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El Bor Corp. D/B/A Juniata Fitness v. Fireman's Fund Insurance Company

May 6, 2011


The opinion of the court was delivered by: Eduardo C. Robreno, J.



Plaintiff El Bor Corporation d/b/a Juniata Fitness ("Plaintiff") brings this insurance contract action against Fireman's Fund Insurance Company ("Defendant"). Plaintiff alleges that Defendant, in bad faith, breached its contractual obligations by failing to indemnify covered losses at Plaintiff's Juniata Fitness gym facility ("Juniata"). Juniata is owned and operated by Glenn Roble, who agreed to have a property damage claim submitted on Juniata's behalf by Metro Public Adjustment, Inc. ("Metro").

Plaintiff pleads two counts: (1) Count One-breach of contract; and (2) Count Two-bad faith conduct in violation of 42 Pa. Cons. Stat. § 8371. Defendant moves for summary judgment, urging that the undisputed evidence of record demonstrates that Defendant neither breached its obligations under the contract nor exercised any bad faith in resolving Plaintiff's claim. For the reasons set forth below, Defendant's motion will be granted in part and denied in part.


A. The Insurance Policy

Defendant issued an insurance policy to Plaintiff, insuring Juniata in the amount of $1,000,000. (Pl.'s Resp. In Opp., Ex. A, at FFIC-262.) The policy covers "risks of direct physical loss unless the loss is limited or caused by a peril that is excluded." (Id. at FFIC-295.)

Amongst others, the policies' exclusions include "loss or damage caused directly or indirectly by": (1) "contamination or deterioration including corrosion, decay, fungus, mildew, mold, rot, rust . . . in covered property that causes it to damage or destroy itself"; (2) defects, errors and omissions, negligent or otherwise, in the "design, specification, construction, workmanship, installation, or maintenance of the property"; (3) the insured's "neglect to use all reasonable means to save covered property at and after the time of loss"; (4) "continuous or repeated seepage or leakage of water or steam that occurs over a period of 14 days or more"; (5) "settling, cracking, shrinking, bulging, or expanding of . . . roofs"; and (6) "wear and tear." (Id. at FFIC-295, FFIC-298, FFIC-299, FFIC-300.)

In addition to the above-mentioned exclusions, the policy contains a provision barring "a legal action" against Defendant unless "all of the 'terms' of the Commercial Output Program coverages have been complied with." (Id. at FFIC-308.) These terms include providing Defendant with "prompt notice" of a claim, and taking "reasonable steps to protect covered property at and after an insured loss to avoid further loss." (Id. at FFIC-303.)

B. The Damage and Juniata's Arrangement with Metro

In early 2009,*fn1 Roble noticed staining on Juniata's ceiling. (See Def.'s Mot. For Summ. J., Ex. A-3, at 23.) Roble did not call Defendant to apprise it of a possible loss in response to the staining because he "didn't think that it was going to be that big of a thing" and "thought it was just a little excess of rain." (Id. at 25.) Roble similarly opted not to undertake any corrective action on Juniata's roof at this time. (See id. at 29.) Sometime thereafter, the stains on the ceiling started to leak. (See id. at 27.) Initially, Roble did not contact Defendant to apprise it of a potential claim. (See id. at 29.)

In February 2009, however, Roble decided to do so after he was approached by Angel Bernardy, a claim solicitor for Metro. (See id., Ex. A-1, at 20, 32, 40.) As a claim solicitor, Bernardy's role was to "go find damage in houses and make sure --offer to people, representation for their claims." (Id. at 20.) Bernardy spoke with Roble about the possibility of signing up for Metro's services, and Roble permitted Bernardy to inspect Juniata to look for damage. (Id. at 32-33, 35.) That same day, Bernardy contacted roofer Steve Price to arrange an initial consultation. (Id. at 40.) After inspecting Juniata's roof, Price performed $250 worth of emergency repairs "due to weight of ice, and snow damage." (Id., Ex. A-6; see id., Ex. A-1, at 41; Pl.'s Resp. In Opp., Ex. C, at 32.)

Following these emergency repairs, Bernardy and Roble spent "about a month" negotiating Metro's fee. (Def.'s Mot. For Summ. J., Ex. A-1, at 33.) During the pendency of negotiations, no additional repairs were undertaken, no portions of Juniata were closed, and no patrons cancelled their gym memberships due to the roof's damage. (Id., Ex. A-3, at 48.) Finally, on March 31, 2009, Roble and Metro came to an agreement whereby Metro would adjust Juniata's claim in exchange for twenty percent of any recovery from Defendant. (Id., Ex. A-5, at 25.) This agreement, which was signed by Bernardy and Roble, listed the date of loss as January 28, 2009, indicating that the damage to Juniata was caused by wind, rain, and ice. (See id., Ex. A-7.) The parties, however, were unable to identify the specific day on which the loss ...

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