United States District Court, Eastern District of Pennsylvania
August 16, 2002
CARMEN M. SMITH, PLAINTIFF,
AMERICAN EQUITY INSURANCE CO., DEFENDANT.
The opinion of the court was delivered by: Pollak, District Judge
On September 28, 2000, plaintiff Carmen M. Smith filed a praecipe to
issue writ of summons in the Court of Common Pleas for Philadelphia
County. Ms. Smith's complaint, filed in that court on November 28, 2000,
asserted causes of action against defendant American Equity Insurance
Co. ("American Equity") arising out of a failure by American Equity to
pay homeowner's insurance claims that she had filed. The complaint stated
two causes of action: one for breach of contract, and one for unfair and
deceptive business practices in violation of 73 Pa. C.S.A. § 201-1.
On December 14, 2000, the defendant filed a notice of removal, asserting
that federal jurisdiction existed under 28 U.S.C. § 1332.*fn1
After a contentious period of discovery, in which this court was
obliged at one point to compel the plaintiff to respond to discovery
requests, American Equity filed a motion for summary judgment on January
7, 2002. (Docket #12). The next item on the docket sheet is a document
filed on February 12, 2002, by the defendant entitled "Reply to
Plaintiff's Reply to Defendant's motion for summary judgment" (Docket
#13). Although the discussion in that document establishes that the
plaintiff composed a response to the motion for summary judgment, that
response has never been filed with this court, despite repeated and
persistent inquiries by chambers staff. In the absence of a timely
response, this court will rule on
the summary judgment motion according
to the standard of Fed.R.Civ.P. 56(c). See E.D. Pa. Rule 7.1. According
to Rule 56, summary judgment is appropriate, "if the pleadings,
depositions, answers to interrogatories, and admissions on files,
together with the affidavits, if any, show that there is no genuine issue
of material fact and that the moving party is entitled to judgment as a
matter of law."
Count I — Breach of Contract
American Equity's motion for summary judgment asserts that plaintiff's
first claim is time-barred. Paragraph 8 of the "Conditions" section of
the insurance policy at issue in this case states:
Suit Against Us. No action can be brought unless the
policy provisions have been complied with and the
action is started within one year after the date of
Contractual limitations on actions which are shorter than an applicable
statute of limitations are valid under Pennsylvania law so long as they
are not manifestly unreasonable. See 42 Pa.C.S.A. § 5501(a)*fn2;
Bostick v. ITT Hartford Group, Inc., 56 F. Supp.2d 580, 585-86 (E.D.Pa.
1999) (applying one-year contractual period of limitation in homeowner's
insurance case) (Reed, J.). The plaintiff has not suggested that the
one-year period specified in her policy is unreasonable in any way.
Paragraph 8 appears to this court to bar the plaintiff's claim. The
complaint asserts that "On or about August 23, 1999 . . . [plaintiff]
suffered damage to her home from which Defendant received due and timely
notice." But Ms. Smith does not appear to have initiated legal action
until more than one year later, by filing her praecipe for writ of
summons on September 28, 2000. Ms. Smith not having provided a
substantive response, the court accepts the foregoing chronology as
correct, and will therefore grant summary judgment for the defendant on
the breach of contract claim. See Fed.R.Civ.P. 56(c).
Count II — Unfair Business Practices
American Equity moves for summary judgment on Ms. Smith's unfair
business practices claim on the ground that she fails to allege that
American Equity is guilty of malfeasance. As pointed out by American
Equity, the Third Circuit has held that:
In Pennsylvania, only malfeasance, the improper
performance of a contractual obligation, raises a
cause of action under the Unfair Trade Practices and
Consumer Protection Law, 73 P.S. § 201-1, et
seq., and an insurer's mere refusal to pay a claim
which constitutes nonfeasance, the failure to perform
a contractual duty, is not actionable. Gordon v.
Pennsylvania Blue Shield, 378 Pa. Super. 256, 264,
548 A.2d 600, 604 (1988). See Raab v. Keystone Ins.
Co., 271 Pa. Super. 185, 187-88, 412 A.2d 638, 639
Horowitz v. Federal Kemper Life Assur. Co., 57 F.3d 300
, 307 (3d Cir.
1995) (rejecting claim that insurer's denial letter constituted unfair
trade practice and bad faith dealing by leading plaintiff to believe that
she had no hope of recovery).
Several paragraphs of Ms. Smith's complaint might suggest that her
claim is limited to American Equity's failure to pay her insurance
claim. See ¶ 6 (asserting the defendant "failed to timely pay . . .
elements of damage which are due"); ¶ 9 ("[i]n failing to make
payments . . . failed to abide by the terms of its policy"). Paragraph
10, however, asserts that American Equity "engaged in fraudulent conduct
which created a likelihood of confusion of misunderstanding." This
allegation might support a claim of malfeasance. But Ms. Smith has done
nothing to support it with affidavits or other documents so as to
establish that there is a genuine issue of material fact requiring a
trial. The only evidence before the court on this issue is the denial
letter issued by American Equity on September 24, 1999 (attached as
Exhibit E to American Equity's summary judgment motion). That letter,
written by an American Equity claims adjuster, discloses a facially
reasonable basis for rejecting Ms. Smith's claim. It states that the
adjuster inspected Ms. Smith's house and determined that the water damage
for which she sought coverage was the result of "severe decay and a long
term deferred maintenance on roof repairs." It then explains:
In order to be covered for interior water damage to
your dwelling, there must be a physical opening in the
exterior of the dwelling caused by the force of the
wind, during the policy period. The water must enter
through the physical opening. In this instant matter,
there was no indication of any windstorm damage to the
property. It was this adjuster's opinion that the
water damage inside your dwelling has been occurring
over a long period of time and certainly had been
occurring prior to the inception of this policy. As
there was no windstorm damage, I must advise you that
no claim payment can be made in this matter.
Rule 56(e) states that the party opposing summary judgment "may not rest
upon the mere allegations or denials of [her] pleading." Instead, "by
affidavits or as otherwise provided in [Rule 56], [she] must set forth
specific facts showing that there is a genuine issue for trial." Id. Ms.
Smith has failed to do so. Accordingly, the court finds that summary
judgment is appropriate for the defendant on plaintiff's unfair business
For the foregoing reasons, it is hereby ORDERED that summary judgment
is GRANTED for defendant.