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James Enwereji and Bertha Enwereji v. State Farm Fire and Casualty Co.

July 28, 2011


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


I. Introduction

Plaintiffs James Enwereji and Bertha Enwereji ("Plaintiffs") are insurance policyholders who submitted a claim to Defendant State Farm Fire and Casualty Company ("State Farm" or "Defendant") for damages to their slate tile roof. Defendant issued two payments to Plaintiffs to cover the cost of repairs, including replacing the damaged slate tiles. Plaintiffs, however, claim that Defendant should pay the cost of replacing their entire roof, not merely the damaged slate tiles. Defendant contends that it fulfilled its obligations under the insurance contract and has filed a Motion for Summary Judgment (ECF No. 16).

The legal question before the Court is a determination of Defendant's coverage obligation under the parties' insurance contract. The Court must also evaluate whether there is evidence in the record to support a claim of bad faith under Pennsylvania law. The Court finds that based on the undisputed facts, Defendant has fulfilled its coverage obligations and has acted in good faith. Defendant is entitled to summary judgment as a matter of law.

II. Factual and Procedural History

Plaintiffs held a State Farm homeowners insurance policy, Policy Number 78-PM-6166-2 ("the Policy"), effective from December 22, 2009 to December 22, 2010, for property located at 6531 N. 11th Street Philadelphia, PA 19126 ("Plaintiffs' property"). Policy, Ex. B.*fn1 The Certified Renewal Certificate indicates that Plaintiffs selected the loss settlement option called "A2 Replacement Cost - Common Construction." Certificate, Ex. B. Section A2 of the Policy states in relevant part:

We will pay the cost to repair or replace with common construction and for the same use on the premises shown in the Declarations, the damaged part of the property covered under SECTION I - COVERAGES, COVERAGE "A" DWELLING, except for wood fences, subject to the following:

(1) we will pay only for repair or replacement of the damaged part of the property with common construction techniques and materials commonly used by the building trades in standard new construction. We will not pay the cost to repair or replace obsolete, antique or custom construction with like kind and quality. . .

Policy at 11.

Plaintiffs filed a claim with State Farm following the ice and snow storms that occurred on or about February 16, 2010. Fire Claim Service Record, Ex. A at SF001. The claim was reported to State Farm on February 26, 2010. Id. at SF004, SF011. On March 4, 2010, State Farm's representative Brandon Milton ("Milton") inspected Plaintiffs' property. Id. at SF010. Plaintiffs' representative, Daniel Monaco ("Monaco") of Certified Public Adjusters ("CPA"), was present for the inspection.*fn2 Id. Milton observed damage to the gutters, soffit, and fascia; found four slate roofing tiles on the ground; and referred the property to the "2 story steep team" for further inspection of the roof. Id. On March 22, 2010, State Farm conducted a second inspection of the property with Monaco present, which found damage to 79 slate roofing tiles, the gutter, the plastic gutter guard, and the fascia. Id. at SF009. The following day, State Farm issued a draft to Plaintiffs to cover "slate roof repair, gutters, soffit/fascia repair." Id. The draft amount equaled the estimated replacement cost value of $7,671.76, minus depreciation and the deductible, for a net actual cash value payment of $1,128.50. Estimate, Ex. C. State Farm sent a cover letter with the statement of loss and the draft (Ex. D) to Plaintiffs on March 23, 2010.

Monaco, on behalf of Plaintiffs, sent State Farm a letter on April 5, 2010, rejecting the offer as "totally unacceptable" and contending that the proposed "repair is neither the same like kind or quality as what was on the property, therefore a total replacement is necessary." Ex. E at SF099. Monaco also wrote that "[r]egarding the potential for Bad Faith, you are also taking an enormous depreciation on the repairs, which as you know, no depreciation is to be taken on minimum repairs." Id. at SF100. The letter requested that State Farm revise its estimate and threatened legal action. Id. On April 21, 2010, Monaco sent State Farm a letter indicating that Plaintiffs had not accepted State Farm's estimate. Ex. H at SF091. Monaco also sent CPA's March 2, 2010 estimate of the damage to Plaintiffs' property as $72,844.60. Ex. I at SF087. Plaintiffs' estimate includes replacement of 1250 slate shingles. Id. Ex. I at SF088.

On June 3, 2010, State Farm retained Doug Weiss ("Weiss") of Rainmasters Inc. to inspect Plaintiffs' property a third time. Letter, June 14, 2010, Ex. F. Weiss found "slates missing, cracked slates, slates out of place," as evidenced in the photographs attached to his report, and estimated that 100 slate tiles needed replacement. Id. Based on Weiss's report, State Farm prepared a revised estimate of the replacement cost value, which totaled $13,134.44, minus the depreciation and deductible, for a net actual cash value payment of $5,677.23. Ex. G at SF156. On August 4, 2010, State Farm issued a check for $4,548.67 to cover the amount in excess of the first draft issued to Plaintiffs. Ex. G.*fn3

On August 6, 2010, Monaco sent a letter to State Farm stating: "We received your supplemental estimate along with the secondary payment. . . At this time we will accept and process this as a partial payment #1 as we continue to negotiate this claim." Ex. J at SF080. Plaintiffs admit that they accepted both drafts in partial payment of the claim. Pls.' Resp. Def.'s Mot. Summ. J. ¶ 18.

On November 19, 2010, Weiss sent a letter to State Farm, in which he evaluated Monaco's April 5, 2010 letter and estimate. Letter, Ex. K. Weiss explained that the pictures he took of the roof during his inspection revealed that the roof, originally constructed in 1920, "has been repaired many times previously. Some of the repairs were proper (ie. using new pieces of slate to replace damaged pieces) and some repairs were done improperly (slate roofing sealed with roof cement)." Id. at 1, 2. Weiss also wrote that it was "standard in the slate roofing industry to remove broken, or split slate shingles and replace them with new pieces of slate," and that his conclusions relied on the award-winning industry manuals, "Slate Bible" and "The Slate Book." Id. Weiss explained that replacement tiles of "like kind and quality" in size, thickness, and shade are "not unusual and are standard for roofing," and available from several distributors. Id. at 2.

On August 9, 2010, Plaintiffs filed a Complaint against Defendant in the Court of Common Pleas of Philadelphia County, Pennsylvania, August Term 2010, Docket No. 01212. Compl. (Ex. A to Def.'s Notice of Removal, ECF No. 1). The Complaint alleges breach of contract (Count I) and bad faith in violation of 42 Pa. Cons. Stat. Ann. § 8371 (Count II). Plaintiffs seek compensatory damages, punitive damages, attorney fees, costs, and interest.*fn4

Defendant removed the case to federal court on September 23, 2010 on the basis of diversity jurisdiction. (ECF No. 1) Defendant filed this Motion for Summary Judgment on April 29, 2011 and attached record evidence as exhibits.*fn5 (ECF No. 16) Plaintiffs filed their response on May 19, 2011 and did not file any ...

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