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Bomgardner v. State Farm Fire and Casualty

September 14, 2010


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


This action involves an insurance coverage dispute between the plaintiff, Brad Bomgardner d/b/a Brad Bomgardner Concrete ("Bomgardner") and the defendants, State Farm Fire and Casualty ("SFFC") and State Farm Mutual Automobile Insurance Company ("SFMA"). Bomgardner seeks a declaratory judgment that his claim is covered under his insurance policy with SFFC, damages for breach of the insurance contract, and damages pursuant to 42 Pa.C.S. § 8371, which permits special damages where an insurer has acted in bad faith toward the insured.

The defendants move to dismiss the action under Federal Rule of Civil Procedure 12(b)(6), arguing that Bomgardner fails to state a claim for insurance coverage or insurer bad faith, and that the complaint fails to state any claim against SFMA. For the reasons that follow, the Court grants the defendants' motion and dismisses the claims against SFFC and SFMA with prejudice.

I. Factual Background

Bomgardner is in the "business of performing concrete related services" and on November 14, 2008, he installed a concrete floor at a residence under construction for Mr. and Mrs. Gallo. Compl. ¶¶ 3, 9. The general contractor for the Gallo project was D. Terry Miller & Associates ("DTM"). Compl. ¶ 11. The concrete that Bomgardner used was mixed and supplied by Pennsy Supply, Inc. Compl. ¶ 10.

Bomgardner was at all times relevant insured under a "Contractor's Policy" issued by SFFC that provided business liability coverage. Compl. ¶ 5. The policy states that SFFC "will pay those sums that the insured becomes legally obligated to pay as damages because of... property damage... to which this insurance applies. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments." The policy also provides that SFFC assumes the "right and duty to defend any claim or suit seeking damages payable under this policy." Contractor's Policy, Sec. II, Coverage L, p. 18, Ex. A to Pl. Compl.

The policy restricts business liability coverage for property damage to "property damage caused by an occurrence which takes place in the coverage territory during the policy period." Id. (emphasis added). "Occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions which result in bodily injury or property damage." Id. at 27 (emphasis added).*fn1

In February 2009, DTM informed Bomgardner that there were problems with the floor he had installed at the Gallo residence due to spalling and delamination of the concrete. Compl. ¶ 11. On January 13, 2010, DTM, through its counsel, sent a letter to Bomgardner and Pennsy demanding $25,897.42, the cost to DTM of repairing the floor. Letter from Counsel for DTM to Bomgardner, Ex. B to Pl. Compl. On January 27, 2010, Bomgardner notified SFFC of DTM's claim against him and requested coverage. Compl. ¶ 14.

As part of its investigation into Bomgardner's insurance claim, SFFC retained Astrotech to perform petrographic testing on the concrete in the Gallo home. Compl. ¶ 16. Astrotech determined that the spalling and delamination were the result of both excess water in the concrete mix prepared by Pennsy and inadequate curing of the concrete. Compl. ¶ 17; Astrotech Report, Ex. C. to Pl. Compl.

In a letter dated May 22, 2009, SFFC denied Bomgardner coverage for his claim. SFFC explained that, based on Astrotech's findings, the defects in the concrete floor were considered "improper workmanship" and not an "occurrence" as required by the policy, and therefore his claim did not come within the insuring agreement. Furthermore, the letter stated, coverage would be excluded under Exclusion 11(f) of the policy. Compl. ¶¶ 18-19; SFFC Denial.

Bomgardner continued to press SFFC regarding his claim and requested a copy of the Astrotech report. Compl. ¶¶ 20-22. SFFC refused to provide the report on the grounds that it constituted work product of State Farm. Compl. ¶ 23. On July 10, 2009, Bomgardner's attorney wrote a letter to SFFC's Claim Team Manager, David Konefal-Shaer, asking SFFC to reconsider its refusal to provide the report and advising him that Bomgardner could obtain the report through discovery if he filed a lawsuit against SFFC. Letter to Konefal-Shaer, Ex. F to Pl. Compl. Mr. Konefal-Shaer responded three months later, on October 14, 2009, stating that Bomgardner's letter had only that day been brought to his attention and apologizing for the delay. Letter from Konefal-Shaer, Ex. G. to Pl. Compl. Mr. Konefal-Shaer confirmed that the Astrotech report was considered State Farm's work product and that SFFC would not voluntarily turn over a copy of the report to Bomgardner. Id. After Bomgardner commenced this action, SFFC produced the Astrotech report in response to pre-pleading discovery. Compl. ¶ 30.

On March 5, 2010, Bomgardner brought an action against SFFC and SFMA in the Lancaster County Court of Common Pleas, alleging that SFFC wrongfully denied it coverage under the insurance policy. On March 25, 2010, the defendants removed the action to this court based on diversity of citizenship. The court heard oral argument on the motion to dismiss on September 8, 2010.

II. Analysis

Bomgardner asserts that his insurance claim comes within the definition of an "occurrence" and is therefore covered under the policy. He argues that because the underlying problems with the concrete were the fault of Pennsy - not Bomgardner - his was not a claim for "faulty workmanship." Bomgardner also contends that the problems with the floor were "unexpected and unintentional," therefore bringing his claim within the definition of an "accident" or "occurrence." Furthermore, he argues, his claim is not barred under any of the policy exclusions. He alleges that SFFC breached the insurance contract when it refused him coverage and that it acted in bad ...

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