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Colella v. State Farm Fire & Casualty Co.

March 30, 2010


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


Before the Court is Defendant's Motion for Summary Judgment (Doc. No. 13), and responses thereto (Doc. Nos. 14, 15, 16). For the reasons set forth in this Memorandum, summary judgment is granted.


Plaintiffs are Andre and Christina Colella. Defendant is State Farm Fire and Casualty Company ("State Farm"). On July 1, 2008, Plaintiffs suffered a physical loss to their home which is located at 650 9th Avenue, Warminster, Pennsylvania. At the time of the loss, the home was covered under an insurance policy with State Farm. Plaintiffs' Complaint sets forth two claims against State Farm arising out of this loss: Breach of Contract (Count I) and Bad Faith (Count II). At the time of Plaintiffs' loss, they had an all-risk insurance policy with State Farm under policy number 768-LY-4561-3 which was comprised of Homeowners Policy form FP-7955, form FE-7269 Amendatory Endorsement, form FE-5320 Policy Endorsement, form FE-5398 Fungus (Including Mold) Exclusion, form FE-5287 Back-up Dwelling/Listed Property, form FE-5452 Motor Vehicle Endorsement, and form FE-5831 Telecommuter Coverage (collectively, the "Policy").

The Colellas live in a two story home with a basement, however the basement does not run across the entire length of the first floor. Underneath the part of the house which is not supported by the foundation is a concrete slab with soil underneath. On July 1, 2008, Plaintiffs called State Farm and reported a claim to their agent. They told the agent that a broken pipe underneath the house was causing damage to carpeting and walls in the basement. Plaintiffs advised their agent that they had retained a plumber who would be coming to the house on July 10, 2008 to determine if there was a crack in the sewer pipe under the house. On July 10, 2008, Plaintiffs retained Free Flow Inc. to perform a camera scope of the pipe believed to be at issue. On July 11, 2008, public adjuster Daniel Pierson contacted State Farm and advised State Farm that he was representing Plaintiffs in their insurance claim.

State Farm representative Alice Hoffman was assigned to the matter and she contacted Pierson's office to schedule an inspection. On July 22, 2008, Hoffman and Pierson met at Plaintiffs' home for an inspection. Pierson advised Hoffman that the drain line under the family room was leaking and that it had caused water damage to the basement wall. Hoffman also advised Plaintiffs that prior to determining coverage, she would need to retain a plumber to perform an inspection to determine the cause of the loss.

Hoffman retained plumber Tom Pileggi to perform an inspection of Plaintiffs' home. On July 28, 2008, Pileggi met with Pierson at Plaintiffs' home. Pileggi reviewed paperwork provided by Pierson, viewed the video taken of the cast iron pipe under the slab by Free Flow, Inc., and inspected the first and second floors of Plaintiffs' home. Afterwards, Pierson spoke to a State Farm team manager, Mike Pacchione. Pierson told Pacchione that water was in fact leaking from a drain line beneath the concrete slab supporting part of the home. Pacchione advised Pierson that there may be a coverage issue if the damage was caused by water below the surface of the ground. Pacchione also spoke to Pileggi who advised Pacchione that he scoped the line and that the leak was somewhere in the fifteen to eighteen feet of run pipe that was under the slab. Pileggi opined that water was leaking from the pipe underneath the slab into the ground and then into the foundation of the home.

On July 29, 2008, Pacchione called Pierson and explained the results of Pileggi's inspection. Pacchione told Pierson that the claim would be denied based on the inspection and the relevant exclusionary language in the policy regarding ground water. The Policy states in relevant part:

2. W(e) do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other clauses acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the even occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:

C. Water damage, meaning:

(1) flood, surface water, waves, tidal water, tsunami, seich, overflow of a body of water, or spray from any of these, all whether driven by wind or rot;

(2) water or sewage from outside the residence premises plumbing system that enters through sewers or drains or water which enters into and overflows from within a sump pump, sump pump well or any other system designed to remove subsurface water which is drained from the foundation area; or

(3) water 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.

Pacchione prepared a denial letter on July 29 based on State Farm's investigation and conclusion that Plaintiffs' loss was caused from ...

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