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Long v. United Farm Family Insurance Co.

United States District Court, W.D. Pennsylvania

February 17, 2017

WILLIAM P. LONG, et. al. Plaintiffs,
v.
UNITED FARM FAMILY INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION

          Susan Paradise Baxter Magistrate Judge [1]

         I. Background

         A. Introduction

         This action arises out of an insurance policy issued by the Defendant United Farm Family Insurance Company (“UFF” or “Defendant”) to Plaintiffs William and Susanne Long, husband and wife (“Mr. Long” and “Mrs. Long, ” collectively “Mr. and Mrs. Long”) covering losses regarding their residence. Mr. and Mrs. Long instituted this action in federal court against UFF by original Complaint filed on December 17, 2015 (ECF No. 1), alleging that Defendant's handling of two separate losses under the insurance policy was in bad faith in violation of 42 Pa.C.S.A. § 8371 (Count I) and was in breach of the implied covenant of good faith and fair dealing (Count II). Subsequently, with consent of UFF, (ECF No. 14), Mr. and Mrs. Long filed an Amended Complaint on April 26, 2016, with the same two counts. (ECF No. 15). Neither the Complaint nor the Amended Complaint attempted to state any claim on behalf of their adult daughter, Andrea Long (“Ms. Long” or “Andrea”), who resided with them. On June 1, 2016, Mr. and Mrs. Long filed a motion and amended motion pursuant to Federal Rule of Civil Procedure 20(a) to join Ms. Long as party-plaintiff in this action, (ECF Nos. 26 and 28), asserting that Ms. Long resided in and continued to reside in the home covered by the policy, that Ms. Long's claim for physical and emotional distress arose out of the same transactions, occurrences or series of transactions or occurrences as the two casualty losses on which the Amended Complaint was based, and that Ms. Long's claim presented common questions of law and fact, and therefore, permissive joinder would minimize judicial waste and promote judicial economy. (ECF No. 28). UFF opposed the joinder and argued, in part, that any claim by Ms. Long would be untimely. (ECF No. 29). Noting its broad discretion, on July 22, 2016, the Court granted the motion to join Ms. Long (ECF No. 34), but also indicated that it was without prejudice to Defendant to raise the arguments on a dispositive motion. As a result, the Second Amended Complaint was filed on July 27, 2016, (ECF No. 25), including a claim under Count III by Ms. Long for breach of the implied covenant of good faith and fair dealing regarding the insurance policy. (ECF No. 35 at ¶¶ 130-134). On August 16, 2016, UFF filed its present motion to dismiss. (ECF No. 37).

         After considering the complaint (Docket No. 35), UFF's motion to dismiss and brief in support, (Docket Nos. 37 and 38), and Ms. Long's response in opposition, (Docket No. 47), the Court will grant the motion to dismiss Count III, (Docket No. 37), with leave to amend.

         B. Facts

         The following well pleaded facts, taken from the Second Amended Complaint, will be taken as true in the motion to dismiss context. Erickson v. Pardus, 551 U.S. 89, 94 (2007).

         Ms. Long, an adult, lived with her parents, Mr. and Mrs. Long, in their home in Russell, PA (“the residence”). (Docket No. 35 ¶¶ 1, 2). UFF issued a policy of insurance (“policy”) to Mr. and Mrs. Long insuring against risk of loss to the residence and household contents and providing for living expenses in the event of certain perils regarding the residence. (Docket No. 35 ¶¶ 7, 9).

         The policy contains two provisions addressing “Suit Against Us.” One provision is located under the section addressing “Property Conditions I, II, III and IV” and states:

6.Suit Against Us. No actions can be brought against U.S. unless YOU have complied with policy provisions and that action is started within one (1) year after the date of loss or damage.

         (ECF No. 35-1 at 24). The other provision is located under the section of the policy addressing “Liability Conditions Division V, ” and states:

6.SUIT Against US. No action can be brought against U.S. unless:
a. the INSURED had fully complied with the policy provisions; and
b. the obligation of the INSURED has been determined by final judgement or agreement signed by US.
If WE do not satisfy a judgment against YOU within thirty (30) days of entry, for loss, damage or injury during the life of the policy, WE can be sued for the amount of the judgment within the coverage limits. The person who recovers a judgment against YOU may sue US, as can anyone who lawfully shares in or assumes that interest.
In the event of a dispute between YOU and U.S. as to whether there is coverage under this policy, that action must be filed in the courts of the United States of America (including its territories and possessions), Puerto Rico or Canada.

(ECF No. 35-1 at 32).[2]

         On January 9, 2014, Mr. and Mrs. Long discovered that they had suffered a loss under the policy due to a broken pipe in the heating system on the second floor of their home, which resulted in water running down from the second floor through the kitchen on the first floor and into the finished basement. (Docket No. 35 ¶¶ 11, 12). On January 9, 2014, Mr. and Mrs. Long notified UFF of the property loss. (Docket No. 35 ¶ 14). The residence, as a result, suffered damage, including mold growth. (Docket No. 35 ¶ 18). The UFF adjuster gave Mr. and Mrs. Long the name of a “cleanup” company, however, as it turned out that company did not service their area. (Docket No. 35 ¶¶ 16-17). Mr. and Mrs. Long then engaged a company to remediate the mold and water damage to the residence and its contents, but promptly thereafter terminated that company's service because they found it to be dissatisfactory. (Docket No. 35 ¶¶ 19-20). Mr. and Mrs. Long informed UFF that their daughter, Andrea, suffered an immunodeficiency disorder and that the mold exposure could be seriously detrimental to her health. (Docket No. 35 ¶ 21). As a result of exposure to the mold at the residence, Mr. and Mrs. Long, as well as Andrea Long, became physically ill, and after Andrea sought medical attention, she was informed by her doctor that remaining in the residence was dangerous to her health. (Docket No. 35 ¶¶ 22-23). Accordingly, Mr. and Mrs. Long and Andrea Long temporarily relocated elsewhere, but the exposure to a different environment caused great distress to Mr. and Mrs. Long and Andrea Long. and Mr. and Mrs. Long had to monitor Andrea Long's health closely and frequently seek medical attention and care for her as a result. (Docket No. 35 ¶¶ 34-35). During the process of addressing the loss, UFF representatives performed various inspections of the residence, but did not inspect the contents. (Docket No. 35 ¶¶ 25, 26, 42-43).

         In the meantime, Mr. and Mrs. Long had mold remediation estimates prepared by Ahold of Mold and UFF attributed the work to be performed by Ahold of Mold for mold remediation, water damage remediation and mold testing and analysis to Mr. and Mrs. Long's mold loss claim, which estimates were in excess of the mold loss cap of $15, 000.00. (Docket No. 35 ¶¶ 38, 41). Mr. and Mrs. Long and their insurance company disputed the appropriate estimate as to the cost of repairs to the residence as a result of the water loss, and Mr. and Mrs. Long engaged National Fire Adjusters (“NFA”), a public adjusting company, regarding the dispute. (Docket No. 35 ¶¶ 38, 41). UFF issued various checks to pay for repairs and living expenses during the loss and repair. (Docket No. 35 ¶ 50). On March 28, 2014, Mr. and Mrs. Long requested an extension to file proofs of loss, but the extension was denied. (Docket No. 35 ¶¶ 51-52).

         On April 3, 2011, NFA, on behalf of Mr. and Mrs. Long, provided UFF with signed and sworn proofs of loss by Mr. and Mrs. Long for the residence, including the mold loss, contents loss, and loss in the form of additional living expense they incurred as part of their property loss claim under the insurance policy. (Docket Nos. 35 ¶ 55; 35-16 and 35-17 (Ex. 15)). UFF did not provide a written acceptance or written denial of Mr. and Mrs. Long's proof of loss within fifteen working days after UFF received it. (Docket No. 35 ¶ 56). On April 14, 2014, UFF stopped making payments for additional living expenses and Mr. and Mrs. Long with Andrea Long moved back to the residence, living there and in a camper parked on the premises next to the residence. (Docket No. 35 ¶¶ 58, 59).

         Then, on May 5, 2014, a fire occurred at the residence, originating in the basement and a cause and origin investigator determined that the fire was accidentally started in a basement fixture with pooled water likely caused by the January 9, 2014 incident. (Docket No. 35 ¶¶ 68, 72). Mr. and Mrs. Long reported their loss and UFF acknowledged receipt of their claim. (Docket No. 35 ¶¶ 69, 70). On May 15, 2014, Mr. and Mrs. Long through NFA requested an advance for the content loss and for additional living expenses, (Docket Nos. 35 ¶ 77; 35-22), which UFF denied on May 18, 2014. (Docket No. 35 ¶¶ 82). Mr. and Mrs. Long then engaged present counsel to represent them regarding the fire loss claim and they submitted to examination under oath by UFF on June 16, 2014. (Docket No. 35 ¶¶ 84, 87). On July 9, 2014, as with the water loss. Mr. and Mrs. Long submitted to UFF signed and sworn proofs of loss regarding the fire. (Docket No. 35 at ¶ 90; 35-26 (Ex. 24)). Neither Andrea's name nor signature appears anywhere on the sworn proofs of loss submitted by Mr. and Mrs. Long. There likewise is no factual allegation in the Second Amended Complaint or indication in the attachments thereto that Andrea Long ever submitted any claim of loss for coverage by UFF.

         On August 14, 2014, Mr. and Mrs. Long demanded appraisal of the water, mold and fire loss, and offered to afford UFF additional time to respond so that UFF could meet with NFA and attempt a resolution of all the outstanding matters. (Docket Nos. 35 ¶ 92; 35-27 (Ex. 25)). However, between August 14, 2014 and September 9, 2014, UFF did not agree to meet with an NFA representative, did not attempt to come to an agreement of value in dispute, and did not provide a written response to Mr. and Mrs. Long's sworn proofs of loss. (Docket No. 35 ¶¶ 93). On September 9, 2014, Mr. and Mrs. Long provided UFF with their signed sworn proofs of loss and inventory of the fire contents loss claim in the amount of the limits of insurance, and counsel for Mr. and Mrs. Long informed UFF's counsel that they had not responded to the August 14, 2014 appraisal demand. (Docket Nos. 35 ¶¶ 94, 95; 35-28, 35-29 (Exhibit 26)). UFF then responded on September 9, 2014, by indicating a hold was placed on the items listed in the contents proof of loss until documented, accounted and confirmed, and UFF also responded on September 15, 2014 by nominating its appraiser. (Docket No. 35 ¶¶ 96, 97). On October 1, 2014, UFF inquired as to the contents that remained in the home after the water loss, (Docket No. 35 ¶ 98), and on October 3, 2014, first inspected the fire damaged contents. (Docket No. 35 ¶ 99). Examination of Mr. and Mrs. Long under oath was completed on October 8, 2014. (Docket No. 35 ¶ 100). On October 13, 2014, Mr. and Mrs. Long requested through NFA: that UFF resolve the contents and additional living expense portion of their fire claim; that UFF provide a reasonable and suitable advance for additional living expense so Mr. and Mrs. Long could establish a reasonable living environment for their family; and that UFF provide an advance on the contents loss so they could purchase winter clothing. (Docket Nos. 35 ¶ 101; 35-35). UFF's assigned adjuster indicated that he would respond by October 15, 2014, and then on October 15, 2014 indicated to NFA that a formal letter would be emailed and sent the following morning. (Docket No. 35 ¶¶ 102, 103). Then on October 16, 2014, by letter dated October 14, 2014, UFF indicated regarding the fire loss that it was denying the entire contents proof of loss except for items in the immediate vicinity of the fire, all structure loss beyond the estimate of $50, 315.93 and any additional living expense advance, and indicated that the remainder of any such claim would be determined through appraisal. (Docket No. 35 ¶ 105).

         With no additional advance for living expenses, Mr. and Mrs. Long, as well as their daughter Andrea Long, continued to live in an unfinished garage at the residence premises and utilized their camper for toilet facilities through the winter of 2014-2015. (Docket No. 35 ¶ 106). Mr. William Long and Ms. Andrea Long became physical ill and sought medical attention based on the living conditions and Mr. and Mrs. Long and Andrea Long purportedly suffered great distress as a result of the living environment. (Docket No. 35 ¶¶ 107, 108).

         On October 17, 2014, Ahold of Mold submitted to UFF a remediation estimate for heavy smoke infiltration of the wall and ceiling cavities in the residence and provided an estimate for tear out beyond the immediate vicinity of the fire, which UFF denied as to estimates beyond tear out in the affected room where the fire originated. (Docket No. 35 ¶¶ 109, 110). Mr. and Mrs. Long filed suit on January 6, 2015, in the court of common pleas and the parties submitted all of the claims to appointed appraisers. (Docket No. 35 ¶¶ 111-112). On February 26, 2015, the appraisers entered an award on both the water loss and fire loss claims submitted by Mr. and Mrs. Long, (Docket No. 35 ¶ 113), and UFF paid the award minus amounts previously paid. (Docket No. 35 ¶¶ 114, 116). Ultimately, UFF's payments on the ...


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