphon Building in Joplin (the Replacement Location). The Replacement Location required substantial construction before Midwest Regional could begin its operations. Until construction was complete, Midwest Regional operated out of a temporary location in Webb City, Missouri (the Temporary Location). Midwest Regional, however, was unable to operate at its normal business capacity while at the Temporary Location. Midwest Regional did not accept new patients, and it operated at a reduced schedule. In part because of space restrictions, Midwest Regional did not install the MRI machine, X-ray machine, bone density scanner, or infusion equipment at the Temporary Location and did not receive any revenue from such services.

In preparation to move into the Replacement Location, Midwest Regional repaired the MRI machine and replaced the destroyed X-ray machine, bone density scanner, laboratory analysis equipment, and specialty infusion equipment (collectively, other specialty equipment). Moving the repaired MRI machine to the Replacement Location required a crane and the special expertise of the machine's manufacturer. In addition, the Replacement Location required substantial modification in order to house the MRI and X-ray machines. Among other things, it was necessary to reinforce the floors with concrete, remove and replace exterior brick, as well as install pipe, specialized heating and air conditioning equipment, and copper shielding in the walls, door, and ceiling. The Replacement Location opened on May 1, 2012, slightly less than one year after the tornado.

The Premises was insured by a business owner's policy issued by Cincinnati Insurance (the Policy). Cincinnati Insurance paid Midwest Regional the policy limit of $2,414,161.26 for the building loss, and the policy limit of $388,000 for Midwest Regional's business personal property loss. In addition, Cincinnati Insurance paid $828,081.75 for business income interruption and extra expenses. The parties agree that Cincinnati Insurance paid the full amount of business income loss. Under the " Extra Expense" provision, Cincinnati Insurance reimbursed Midwest Regional for office computer equipment, other medical equipment, office equipment and furniture, and other miscellaneous property.

Midwest Regional subsequently requested reimbursement under the Extra Expense provision for the costs to repair and relocate the MRI machine and to replace the other specialty equipment necessary to resume the normal operations of the medical practice. Cincinnati Insurance denied payment for the additional expenses contending the expenditures did not fall under the Extra Expense provision. Cincinnati Insurance contended the expenses were losses ...


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