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Gray v. Allstate Indemnity Co.

United States District Court, M.D. Pennsylvania

February 23, 2015

BRIAN GRAY, Plaintiff,
v.
ALLSTATE INDEMNITY CO., Defendant.

MEMORANDUM

MALACHY E. MANNION, District Judge.

The plaintiff is proceeding on his amended complaint asserting a breach of contract claim and a bad faith claim due to defendant's alleged wrongful denial and refusal to pay insurance benefits for his fire loss claim. (Doc. 14). After discovery, defendant filed a motion for summary judgment regarding both of plaintiff's claims. (Doc. 30). The court will GRANT defendant's motion with respect to plaintiff's bad faith claim and, it will DENY the motion with respect to plaintiff's breach of contract claim.

I. PROCEDURAL BACKGROUND

Plaintiff Brain Gray initially brought this suit in the Court of Common Pleas of Lackawanna County on March 27, 2013, seeking to obtain coverage under his insurance policy with Allstate Indemnity Company ("Allstate"). On May 6, 2013, Allstate removed the case to this court pursuant to 28 U.S.C. § 1441(a) and § 1332(a)(2), since Plaintiff is a resident of Pennsylvania and Allstate is an Illinois corporation. (Doc. 1).

On June 12, 2013, Allstate filed a motion to dismiss plaintiffs complaint. (Doc. 4). On July 12, 2013, plaintiff filed an amended complaint seeking damages for Allstate's failure to pay his alleged covered loss. (Doc. 14). On July 17, 2013, Allstate filed its answer and affirmative defenses to Plaintiffs amended complaint. (Doc. 16).

On June 30, 2014, after discovery was completed, Allstate filed a summary judgment motion, pursuant to Fed.R.Civ.P. 56, with attached exhibits. (Doc. 30). Allstate contends that since the subject property was vacant and unoccupied from the time the last tenant left the property in April 2012, until the time of the vandalism and resulting fire on August 27, 2012, as a matter of law, it does not owe coverage for the fire loss claim of plaintiff. Allstate simultaneously filed its brief in support. (Doc. 31). After being granted an extension of time, plaintiff filed his brief in opposition on July 31, 2014, and argues that issues of fact exist as to whether the language of the policy was ambiguous and whether the subject property was unoccupied and vacant during the relevant times of this case. (Doc. 34). Allstate filed its statement of material facts, pursuant to Local Rule 56.1, M.D.Pa., on August 13, 2014, and on September 22, 2014, plaintiff filed his response. (Doc. 35. Doc. 36).

Allstate's motion for summary judgment is ripe for disposition. This court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332. Venue is proper in this court since plaintiff alleges that all of the events giving rise to his claims occurred in this judicial district. 28 U.S.C. § 1391.

II. FACTUAL BACKGROUND

Early on August 27, 2012, vandals broke into plaintiff's commercial rental property located at 333-335 South Hyde Park Avenue, Scranton, Pennsylvania ("subject property"). The vandals started a fire in plaintiff's 2-story residential apartment unit located on the left side at 335 South Hyde Park. During all relevant times, plaintiff owned the subject property and it was insured by Allstate under a Landlords Package Policy, Policy No. 928 557662. (Doc. 30-8). Plaintiff submitted a fire loss claim, Claim Number XXXXXXXXXX WJH, for the August 27, 2012, damage to his property. On December 12, 2012, Allstate denied coverage for plaintiff's claim. (Doc. 30-9). Plaintiff's insurance policy had a fire policy endorsement precluding coverage for fire losses caused by vandalism if the property was vacant or unoccupied for more than 90 consecutive days before the vandalism, and precluding coverage for any loss occurring while the property is vacant or unoccupied beyond 60 consecutive days. Allstate contends that at the time of the fire, the subject property was vacant and unoccupied since mid-April of 2012 and, as such, the insurance policy does not cover the damage caused by arson. Plaintiff asserts that the subject property was neither unoccupied nor vacant and that the policy is ambiguous as to these terms. Plaintiff states that he was continually in the subject property since he was reconstructing, refurbishing and updating the units, and that his equipment was present in the units. Plaintiff also points out that his property manager was showing the rental units to prospective tenants during the relevant time.

Plaintiff then commenced the present case on March 27, 2013, raising claims of breach of contract and bad faith, and alleging the wrongful denial and refusal to pay his insurance claim for his fire loss. The pleadings are closed and discovery has been completed.

III. MATERIAL FACTS[1]

This action involves a claim submitted by plaintiff for insurance proceeds following a fire loss that occurred at a property that plaintiff owned. The subject property is a commercial rental property located at 333-335 South Hyde Park Avenue, Scranton, Pennsylvania. At all relevant times, plaintiff was the owner-landlord of the subject property and the property was insured by Allstate under an AS84 Landlords Package Insurance Policy No. XXXXXXXXX. Plaintiff resided at 400 Royal Oak Drive, South Abington, Pennsylvania. Plaintiff never resided at the subject property. The subject property was a commercial rental property consisting of three separate apartment units. The tenants in all three rental units in the subject property moved out as of April 16, 2012, and plaintiff began to rehabilitate, update, and reconstruct the property. The parties dispute whether the subject property was vacant and unoccupied as of April 16, 2012, and plaintiff states that he continuously occupied the property while he rehabilitated it. Plaintiff also states that the property manager Peter Lamandre was continuously present at the property since he was showing the rental units to prospective new tenants and supervising the construction work for plaintiff. In the early morning hours of August 27, 2012, three or four adolescent vandals broke into the subject property and set the 2-story residential apartment unit, located on the left side of the property, on fire.

The AS84 Landlords Package Insurance Policy No. 928 557662, provided insurance coverage to the subject property for covered casualty losses and was effective from November 25, 2011 to November 25, 2012. (Doc. 30-8). Plaintiff also states that the policy was in good standing at the time of the fire and that he continued to make all premium payments on the policy. Pursuant to the AS84 Policy provisions, Allstate does not provide coverage for fire losses caused by vandalism if the dwelling has been vacant or unoccupied for more than 90 consecutive days immediately prior to the vandalism. Allstate denied plaintiff's claim on December 12, 2012, based on the above provision. (Doc. 30-9). Plaintiff states that his fire loss claim should have been covered by Allstate since his property was neither vacant nor unoccupied for more than 90 consecutive days immediately prior to the vandalism. Plaintiff also states that the terms "vacant" and "unoccupied" were not defined in the policy which was written by Allstate. Plaintiff further states that it is a question of law as to how these terms should be interpreted, and that these terms are ambiguous.

The Allstate policy which plaintiff purchased also included an AU277-2 Fire Policy Endorsement, providing that Allstate is not liable for any loss occurring "while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of [60] consecutive days...." Plaintiff again points out that the subject property was not vacant or unoccupied at the relevant time. The parties dispute whether at the time of the fire on August 27, 2012, the subject property was vacant and unoccupied since at least April of 2012. Plaintiff contends that his continuous presence at the subject property, after the tenants moved out in April of 2012, to personally rehabilitate and rebuild parts of the property rendered the property occupied and not vacant for purposes of coverage on his fire loss claim.

Subsequent to the fire loss on August 27, 2012, plaintiff retained Metro Public Adjustment, Inc. ("Metro") to adjust the loss caused to plaintiff's property and for the purposes of negotiating an insurance settlement with Allstate. After Metro adjusted the loss, Metro submitted a claim to Allstate seeking to have Allstate tender the applicable policy limit in satisfaction of plaintiff's casualty loss. On December 12, 2012, Allstate sent a formal written notice to Metro denying coverage for plaintiff's claim based on the language of the policy vacancy clause. Specifically, Allstate stated that the policy did not provide coverage for plaintiff's claim since it excluded coverage for damage caused by vandalism if the subject property was vacant or unoccupied for more than 90 days immediately preceding the vandalism. (Doc. 30-9). Plaintiff claims that the denial of coverage by Allstate was improper and not reasonably based on the law and, that the clause was vague and ambiguous. Thus, plaintiff states that Allstate breached the insurance contract by failing to pay his claim and, that his claim was denied by Allstate in bad faith.

Allstate argues that it is entitled to summary judgment regarding both of plaintiff's claims related to his fire loss since coverage is barred under the policy's vacancy clause. There is no dispute that plaintiff's August 27, 2012 fire loss was caused by vandalism, however, it is disputed whether the subject property was vacant or unoccupied for the required period of time before the loss.

IV. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Aetna Casualty & Sur. Co. v. Ericksen, 903 F.Supp. 836, 838 (M.D. Pa. 1995). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249; see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d ...


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