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James F. Campenella Construction Co., Inc. v. Great American Insurance Company of New York

May 21, 2010

JAMES F. CAMPENELLA CONSTRUCTION CO., INC., AND W.U. LOCUST PARTNERS, L.P., PLAINTIFFS,
v.
GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, DEFENDANT.



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

MEMORANDUM ON PARTIAL DISMISSAL

This action arises out of a contractual dispute respecting an insurance policy Defendant Great American Insurance Company of New York ("Defendant" or "Great American") issued to Plaintiffs James F. Campenella Construction Co., Inc. ("Campenella") and W.U. Locust Partners, L.P. ("W.U. Locust," collectively with Campanella, "Plaintiffs"). Pending before this Court is Great American's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6), which seeks to dismiss various of Plaintiffs' claims. (Docket No. 3.) For the reasons that follow, the Motion will be granted in part and denied in part.

I. Factual and Procedural Background

On January 2, 2006, Plaintiffs, a Pennsylvania corporation and a Pennsylvania limited partnership, entered into a contract under which Campanella agreed to renovate, repair, and restore W.U. Locust's property, which is located at 1111 Locust Street, Philadelphia, PA 19107-5890 ("W.U. Property"). (Am. Compl. ¶¶ 1-3, Docket No. 1, Ex. A.) Thereafter, Great American, in exchange for a premium, issued Plaintiffs an insurance policy ("Policy") for the W.U. Property in the amount of "$42,000,000, covering loss or damage from all risks of direct physical loss to business property at the insured premises" from June 12, 2006, to June 12, 2008, subject to the Policy's terms and conditions. (Am. Compl. ¶ 4, Ex. P-1).

On or about October 23, 2007, "water loss" caused "water damage and other insured damage" to the W.U. Property and Campenella's work on the property, as a result of which W.U. Locust "incur[red] certain 'soft costs' as defined in the insurance policy." (Am. Compl. ¶ 6.) The parties disagree as to the amount of loss Plaintiffs have suffered. (Am. Compl. ¶ 7.) The Policy contains the following provision to resolve disputes as to the amount of loss:

B. Appraisal

If we and you disagree on the value of property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

1. pay its chosen appraiser; and

2. bear the other expense of the appraisal and umpire equally.

If there is an appraisal, we will still retain our right to deny the claim.

(Am. Compl. ¶ 7, Ex. P-1.) According to Plaintiffs, they "have demanded an appraisal concerning the amount of the loss in accordance with the aforesaid appraisal clause," and "have named their appraiser," but Great American has not done so, meaning that "no umpire has been chosen." (Am. Compl. ¶¶ 9--10.)

On January 29, 2010, Plaintiffs filed a complaint with the Court of Common Pleas of Philadelphia County. (Docket No. 1.) On February 6, 2010, the parties stipulated to amend the Complaint. (Docket No. 1.) The Amended Complaint brings one contract count and one bad faith count against Great American. (Am. Compl. ¶ 8-12.) Count I demands that the Court order Great American to appoint an appraiser, or should Great American fail to do so, appoint an umpire. (Am. Compl. ¶ 10.) Count I also seeks recovery of "[i]nterest from October 23, 2007," "[t]he costs of this action," and "[s]uch relief as may be due and owing under the circumstances[,] including judgment for the amount of the unpaid loss if an appraisal is not conducted." (Am. Compl. ¶ 10.)

Count II alleges that Great American "committed bad faith" in violation of 42 Pa. Cons. Stat. Ann. § 8371 (West 2010) ("UTPCPL" or "§ 8371") and Unfair Insurance Practices Act , 40 Cons. Stat. Ann. § 1171.1 et seq. (West 2010) ("UIPA") "during the adjustment of the loss," by "misrepresenting pertinent facts" or provisions of the Policy, "[r]efusing to pay claims without conducting a reasonable investigation," "[n]ot attempting in good faith to effectuate . . . settlement" of Plaintiffs' claims under the Policy, "[c]ompelling persons to institute litigation . . . by offering substantially less than the amounts due," "[f]ailing to promptly provide a reasonable explanation" for denying Plaintiffs' claim or offer of a compromise settlement," and "[f]ailing to accord [Plaintiffs] the same faithful interest" that Great American accorded to itself in only "partially paying loss and . . . partially denying" Plaintiffs' claims. (Am. Compl. ¶ 12(a)--(f).) Plaintiffs request punitive damages pursuant to § 8371and the UIPA, interest under § 8371, any other interest permitted by law, attorney's fees pursuant to 42 Pa. Cons. Stat. Ann. §§ 1726(1) and 2503(9)--(10) (West 2010), 73 Pa. Cons. Stat. Ann. § 201-9.2(a) (West 2010), and 42 Pa. Cons. Stat. Ann. § 8371(3), and incurred costs and reasonable expenditures. (Am. Compl. ¶ 12(1)--(5).) In addition, Plaintiffs seek an order that Great American's defenses are "barred by its bad faith conduct." (Am. Compl. ¶ 12 (6).)

On February 22, 2010, Great American filed the pending Motion to Dismiss, which seeks to dismiss several of ...


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