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Moore's Home Improvement, Inc., et al v. Nationwide Prop. & Cas. Ins. Co

August 24, 2011


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



This case arises out of Defendant Nationwide Property and Casualty Insurance Company's denial of an insurance claim that Plaintiffs submitted after suffering property damage at their place of business. Plaintiffs have sued Defendant for (1) breach of contract and (2) bad faith under 42 Pa. Cons. Stat. Ann. § 8371. At the bench trial on February 14-15, 2011, the parties agreed that some property damage was compensable under the insurance policy but disagreed as to (1) the extent of damage to the building's roof, (2) the extent of damage to the building's interior, (3) the extent of damage to the building's contents, and (4) whether Defendant acted in bad faith. Thereafter, the parties submitted proposed findings of fact and conclusions of law. (Docs. Nos. 30, 31.) After consideration of all the foregoing, the Court now makes the following:


1. Plaintiffs George Moore and Barbara Moore purchased the building at 1274 Virginia Avenue, Bensalem, Pennsylvania, in 2001. The building had been built in 1950. (N.T. 2/14/11, at 16, 66, 133.)

2. The building was the location of Plaintiffs' general contracting business, Plaintiff Moore's Home Improvement, Inc. It contained warehouses, offices, and other rooms, and was used for storage, for some construction, and for administration of the business. (Id. at 16-34.)

3. The building was insured for up to $442,638, and personal property within the building was insured for up to $250,000. The insurer was Defendant, Nationwide Property and Casualty Insurance Company. (Insurance Policy, Pls.' Ex. 1.)

4. In late January of 2008, Mr. Moore returned to the warehouse section of the building for the first time in two months. (N.T. 2/14/11, at 73-74.) According to Mr. Moore, there was "water coming in warehouse three." (Id. at 42.) The "side portion" of warehouse three was wet, and there was water dripping on the vans, ladders, tools, and the "Metro" racks. (Id.) In the wood room, Mr. Moore saw water "all over the table saws, the miter saws, the laminate. . . . [I]t looked like about a half-inch of water inside." (Id. at 50.) He also saw "a lot of water" near the lunchroom and warehouse one. (Id. at 42-43.)

According to Mr. Moore, when he went up to the roof of warehouse one he saw that a telephone pole that was attached by a wire to the roof had pulled a ten-to-twelve-foot piece of barge board and the rubber roofing off. (Id. at 43-45.) On the roof of warehouse two, Mr. Moore observed "just a couple shingles missing on the back side." (Id. at 46.) On the roof of warehouse three, Mr. Moore saw that the rubber roof was peeled back. (Id. at 47.) On the roof over the wood room, the aluminum that went around the capping was "pulled back and over" and "[t]he whole side was lifted up." (Id. at 48-49.)

5. Mr. Moore did not document the damage or notify Nationwide of it. Instead, he nailed some pieces of the roof back down, screwed other pieces down, and placed a tarp over certain areas. (Id. at 46-48, 52.) He also moved items inside the building from the wet areas to dry areas and discarded certain items, removing ceiling tiles, insulation, and cardboard signs. (Id. at 53-57.) This process took three or four people and, according to Mr. Moore, around two months. (Id. at 56-57.)

6. There was still leakage from the roof in February of 2008. (Id. at 79.) Nonetheless, Plaintiffs did not call a roofer or notify Defendant. (Id. at 80-81.)

7. In March of 2008, Mr. Moore met with public adjuster Joseph Melleski in an unrelated matter, after Mr. Melleski asked Mr. Moore, as a contractor, to render an expert opinion on electrical damage at an unrelated site. Mr. Moore saw damage that looked similar to the damage at his building and recounted this to Mr. Melleski, who suggested that Mr. Moore submit an insurance claim. (Id. at 58-60.) Mr. Melleski also suggested that a roofer he knew, Joseph McCall, fix Plaintiffs' roof, (id. at 60), and that the damage was likely caused by a wind storm in the area on December 16, 2007. (Id. at 76-79.)

8. Michael Melleski, Joseph Melleski's son, visited the building in March of 2008 and prepared an estimate of the repair cost based on his visit. He used the Xactomate system, entering the damage he saw into a program that generated the cost of labor and materials in a "unit price." (Id. at 106-07.) The total estimate for the roof and interior was $104,676.70. (Melleski Estimate, Pls.' Ex. 6.)

9. On March 20, 2008, Joseph McCall made repairs to Plaintiffs' roof. These repairs were to be a "temporary" measure, (id. at 87-89), and made the roof watertight. (Id. at 62.) Mr. McCall took photos of the roof both before and after he made his repairs and provided these photos to Plaintiffs. (Id. at 97.) Mr. McCall was paid $1650 for his work. (Roofing Invoice, Pls.' Ex. 4.)*fn1

10. On March 26, 2008, Plaintiffs filed a claim with Defendant, through Joseph Melleski. Plaintiffs indicated that the loss was due to severe wind and rain on December 16, 2007. (N.T. 2/14/11, at 62; Property Loss Notice, Pls.' Ex. 3.)

11. On April 25, 2008, Edward O'Rangers, the adjuster whom Defendant assigned to handle Plaintiffs' claim, went to the property with Michael Melleski. (N.T. 2/14/11, at 161-63.) Mr. O'Rangers did not see any evidence that the roof had been blown off or otherwise been damaged by wind; rather, it appeared that there might have been a need for maintenance because of age. (Id. at 256.)

12. Subsequent to Mr. O'Rangers's visit, Mr. O'Rangers had a roofer, Michael Anthony, examine the roof and prepare a report. (Id. at 163-65.) Mr. Anthony observed many "old and worn" areas in the roof, as well as patches that appeared to be from older repairs. (Roof Inspection Report, Def.'s Ex. D.) With the exception of one area where the drip edge was missing, "possibl[y] [from] wind damage," there was "[n]o evidence of storm damage." (Id.) Any damage from the drip edge was in an amount below the policy deductible. (N.T. 2/14/11, at 165-66.)

13. In light of Mr. O'Rangers's observations and Mr. Anthony's report, Defendant sent a letter to Plaintiffs dated May 14, 2008, denying coverage for the claim. (Id.; Denial of Coverage Letter, Pls.' Ex. 12.) The denial letter explained that there was no coverage because Defendant had concluded that the damage was due to "[w]ear and tear" and/or "[r]ust, or other corrosion, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself." (Denial of Coverage Letter, Pls.' Ex. 12.)

Although Mr. McCall had taken photographs before and after he made the repairs, Defendant had not seen these photographs before issuing the denial. (Id. at 258-62.) Indeed, at the time the claim was denied, Defendant was unaware of the repairs that had been made to the roof and thus of the original damage. (Id. at 172-74.)

14. Once Mr. O'Rangers learned of the previous repairs, he told the Melleskis that if Mr. McCall's photos were sent to him, Nationwide could reconsider the claim. (Id. at 167-68.)

15. Michael Melleski sent an email to Mr. O'Rangers on June 16, 2008, attaching photos he took of the photos he understood to have been taken by Mr. McCall. (Id. at 112-13, 115.)

16. Michael Melleski never received confirmation from Mr. O'Rangers that the latter had received the ...

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