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Blackwell v. Allstate Insurance Co.

United States District Court, E.D. Pennsylvania

September 3, 2014

SHARIFF BLACKWELL, Plaintiff,
v.
ALLSTATE INSURANCE CO., Defendant.

MEMORANDUM OPINION

CYNTHIA M. RUFE, District Judge.

Plaintiff Blackwell has brought this action against defendant Allstate Insurance Co. for breach of contract, statutory bad faith, and common law bad faith. Specifically, Blackwell contends that Allstate failed to fully indemnify him for damages to his home that resulted from a water leak and subsequent vandalism by a contractor, in March 2011. Allstate has moved to dismiss the claims, arguing that the suit limitations provision in the insurance policy bars the breach of contract claims, that the statute of limitations bars his statutory bad faith claim, and that his common law bad faith claim must be dismissed as a matter of law.

I. Factual Background[1]

On or about March 2, 2011, Plaintiff's home in Philadelphia, Pennsylvania was damaged by water when a pipe in a second floor bathroom failed. At that time, Plaintiff had a homeowner's insurance policy issued by defendant Allstate.

The day the leak occurred, Plaintiff hired Hillis Public Adjusters to assist him in filing an insurance claim for damages. Hillis contacted Allstate on or about March 4, 2011, to initiate a claim for water damage, and hired a water remediation company, National Restoration and Facilities Services, to mitigate the damage to Plaintiff's home. National Restoration unnecessarily stripped walls to their framing studs, pulled up carpets, removed a bathtub, and removed a load-bearing floor joist, which caused part of Plaintiff's first floor to sink. A representative of Allstate inspected the property on March 8, 2011, spoke with Plaintiff's plumbing contractor, and documented both the water damage and the work in progress by National Restoration. Allstate determined that National Restoration had performed extensive, unnecessary, and destructive remediation work in the home, causing additional damage to the residence. On May 3, 2011, Plaintiff fired the public adjuster. On or about May 5, 2011, Allstate advised him of the need to set up a new claim for vandalism, as some of the damage to the home was caused by the work of National Restoration. The home was re-inspected on May 24, 2011, to determine which damage was caused by water and which was caused by National Restoration, and estimates were prepared. For each instance of water damage and vandalism, the policy allows up to $184, 084 in compensation for vandalism to the dwelling, $101, 901 for damage to personal property, and $18, 408 for living expenses due to loss of use of the dwelling.[2]

On June 22, 2011, Allstate issued estimates to Plaintiff for both claims. Significantly, with regard to the water damage claim, a second estimate was prepared and adjusted to include the estimated cost to repair damage to the air ducts and furnace. Allstate's revised estimate valued the replacement cost to be $9, 437 and the actual cash value to be $6, 933 for water damage. After subtracting the deductible, Allstate issued a payment of $5, 933 for the water damage, and informed Plaintiff that, per the terms of his policy, he had 180 days to repair, rebuild, or replace the damaged property and request the depreciation amount in addition to the sums already paid by Allstate. Under the vandalism claim, Allstate estimated the replacement cost value to be $7, 305 and the actual cash value to be $6, 203. After subtracting the deductible, Allstate issued a payment of $5, 203 for the vandalism claim and advised Plaintiff that, per the terms of his policy, he had 180 days to repair, rebuild, or replace the damaged property and request the depreciation amount. On February 9, 2012, Defendant completed an estimate for damages to the contents in Plaintiff's home, estimating the replacement cost at $10, 386 and the actual cash value to be $9, 661, and advised Plaintiff that, per the terms of his policy, he had 180 days to repair or replace the damaged items and request the depreciation amount. Allstate also paid nearly $18, 000 in living expenses to Plaintiff.

Plaintiff returned to his home in the spring of 2012. In October or November 2012, he attempted to use the furnace, but discovered that it was not working and needed to be replaced. Plaintiff asked Allstate to compensate him for the replacement cost of the furnace, claiming it was made inoperable either by the water damage or the vandalism that occurred in 2011. Allstate denied the claim on November 13, 2012, explaining that an unreasonable amount of time (approximately 20 months) had passed between the initial claims and the discovery of the damage to the furnace. Thus, Plaintiff received only approximately $1, 000 for the damage to the ducts and furnace (in the June 22, 2011 disbursement) and not the full replacement cost of the furnace, which he sought for the first time in Fall 2012. Plaintiff notes that Allstate's November 13, 2012 denial of coverage to replace the furnace was "the first time Allstate denied any requests for payment for Plaintiff's real property damage" and put him "on notice for the first time that Defendant may not fully compensate him for the damage sustained to his home...."[3] In November 2013, Plaintiff filed this lawsuit.

II. Standard of Review

In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the court also must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief."[4] In order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter... to state a claim to relief that is plausible on its face."[5]

III. Discussion

1. Breach of Contract

Plaintiff argues that Allstate's November 13, 2012 denial of coverage for damage to his furnace constituted a breach of its obligations under the insurance policy.

Allstate argues that the breach of contract claim is time barred by the one-year suit limitation provision in Section I of the insurance policy.[6] That provision, titled "Action Against Us, " reads:

No one may bring an action against us in any way related to the existence or amount of coverage, or the amount of loss for which coverage is sought, under a coverage to ...

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