The opinion of the court was delivered by: Sylvia H. Rambo United States District Judge
This case involves an insurance contract between Plaintiffs Young Sook Pak and In Suk Pak (hereinafter collectively "the Paks") and Defendants ALEA London Limited ("ALEA") and Sirius International Insurance Corporation ("Sirius"). Before the court is Defendants' motion for summary judgment. (Doc. 14.)
The following facts are undisputed except where noted.
The Paks are husband and wife who operate various businesses, including Joe's Grocery Store located at 360 S. Queen Street, York, Pennsylvania. (Doc. 14-2, Defs.' Stat. of Mat. Facts, ¶ 4; Doc. 21, Pls.' Response to Stat. of Mat. Facts, ¶ 4.) The Paks purchased commercial property insurance from All Risks Limited ("All Risks"), an authorized agent of Defendants. Defendants jointly issued a Certificate of Insurance with 50% issued by ALEA and 50% issued by Sirius. Coverage under this policy was for all of the Paks' businesses including Joe's Grocery Store. (Defs.' Stat. of Mat. Facts ¶¶ 5, 11; Pls.' Response to Stat. of Mat. Facts ¶¶ 5, 11.) The policy was in effect from May 3, 2005 through May 3, 2006.*fn1
2. The Wall Collapse and Maintenance
On April 8, 2006, the north wall of Joe's Grocery Store partially collapsed. Prior to collapse, the wall was covered in vines and other vegetation. (Doc. 17-14, Young Sook Pak Dep. 39-40; Doc. 17-15, In Suk Pak Dep. 22-23.) The parties dispute whether deterioration or decay was visible on the wall prior to its collapse. The Paks state that no deterioration was evident to them, and that they took preventative steps to maintain the entire building. Specifically, in 2001-2002, the Paks had the roof replaced because of water leakage. (Doc. 21-3, Paks' Aff. ¶ 3.) Following the roof replacement, there continued to be a water leakage problem that was ultimately resolved by the roofing contractor, and there were no visible signs of any moisture penetration into any part of the building for at least six months prior to the wall's collapse. (Id. ¶¶ 5-6.) According to the Paks, the last sign of moisture penetration was in the area opposite the collapsed wall. (Paks' Aff. ¶¶ 7-9.) The Paks state that any time they became aware of maintenance issues, they made repairs. For instance, they received a notice from their prior insurer, Donegal Insurance, listing certain items in need of repair. (Paks' Aff., Ex. B, Loss Control Dep't. Recommendation Form from Donegal Insurance.) Among the items listed were: (1) a rotting window on the rear third floor of the main section; (2) a balcony along the left side of the building that needed to be inspected for rotted wood, repaired, and painted; (3) the cantilever roof on the first floor near the balcony needed to be secured to or removed from the building, (4) loose bricks along the left side of the building above the basement window needed to be repaired, and (5) the source of water in the basement and water damage in the store needed to be identified and repaired. (Id.) None of these deficiencies was near the collapsed wall, and, according to Plaintiffs, all of them were remedied to the satisfaction of Donegal Insurance. (Paks' Aff. ¶¶ 14-19.) Donegal Insurance also required the Paks to remove vegetation from around the property, but not the vines growing on or near the wall that collapsed. (Id. ¶ 20.) Prior to the wall's collapse, no one, including Donegal Insurance, alerted the Paks to any decay or deterioration of the wall, or that the wall needed to be repaired or maintained. (Id. ¶ 23; Young Sook Pak Dep. 37; In Suk Pak Dep. 12, 21.)
Defendants assert that the deterioration was visible to the Paks prior to the wall's collapse. Specifically, they state that the undisturbed brickwork of the north wall was visibly weathered, deteriorated, and discolored from excessive moss and algae growth. (Doc. 17-11, Feb. 16, 2009 Report by Kelly Huff, at 10.) In some areas of the remaining wall, the mortar was cracked and disintegrated, while in other areas there was no mortar at all (Id.) A large amount of vegetation was growing on the wall, some of which was well entrenched into the exterior face of the brick. (Id. at 10.) In her report, Kelly Huff stated that during her investigation of the premises, water staining was apparent on a ceiling tile near the collapsed wall, and on the interior face of the north wall. (Id. at 26.) Furthermore, Huff's report states that "exposed wood framing was weathered and the siding was dilapidated and hanging off of the north wall." (Id.) According to Defendants, all of these conditions were visible prior to the wall's collapse, and should have put the Paks on notice that the wall needed to be repaired.
After the wall collapsed, the Paks submitted a claim through All Risks who then assigned the claim to its adjuster Johns Eastern Company. Johns Eastern assigned the claim to one of its employees, Robert Faith, to conduct an investigation. Throughout the course of the investigation, Johns Eastern and Faith communicated only through Susan Eich, an employee of All Risks, and never communicated with anyone from ALEA or Sirius.*fn2 (Doc. 17-8, Robert Faith Dep. at 12.) Faith received the referral from All Risks on April 11, 2006 and called the Paks that same day. (Id. at 36.) Faith noted immediately that it was difficult to communicate with the Paks because they do not speak English very well. (Id.) No one representing Defendants ever attempted to get a Korean interpreter to speak to the Paks about the incident, all conversations between any of Defendants representatives and the Paks were in English. (Faith Dep. 40.) Faith went to the site of the wall collapse on April 11, 2006. (Id.) Faith's initial impression was that the wall collapse was caused by "[p]ossibl[e] settlement, earth movement." (Faith Dep., Ex. 1, case notes.) Faith does not remember what he talked about with the Paks during his initial visit to the site, and does not know whether he asked them any questions about any maintenance that they performed on the wall or the property in general. (Faith Dep. at 41.) Because he could not diagnose the cause of the collapse himself, Faith requested permission from All Risks to hire an engineer to provide an opinion. (Faith Dep. at 39.)
After receiving permission to do so, Faith hired SEA Limited, an engineering firm located in Maryland, to provide expert engineering services. SEA assigned the job to Kelly Huff, a professional engineer. (Id. at 46.) Faith testified at his deposition that he adjusts 4-6 wall collapse claims per year, and that he hires an engineer for all of these claims. (Id. at 19). SEA is the engineering firm that Faith typically uses for wall collapse claims, and the only engineer ever sent by SEA is Kelly Huff. (Id. at 47.) On or about April 17, 2006, Huff visited the wall collapse site; Huff's opinion was that the wall collapsed because of a lack of maintenance and continuous water seepage, which caused the deterioration of the wood framing, and the brick and mortar joints. (Doc. 17-7, May 22, 2006 Ltr. from Robert Faith to the Paks, at 3.) The parties disagree whether Huff spoke to the Paks about the condition of the wall prior to its collapse. Huff states in her report that Young Pak was interviewed regarding the history of the building and the reported damage. (Doc. 17-6, Apr. 20, 2006, Huff Report, at 1.) The Paks acknowledge speaking to Huff, but deny that she inquired about what was visible to them prior to the collapse and/or their maintenance history for the building. (Paks' Aff. ¶ 24.) Based solely on the report of Huff, Faith recommended to All Risks that the claim be denied; and on May 22, 2006 Faith sent the Paks a denial letter. (Faith Dep. 43; 58.)
4. Terms of the Insurance Policy
The terms of the insurance policy include various exclusions listed on a form titled "Causes of Loss -- Special Form (CP 10 30 04 02)" (hereinafter "Causes of Loss form"). (See Doc. 21-2.) The exclusions listed in section B of that form are the crux of the dispute between the parties.*fn3 In particular, Section B.2 lists 13 specific exclusions, and subsets of those exclusions, only three of which are relevant here: B.2.d.1-4; B.2.f; and B.2.k. Those sections state:
2. We will not pay for loss or damage caused by or resulting from any of the following:
(2) Rust or other corrosion, decay, deterioration, hidden or latent defects or any quality in property that causes it to damage or destroy itself;
(4) Settling, cracking, shrinking, or expansion
f. Continuous water seepage or leakage of water, or the presence or condensation of humidity, moisture or vapor, that occurs ...