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ALEA LONDON LIMITED v. RUDLEY

United States District Court, E.D. Pennsylvania


July 12, 2004.

ALEA LONDON LIMITED
v.
HOWARD and EDITH RUDLEY, ROBERT HANDFINGER, PROPERTY & CASUALTY INSURANCE COMPANY OF HARTFORD, and ALBERT DAVIS.

The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge

MEMORANDUM & ORDER

Presently before the Court is Plaintiff Alea London Limited's Motion for Summary Judgment. (Doc. No. 19.) Plaintiff filed its Motion on February 4, 2004. Responses to the Motion were due fourteen days later. E.D. Pa. Local Rule 7.1(c). Defendant Property & Casualty Insurance Company of Hartford ("Hartford") timely filed its response on February 17, 2004, stating that it took no position on the merits of Plaintiff's Motion. (Doc. No. 20.) The other Defendants, Howard Rudley, Edith Rudley, Robert Handfinger, and Albert Davis, all acting pro se, failed to timely file responses to Plaintiff's Motion. On May 24, 2004, we ordered Defendants to respond to Plaintiff's Motion within fourteen days, stating that if they failed to do so, the Court would rule on Plaintiff's Motion without the benefit of Defendants' responses. (Doc. No. 21.) Defendants Davis and Handfinger then moved for an extension of time in which to respond to Plaintiff's Motion. (Doc. Nos. 22, 23.) On June 23, 2004, we granted their motions for an extension and ordered all Defendants to respond to Plaintiff's Motion within ten days, again stating that if they failed to do so, the Court would rule on Plaintiff's Motion without the benefit of their responses. (Doc. No. 26.) We indicated that no further extensions would be granted. (Id.) As of the date of this Memorandum & Order, Hartford is the only Defendant to file a response to Plaintiff's Motion. This is the Court's decision on Plaintiff's Motion.

I. BACKGROUND

  On October 25, 2002, the Rudleys and Handfinger sued Hartford and Davis in the Court of Common Pleas for Philadelphia County, Pennsylvania (the "Common Pleas Action"). (Doc. No. 19, Ex. A.) In the Common Pleas Action, the plaintiffs alleged that on or about June 30, 2001, Davis owned an apartment located in Philadelphia, Pennsylvania, that he rented to Handfinger. (Id. ¶¶ 5-6.) On or about June 30, 2001, one of the tenants residing in the same building as Handfinger used a washing machine that broke and leaked water. The water caused the ceiling of Handfinger's apartment to collapse and some pipes to break. (Id. ¶¶ 9-11.) As a result of the leak and/or ceiling collapse, Handfinger's furniture and clothing became wet and subsequently contaminated with mold, causing Handfinger to suffer the physical effects of mold contamination. (Id. ¶¶ 12, 23.) Handfinger was forced to move out of the apartment and into the Rudley's home. (Id. ¶ 13.) As a result, the Rudley's home is now contaminated with mold. (Id. ¶ 14.)

  At the time of these events, the Rudleys and Handfinger were insured by Hartford. (Id. ¶ 15.) The Rudleys and Handfinger brought the Common Pleas Action against Hartford and Davis to recover for the damage to their properties and persons. Count One alleges that Hartford breached its insurance contracts with the Rudleys and Handfinger by failing to provide coverage for the cost to decontaminate their home, furniture, and other belongings. (Id. ¶¶ 7-17.) Counts Two and Three allege that Davis was negligent for a variety of reasons and is liable to Handfinger for the damages cause by the mold contamination. (Id. ¶¶ 18-35.) The final Count seeks punitive damages on the grounds that Davis acted in an intentional, wilful, wanton, malicious, and/or reckless manner indifferent to the safety and well being of Handfinger. (Id. ¶¶ 36-39.)

  Upon receiving the complaint in the Common Pleas Action, Davis submitted a claim to Plaintiff, his insurer, asking Plaintiff to defend and indemnify him for all claims asserted in the Common Pleas Action. (Id., Ex. 2.) The insurance policy that Plaintiff issued to Davis (the "Policy")*fn1 includes a clause entitled, "MOLD AND FUNGI EXCLUSION CLAUSE," which states:

Notwithstanding any other provision in this policy, this insurance does not apply to the following:
Under the Commercial Property Coverage:
for any loss or damage involving in any way the actual or potential presence of mold, mildew or fungi of any kind whatsoever, whether or not directly or indirectly caused by or resulting from any peril insured under this Policy.
Under the Commercial General Liability Coverage:
(1) Any sums which any Insured becomes legally obligated to pay as damages because of Bodily Injury, Property Damage, Personal Injury, Advertising Injury or Medical Payments directly or indirectly relating to the actual, potential, alleged or threatened presence of mold, mildew or fungi of any kind whatsoever, or any materials containing them at any time.
(2) Any loss, cost or expense:
(a) any Insured or any other person or organization may incur in testing for, monitoring, removing, treating or in any way responding to the actual, potential, alleged or threatened presence of mold, mildew or fungi of any kind whatsoever, or any materials containing them, whether as a result of a request, demand, statutory or regulatory requirement or otherwise; or
(b) any Insured or any other person or organization may incur in connection with any claim or suit on behalf of any governmental authority or any person or organization relating to the actual, potential, alleged or threatened presence of mold, mildew or fungi of any kind whatsoever, or any materials containing them.
(3) Underwriters will have no duty or obligation to defend any Insured with respect to any claim of suit seeking any such damages.
(Id., Ex. C.)

  The Policy also contains a clause entitled, "EXCLUSION — PUNITIVE OR EXEMPLARY DAMAGES," which states, in relevant part:

This insurance does not apply to any claim of or indemnification for punitive or exemplary damages. If a suit seeking both compensatory and punitive or exemplary damages has been brought against you for a cl[ai]m within the coverage provided by this policy, we will provide defense for such action. We will not have any obligation to pay for any costs, interest or damages attributable to punitive or exemplary damages.
(Id., Ex. D at 3.)

  According to Plaintiff, the Policy clearly and unambiguously excludes coverage for the defense or indemnification of the mold-related and punitive damages claims asserted in the Common Pleas Action. For these reasons, Plaintiff seeks a declaratory judgment that it has no duty under the Policy to (1) defend or pay costs to or on behalf of Davis in connection with the Common Pleas Action; (2) indemnify Davis for any judgment, settlement, or other award of monies as damages, including punitive damages, arising out of the Common Pleas Action; or (3) pay monies, including punitive damages, on behalf of Davis to the Rudleys, Handfinger, or Hartford in connection with the Common Pleas Action. We have jurisdiction over this case pursuant to 28 U.S.C. § 1332 because Plaintiff and Defendants are of diverse citizenship and the amount in controversy exceeds $75,000.

  II. LEGAL STANDARD

  Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact is in dispute. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Once the moving party carries this initial burden, the nonmoving party may not rest upon the mere allegations in its pleading, but must set forth specific facts showing that there is a genuine issue for trial. FED. R. CIV. P. 56(e). When, as in this case, a motion for summary judgment is unopposed, "the Court is required to conduct its own examination of whether granting summary judgment is appropriate." Fekade v. Lincoln Univ., 167 F. Supp.2d 731, 738 (E.D. Pa. 2001); FED. R. CIV. P. 56(e) ("If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party."). In considering a motion for summary judgment, we will not resolve factual disputes or make credibility determinations, and we must view facts and inferences in the light most favorable to the nonmoving party. Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1127 (3d Cir. 1995).

  III. ANALYSIS

  An insurer has no duty to defend or indemnify an insured if the insurance contract excludes coverage over the claims made in the underlying litigation. Certain Underwriters at Lloyd's of London v. Lehigh Hoagie City, Inc., No. 96-cv-3282, 1997 WL 50416, at *2 (E.D. Pa. Feb. 6, 1997) (citing Gene's Rest. v. Nationwide Ins. Co., 548 A.2d 246, 246 (Pa. 1988)); see also Keystone Spray Equip., Inc. v. Regis Ins. Co., 767 A.2d 572, 574 (Pa. Super. 2001) ("It is well established that an insurer need only defend an insured in a claim if the insurance contract provides coverage for a suit of that nature.") (citing Gene's Rest., 548 A.2d at 246).*fn2 In order to determine whether an insured is entitled to coverage under an insurance policy, we must compare the allegations in the underlying litigation with the provisions of the policy. Keystone Spray Equip., 767 A.2d at 574. "In examining the language of an insurance policy, we are mindful that `[w]hile any ambiguities in an insurance contract will be resolved in favor of the insured, a court is required to give effect to clear and unambiguous language.'" Estate of Higgins ex rel. Higgins v. Washington Mut. Fire Ins. Co., 838 A.2d 778, 781 (Pa. Super. 2003) (quoting Coppola v. Insurance Placement Facility of Pa., 563 A.2d 134, 136 (Pa. Super. 1989)). If coverage cannot possibly extend to the claims at issue in the underlying action, then the insurer has no duty to either indemnify or defend the insured. Lehigh Hoagie City, 1997 WL 50416, at *2.

  After comparing the claims made in the Common Pleas Action with the provisions of the Policy, we are compelled to conclude that Plaintiff has no duty under the Policy to defend or indemnify Davis in connection with the claims made in the Common Pleas Action. Count One in the Common Pleas Action is a breach of contract claim asserted by the Rudleys and Handfinger against Hartford. We can find nothing in the Policy that would obligate Plaintiff to defend or indemnify Davis in connection with such a claim. (See Doc. No. 19, Ex. E.) Counts Two and Three seek to hold Davis liable for damages caused by mold contamination. The Policy clearly excludes coverage over such claims. (See id., Ex. C. ("Notwithstanding any other provision in this policy, this insurance does not apply to the following . . . [a]ny sums which any Insured becomes legally obligated to pay as damages because of Bodily Injury, Property Damage, Personal Injury, Advertising Injury or Medical Payments directly or indirectly relating to the actual, potential, alleged or threatened presence of mold, mildew or fungi of any kind whatsoever, or any materials containing them at any time. . . . [or] [a]ny loss, cost or expense . . . any Insured or any other person or organization may incur in connection with any claim or suit on behalf of any governmental authority or any person or organization relating to the actual, potential, alleged or threatened presence of mold, mildew or fungi of any kind whatsoever, or any materials containing them.").) The final Count seeks to hold Davis liable for punitive damages. The Policy clearly excludes coverage over claims for punitive damages. (Id., Ex. D at 3 ("This insurance does not apply to any claim of or indemnification for punitive or exemplary damages.").)*fn3 Because no genuine issue of material fact exists as to Plaintiff's obligations under the Policy, we are compelled to grant Plaintiff's Motion.

  An appropriate Order follows. ORDER

  AND NOW, this ____ day of July, 2004, upon consideration of Plaintiff Alea London Limited's Motion for Summary Judgment, (Doc. No. 19), it is ORDERED that Plaintiff's Motion is GRANTED. It is further ORDERED that Plaintiff has no obligation under Commercial General Liability Insurance Policy Certificate No. ALE0650 issued by Plaintiff to Albert Davis to:

1. defend or pay costs to, or on behalf of, Davis in connection with the civil action captioned Rudley v. Property & Cas. Ins. Co. of Hartford, No. 02064002 (Pa. Ct. Common Pleas Oct. 25, 2002) (the "Common Pleas Action");
2. indemnify Davis for any judgment, settlement, or other award of monies as damages, including punitive damages arising out of the Common Pleas Action;
3. pay monies, including punitive damages, on behalf of Davis to Howard and Edith Rudley, Robert Handfinger, or Property and Casualty Insurance Co. of Hartford in connection with the Common Pleas Action.
IT IS SO ORDERED.


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