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Fry v. Phoenix Ins. Co.

United States District Court, E.D. Pennsylvania

September 19, 2014


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Plaintiffs, Frederick P. Fry and Eleanor H. Fry (collectively " the Frys" ), brought this action alleging breach of a home owners' insurance policy issued by Defendant The Phoenix Insurance Company (" Phoenix" ), as well as a claim for bad faith, arising fro Phoenix's denial of two claims the Frys made under their policy. In 2011, the Frys made a claim for water damage that allegedly caused an exterior stone veneer wall to bulge. In 2012, they made a claim when the same wall collapsed. Phoenix denied both claims. Presently pending is Phoenix's Motion seeking summary judgment on both the breach of contract claim and the bad faith claim, based upon a Statement of Undisputed Facts (" DSUF" ). For the reasons that follow, the Motion is granted and judgment is entered in favor of Phoenix.


The Frys have owned and lived in a house located at 115 E. Main Street, Fleetwood,

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Pennsylvania (" the Property" ) for over forty years. (Pl.'s App. at 245 (Dep. of Frederick Fry (" Fry Dep." ) at 10:16-18).) The wood-frame house is two stories, covered in a stone veneer, and supported by a rubble stone foundation. (Def.'s Ex. I (Barry Isett & Associates Report) (hereinafter " Isett Report" ) at 2.) At all relevant times, the Property was covered by Phoenix Policy No. 948258604-633-1. (Def.'s Ex. C (2010-2011 Homeowner's Insurance Policy Statement) (hereinafter " 2010 Policy" ); Def.'s Ex. D (2011-2012 Homeowner's Insurance Policy Statement) (hereinafter " 2011 Policy" ).)

In " Section 1 -- Perils Insured Against," the Policy states that it " insure[s] against risk of direct physical loss to property described in Coverages A and B." (2010 Policy at 7; 2011 Policy at 7.) In Coverage A, the Policy lists a number of specific exclusions to coverage, including an exclusion " for loss caused by . . . wear and tear, marring, deterioration." (2010 Policy at 7-8; 2011 Policy at 7-8.) The Policy also lists a number of additional coverages, including coverage in the event of a building collapse. (2010 Policy at 4; 2011 Policy at 4.) In that section, the Policy provides that it " insure[s] for direct physical loss to covered property involving collapse." (2010 Policy at 5-6; 2011 Policy at 5-6.) A collapse is defined as " an abrupt falling down or caving in of a building . . . with the result that the building or part of the building cannot be occupied for its current intended purpose." (2010 Policy at 6; 2011 Policy at 6.) The Policy continues that coverage will apply for a collapse if it was caused by " [d]ecay that is hidden from view unless the presence of such decay is known to the insured prior to collapse or there are visible signs of water damage and the insured has not taken prompt action to prevent further damage." (2010 Policy at 6; 2011 Policy at 6.)

In 2003, the Frys noticed that the stone veneer on the west elevation of the Property was bulging. (App. at 260 (Fry Dep. 25:19-20).) At their request, an engineering report assessing the bulging wall was prepared on October 3, 2003 by Barry Isett & Associates Inc. (Isett Report 1.) This report, written by Isett's Manager of Construction Services, Richard K. Fain, and Engineer-in-Training, Timothy J. Campion, was based on a visual inspection of the exterior and interior of the residence and the engineering expertise of the inspectors. (Id. at 3.) The inspectors observed a bulge in the stone veneer between the windows of the first floor. (Id. at 1.) They also observed that numerous repairs had been made to the wall. Id. The report concluded that the bulging " was caused by an insufficient number of veneer wall ties and fasteners." (Id. at 2.) The report " recommend[ed] that this situation be addressed in the very near future so as to avoid the possibility of complete failure of the veneer and the stone falling down." (Id.[1]) The inspection " did not include

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any demolition or testing of materials and building components." Id.

The Frys paid Ken Saul, a general contractor, $22,000 to repair the bulging wall. (App. at 262 (Fry Dep. 27:13-15, 18-24).) In order to repair the wall, Saul removed the stones from the area of the bulge and reset the stones in the wall. (App. at 262 (Fry Dep. 27:22-24).) Following the work, the bulge was " completely flat." (App. at 263 (Fry Dep. 28:9).) A claim for the 2003 loss was denied by Phoenix. (DSUF ¶ 16.) Denial of the 2003 claim is not at issue in this litigation.

On July 25, 2011, the Frys filed a claim for a loss that occurred to the interior and exterior of the Property following a storm (" the 2011 loss" ). (App. at 26.) After filing the claim for the 2011 loss, the Frys commissioned an engineering report. (Def.'s Ex. F (the " Gold Report" ).) Professional Engineer Scott D. Gold of Lock Ridge Engineering, LLC prepared this report, which was completed on August 20, 2011. (Gold Report at 1.) Gold is a Professional Engineer licensed in several states, including Pennsylvania, with a Master's of Science degree in Civil Engineering from Pennsylvania State University, and a Bachelor's of Science degree in Civil Engineering from Lafayette College. (App. at 114 (Dep. of Scott D. Gold (" Gold Dep." ) 6:9-24, 7:1-20).) To prepare his report, Gold conducted a visual inspection from the outside and the inside of the premises. (App. at 137 (Gold Dep. 30:3-8).) He was unable to evaluate the condition of the mortar between the stones based on his visual inspection. (Id. at 30:3-13.)

In the course of his investigation, Gold observed " visible movement" to the wall " from both inside and outside." (App. at 31 (Gold Report at 1).) His measurements indicated that " the interior frame walls were relatively plumb, which confirmed the movement is in the stone veneer." (Id.) The report notes that " the windows appear to have moved with the stone, while the framed wall has not moved," indicating that " there is not a good connection between the stone veneer and the framed wall." (Id.) The report continues, " Ken [Saul] reported, as indicated in the photographs taken, they discovered during repairs eight years ago very few masonry anchors securing the stone to the framing behind." (Id.) Based on his findings, Gold concluded that " while the stone does not appear to be in danger of sudden collapse at this time, repairs are needed." (App. at 31-32 (Gold Report at 1-2).) He concluded that " if repairs are not going to be made within the next couple months I recommend temporary bracing from the outside as soon as possible." (App. at 32 (Gold Report at 2).) Gold also opined that he was " uncertain as to whether the movement has been gradual or occurred during a specific event such as a wind storm. It is possible the observed movement occurred at a specific event." (Id.)

In correspondence with the Frys dated September 29, 2011, Phoenix agreed to pay for repairs to the interior of the home, but denied coverage for the repairs to the exterior wall. (App. at 26.) Phoenix based the partial denial on the assertion that the damage was " not sudden and accidental and was not a result of the storm which occurred on the loss date in question. As such, there is no coverage for this portion of the loss." (Id.[2])

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Phoenix based its partial denial on its own engineering report conducted by Russel E. Daniels of Paul Zamrowski Associates, Inc. (Id.) Daniels is a licensed Professional Engineer with a Bachelor of Science degree in Civil Engineering from Drexel University. (App. at 195-96 (Dep. of Russel E. Daniels (" Daniels Dep." ) 6:23, 7:23-25).) To prepare his report, Daniels conducted a visual inspection of the bulging wall from both the interior and exterior of the Property. (App. at 199-200 (Daniels Dep. 10:24-25).) Daniels did not, however, remove the exterior, cosmetic mortar from the outside of the bulging wall to inspect the structural mortar behind it. (App. at 206 (Daniels Dep. 17:10-13).) During his visit to the Property, the Frys informed Daniels about the previous repairs made by Ken Saul and that he had told them that there were few or no anchors in the wall. (App. at 202 (Daniels Dep. 13:5-9).) In his report, Daniels noted he observed " large gaps" inside the second floor and the attic window. (App. at 29.) He observed further that the stone veneer had " bulged outward and the windows moved with the stone veneer" and that the " stone veneer was visibly bulged when viewed from the outside." (App. at 29.) The report also states that " the contractor that did the repairs in 2003 reportedly stated the stone veneer had very few masonry anchors." (Id.)

Daniels concluded that the " bulging of the stone veneer was caused by inadequate anchorage to the wood framing. Deterioration of the anchors most likely allowed the stone veneer to bulge." (App. at 29.) He further opined that " bulging of masonry and stone walls typically occurs over years, not days" and that, had the bulge occurred suddenly, " there should be large cracks which weren't in the bulged area." (App. at 30.) He also noted that " the stone veneer would have to be removed to determine the condition, type, and number of anchors." (App. at 29.) Finally, he recommended that the " stone veneer should be temporarily braced until repairs can be made." (App. at 30.)

The Frys reported to Phoenix on or about February 24, 2012, that the bulging wall had collapsed. (DSUF ¶ 17.) Between the July 2011 loss and the collapse of the exterior wall in February 2012, no repairs were made to the bulging wall, nor was any bracing installed to prevent the wall from collapsing. (DSUF ¶ 18.) The Frys did, however, contact Derrick Leininger, owner of Tri-Valley Stone & Stucco Solutions, LLC, to repair the wall. (App. at 48 (Dep. of Derrick Leininger (" Leininger Dep." ) 6:8-12).) Leininger has owned his business since 2000. (App. at 48-50 (Leininger Dep. 6:13-14; 8:6-10).) He testified that he provided an estimate to the Frys in either August or September, 2011, to remove the bulging stone, haul it away, and stucco that portion of the wall. (App. at 57-58 (Leininger Dep. 14:17-24, 15:1).) However, he could did not produce a copy of the estimate at his deposition. (App. at 57 (Leininger Dep.14:20-21).) According to Leininger, the Frys hired him to repair the bulging wall, but no deposit was ever given to Leininger, and no work was completed on the Property before the 2012 collapse. (App. at 58 (Leininger Dep. 15:9-20).)

Leininger, at the request of the Frys' counsel, wrote an undated letter outlining his opinion on the cause of the collapsed wall. (App. at 42.) Leininger stated that, " after removing [the bulging section] it was clearly indicated that the mortar used to set or lay the stones in place was disintegrated, and that only the grouting on the face of the stones was holding the stones from completely falling down." (Id.) He opined that " the cause for ...

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