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Charbonneau v. Chartis Property Casualty Co.

United States District Court, E.D. Pennsylvania

July 1, 2015




On April 4, 2012, plaintiff Julie Charbonneau was living as a tenant at Bloomfield, a historic home in Villanova, Pennsylvania, when a fire destroyed the property. Charbonneau thereafter attempted to exercise an option under her lease to purchase Bloomfield from Jerald Batoff, the property’s owner. During roughly the same period of time, Batoff was involved in negotiations with the issuer of his homeowner’s insurance policy, defendant Chartis Property Casualty Company, which ultimately agreed to pay him $18.5 million (plus additional payments already made) as a result of the fire. Several rounds of litigation ensued between Batoff and Charbonneau, leading to a settlement agreement under which Charbonneau received $11 million of the $18.5 million and title to Bloomfield. Charbonneau subsequently brought this action against Chartis, claiming that Chartis’s dealings with Batoff were improper and that she has been wrongly denied millions of dollars in additional insurance proceeds owed to her to cover the cost of rebuilding Bloomfield. Chartis has filed a motion for summary judgment, to which Charbonneau responded in opposition. Because there is a genuine dispute of material fact with respect to only plaintiff’s claim for intentional interference with contractual relations, I will grant the motion as to her other claims.


In December 2011, Batoff and Charbonneau executed a lease/option agreement (“LOA”) for Bloomfield, a property located in Villanova, Pennsylvania. Pl.’s Resp. & Counterstatement of Facts to Def.’s Statement of Undisputed Material Facts (“Resp.”) at 5 ¶ 19; Def.’s Statement of Undisputed Material Facts (“SUMF”) Ex. A at 2. Under the LOA, Charbonneau had the option to purchase Bloomfield from Batoff during the lease period for $3.9 million. Resp. 6 ¶ 21; SUMF Ex. C at § 5(a)(iii). In the event that Bloomfield suffered a casualty during the lease period costing more than $1 million to repair, the LOA further provided that Charbonneau could likewise exercise her option, and that she would also be “entitled to receive at closing a credit in the amount of any insurance proceeds paid to [Batoff], and an assignment [of Batoff’s] rights to receive any unpaid proceeds.” Resp. 6 ¶ 22; SUMF Ex. C at § 17. Bloomfield was destroyed by fire on April 4, 2012. Resp. 6 ¶ 23; SUMF 5 ¶ 23.

At the time of the fire, Batoff held a homeowner’s insurance policy for Bloomfield issued by Chartis Property Casualty Company. Resp. 3 ¶ 10; SUMF 3 ¶ 10. The policy provided for two different types of payments in the event of a covered loss: “Replacement Cost” coverage or “Guaranteed Rebuilding Cost” coverage. Resp. 4 ¶¶ 14-15; SUMF Ex. A at 31. As defined by the policy, “Replacement Cost Coverage means that for a covered loss [Chartis] will pay the reconstruction cost of your house or other permanent structures, up to the coverage limit shown for that location on your Declarations Page, for each occurrence.” Id. The declarations page of Batoff’s policy specifies that the coverage limit for his dwelling is $22, 373, 762. SUMF Ex. A at 2.[1] The policy further provides that Chartis will pay this reconstruction cost “whether or not you will actually rebuild your house or other permanent structures.” Id. at 31. By contrast, the policy states that “Guaranteed Rebuilding Cost coverage means that for a covered loss we will pay the reconstruction cost of your house or other permanent structure, for each occurrence, even if this amount is greater than the amount of coverage shown on the Declarations Page.” Id. A payment of the Guaranteed Rebuilding Cost, however, requires that “you must repair or rebuild your home or other permanent structure at the same location.” Id. The policy also contains a non-assignment clause providing that “[n]o one covered under this policy may assign or turn over any right or interest in regard to the policy without [Chartis’s] written consent, ” as well as a commencement of suit provision that states the policyholder “agree[s] to bring any action against [Chartis] within one year after a loss occurs, but not until thirty (30) days after proof of loss has been filed and the amount of loss has been determined.” Resp. 4-5 ¶¶ 16-17; SUMF Ex. A at 18.

Both Batoff and Charbonneau retained the public adjusting firm Clarke & Cohen to assist with filing their respective insurance claims arising out of the fire. Resp. 7 ¶ 24; SUMF 5 ¶ 24. During this process, neither Batoff nor Charbonneau submitted a proof of loss to Chartis. Resp. 7 ¶ 25; SUMF 5-6 ¶ 25. On July 25, 2012, Batoff informed Charbonneau that he believed the option provision of the LOA was null and void and that Charbonneau was in breach of the LOA. Resp. 8 ¶ 27; SUMF 6 ¶ 27. By letter to Batoff on August 7, 2012, Charbonneau stated that she “hereby exercises the option” under the LOA. The letter constitutes mostly a rebuttal to Batoff’s claim that the purchase option was null and void or never existed. Significantly, it contains absolutely no reference to an assignment of the insurance proceeds. Resp. 8 ¶ 28; SUMF Ex. H. On August 15, 2012, Batoff sued Charbonneau in the Delaware County Court of Common Pleas, and the case was subsequently removed to this district. Resp. 9-10 ¶ 32; SUMF 7 ¶ 32; see also Batoff v. Charbonneau (Batoff I), No. 12-cv-5397-WY (E.D. Pa. Sept. 21, 2012). Shortly thereafter, Batoff filed a second suit against Charbonneau and her co-tenant at Bloomfield, Dean Topolinski. Resp. 9-10 ¶ 32; SUMF 7 ¶ 32; see also Batoff v. Topolinski (Batoff II), No. 12-cv-6673-WY (E.D. Pa. Nov. 29, 2012).

On September 16, 2012, Richard Cohen of Clarke & Cohen sent a letter to Chartis on behalf of Batoff, stating in part:

I think it is important to remind you that we are quickly coming to the end of the window Mr. Batoff has allowed me to continue discussing a negotiated deal. If we are not able to come to an agreed figure by the end of the week, I am being directed to proceed with submitting our claim.
As I told you when we spoke on Monday of last week, I had no room to negotiate from the figure I expressed would get this done. Frankly I am a little surprised by your most recent offer based on the potential exposure to Chartis if we do not get a deal done. The figure I gave you is a significant savings to Chartis and I think we both agree we will get to the total policy limits as well as far into the guaranteed replacement cost provision the longer this continues.

Resp. 10-11 ¶ 35; SUMF Ex. K. On October 1, 2012, Chartis and Batoff reached a settlement of Batoff’s insurance claim, under which Chartis agreed to pay Batoff an additional $18.5 million. Resp. 12-13 ¶ 40; SUMF 9 ¶ 40. Batoff also released Chartis from any further “claims, demands, damages, actions or other form of proceedings of any kind whatsoever” arising out of the fire, released Chartis from any claims of bad faith under 42 Pa. Cons. Stat. Ann. § 8371, and agreed to indemnify Chartis against any future claims arising out of Batoff’s policy, specifically including claims made by Charbonneau or Topolinski. Resp. 13-14 ¶¶ 42-43; SUMF Ex. F.

On October 1, 2012, Charbonneau filed counterclaims in Batoff I, seeking various forms of relief, including a declaration that “[a]t the closing, Defendants have the right to be assigned Mr. Batoff’s rights to receive any insurance proceeds paid with respect to the Property post-closing . . . .” Resp. 14-15 ¶ 46; SUMF 11 ¶ 46. Charbonneau further requested specific performance such that “[a]t the closing, Jerald Batoff shall assign to Defendants the right to receive any insurance proceeds received post-closing . . . .” Resp. 16-18 ¶ 47; SUMF 11 ¶ 47. Charbonneau made essentially the same requests for relief in her amended counterclaims in Batoff I, filed on October 22, 2012. Resp. 18-21 ¶¶ 48-50; SUMF 11-12 ¶¶ 48-50.

On April 5, 2013, Charbonneau entered into a settlement agreement and mutual release with Batoff, under which Batoff agreed to disburse to Charbonneau $11 million in insurance proceeds that Chartis had previously paid to him. Resp. 23-24 ¶¶ 54-55; SUMF Ex. P. Moreover, Batoff agreed to convey title of Bloomfield to Charbonneau within ten days of the court’s approval of the settlement. Resp. 24 ¶ 56; SUMF 13-14 ¶ 56. Batoff and Charbonneau further agreed to a mutual release and discharge of “any and all claims, demands, causes of action, obligations, damages, and liabilities” against one another. Resp. 24 ¶ 57; SUMF 14 ¶ 57. By its terms, the settlement agreement was fully integrated. Resp. 25 ¶ 59; SUMF 14-15 ¶ 59. Title to Bloomfield transferred as agreed from Batoff to Charbonneau in May 2013 by way of a “modified stipulation” entered with the court, which did not include an assignment of any of Batoff’s rights under his insurance policy. Resp. 26 ¶¶ 61-62; SUMF Ex. Q. Charbonneau admits that she never notified Chartis of an assignment from Batoff. Resp. 26-27 ¶ 64; SUMF 15-16 ¶ 64.

Charbonneau filed this lawsuit against Chartis on July 25, 2013. Chartis filed a motion to dismiss on September 20, 2013, which I denied on March 26, 2014. See Doc. No. 15. Chartis moved for summary judgment on June 25, 2014, which I denied without opinion by order on October 16, 2014. See Doc. No. 49. Charbonneau subsequently filed an amended complaint on October 21, 2014. Chartis then filed this renewed motion for summary judgment on April 15, 2015. Charbonneau submitted a response in opposition on May 20, 2015, and Chartis replied on May 27, 2015.


“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Material facts are those that could affect the outcome of the proceeding, and a dispute about a material fact is genuine if the evidence is sufficient to permit a reasonable jury to return a verdict for the nonmoving party.” Roth v. Norfalco, LLC, 651 F.3d 367, 373 (3d Cir. 2011) (citations and internal quotation marks omitted). To establish the existence or absence of a genuine dispute as to any material fact, a party must “cit[e] to particular parts of materials in the record” or “show[] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A)-(B). “In evaluating the motion, ‘the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.’” Guidotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764, 772 (3d Cir. 2013) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and internal quotation marks omitted).


Chartis has moved for summary judgment on every claim in Charbonneau’s amended complaint: breach of contract (Count I), breach of the implied duty of good faith and fair dealing (Count II), intentional interference with contractual relations (Count III), [2] bad faith in violation of 42 Pa. Cons. Stat. Ann. § 8371 (Count IV), and a request for declaratory relief (Count V).

As a threshold matter, Charbonneau asserts that the court should decline to consider or otherwise deem waived many of Chartis’s arguments. First, Charbonneau claims that where Chartis raises arguments that it previously made in its earlier motion for summary judgment, the court has “discretion not to consider facts” in support of those arguments that were available to Chartis at the time but not relied on in that motion. Opp. 8. Second, Charbonneau contends that where Chartis raises for the first time here arguments that rely solely on facts that were available as of the prior motion, those arguments are waived “as a matter of Pennsylvania law.” Id. at 9.

These claims fail for several reasons. Most importantly, the cases that Charbonneau cites do not support the conclusions that she reaches. On the discretion point, Charbonneau relies entirely on Krueger Associates v. American District Telegraph Company of Pennsylvania, 247 F.3d 61 (3d Cir. 2001), in which the district court denied defendant’s initial motion for summary judgment to allow for discovery, then granted its renewed motion. The Third Circuit affirmed:

[N]othing prohibited the district court from ruling on [defendant’s] renewed motion for summary judgment. Under the law of the case doctrine the district court’s denial of [defendant’s] initial summary judgment motion did not create any bar to the court’s later reconsideration of the renewed motion. After having turned down [defendant’s] first try without opinion in an apparent effort to allow [plaintiff] to conduct discovery, the district court surely acted within its discretion in reconsidering the motion post-discovery.

Id. at 65-66 (citations omitted). The fact that I denied Chartis’s initial motion for summary judgment without opinion, which was filed before either party could take discovery, therefore, poses no bar to my considering Chartis’s renewed motion for summary judgment now that the evidentiary record has had time to develop. Moreover, even if Krueger Associates can be read as authorizing the court not to consider some of Chartis’s arguments, the stated rationale for doing so is self-defeating. Charbonneau contends that “the parties could have saved nearly a year of costly additional litigation” if, in its prior motion, Chartis had pointed to facts known at the time that it now says are dispositive. Opp. 8. But this claim, which is essentially an appeal to judicial economy, cuts against Charbonneau’s position. It does not conserve judicial resources (nor does it comply with Rule 56) to deny the motion on this basis and then to have a jury serve as factfinder where there is no genuine dispute of material fact based on the fully developed record. Thus, for these reasons and to the extent it is a matter of discretion, I choose to hear Chartis’s arguments.

On the waiver point, Charbonneau likewise cites only one decision that is binding on this court: Allegheny International v. Allegheny Ludlum Steel Corporation, 40 F.3d 1416 (3d Cir. 1994). There, the Third Circuit affirmed a denial of defendant’s second motion for summary judgment, finding that its belatedly-raised argument had been waived. Id. at 1431. But that decision turned on the fact that the argument at issue concerned standing, as those particular arguments “‘should be [raised] with reasonable promptness.’” Id. (quoting 6A Charles A. Wright, et al., Federal Practice and Procedure § 1554, at 407 (1990)). The Third Circuit did not lay down a general waiver rule of the kind that Charbonneau suggests. By the same token, every other case cited by Charbonneau on the topic of waiver-none of which controls here, in any event-is inapposite in some way.[3] I will therefore fully consider all of Chartis’s arguments.[4]

A. Breach of Contract

Under Pennsylvania law, breach of contract claims must contain three elements: “‘(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract[, ] and (3) resultant damages.’” Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003) (citing CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. Ct. 1999)). Charbonneau contends that a contract formed between herself and Chartis when she received her assignment from Batoff. Amend. Compl. ¶¶ 77-78. She argues that Chartis breached both “by expressly refusing in advance to pay [her] anything” and by failing to secure her “prior approval” before entering its settlement with Batoff. Opp. 23, 19. And she claims that she suffered damages “consisting of unpaid insurance proceeds” and “the reduced amount of insurance proceeds received in her settlement with Batoff.” Amend. Compl. ¶¶ 83-84. Chartis offers numerous arguments in response, which I will address in turn.

1.The non-assignment clause

First, Chartis asserts that no contractual relationship ever formed between itself and Charbonneau, as Charbonneau “could not have been assigned the Homeowner’s Policy itself because the Policy included a ...

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