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Anthony Fabrikant v. State Farm Fire and Casualty Company

May 14, 2012

ANTHONY FABRIKANT, PLAINTIFF,
v.
STATE FARM FIRE AND CASUALTY COMPANY, DEFENDANT.



The opinion of the court was delivered by: (judge Conaboy)

MEMORANDUM

Here we consider State Farm Fire and Casualty Company's Motion for Summary Judgment (Doc. 19). In the underlying action, Plaintiff claims that Defendant is liable for breach of contract, bad faith, and violations of the Unfair Trade Practices and Consumer Protection Law ("UTPCPL") based on its handling of Plaintiff's claim for insurance coverage following a fire which destroyed his house on November 26, 2009. (Doc. 1 at 11-20.) With its motion for summary judgment, Defendant seeks judgment in its favor on all claims. (Doc. 19.)

This matter is now fully briefed and ripe for disposition. For the reasons discussed below, we conclude Defendant State Farm Fire and Casualty Company's Motion for Summary Judgment (Doc. 19) is properly granted.

I. Background

A. PROCEDURAL BACKGROUND

Plaintiff filed his Complaint on February 7, 2011, in the Court of Common Pleas of Lackawanna County (Doc. 1 at 11) and Defendant removed the Complaint to this Court on March 8, 2011 (Doc. 1 at 1). The Complaint contains three counts: Count I for Breach of Contract (Doc. 1 at 13); Count II for Bad Faith (id. at 16); and Count III, a claim under the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. § 201-1 et seq. (id. at 18).

On March 15, 2011, Defendant filed a motion to dismiss the Complaint. (Doc. 3.) The Court denied the motion with its April 27, 2011, Memorandum and Order. (Doc. 11.)

Defendant State Farm Fire and Casualty Company's Motion for Summary Judgment (Doc. 19) was filed on February 29, 2012. Defendant State Farm Fire and Casualty Company's Statement of Material, Undisputed Facts in Support of Its Motion for Summary Judgment (Doc. 20) was filed on the same date, and Defendant filed its supporting brief (Doc. 22) on March 13, 2012. Plaintiff filed Plaintiff's Answer to Defendant's Statement of Material Facts in Support of Its Motion for Summary Judgment and Counter-Statement of Facts (Doc. 24) on March 20, 2012, and Plaintiff's Brief in opposition to Defendant's Motion for Summary Judgment (Doc. 25) on March 23, 2012. Defendant filed State Farm Fire and Casualty Company's Reply Brief in Support of Its Motion for Summary Judgment (Doc. 28) on April 4, 2012. On April 5, 2012, Defendant filed Defendant State Farm Fire and Casualty Company's Response to Plaintiff's Counter-Statement of Facts, in Support of State Farm's Motion for Summary Judgment. (Doc. 29.)

B. FACTUAL BACKGROUND

The event giving rise to this action was a fire which essentially destroyed Plaintiff's house on November 26, 2009, Thanksgiving Day. (Doc. 20 ¶ 2.) Plaintiff was not at home at the time--after having dinner with his sons at the home of friends, he was en route to the movies when he got word of the fire. (Doc. 24 at 10 ¶ 2.) Plaintiff's residence was covered by a homeowners policy issued by Defendant State Farm Fire and Casualty Company. (Doc. 20 ¶ 1.) Plaintiff made a claim under his policy for dwelling coverage, personal property coverage, and loss of use coverage. (Doc. 20 ¶ 3.) As of the filing of this summary judgment motion, Plaintiff's dwelling and personal property claims had been paid in full. (Doc. 20 ¶¶ 6-7.)

Plaintiff reported the loss to Defendant shortly after the fire occurred on November 26, 2009. (Doc. 20 ¶ 13.) The State Police Fire Marshall, Trooper Mark Naylor, visited the scene on November 27, 2009.*fn1 (Doc. 24 at 10 ¶ 3.) Plaintiff reports that Trooper Naylor said he believed it was a space heater that was the origin of the fire. (Doc. 24 at 10 ¶ 2; Doc. 29 at 2 ¶ 2.)

On November 27, 2009, Defendant hired Paul Savage, Senior Fire & Explosion Consultant, of PT&C Forensic Consulting Services, P.A., ("PT&C") to conduct an origin and cause investigation on the fire. (Doc. 20 ¶ 15.)

On November 27, 2009, Defendant sent Plaintiff a letter outlining and explaining coverages, the claims process, and a summary of Plaintiff's responsibilities. (Doc. 20 ¶ 16.) Personal property inventory forms were enclosed with the letter. (Id.)

On November 28, 2009, Defendant's Claim Team Manager Jeff McIntyre met with Plaintiff to inspect the loss site and discuss the claim, coverages, and policy forms. (Doc. 20 ¶ 17.) During the inspection, McIntyre learned that Plaintiff's wife recently filed for divorce. (Doc. 20 ¶ 18.) McIntyre reported that he learned from a neighbor that Plaintiff had financial problems, the first propane provider canceled and the second supplier would only deliver on a cash basis, and Plaintiff was heating with electric space heaters at the time of the fire. (Id.) McIntyre also reported that Plaintiff advised him he owed $37,000 on his mortgage and was up to date on his payments.*fn2 (Id.)
Also on November 28, 2009, Defendant's Fire & Explosion Consultant Paul Savage met with Plaintiff and McIntyre at the scene. (Doc. 20 ¶ 19.) McIntyre later reported that Savage had shared with him a sample that had a clear odor of flammables on the carpet pad. (Id.)

Savage provided an oral report to McIntrye on November 28, 2009. (Doc. 20 ¶ 20.) In Savage's written Origin and Cause report issued on December 15, 2009, he concluded that the "'ignition source' of the fire was possibly a manually contacted open flame or human prepared source such as a pack of matches with cigarette fuse. He opined the first material ignited was the heat source, then ordinary combustibles and ignitable/flammable liquid." (Doc. 20 ¶ 22.) Savage classified the "cause" of the fire as "incendiary" and attached to his report the findings of the Armstrong Forensic Laboratory, Inc., dated December 9, 2009, which concluded that the carpet and matting from Plaintiff's living room by the stairs tested positive for concentrated gasoline. (Doc. 20 ¶¶ 19-20.)

At an unspecified time, Trooper Naylor, the State Police Fire Marshall who had investigated the scene, finished his investigation and concluded that the fire was caused by an electric space heater and was accidental. (Doc. 24 ¶ 3.) He does not recall being contacted by any representative of Defendant.*fn3 (Doc. 24-7 at 16-17.) Trooper Naylor testified at his deposition that two individuals who investigate a fire could come to different conclusions. (Id. at 17; Doc. 29 at 2 ¶ 3.)

On November 29, 2009, McIntyre referred the claim to Defendant's Special Investigative Unit ("SIU"). (Doc. 20 ¶ 24.) He reported the following reasons for doing so: 1) origin and cause found evidence of incendiary/flammables in carpet padding; 2) Plaintiff's finances were in question and a neighbor indicated Plaintiff had employment and worker's compensation issues; 3) Plaintiff was not at home at the time of the loss; 4) Plaintiff was heating his house with electric space heaters and the neighbor advised the propane service was disconnected due to financial issues; and 5) the claim was originally reported as a space heater fire and the Origin and Cause findings were under review. (Doc. 20 ¶ 24.)

On December 3, 2009, McIntyre again met with Plaintiff, gave him PPI forms, explained how to complete them, and discussed other aspects of the claim. (Doc. 20 ¶ 25.)

On December 10, 2009, Defendant took Plaintiff's recorded statement in which Plaintiff stated he did not know how much income he made as a self-employed photographer, he may have been thirty to sixty days behind on his mortgage of approximately $30,000, and he had not paid his 2008 property taxes. (Doc. 20 ¶ 26.) At that time, Defendant requested that Plaintiff sign a records authorization form and that he provide his cell phone records, 2007 and 2008 tax returns, and mortgage history. (Id.) By letter dated December 18, 2009, Defendant asked Plaintiff for documentation including the 2007 and 2008 federal tax returns, mortgage statements, cellular phone records, checking and savings account statements, and a signed authorization so Defendant could request a copy of Plaintiff's credit report and review his financial status prior to the loss, and to secure current mortgage information. (Doc. 20 ¶ 27.)

By letter dated December 23, 2009, Defendant sent Plaintiff a reservation of rights letter informing him there was a question if there had been an accidental direct physical loss to the property. (Doc. 20 ¶ 29.) Although Plaintiff agrees that Defendant sent the letter, he specifically denies that the fire was not accidental. (Doc. 24 ¶ 29.) Plaintiff adds that Defendant "was aware at all times that the Pennsylvania State Police Fire Marshall concluded that the fire was accidental."*fn4 (Id.) Plaintiff points to an invoice from the Brunozzi Investigative Agency, Inc., dated February 19, 2010, in which "[t]he following notation was made, "01/07/10 contacted and interviewed PSP Fire Marshall. 01/08/10 contacted and brief Mr. Marzani.'"*fn5 (Doc. 24 at 14 ¶ 9.)

By letter dated January 27, 2009, Defendant again asked that Plaintiff provide the information requested in the December 18, 2009, letter and quoted policy requirements regarding Plaintiff's duties after the loss. (Doc. 20 ¶ 31.)

In a preliminary report dated January 31, 2010, Defendant's SIU investigator summarized the investigation to date, noting the following: 1) it was a set fire with a positive sample analysis of gasoline; 2) Plaintiff appears to have financial difficulties, mortgage payments in excess of 60 days, and propane heat service turned off because of nonpayment; 3) Plaintiff has a pending worker's compensation claim that had not been resolved since 2002; and 4) Plaintiff does not want to disclose his income. (Doc. 20 ¶32.)

By letter dated February 4, 2010, Defendant advised Plaintiff that the investigation was continuing, the claim was being referred to Attorney Scott Grenoble to conduct Plaintiff's Examination Under Oath ("EUO"), and reminded Plaintiff of his post-loss obligations. (Doc. 20 ¶ 34.) By letter dated February 17, 2010, Attorney Grenoble requested the EUO of Plaintiff and asked for production of a number of documents. (Doc. 20 ¶ 35.) The EUO was scheduled for March 1, 2010, but Plaintiff did not appear. (Doc. 20 ¶¶ 37-38.) Plaintiff acknowledges that he did not appear, explaining that he "was experiencing severe emotional difficulties due to his loss, which lead to the hiring of a public adjuster to assist him." (Doc. 24 ¶ 38.) By letter to Plaintiff dated March 3, 2010, Attorney Grenoble confirmed that Plaintiff did not appear for the EUO or advise Attorney Grenoble that he would not be appearing. (Doc. 20 ¶ 39.) Attorney Grenoble explained Plaintiff's duty to cooperate with Defendant's investigation and appear for the EUO which was rescheduled for March 23, 2010. (Id.) Attorney Grenoble again asked for the signed authorization and previously requested documents. (Id.)

By letter to Plaintiff dated March 15, 2010, Defendant confirmed that it was continuing its investigation of the claim pursuant to its reservation of rights because it was questionable whether there had been compliance with the provisions of the policy requiring the assistance and cooperation of Plaintiff. (Doc. 20 ¶ 40.) The letter referenced pertinent policy language and the one-year suit limitation clause. (Id.)

At the EUO Plaintiff testified that his wife had moved out approximately two months before the fire and served him with divorce papers, he was not current on most of his bills at the time of the loss, he could not estimate how far behind he was on his mortgage or any other payments, and that his photography business operated at a loss over the last several years. (Doc. 20 ¶¶ 42-43.) Plaintiff also testified that he had over $6,000 in cash either under the carpet or in the closet of the master bedroom, he did not have substantive savings, did not know the balances of his personal or business bank accounts, and had outstanding college loans but was not making any payments. (Doc. 20 ¶ 44.)

As of the date of the EUO, Plaintiff had not provided requested information, but Plaintiff agreed to do so then. (Doc. 20 ¶ 45.) Plaintiff adds that he did not have the information as it had been lost in the fire but he did agree at the EUO to provide it within two to three weeks. (Doc. 24 ¶¶ 45-46.) Defendant followed up this request with correspondence dated March 25, 2010, April 12, 2010, April 22, 2010, May 20, 2010, and June 15, 2010, again requesting the information. (Doc. 20 ¶¶ 47, 50, 51, 53, 55.) In the May 20th correspondence, Defendant informed Plaintiff that failure to cooperate could jeopardize coverage for the claim and requested that Plaintiff provide the information requested within twenty days. (Doc. 20 ¶ 55.) By letter dated June 28, 2010, Defendant advised Plaintiff that the claim was not finalized due to the continuation of the coverage investigation, including all requested documentation. (Doc. 20 ¶ 57.)

On July 8, 2010, Plaintiff hired a public adjuster, Scott Seeherman. (Doc. 20 ¶ 58.) In correspondence dated July 9, 2010, Defendant (through Attorney Grenoble) advised Seeherman of Defendant's attempts to get Plaintiff to cooperate and provide the requested documentation. (Doc. 20 ¶ 61.)

On July 19, 2010, Defendant's Special Investigation Unit completed an internal progress report in which the EUO of Mrs. Fabrikant was summarized and it was noted the Origin and Cause expert advised that the solvent used in the space heater did not show up in the lab samples and is unlikely to have been the ignition source of the fire since it is manufactured to be heated at very high temperatures.*fn6 (Doc. 20 ¶ 66.)

By letter dated August 18, 2010, Plaintiff (through PA Seeherman) sent Defendant some requested records and sent others on August 23, 2010. (Doc. 20 ¶¶ 70, 71.) Those sent on August 18th were the first documents Plaintiff provided to Defendant. (Doc. 20 ¶ 70.) The August 23rd documents showed that Plaintiff's business checking account had a balance of $301.32 on October 31, 2009, and $154.45 on November 30, 2009, and his personal ...


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