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Bottke v. State Farm Fire and Casualty Co.

January 22, 2009


The opinion of the court was delivered by: Schiller, J.


Plaintiff David Bottke brings this action against Defendant State Farm Fire and Casualty Company ("State Farm"), alleging that State Farm breached its insurance contract with him and violated Pennsylvania's Bad Faith Statute, 42 Pa. Cons. Stat. Ann. § 8371 (2008). Currently before the Court is Defendant's motion for partial summary judgment on Plaintiff's bad faith claim. For the following reasons, Defendant's motion is granted.


A. Facts

Plaintiff has a homeowner's insurance policy, as well as several endorsements to that policy, with Defendant. (Def.'s Mot. for Partial Summ. J. [hereinafter "Def.'s Mot."] ¶ 8.) On February 16, 2007, the furnace in Plaintiff's home broke, causing the pipes to freeze and burst, resulting in water damage to his home. (Id. ¶ 9; Pl.'s Resp. to Def.'s Mot. for Partial Summ. J. [hereinafter "Pl.'s Resp."] Ex. C [Letter from AMC Plumbing] & Ex. D [Claim Log] at SF084.) Plaintiff reported the loss to State Farm that same day. (Def.'s Mot.¶¶ 9-10.) On February 20, 2007, Alice Hoffman, the State Farm representative handling Plaintiff's claim, and James Wagner, Plaintiff's public adjuster, inspected Plaintiff's home. (Id. ¶¶ 10, 16; Claim Log at SF083.) Wagner also called a contractor, FloorWorks, to perform emergency services, including drywall and flooring removal. (Def.'s Mot. ¶ 16; Claim Log at SF083.) At some point after inspecting the property, Wagner submitted an estimate of $87,728.31 to State Farm for the loss. (Pl.'s Resp. Ex. F [Wagner Estimate].)

After an initial inquiry, State Farm determined that Plaintiff's loss was covered.*fn1 (Def's. Mot. ¶¶ 15, 24; Claim Log at SF077; Def.'s Mot. Ex. E [Feb. 20, 2007 Letter].) Accordingly, State Farm issued payment to FloorWorks for the emergency services it performed, issued Plaintiff an advance payment that he had requested, and scheduled a time for a building contractor, Madsen Kneppers & Associates ("MKA"), to perform an inspection. (Def's. Mot. ¶¶ 24-25; Claim Log at SF077, SF082.) On April 20, 2007, Ron Mahon of MKA and Wagner inspected the water damage to Plaintiff's house. (Claim Log at SF076.) After inspecting the property, Mahon requested, from State Farm, FloorWorks's supporting documentation for the loss and a copy of a report completed by the HVAC contractor, who inspected the property on March 2, 2007. (Id. at SF075, SF083.) Hoffman followed up accordingly. (Id. at SF075.)

State Farm received a copy of MKA's estimate on June 4, 2007. (Id. at SF073.) The estimate states, under the heading "General Notes," that it was "derived from repair recommendations based on the following": (1) "a site investigation performed by MKA on April 20, 2007"; (2) "site notes, phote [sic] documentation and take-offs at the time of inspection"; and (3) "discussions with David Bottke (homeowner) and James Wagner from Alliance Adjuster Group." (Pl.'s Resp. Ex. E [MKA Estimate] at SF138.) The estimate describes the damage as follows: "On February 16, 2007 a frozen water pipe was discovered to have burst in the baseboard heater on the east wall of the left (east) front bedroom. The house sustained water damage." (Id.) The scope of the estimate "include[d] replacement of water damaged materials throughout the house," which MKA estimated to be $37,687.87. (Id. at SF137-138.)

After reviewing MKA's estimate and comparing it with Wagner's estimate, Hoffman sent a letter to Plaintiff on June 21, 2007, enclosing payment of $21,509.98 per the MKA estimate with some adjustments and attaching a copy of the estimate for Plaintiff's review. (Claim Log at SF073, SF234; Def.'s Mot. Ex. L [June 21, 2007 Letter].) The June 21, 2007 letter explained that State Farm had deducted from the MKA estimate the amount that State Farm already paid to Plaintiff and amounts attributable to a prior overlapping loss.*fn2 (Def.'s Mot. ¶ 29; June 21, 2007 Letter.) The letter also explained that State Farm had adjusted the estimate for depreciation and to include twenty-percent overhead and profit instead of the fifteen-percent figure used by MKA. (June 21, 2007 Letter.)

On October 24, 2007, Hoffman and Michael Pacchione, Hoffman's team manager, met with Wagner to reinspect the property and discuss their differing estimates. (Def.'s Mot. ¶ 33; Claim Log at SF068.) State Farm contends that Wagner agreed to review and revise his estimate, while Plaintiff asserts that Wagner only agreed to review his estimate and revise if appropriate. (Def.'s Mot. ¶ 33; Claim Log at SF068; Pl.'s Resp. Ex. A [Wagner Aff.] ¶ 10.) Irrespectively, Hoffman and Pacchione subsequently spoke with Ron Mahon of MKA and requested a revised estimate based on their discussions with Wagner. (Claim Log at SF067.) State Farm ultimately paid Plaintiff an additional $1,245.07 based on MKA's revised estimate. (Def.'s Mot. ¶ 38; Def.'s Mot. Ex. S [Nov. 28, 2007 Letter].) The revised estimate, which was included in a November 28, 2007 letter to Wagner with State Farm's additional payment, contains the same general notes and damage description as the initial estimate. (Nov. 28, 2007 Letter.)

Shortly after the October 24, 2007 meeting, Wagner advised Hoffman of additional damages. (Def.'s Mot. ¶ 34; Def.'s Mot. Ex. P [Oct. 28, 2007 Letter].) Wagner reported that FloorWorks recommended removal of part of the second floor hall bathroom walls, and that Plaintiff's plumber, AMC Plumbing, discovered two additional leaks that needed repair. (Oct. 28, 2007 Letter.) Plaintiff also submitted an invoice from AMC plumbing for $5,000.00 for the repair of the broken pipes. (Def.'s Mot. Ex. R [Letters Regarding Invoice]; Letter from AMC Plumbing.) After speaking with Charlie Heiland of AMC Plumbing to ensure that the repairs related to Plaintiff's loss, Hoffman sent Wagner a check for $5,000.00 to cover the repairs. (Def.'s Mot. ¶ 36; Claim Log at SF066-67; Letters Regarding Invoice.)

On November 19, 2007, Wagner sent Hoffman a letter requesting that she add to the estimate the cost of tearing out the walls in the second floor hall bathroom. (Def.'s Mot. ¶ 37; Def.'s Ex. S [Nov. 19, 2007 Letter].) Hoffman followed up with Mahon of MKA regarding whether tearing out these walls was necessary as a result of Plaintiff's loss. (Claim Log at SF065.) In a December 5, 2007 letter, Hoffman informed Wagner that, based on MKA's opinion, State Farm did not consider the removal of walls necessary. (Def.'s Mot. Ex. T [Dec. 5, 2007 Letter].)

On February 11, 2008, Plaintiff filed his Complaint in state court. Defendant subsequently removed the matter to this Court. The case was initially sent to arbitration; Plaintiff appealed for a trial de novo, which is scheduled for January 26, 2009.

B. Contentions

The parties do not dispute that Plaintiff's property was damaged on February 16, 2007 nor do they dispute that the loss is covered - indeed, they agree that State Farm paid Bottke $42,307.75 in connection with his claim.*fn3 (Def.'s Mot. ΒΆΒΆ 7, 24.) Instead, the parties dispute the scope of repairs and method of repairs necessary to properly restore Plaintiff's property. This will be the focus of Plaintiff's breach of contract claim at trial. The focus of the instant motion, however, is Plaintiff's bad faith claim. Plaintiff claims that when Hoffman hired MKA, she falsely represented that there was only one leak at Plaintiff's house when she knew that there were several. According to Plaintiff, this led MKA's representative, who inspected Plaintiff's property and prepared an estimate accordingly, to drastically underestimate the cost of the repairs. Thus, Hoffman was aware that MKA ...

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