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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MANPOWER INC.,
Plaintiff,
v.                                                                                             Case No.   08C0085
INSURANCE COMPANY OF
THE STATE OF PENNSYLVANIA,
Defendant.
DECISION AND ORDER
Plaintiff Manpower, Inc. brings this insurance-coverage action against the Insurance
Company of the State of Pennsylvania (“ISOP”).   Before me now is ISOP’s motion for
summary judgment on “valuation” issues.
On June 15, 2006, a portion of an office building located in Paris, France  - the  “rue
de la Victoire” building - collapsed.   At the time of the collapse, Manpower’s subsidiary,
Right Management (“Right”), leased office space in the building.  Although the collapse did
not damage the part of the building where Right’s offices were located, it damaged the
building’s foundation and rendered the entire building uninhabitable for an extended period,
forcing Right to relocate to temporary office space.  In December 2006, Right entered into
a lease agreement for permanent replacement office space in a new building, the “avenue
d’Iena” building.   Right began the process of building-out and moving into the avenue
d’Iena offices in January 2007, and its move was complete by June 2007.   Between the
time of the collapse and the completion of Right’s move into the avenue d’Iena building,
the rue de la Victoire building remained uninhabitable, and Right was unable to retrieve any




of its business personal property (such as furniture) from the Victoire building.  Thus, Right
purchased replacement property for use at its avenue d’Iena offices.   Right also incurred
expenses for  “improvements and betterments” at the d’Iena offices  - flooring, walls,
ceilings, light  fixtures, doors  and  other interior finishes.    These  improvements and
betterments replaced those left behind at the Victoire building.
Because Right is Manpower’s subsidiary, Manpower filed a claim under its “all risk”
policy with ISOP for losses incurred as a result of the collapse, and when ISOP denied
coverage Manpower commenced this suit.    A substantial issue in the case was whether
the collapse caused a “direct physical loss” of Right’s business personal property and
improvements and betterments within the meaning of the policy.   (Policy [Docket #153-3]
§ 10.)   In ruling on the parties’ motions for summary judgment on this issue (see Docket
#79), I determined that the collapse did indeed cause a direct physical loss of these items
and that Manpower was entitled to coverage for them under two different types of
coverages available under the policy: (1) real-and-personal-property coverage (Policy
§ 9.A.), and (2) extra-expense coverage (Policy § 9.D.).   However, I left calculating the
amount of Manpower’s loss under these provisions to further proceedings.  ISOP’s present
motion seeks to resolve certain issues concerning the amount of the loss.
The parties agree that although coverage for business personal property and
improvements and betterments is (as a result of my prior ruling) available under both the
real-and-personal-property provisions and the extra-expense provisions, Manpower cannot
recover the same loss twice - once as an extra expense and again as a loss of real and
personal property.   The difference between the two coverages is that extra-expense
coverage is limited to costs incurred during the “period of recovery” that are over and above
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the costs that would have been incurred had there been no loss, whereas coverage under
the real-and-personal-property provisions is not limited to the period of recovery.              (See
Policy § 9.I(1)(a).)   Because coverage for real and personal property is broader than
coverage for extra expenses, I will first value Manpower’s loss as a loss of real and
personal   property.   If I determine that full recovery is not available under the real-and-
personal property provisions, I will then consider whether Manpower is entitled to additional
recovery under the extra-expense provisions.
In quantifying its loss, Manpower seeks the replacement value of Right’s personal
property and improvements and betterments - that is, the cost of purchasing new property
and fitting Right’s avenue d’Iena offices with improvements and betterments.   The total
replacement cost for these items was  $2,914,396.   ISOP’s position is that the most
Manpower can recover is the rental value of temporary replacement property for the period
of time in which the property inside the Victoire building was inaccessible.
To resolve this issue, I begin with the policy language.   The policy specifies a
method for valuing  “office furniture, fixtures, and equipment and improvements and
betterments.”                                                                                    (Policy § 13.A.)   Under this method, the value of property that has been
“damaged or destroyed by an insured peril” is measured by the cost of repairing, rebuilding
or replacing the property, whichever is cheapest.  However, in the event of “loss or damage
to such property that is not repaired, rebuilt or replaced,” recovery is limited to the actual
cash value of the property at the time of loss.
In the present case, Manpower has “replaced” the Victoire property with the property
it purchased for use at avenue d’Iena, and so Manpower’s loss does not fall within the part
of the valuation provision specifying that recovery for property that is not repaired, rebuilt
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or replaced is the actual cash value of the property at the time of loss.  However, as ISOP
points out, the Victoire property was not “damaged or destroyed” during the collapse, and
so it is not immediately apparent that Manpower is entitled to recover the replacement
value  of  the  property  under  the  first  provision  quoted  in  the  preceding  paragraph.
Nonetheless, I conclude that the parties did not intend the phrase “damaged or destroyed”
to preclude recovery of the replacement cost of property that has been lost but not
damaged or destroyed.   Otherwise, the policy would not contain a provision for valuing
property that has been stolen and replaced by the insured, since property can be stolen
without being “damaged or destroyed.”  And as noted in my decision on the parties’ initial
motions for summary judgment, ISOP does not contend that the policy does not cover
theft.   Thus, the phrase “damaged or destroyed” must be interpreted to include property
that has been lost but not damaged or destroyed.
That this is the correct interpretation of the policy is confirmed by noting that the
policy uses the phrases “damaged or destroyed” and “loss or damage” interchangeably.
The valuation provision begins by stating that property that has been  “damaged or
destroyed” is valued at replacement cost (or the cost to repair or rebuild the property, if that
would be cheaper than replacing it).   Later, the provision states that in the event of “loss
or damage to such property that is not repaired, rebuilt or replaced,” recovery is limited to
actual cash value.   The word “damage” appears in both of these statements, but one
statement uses “destroy” and the other “loss.”  It would be absurd to interpret the policy as
meaning that property that has been “lost” but not replaced is valued at actual cash value
while property that has been “destroyed” but not replaced is valued at full replacement
cost.  What reason would justify such a distinction?  To avoid this absurdity, the word “loss”
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must be interpreted to include “damage,” and the word “damage” must be interpreted to
include “loss.”  Accordingly, since Manpower replaced the business personal property and
improvements and betterments it lost as a result of the collapse, Manpower’s loss will be
measured by the cost of the replacement property.1
Although ISOP contends that Manpower’s loss should be measured as the loss of
use of the property in the Victoire building, not as a permanent loss of the property, it does
not point to any policy provision supporting the proposition that a loss of the kind sustained
by Manpower is measured on a loss-of-use basis.  ISOP does cite cases stating that loss-
of-use damages should be determined by the rental value of similar property during the
period of loss, 2but these cases would come into play only after ISOP established that the
proper measure of damages in this case is loss of use rather than permanent loss.   But
again, the policy does not contain provisions for valuing lost real and personal property on
a loss-of-use basis, and so the loss must be measured by either replacement cost or actual
cash value.  Certainly one could imagine a policy being drafted in a manner that would limit
Manpower to loss-of-use damages in a situation such as this one, but ISOP has not shown
that its policy was drafted that way.
Accordingly, Manpower is entitled to recover the replacement cost of the business
personal property and improvements and betterments lost in the collapse of the Victoire
1
As noted, the policy states that recovery will be limited to the cost of repairing or
rebuilding property if that would be cheaper than replacing it.   However, there can be no
dispute that replacing the property was Manpower’s only option.  It could not have repaired
or rebuilt the property trapped inside the Victoire building any more than it could have
repaired or rebuilt property that had been stolen.
2
Advanced Network, Inc. v. Peerless Ins. Co., 119 Cal. Rptr. 3d 17, 24 (Ct. App.
2010); Coulter v. CIGNA Prop. & Cas. Co., 934 F. Supp. 1101 (N.D. Iowa 1996).
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building.  Because this will provide Manpower with full reimbursement for its property loss,
I do not separately consider how the loss would be valued under the extra-expense
provisions.
Before concluding, I dispose of ISOP’s argument that Manpower’s recovery is
limited by the “leasehold interest” section of the policy.                                         (Policy § 9.F.)   This section is a
form of coverage for loss caused when a covered peril results in the termination of a lease
on property rented by the insured.   This section is not a limitation on other forms of
coverage available under the policy, and resort to this provision is necessary only when a
loss is not covered under other policy provisions.   The reason ISOP seeks to invoke the
leasehold-interest section is that coverage under that section is subject to a $500,000
sublimit rather than the policy limit of $15 million.
ISOP contends that the leasehold sublimit applies to Manpower’s claim for the
replacement cost of the rue de la Victoire improvements and betterments because the
leasehold-interest section covers “improvements and betterments to real property during
the unexpired term of the lease which is not covered under any other section of [the]
policy.” (Policy § 9.F.(1)(b).)  But this argument is very nearly frivolous, since the provision
by its terms does not apply when a loss is covered by another section of the policy, and as
I have already determined Manpower is entitled to coverage under the real-and-personal-
property section of the policy, which covers “all real and personal property (including
improvements  and  betterments).”                                                                  (Policy                               §  9.A.(1)   (emphasis  added)).  Thus,  the
leasehold-interest section and its $500,000 sublimit do not apply to Manpower’s claim.
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In accordance with the above rulings, IT IS ORDERED that ISOP’s motion for
summary judgment on valuation issues is DENIED.  In addition, I conclude that as a matter
of law Manpower is entitled to recover as damages for the loss of property at rue de la
Victoire the cost of the business personal property and improvements and betterments
Right purchased for use at its avenue d’Iena offices.
Dated at Milwaukee, Wisconsin, this 9th day of June, 2011.
/s_______________________
LYNN ADELMAN
District Judge
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