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Dunn v. Scottsdale Insurance Co.

United States District Court, Third Circuit

August 1, 2013

JEFFERY DUNN and ANNA DUNN, individually, collectively and t/d/b/a JD CUSTOM POOLS, INC., Plaintiffs,
v.
SCOTTSDALE INSURANCE COMPANY, Defendant.

MEMORANDUM

MALACHY E. MANNION, District Judge.

Presently before the court is the defendant's motion for summary judgment, (Doc. No. 22). Finding that the genuine issues of material fact remain as to the ultimate cause of the damage to the plaintiffs' property, the motion will be DENIED with respect to the breach of contract and unjust enrichment claims. Finding that there is no dispute as to the defendant's basis for denying the plaintiffs' insurance claim, the motion will be GRANTED with respect to the bad faith claim.

I. BACKGROUND

The defendant issued an insurance policy to the plaintiffs' business, J.D. Custom Pool and Service, Inc., with effective dates of June 17, 2008 to June 17, 2009, Policy No. CLS1511965 (hereinafter the "Policy"). (Doc. No. 25, Att. 1-2). The Policy contains several provisions related to coverage for water damages and resulting fungus and rot:

A. Covered Causes Of Loss
When Special is shown in the Declarations, Covered Causes of Loss means Risks of Direct Physical Loss unless the loss is:
1. Excluded in Section B., Exclusions; or
2. Limited in Section C., Limitations; that follow.
B. Exclusions
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of other cause or event that contributes concurrently or in any sequence to the loss.
...
h. "Fungus", Wet Rot, Dry Rot And Bacteria. Presence, growth, proliferation, spread or any activity of "fungus", wet or dry rot or bacteria. But if "fungus", wet or dry rot or bacteria results in a "specified cause of loss", we will pay for the loss or damage caused by that "specified cause of loss".
This exclusion does not apply:
1. When "fungus", wet or dry rot or bacteria results from fire or lightning; or
2. To the extent that coverage is provided tin the Additional Coverage - Limited Coverage For "Fungus", Wet Rot, Dry Rot And Bacteria with respect to loss or damage by a cause of loss other than fire or lightning.
Exclusions B.1.a through B.1.h apply whether or not the loss event results in widespread damage or affects a substantial area.
2. We will not pay for loss or damage caused by or resulting from any of the following:
...
d. (1) Wear and tear; (2) Rust or other corrosion, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself;... (4) Settling, cracking, shrinking or expansion;
...
3. We will not pay for loss or damage caused by or resulting from any of the following, 3.a through 3.c. But if an excluded cause of loss that is listed in 3.a through 3.c results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.
...
c. Faulty, inadequate or ...

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