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Weinberg v. Nationwide Casualty and Ins. Co.

United States District Court, Third Circuit

June 14, 2013




Plaintiffs, Gary and Beverly Weinberg (“Plaintiffs”), bring this insurance contract action against Nationwide Casualty and Insurance Company (“Nationwide”). Plaintiffs allege that Nationwide, in bad faith, breached its contractual obligations by failing to cover damage to their home. Plaintiffs also allege that Nationwide did not permit them to amend their claim and denied coverage without pursuing a complete and thorough investigation.

Plaintiffs plead two counts: (1) breach of contract; and (2) bad faith conduct in violation of 42 Pa. C.S.A. Stat. § 8371. Nationwide moves for summary judgment, urging that the undisputed evidence of record demonstrates that Nationwide neither breached its obligations under the contract nor exercised any bad faith in resolving Plaintiff’s claim. For the reasons set forth below, Nationwide’s motion will be granted in part and denied in part.

I. Background

A. The Insurance Policy

Nationwide issued a homeowners’ insurance policy to Plaintiffs for their home in Collegeville, Pennsylvania. The policy covers accidental direct physical loss to Plaintiffs’ home unless the loss is caused by a peril that is excluded. Amongst others, the policy covers “direct loss caused by rain, snow, sleet, sand or dust driven through roof or wall openings made by direct action of wind, hail, or other insured peril.” (See Def.’s Ex. C, Nationwide Homeowner Policy, at p. C1.)

The policy does not cover loss resulting directly or indirectly from “a fault, weakness, defect or inadequacy in the . . . design, workmanship, construction, or materials” if another excluded peril contributes to the loss. (Id. at p. D2.) The policy also excludes losses resulting directly or indirectly from: (1) “wear and tear, marring and deterioration, ” and (2) biological deterioration or damage, [1] “even if another peril or event contributed concurrently or in any sequence to cause the loss.” (Id. at p. D1-D3.)

B. The Insurance Claim

On June 11, 2010, Plaintiff Gary Weinberg (“Mr. Weinberg”) reported to Nationwide that his house had been damaged as a result of a wind or rainstorm, which occurred on or about April 14, 2010. In making a claim against their insurance policy, Plaintiffs reported that water was seeping into the home and there was water damage in the garage and family room, around the kitchen window, and on the window dressings. Plaintiffs also reported extra water damage on the walls of the residence and vinyl siding, as well as damage to the stucco on the front exterior of the property. Nationwide’s adjuster, Michael Sigafoos (“Mr. Sigafoos”), inspected the loss on June 23, 2010 and expressed concerns about coverage for the claims. He summarized his findings as follows:

0201 COVERAGE DECISION – Unsure of coverage at this time, waiting on report form [sic] PH contractor as to cause of damages, Appears water has been leaking around and behind windows & vinyl siding. First discovered in bay window located in kitchen, PH had contractor out who caulked around window. Then discovered around secondary window in living room, PH called different contractor out (rep. & est. waiting on) Believe to be a bigger problem and believes that the siding will need to be removed and windows properly flashed.

Plaintiffs advised that their contractor, Lou Luciani of Luciani Builders, Inc., was to inspect the property and Mr. Sigafoos agreed to wait until the contractor’s report was prepared before arriving at any conclusions regarding the loss.

By letter, dated August 9, 2010, Nationwide denied coverage for the siding and stucco on the exterior of the property, but provided coverage for interior damage in the amount of $3, 125.28 at replacement cost value. Applying depreciation of $7.99 together with the deductible of $1, 000 resulted in a net payment of $2, 116.40 to the Plaintiffs, which was issued to them on August 11, 2010. In the claim determination letter, Nationwide stated:

We also recognize that you may not be totally in agreement with our estimate of your damages. While we feel that we have written a fair estimate of your damages based on the coverage contained in your policy, we would gladly be willing to review an itemized estimate of your damages prepared by your contractor or representative. While we are awaiting this estimate, we would still like to present you with our payment of $2116.40 today to help you begin the repairs and mitigation of your damages.

(See Def.’s Br., Ex. O.)

On August 10, 2010, Mr. Sigafoos made note in Plaintiffs’ claim file that he spoke with Plaintiffs’ contractor, Mr. Luciani, who reported that there was a “neighborhood class action suit” against the home builder of Plaintiffs’ home for issues of workmanship, including water seeping into the home through the stucco and windows. (See Def.’s Ex. D.) Mr. Sigafoos also noted that Mr. Luciani had faxed over his estimate of Plaintiffs’ damages to Nationwide.

On October 27, 2010, Mr. Weinberg emailed Mr. Sigafoos an amended proposal by Mr. Luciani for the exterior work that needed to be completed on his home and requested that Nationwide contact him with any questions or concerns. Mr. Sigafoos did not respond. About five days later, on November 1, 2010, Mr. Weinberg emailed Mr. Sigafoos again to inform him that there was water penetration underneath the stucco into the house which became apparent when the stucco was removed. Mr. Weinberg noted that Luciani Buliders was at the property and performing the necessary repairs to the stucco and siding, and that Nationwide was invited to inspect and evaluate the additional damage. That same day, Mr. Sigafoos responded, “I’ll stop out quickly this morning.” (See Pl.’s Ex. 1.) Mr. Sigafoos did not visit Plaintiffs’ home until November 15, 2010. When he arrived he took additional photos of the exterior damage.

On November 16, 2010, the day following Mr. Sigafoos’ visit, Mr. Weinberg sent Mr. Sigafoos another email informing him of additional damage to the interior walls from the water seepage and the need to repaint the entire room of the affected areas, which he expected to exceed the $2, 116.40 sent to him in August. He also welcomed Mr. Sigafoos to come back out to the home for another inspection. That same day, Mr. Sigafoos informed Mr. Weinberg, by email, that he had reviewed the cause of damages to Plaintiffs’ home with his manager and, based on such review, Nationwide maintained its denial of coverage. Mr. Sigafoos also attached a formal denial letter, dated November 15, 2010, explaining that Plaintiffs’ insurance policy did not afford coverage for exterior damage sustained to Plaintiffs’ home because such damage was “caused by faulty or inadequate design, workmanship, or construction materials, as well as wear and tear, aging, or deterioration.” (See Def.’s Ex. J.) Nationwide further explained that based on a conversation with Plaintiffs’ contractor (Mr. Luciani), they learned that “the water seepage is due to improper installation, workmanship, and construction error, which occurred when the home was originally built” and that “[t]he water seeped through the exterior stucco system, and around the roof and windows due to improper installation and waterproofing.” (Id.) As such, Nationwide denied Plaintiffs’ claim for additional damage on the basis of the policy exclusions of faulty construction and deterioration.

On December 7, 2010, Mr. Weinberg emailed Mr. Sigafoos about additional repair expenses he incurred for the interior damage covered by Nationwide in August, as well as his total expenses for exterior repairs. Specifically, Mr. Weinberg noted that he received an estimate of $7, 975 to paint the rooms with affected areas, and the total cost of repair for the interior and exterior damage was $50, 000. In closing, Mr. Weinberg requested a ...

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