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White v. West American Insurance Co.

December 5, 2008


The opinion of the court was delivered by: Magistrate Judge Blewitt


I. Background

The instant action was commenced in federal court on December 22, 2006, when the Defendant filed a Notice of Removal from state court pursuant to 28 U.S.C. § 1446. (Doc. 1). The Defendant's removal was based on diversity, and the Defendant indicated that the amount in question was over $75,000, satisfying this Court's jurisdictional requirements. See 28 U.S.C. § 1332(a). The Defendant then filed an Answer to the Complaint on December 26, 2006. (Doc. 5). The parties consented to proceed before the undersigned for a determination of all matters pursuant to 28 U.S.C. § 636(c). (Doc. 9).

Basically, the Plaintiffs allege that they purchased a homeowners insurance policy from the Defendant which covered their double-wide trailer dwelling in Hawley, Pennsylvania, and that the Defendant wrongfully denied coverage with respect to their claims for damages to their trailer and personal property which occurred on June 28, 2006.*fn1 Plaintiffs assert two counts in their Complaint, namely, breach of the insurance contract (Count I) and bad faith (Count II). (Doc. 2).

After the close of discovery, on March 7, 2008, Defendant filed a Motion for Summary Judgment (Doc. 17) and a Brief in support thereof (Doc. 18). Although the Defendant did not strictly follow Local Rule 56.1, M.D. Pa., by filing a separate Statement of Material Facts (SMF), the Court notes that the Defendant did include its lengthy, 28-page, 98-paragraph SMF in the body of its Motion for Summary Judgment, and the statements are in numbered paragraphs which are, for the most part, supported by references to the record. (Doc. 17). To the extent that Defendant's SMF contains conclusions of law, the Court will not accept these paragraphs. The Defendant also filed a Motion in Limine seeking to preclude the Plaintiffs' Expert witness, and a Brief in support on March 8, 2008. (Docs 19 and 20).

On March 18, 2008, the Plaintiffs filed two identical, two-paragraph Answers to the Defendant's Motion for Summary Judgment, which generally denied the statements contained in Defendant's Motion for Summary Judgment. (Docs. 21 and 23). The Plaintiffs did not file a paragraph-by-paragraph response to the Defendant's numbered SMF contained within its Summary Judgment Motion as Local Rule 56.1 mandates. Plaintiffs also filed two identical Answers to Defendant's Motion in Limine on March 18, 2008. (Docs. 22 and 24).

The Plaintiffs filed a Brief in Opposition to the Defendant's Motion for Summary Judgment on March 20, 2008. (Doc. 27). Plaintiffs also filed a Brief in Opposition to Defendant's Motion in Limine on March 25, 2008. (Doc. 30). The Defendant then filed a Reply Brief in support of its Summary Judgment Motion on April 2, 2008. (Doc. 33). The Defendant also filed a Reply Brief in support of its Motion in Limine on April 8, 2008. (Doc. 34).

Subsequently, after obtaining leave of the Court (See Docs. 35 and 36), Defendant filed a Supplemental Brief in Support of its Motion for Summary Judgment on May 16, 2008. (Doc. 37). The Plaintiffs filed an Opposition Brief to Defendant's Supplemental Brief on May 20, 2008. (Doc. 38). The Defendant then filed a Reply Brief in Support of its Supplemental Brief on May 30, 2008. (Doc. 39).

Upon request of the Defendant, the Court conducted oral argument with respect to its Summary Judgment Motion on November 10, 2008. (Doc. 40). The parties primarily argued about Defendant's dispositive Motion and reserved argument concerning Defendant's Motion In Limine since the latter Motion would be moot if the Summary Judgment Motion was granted. (Doc. 44).

II. Summary Judgment Standard

A motion for summary judgment may not be granted unless the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The court may grant a motion for summary judgment if the pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits show that there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). An issue of fact is "'genuine' only if a reasonable jury, considering the evidence presented, could find for the nonmoving party." Childers v. Joseph, 842 F.2d 689, 693-694 (3d Cir. 1988) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A fact is "material" if proof of its existence or non-existence could affect the outcome of the action pursuant to the governing law. Anderson, 477 U.S. at 248. "Facts that could alter the outcome are material facts." Charlton v. Paramus Bd. of Educ., 25 F. 3d 194, 197 (3d Cir.), cert. denied, 513 U.S. 1022 (1994).

The burden of proving that there is no genuine issue of material fact is initially upon the movant. Forms, Inc. v. American Standard, Inc., 546 F. Supp. 314, 320 (E.D. Pa. 1982), aff'd mem. 725 F.2d 667 (3d Cir. 1983). Upon such a showing, the burden shifts to the nonmoving party. Id. The nonmoving party is required to go beyond the pleadings and by affidavits or by "depositions, answers to interrogatories and admissions on file" designate "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

In determining whether an issue of material fact exists, the court must consider the evidence in the light most favorable to the nonmoving party. White v. Westinghouse Electric Company, 862 F.2d 56, 59 (3d Cir. 1988). In doing so, the court must accept the non-movant's allegations as true and resolve any conflicts in his favor. Id., quoting Gans v. Mundy, 762 F.2d 338, 340 (3d Cir. 1985), cert. denied, 474 U.S. 1010 (1985); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976) cert. denied, 429 U.S. 1038 (1977).

Under Rule 56, summary judgment must be entered where a party "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." Celetox Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Moreover, the Third Circuit has recently indicated that "although the party opposing summary judgment is entitled to'the benefit of all factual inferences in the court's consideration of a motion for summary judgment, the nonmoving party must point to some evidence in the record that creates a genuine issue of material fact,' and'cannot rest solely on assertions made in the pleadings, legal memorandum or oral argument.'" Goode v. Nash, 2007 WL 2068365 (3d Cir. 2007)(Non-Precedential)(citation omitted).

III. Material Facts

While the Defendant did not submit a separate filing containing its SMF, as mentioned, the Court finds as sufficient the Defendant's SMF that was submitted as part of its Motion for Summary Judgment. (Doc. 17). The Defendant's fact paragraphs in its Motion were numbered and properly supported by citation to evidence. Therefore, the Court shall adopt as its own all of Defendant's facts contained in its SMF that are supported by citation to evidence and that are not disputed by the Plaintiffs. The Plaintiffs did not submit a Counter-Statement of Material Facts, as required, to respond to the facts stated in the Defendant's SMF. Therefore, the Court deems the facts in the Defendant's SMF supported by the record as undisputed facts. The Defendant has offered evidentiary support for all of its factual paragraphs contained in its SMF, while the conclusory paragraphs do not cite to the record. (Doc. 17). The Court will accept the facts (not the conclusions) contained in Defendant's SMF that are supported by evidence and that are not controverted by Plaintiffs, and it will adopt them as its own herein. See U.S. ex rel. Paranich v. Sorgnard, 396 F. 3d 326, 330, n. 5 (3d Cir. 2005) (under M.D. Pa. L.R. 56.1, the Third Circuit noted that the District Court adopted all the facts of one party that were not clearly disputed by the other party with sufficient citation to the record).*fn2

Also, as stated, since Plaintiffs did not respond to the facts contained in the Defendant's SMF, the Court shall not repeat these evidentiary supported factual paragraphs herein and will incorporate them by reference. In the case of Barthalow v. David H. Martin Excavating, Inc., 2007 WL 2207897, * 1, n. 5, (M.D. Pa. 2007), this Court noted:

The Middle District of Pennsylvania's Local Rule of Court 56.1 provides that a summary judgment motion must include a separate concise statement of material facts. M.D. Pa. Local R. 56.1. The rule also requires that an opposition to a summary judgment motion must similarly include a statement that "responds to the numbered paragraphs set forth in [the moving party's concise statement of material facts], as to which it is contended that there exists a genuine issue to be tried."

Id. Moreover, "[a]ll material facts set forth in [the moving party's statement] will be deemed to be admitted unless controverted by the [opposing party's statement]. " Id.

See also Dusenbery v. U.S., 2006 WL 218220, * 1 (M.D.Pa. 2006) ("it appearing that defendants' statement of material facts was properly deemed admitted by Plaintiffs see L.R. 56.1 providing that the moving party's statement of material facts will be deemed admitted unless the non-moving party specifically contradicts the statement").

IV. Discussion

The Court must ascertain the scope and extent of the insurance policy Plaintiffs purchased from Defendant in order to determine if there was a breach of contract. Only after first determining if there was a breach of contract can the Court properly address the issue of bad faith. If there was no breach of contract, the Plaintiffs cannot, by law, pursue a bad faith claim. If there was a breach of contract, the Plaintiffs would have to make a showing by clear and convincing evidence that the Defendant's denial of coverage was made in bad faith, in order to proceed to trial on this claim.

A. Policy/Exclusion Clause Interpretation

The determination of the scope and extent of the Plaintiffs' policy is the gravamen of this case. In making an insurance policy coverage determination, the Court must initially decide the scope of the insurance coverage and then review the allegations raised in the pleading to see if they fall within the scope of the policy, if proven. See Britamco Underwriters, Inc. v. Grzeskiewicz, 433 Pa. Super. 55, 59, 639 A. 2d 1208 (1994) (citation omitted). Further, under Pennsylvania law, the interpretation of an insurance contract is a question of law for the Court to decide. See Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir. 1997) (citation omitted).*fn3

[I]n Pennsylvania a court construes ambiguities in an insurance policy strictly against the insurer. See, e.g., Selko v. Home Ins. Co., 139 F.3d 145, 152 n. 3 (3d Cir. 1998) (citing Standard Venetian Blind Co. v. Am. Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (Pa. 1983)). Nevertheless, in Pennsylvania, and no doubt elsewhere, "[c]lear policy language... is to be given effect, and courts should not torture the language to create ambiguities but should read the policy provisions to avoid it." Selko, 139 F.3d at 152 n. 3 (internal citations and quotation marks omitted). In construing policy language, courts should consider any special usage "[w]here terms are used in a contract which are known and understood by a particular class of persons in a certain special or peculiar sense [.]" Sunbeam Corp. v. Liberty Mut. Ins. Co., 566 Pa. 494, 781 A.2d 1189, 1193 (Pa. 2001)."

USX Corp. v. Liberty Mut. Ins. Co., 444, F.3d 192-198, 2006 WL 903192 * 4 (3d Cir. 2006).

The Court agrees with Defendant and determines that there are no ambiguities in the policy in this case. (Doc. 17-2, Ex. 1). There are several clauses in the homeowners insurance policy that are under contention in this case, but when read under the guidance of Pennsylvania law, they form a coherent document which clearly states what damages are covered and excluded under the policy. Initially at issue are two sections of the policy, namely, (1) a Water Damages Exclusion, and (2) a Pollutant Exclusion, with an accompanying Exception.

The Water Damage Exclusion is found in Section I-Exclusions of the policy, which states in relevant part:

Section I-Exclusions

A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area...

3. Water Damage

a. Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind; Water Damage means:

b. Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump, or related equipment; or

c. Water or water-borne material below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure; caused by or resulting from human or animal forces or an act of nature. (Doc. 17-2, Ex. 1, pp. 15-16).

The Pollutant Exclusion is found in the Secure Home Endorsement-Pennsylvania section of the policy, ...

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