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Welde Mabrat v. Allstate Insurance Co

December 12, 2012

WELDE MABRAT
PLAINTIFF,
v.
ALLSTATE INSURANCE CO.,
DEFENDANTS



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

MEMORANDUM RE: CROSS MOTIONS FOR SUMMARY JUDGMENT

I. INTRODUCTION

Plaintiff, Welde Mabrat, alleges Defendant, Allstate Insurance Co. ("Allstate"), breached its contract and acted in bad faith by denying Mabrat's claim for fire-damage coverage under her homeowners insurance policy. The parties, which have filed cross motions for summary judgment, dispute the enforceability of a provision in the insurance policy that conditions coverage of a dwelling on the insured's physical residence in the building. Although there are times when a court should look beyond the plain meaning of an insurance contract, or require a showing of actual prejudice before enforcing it, there is no precedent in Pennsylvania law for doing so under the circumstances here. As discussed below, the Court will GRANT Allstate's Motion for Summary Judgment on both claims.

II. FACTS &PROCEDURAL HISTORY

The material facts in this case are not in dispute. Mabrat is an Ethiopian immigrant unable to proficiently read, write, or speak in English without the assistance of an interpreter. Joint Stmt. of Stipulated Facts ¶ 19. In the spring of 2007, Mabrat purchased a residential, two-family apartment building at 2020 S. 65th Street in Philadelphia. Id. ¶¶ 1-2. Initially, Mabrat lived in the building's basement unit and rented out the upstairs unit. Id. ¶ 6. Prior to purchasing the building, Mabrat contacted a real estate broker about obtaining insurance. Id. ¶ 5. Mabrat told the broker that she intended to live in the basement unit but wanted the entire property insured. Mabrat Aff. ¶6. The broker, who only spoke English, recommended that Mabrat apply for an Allstate policy and filled out an application form for Mabrat to sign. Mabrat Dep. at 15, 22-25. The application form, which listed the building as having two "Apt./Family units," stated that Mabrat was the "owner" who used the property as her "primary" residence. Pl's Cross Mot. Ex. B. at 2.

As set forth on the application form that Mabrat signed, "any insurance bound hereunder shall otherwise be subject in all respects to the terms and conditions of the regular policy forms of the Company at present in use." Pl's Cross Mot. Ex. B. at 6. These terms and conditions are spelled out in Allstate's 35-page Standard Homeowner's Policy ("Policy"). Although the record is unclear whether Mabrat received the Policy prior to submitting her application, she received the Policy each subsequent year as part of Allstate's annual renewal offers. Def's Mot. Ex. E. Mabrat admits that she never read the Policy, nor asked anyone to interpret it for her. Mabrat Aff. ¶ 8; Mabrat Dep. at 19.

Under the terms of the Policy, Mabrat's insurance was for a "dwelling." A dwelling is defined on page four of the Policy as a "a one, two, three or four family building, identified as the insured property on the Policy Declarations, where you reside and which is principally used as a private residence." Def's Mot. Ex. E. at 19. The Policy provides that Allstate's agreement to insure Mabrat was made "[i]n reliance on the information you have given us" and that, "[i]n return, you must pay the premium when due and comply with the policy terms and conditions, and inform us of any change in title, use, or occupancy of the residence premises." Def's Mot. Ex. E. at 20.

According to Mabrat, she was never informed by either the broker or Allstate that her coverage was conditioned on residing in the building and that the Policy required her to notify Allstate if she changed her personal residence. Mabrat Aff. ¶ 8. Because she was unable to read her Policy, Mabrat was not aware of these conditions and thus did not notify Allstate when she permanently changed her personal residence on, or about, March 17, 2009. Id. ¶¶ 11-12; Joint Stmt. of Stipulated Facts ¶ 8. Allstate continued to send its annual renewal offers to the 2020 S. 65th St location*fn1 and Mabrat, believing the property was still covered by her Policy, continued to pay her premiums. Id. ¶ 10.

On June 16, 2011, Mabrat's 2020 S. 65th St property was damaged by a fire that erupted in the second floor apartment. Id. ¶ 9. Mabrat filed a timely claim to recover under her Policy and cooperated with Allstate's investigation. Id. ¶¶ 11, 13. After determining that Mabrat did not reside in the building at the time of the fire, Allstate denied Mabrat's claim. Def's Mot. Ex. G.

On February 6, 2012, Mabrat filed a Complaint against Allstate in the Court of Common Pleas of Philadelphia County. Mabrat's Complaint alleges that Allstate both breached its contract and acted in bad faith. Def's Mot. Ex. A. Allstate, an Illinois corporation with a principal place of business in Northbrook, Illinois, elected to remove the case to this Court. (ECF No. 1). Upon doing so, it filed an Answer with Affirmative Defenses. (ECF No. 4). On May 17, 2012, the parties filed a Statement of Joint Stipulated Facts, (ECF No. 9), and, shortly thereafter, filed cross motions for summary judgment. (ECF Nos. 11-12). At oral argument on November 14, 2012, the Court expressed its inclination to grant Allstate's motion. (ECF No.

21). The Court, however, invited Plaintiff's counsel to submit additional legal authority to support its position. No additional authority was provided.

III. LEGAL BACKGROUND

A. Jurisdiction and Venue

This Court has jurisdiction over Plaintiff's state-law claims pursuant to 28 U.S.C. ยงยง 1332(a) and (c). Mabrat, a citizen of Pennsylvania, seeks damages in excess of $195,596.00 from Allstate, a citizen of ...


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