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HOGGARD v. ALLSTATE INSURANCE COMPANY

April 26, 2004.

JAMES M. HOGGARD, JR.
v.
ALLSTATE INSURANCE COMPANY.



The opinion of the court was delivered by: JACOB HART, Magistrate Judge

MEMORANDUM AND ORDER

This case presents an insurance coverage question. Does the resident of a home, on which he has paid homeowners' insurance premiums, have an insurable interest in the home once a writ of execution is issued on the property? Allstate contends that the writ of execution divested the resident of his insurable interest. Additionally, since the Plaintiff renewed the insurance policy after the writ was executed, Allstate contends that there is no coverage because Plaintiff failed to inform Allstate of the transfer of ownership of the property. The Plaintiff argues that the foreclosure action did not divest him of an insurable interest in the property. Hoggard also claims that he was unaware of the change in title. Therefore, no material misrepresentation was made in the policy renewal.

Factual Background

  On March 9, 2003, the house located at 15 Somerset Drive in Coatesville caught fire. Both the dwelling and its contents suffered significant damage. On March 13, 2003, Plaintiff, who, at that time, lived in the house, contacted his homeowners insurance company to report the fire loss. The Defendant denied the claim.

  Prior to the fire, on June 24, 2002, a writ of execution was issued to the sheriff, based on a foreclosure action filed by the Plaintiff's mortgagee, Eastern Savings Bank, FSB. On November 8, 2002, the property was conveyed from the Office of the Sheriff to Tiger Real Estate, Inc., a subsidiary of Eastern Savings Bank. Plaintiff, who had been insured with Allstate for approximately eighteen years, renewed his homeowners policy on February 25, 2003. Citing the change of ownership and Plaintiff's failure to notify Allstate of the change of ownership, the Defendant denied Plaintiff's claim in an undated letter which is attached to Plaintiff's complaint. Plaintiff filed suit in the Court of Common Pleas and the Defendant removed the case to federal court. Presently before the court is the Defendant's Motion for Judgment on the Pleadings.

  Standard of Review

  Federal Rule of Civil Procedure 12(c) permits a party to move for judgment "after the pleadings are closed but within such time as not to delay the trial." Fed.R.Civ.P. 12(c). A party moving for judgment on the pleadings pursuant to Rule 12(c) must demonstrate that there are no issues of material fact and that judgment should be entered in its favor as a matter of law. See Jablonski v. Pan Amer. World Airways, Inc., 863 F.2d 289, 290 (3d Cir. 1988). In evaluating a Rule 12(c) motion, a court must view the pleadings in the light most favorable to, and draw all inferences in favor of, the nonmoving party. See Soc'y Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1054 (3d Cir. 1980).

  Discussion

  A. Insurable Interest

  We must first determine if Mr. Hoggard had an insurable interest in the property at the time of the fire. In making this determination, Allstate has focused on the fact that Mr. Hoggard was not the titled owner of the property. His name did not appear on the deed at the time of the fire. Hence, according to Allstate, he had no insurable interest in the property. Hoggard argues that the policy does not require that the property be titled to him. Rather, since it was his resident premises, he had an insurable interest in the property.

  We reject Allstate's theory that merely because Mr. Hoggard's name did not appear on the deed he does not have an insurable interest in the property. The courts of Pennsylvania do not limit the classification of those with an insurable interest to those who have legal title to a piece of property. Rather, the courts follow the generally accepted rule that "anyone has an insurable interest who derives pecuniary benefit or advantage from the preservation or continued existence of the property or who will suffer pecuniary loss from its destruction. . . . [A] fee title is clearly not required of the insured, nor even a direct property interest, the test of exposure to financial loss being all important." Luchansky v. Farmers Fire Insurance Co., 357 Pa.Super. 136, 138 (1986) (citing 43 Am.Jur.2d Insurance § 943; 4 Appleman, Insurance Law and Practice § 21).

  In Luchansky, the Superior Court considered and rejected a theory substantially similar to that made by Allstate today. In Luchansky, parents transferred legal title of their property to their son under an agreement providing for the reconveyance of the property and the parents paid for the insurance on the property and its maintenance. When a fire destroyed the property, the insurance carrier denied the claim. The Superior Court held that the parents had an insurable interest in the property despite the fact that their names did not appear on the deed. "[A] fee title is clearly not required of the insured. . . ." Luchansky, at 139.

  Similarly, in Shockley v. Harleysville Mutual Ins. Co., 381 Pa.Super.287 (1989), the Superior Court found that the bona fide purchaser of a stolen vehicle had an insurable interest in the vehicle. "Having perfect legal title is not necessary [to establish an insurable interest]." Id, at 291.

  Thus, we are persuaded that the mere fact that Mr. Hoggard's name did not appear on the deed is not dispositive of the insurable interest issue. Therefore, we must determine if Mr. Hoggard had any ...


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