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Ellen Williams and Ellen Malone v. the Standard Fire Insurance Company and Corelogic

August 30, 2012


The opinion of the court was delivered by: (Judge Munley)


Before the Court is Defendant CoreLogic's motion to dismiss plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 8). The motion has been fully briefed and is ripe for disposition. Background

Plaintiffs Ellen Williams and Ellen Malone (hereinafter "plaintiffs") live in Allentown, Pennsylvania and are the owners of real property (hereinafter "property") located in Harvey's Lake, Pennsylvania. (Doc. 1, Ex. A to Notice of Removal, Complaint, (hereinafter "Compl."), ¶¶ 1-2). Defendant CoreLogic, Flood Services, LLC d/b/a CoreLogic Flood Services*fn1 (hereinafter "CoreLogic") is a flood zone determination company, incorporated in Delaware with its principal place of business in California.

(Id. ¶ 4). Defendant Standard Fire Insurance Company (hereinafter "Standard Fire") is an insurance company incorporated in Connecticut, with a principal place of business in Connecticut. It is licensed to sell insurance in Pennsylvania. (Id. ¶ 3).

Plaintiffs purchased the property on June 10, 2010, for $379,000. (Id. ¶ 5). They received financing in the amount of $218,300, through R.B.S. Citizens Bank, N.A. (hereinafter "Citizens"). (Id. ¶ 6). Before approving the financing, the National Flood Insurance Act (hereinafter "the Act") required Citizens to determine how much flood insurance the property required. 42 U.S.C. § 4012a. Citizens contracted CoreLogic and CoreLogic determined, without physically inspecting the property, that it was in flood risk rated zone "C." (Compl. ¶¶ 7-8).*fn2 Citizens based its decision to provide financing for the plaintiffs' purchase on CoreLogic's determination. (Id. ¶ 8). Standard Fire provided flood insurance based on CoreLogic's determination. (Id. ¶ 9).

On September 7, 2011, the property was flooded due to Tropical Storm Lee. Neither CoreLogic nor Standard Fire inspected the property. On September 17, 2011, an independent adjuster inspected the property.

In September 27, 2011, Standard Fire advised plaintiffs that insurance coverage could not be provided for the lake property because it was not in a flood risk rated zone "C." Standard Fire determined that the property was built entirely above water, so it could not be insured against flood damage. Standard Fire revoked the policy and returned plaintiffs' premiums back to inception. (Id. ¶ 15). Plaintiffs conclude that if CoreLogic had correctly certified the property, Citizens would not have approved the financing for the property, Standard Fire would have refused to insure it and plaintiffs would not have purchased the property. (Id. ¶¶ 12-14). Plaintiffs still owe in excess of $200,000, and the property cannot be insured or mortgaged, thus reducing its marketability and value. (Id. ¶16).

Plaintiffs filed this suit in the Luzerne County Court of Common Pleas to recover the lost value of the property under state law theories of detrimental reliance and negligence. (Doc. 1, Notice of Removal ¶ 1). Standard Fire removed the case based on diversity jurisdiction. (Id. ¶¶ 5-11). CoreLogic filed the instant motion to dismiss on the grounds that plaintiffs failed to state a claim because their cause of action is precluded by the Act, which does not create a private cause of action. (Doc. 8, Motion to Dismiss). Plaintiffs oppose CoreLogic's motion to dismiss arguing that their causes of action are not based on the Act, but rather on Pennsylvania state law.


This Court has jurisdiction pursuant to the diversity jurisdiction statute, 28 U.S.C. § 1332. Plaintiffs are Pennsylvania residents living in Allentown, Pennsylvania. CoreLogic is a Delaware corporation with its principal place of business in California. Standard Fire is a Connecticut corporation with its principal place of business in Connecticut. Because we are sitting in diversity, the substantive law of Pennsylvania shall apply to the instant case. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).*fn3 Standard of Review

When a Rule 12(b)(6) motion is filed, the court tests the sufficiency of the allegations in the complaint. The "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Put another way, granting the motion to dismiss is appropriate if plaintiff has not "nudged [her] claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570. The Third Circuit interprets Twombly to require the plaintiff to describe "enough facts to raise a reasonable expectation that discovery will reveal evidence of" each necessary element of the claims alleged in the complaint. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008)

(quoting Twombly, 550 U.S. at 556). Moreover, the plaintiff must allege facts that "justify moving the case beyond the pleadings to the next stage of litigation." Id. at 234-35.

In relation to Federal Rule of Civil Procedure 8(a)(2), the complaint need only provide "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (citation omitted). "[T]he factual detail in a complaint [cannot be] so undeveloped that it does not provide a defendant the type of notice of claim which is contemplated by Rule 8." Phillips, 515 F.3d at 232 (citation omitted). "Rule 8(a)(2) requires a 'showing' rather than a blanket assertion of an entitlement to relief." Id.

The Supreme Court has counseled that a court examining a motion to dismiss should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Iqbal, 556 U.S. at 679. To decide a motion to dismiss, a court generally should consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim. See In re Burlington Coat Factory Sec. Litig., 114 ...

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