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Totty v. Chubb Corp.

August 28, 2006


The opinion of the court was delivered by: Ambrose, Chief District Judge.


Plaintiff, Helen Totty ("Plaintiff"), alleges claims for breach of contract and bad faith against Defendants Chubb Corporation, doing business as Chubb Group of Insurance Companies ("Chubb"), and Great Northern Insurance Company ("Great Northern") (collectively "Defendants"). Specifically, Plaintiff seeks to recover under a homeowner's insurance policy for alleged damage to her property and also contends that Defendants acted in bad faith in violation of Pennsylvania law.

Pending before the Court is a Motion for Summary Judgment filed by Defendants seeking dismissal of Plaintiff's claims in their entirety. (Docket No. 22). Plaintiff opposes Defendants' Motion. (Docket No. 26). After careful consideration of the parties' submissions and for the reasons set forth below, Defendants' Motion for Summary Judgment (Docket No. 22) is granted in part and denied in part.


A. Factual Background

Unless otherwise indicated, the following material facts are undisputed. I will view any disputed facts in the light most favorable to Plaintiff.

Plaintiff resides at 4303 Bigelow Boulevard, Pittsburgh, Pennsylvania, 15213, a 100 year old home. Plaintiff was issued a policy of insurance covering the period from January 4, 2002 to January 4, 2003 ("Policy").*fn1 Defendants claim that the Policy was issued by Defendant Great Northern, and the Coverage Summary Page of the Policy identifies Great Northern as the issuer of the Policy. Plaintiff, however, alleges that the Policy was issued by Defendant Chubb. The Policy provided coverage for Plaintiff's residence at 4303 Bigelow Boulevard and its contents, subject to the Policy's terms and conditions.

On or about September 9, 2002, Plaintiff submitted a Property Loss Notice indicating that her dwelling had been damaged by vibrations from construction equipment used by the City of Pittsburgh in July 2002 to resurface Bigelow Boulevard. The alleged damage listed included cracked walls, damaged door frames, and plumbing leaks. The notice also indicated that it appeared the right side of the dwelling was sinking. See Docket No. 24, Ex. B.

Property Adjuster Tim Cusick was assigned to investigate and handle Plaintiff's claim. On October 16, 2002, Lorey Caldwell of Rudick Engineering provided Cusick with a report that stated, in part, as follows:

No ground vibration related damages were observed throughout the residence. Most of the cracking observed throughout the house was recent, and related to foundation settlement induced by the extended and ongoing dry weather throughout the summer. Other cracking damages were localized in nature, and could be correlated to plumbing problems and leaks in various locations of the house, typical residential construction details, and normal settlement, movement, and shifting that can be found to various degrees of severity in similar houses built in this climate. . . .

No evidence of Minor level scissor cracking was observed in any of the plaster walls or ceilings. Although the owner reported Major level concrete and masonry cracking to the foundation walls, concrete sidewalks and patios, the quarry tile at the front entrance, and the concrete block walls of the detached garage, most of the reported cracking was not recent, and none of the cracking was related to the construction activities.

Docket No. 24, Ex. D, p.5 ("Rudick Report"). Plaintiff admits the existence of the Rudick Report but disputes the Report's conclusions.

On November 19, 2002, Cusick sent a letter to Plaintiff denying coverage for the structural property damage portion of Plaintiff's claim. Id., Ex. E. Defendants contend that Cusick relied on the Rudick Report and the Structural Movement and Earth Movement exclusions in the Policy in denying coverage. Cusick did not receive a response from Plaintiff to the November 19 letter. On December 17, 2002, Cusick wrote a follow-up letter reiterating his position and advising that he would review any claim relating to fallen pictures and other personal property damage. Id., Ex. F. On December 23, 2002, Cusick received a letter from Plaintiff dated December 10, 2002, indicating that Plaintiff was having the Rudick Report reviewed by an architect and his structural engineer and that she was retaining her own experts and counsel to pursue her claim. Id., Ex. G. Cusick followed up by letter dated January 30, 2003, requesting that Plaintiff's counsel contact him and reiterating that the insurer would consider any additional information relating to coverage. Id., Ex. H.

In a letter dated April 15, 2003, Plaintiff's counsel indicated to Cusick that he and Plaintiff were engaging experts to inspect the damage to Plaintiff's property and to respond to the Rudick Report. Id., Ex. I. Cusick again requested that Plaintiff submit her position in writing and provide expert documentation if she was disputing the insurer's coverage position. Id., Ex. K. On May 12, 2003, Plaintiff's counsel sent a letter to Cusick expressing surprise at Cusick's request. Id., Ex. L.

In a letter dated August 28, 2003, Plaintiff's counsel informed Cusick that they were concluding the investigation into the cause of the damage to Plaintiff's home and that, "[a]ssuming the results of the final investigation" supported the preliminary conclusions, the loss would total $1.3 million in addition to a contents claim and incidental claims. Id., Ex. N. On September 10, 2003, Cusick wrote to Plaintiff's counsel indicating he still had not received any documentation supporting another cause of loss, and suggesting that the parties and the experts meet to resolve any differences. Id., Ex. O. Plaintiff admits receiving this letter and a follow-up letter dated October 10, 2003, but she did not respond to either letter.

On November 10, 2003, Cusick sent a letter to Plaintiff's counsel stating he was closing the file. Approximately four months later, Plaintiff filed the instant lawsuit. After she filed suit and over three years after the alleged damage occurred, Plaintiff produced a report prepared by Morris Knowles & Associates and Pennsylvania Soil & Rock, Inc. ("Morris Knowles Report"). Id., Ex. R. The report concluded that Plaintiff's house was built on soils known as the Carmichaels Deposit, and that vibratory waves from the construction equipment (a double drum vibratory compactor) caused the loose to medium dense sand layer in the Carmichaels Deposit to densify, causing the very stiff to hard silty clay layers above the sand layer to settle over time, eventually affecting the foundation of the house.

According to Defendants, Great Northern retained another expert, Penn Environmental & Remediation, Inc., to review and comment on the Morris Knowles Report. In November 2005, Penn Environmental & Remediation concluded that the settlement of Plaintiff's property is the likely result of the shrinkage of expansive clay soil on which Plaintiff's home was built and related to the reduced moisture content of that soil in 2002. Id., Ex. U. In addition, the insurer retained a structural engineer, Randal Exley of ARRCA, to inspect Plaintiff's home. In a December 29, 2005 Report, Exley agreed with the Rudick Report that the cracking was caused by normal thermal expansion and contraction and differential expansion and contraction between materials with differing expansion coefficients. Exley also observed, inter alia, that the house showed no signs of ongoing settlement damage and concluded that the claimed damages to Plaintiff's plaster walls and trim was caused by the effects of long-term deflection ("creep") of the wood framing members. Id., Ex. V.

B. Procedural Background

On or about March 11, 2004, Plaintiff commenced this action via Writ of Summons in the Court of Common Pleas of Allegheny County. Plaintiff filed a Complaint against Defendants in that same court on January 4, 2005. On January 31, 2005, Defendants removed the case to this Court. (Docket No. 1). On March 18, 2005, Plaintiff filed a First Amended Complaint against Defendants. (Docket No. 8). Defendants answered Plaintiff's First Amended Complaint on March 28, 2005. (Docket No. 9). On January 30, 2006, Defendants filed the instant Motion for Summary Judgment, Brief in Support, and Concise Statement of Material Facts. (Docket Nos. 22-24).*fn2 On February 28, 2006, Plaintiff filed a Brief in Opposition, as well as a Statement of Facts and Answer to Defendants' Statement of Facts. (Docket Nos. 25, 26). Defendants filed a Reply Brief and Response to Plaintiff's Statement of Additional Material Facts on March 20, 2006. (Docket Nos. 32, 33). Defendants' Motion is now ripe for my review.


Summary judgment may only be granted 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 judgment as a matter of law. Fed. R. Civ. P. 56(c). Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against the party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

In considering a motion for summary judgment, this Court must examine the facts in a light most favorable to the party opposing the motion. Int'l Raw Materials, Ltd. v. Stauffer Chem. Co., 898 F.2d 946, 949 (3d Cir. 1990). The burden is on the moving party to demonstrate that the evidence creates no genuine issue of material fact. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987). The dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material when it might affect the outcome of the suit under the governing law. Id. Where the nonmoving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing that the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial.Celotex, 477 U.S. at 322. Once the moving party satisfies its burden, the burden shifts to the nonmoving party, who must go beyond its pleadings, and designate specific facts by the use of affidavits, depositions, admissions, or answers to interrogatories showing that there is a genuine issue for trial. Id. at 324. Summary judgment must therefore be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d Cir. 1988) (quoting Celotex, 477 U.S. at 322).


A. Chubb As Defendant

Defendants argue that Chubb should be dismissed as a defendant because there is no evidence that Chubb was a party to Plaintiff's insurance contract. Therefore, Defendants argue, Chubb cannot be liable to Plaintiff on her breach of contract or statutory bad faith claims. I agree.

Under Pennsylvania law, "one cannot be liable for a breach of contract unless one is party to that contract." Lockhart v. Fed. Ins. Co., No. Civ. A. 96-5330, 1998 WL 151019, at *3 (E.D. Pa. Mar. 30, 1998) (internal quotations omitted) (citing Pennsylvania law). Similarly, 42 Pa. Cons. Stat. Ann. § 8371 allows a claim only for bad faith conduct "toward the insured" by "the insurer." Lockhart, 1998 WL 151019, at *4 (citing 42 Pa. Cons. Stat. Ann. § 8371). Two factors are relevant in determining who is the insurer: (1) the extent to which the company was identified as the insurer on the policy documents; and (2) the extent to which the company acted as the insurer. Brown v. Progressive Ins. Co., 860 A.2d 493, 498 (Pa. Super. Ct. 2004).

Defendants cite the Lockhart case quoted above in support of their argument for dismissal. In Lockhart, the plaintiff sued Federal Insurance Company and Chubb & Son Inc. on breach of insurance contract and bad faith theories. Defendants moved for partial summary judgment as to the claims against Chubb on the grounds that Chubb was not a party to the insurance contract. The district court in Lockhart granted the motion, finding that "[t]he plain language of the policy categorically identifie[d] Federal as the party which agreed to provide plaintiff with coverage." Id. at *3. The court also held that there was no evidence that Chubb had "alter ego" status, was the "de facto" insurer of plaintiff, or was an "agent" of Federal for purposes that would make Chubb the insurer under plaintiff's policy. Id. at **3-4. In this regard, the court noted that the fact that Federal and other affiliated companies used stationery with a common Chubb Group letterhead or forms copyrighted by Chubb did not make Chubb a party to the insurance contract Id. at *3. The fact that Chubb "provides loss adjustment services for Federal and other affiliates" likewise did not make it a party to each underlying insurance contract. Id.

I agree with Defendants that the case at hand is analogous to Lockhart. Not only do both cases involve a Chubb affiliate, but as in Lockhart, Totty's policy categorically identifies Great Northern as the insurer. Specifically, the policy defines the words "we" and "us" as used in the policy as "the insurance company named in the coverage summary." Policy at A-1. The Coverage Summary, in turn, states that the policy was issued by Great Northern. Also as in Lockhart, Chubb is not mentioned anywhere in the substantive terms of the contract. Nor has Plaintiff offered any evidence that Chubb was the alter ego, de facto insurer, or agent of Great Northern. Furthermore, Great Northern readily admits that it is the insurer, and there is no showing that Chubb operated with regard to Great Northern in a fraudulent manner which would deprive Totty of a legal remedy. See Lockhart, 1998 WL 151019, at *3 & n.1.

Plaintiff's attempts to distinguish Lockhart and create an issue of fact as to whether Chubb was an "insurer" are unavailing. First, Plaintiff's evidence does not show that Chubb was identified as the insurer on the policy documents. For example, Plaintiff cites to the fact that Chubb letterhead was used on other documents and correspondence. As the court in Lockhart stated, however, this fact does not make Chubb a party to the insurance contract. Plaintiff's reliance on the language of Chubb's privacy policy attached to the contract also is misplaced. Plaintiff is correct that the privacy policy states that "Chubb has been serving the insurance needs of our customers for more than a century." Docket No. 25, Ex. A. The privacy policy, however, defines "Chubb" as the "following companies on whose behalf this notice is given." Id. Included in the ensuing list are a number of companies, including Great Northern (and not including Chubb Corporation or the Chubb Group of Insurance Companies). Contrary to Plaintiff, I find that this definition supports, rather than undermines, Defendants' position that Defendant Chubb is not the insurer. Plaintiff's reference to the "signatures" page of the policy likewise is unavailing. The "signatures" page contains signatures under a list of several named companies, including Great Northern. Id. Although three of these companies have the word "Chubb" in their name, neither the Chubb Corporation nor the Chubb Group of Insurance Companies is among those listed. I also find that the reference to the policy as a "Chubb Masterpiece Policy" and the statements on the premium renewal summaries stating "thank you for insuring through Chubb" are insufficient to create an issue as to whether Defendant Chubb was the insurer, especially given the plain language in the policy to the contrary.

Plaintiff also has failed to produce evidence that Defendant Chubb "acted as" the insurer in this case. In support of her argument in this regard, Plaintiff notes that: her claim was handled by Tim Cusick, of Chubb's claim department; the Rudick Report was addressed to Chubb; and opposing counsel asked her during her deposition if she "turned her claim into Chubb." Plaintiff also notes that letters from Cusick state that "Chubb evaluates damages on a covered loss, not a non-covered loss." This "evidence," even if true, is simply insufficient to create a genuine issue of material fact. None of the documents cited by Plaintiff specifically identify Chubb as the insurer or otherwise contradict the policy language. Moreover, as set forth above, simply because Chubb may provide loss adjustment services for Great Northern does not make it a party to each underlying insurance contract. Lockhart, 1998 WL 151019, at *3. Further, the Cusick letters to which Plaintiff cites specifically refer to Great Northern as the insurer. See, e.g., Docket No. 24, Ex. C (". . . the policy of insurance issued to you by Great Northern . . . "); Ex. E (identifying Great Northern as the insurance company and indicating "Great Northern Insurance Company further reserves all rights and defenses which it may have to disclaim coverage . . ."); Ex. M (identifying insurance company as Great Northern).

Finally, I disagree with Plaintiff that the Pennsylvania Superior Court's opinion in Brown compels a different result. Although the court in Brown found a genuine issue as to the insurer's identity, the facts of Brown are distinguishable from the facts in this case. Most significantly, unlike Totty's policy and the policy in Lockhart, the policy in Brown did not specifically identify the insurer or the company issuing the policy. Indeed, the Brown court specifically distinguished its facts from Lockhart in this regard. Brown, 860 A.2d at 499-500.

In short, I do not find any evidence sufficient to create a genuine issue of material fact as to the identity of the insurer in this case. Accordingly, Defendants' Motion for Summary Judgment is granted to the extent it requests that I dismiss Chubb ...

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