United States District Court, E.D. Pennsylvania
STATE FARM FIRE & CASUALTY COMPANY, as subrogee of the Estate of Alkis J. Marland, Plaintiff,
HARTMAN CONTRACTORS, JOHN GRIMLEY, trading as “JG ASSOCIATES, ” and ANTHONY ELECTRIC, Defendants.
case arises out of a fire in a townhouse, owned by the Estate
of Alkis J. Marland, and insured by plaintiff State Farm Fire
& Casualty Company (“plaintiff” or
“State Farm”). Plaintiff, as subrogee of the
Marland Estate, asserts claims of negligence, breach of
contract, and breach of express and/or implied warranties,
against defendants Hartman Contractors, John Grimley, and
Anthony Electric. Presently before the Court is Defendant
John Grimley's Motion in Limine to Preclude Evidence of
All and/or Some of the Damages Claimed by Plaintiff.
(Document No. 83, filed August 7, 2017) (“Def.
Grimley's Mot. in Limine”). For the reasons stated
below, defendant Grimley's Motion in Limine is denied.
2003, Alkis Marland purchased a townhouse located in
Phoenixville, Pennsylvania. Def. Grimley's Mot. in Limine
¶ 2. In February 2005, Mr. Marland contracted with
defendant John Grimley to install framing and drywall to
finish the basement of the townhouse. Id. ¶
February 9, 2013, a fire occurred in that townhouse.
Grimley's Mot. in Limine at 3. The details of the fire
and the alleged cause are set forth in the Court's
Memorandum dated May 17, 2017. (Document No. 70). Mr. Marland
passed away on March 6, 2012, over eleven months prior to the
date of the fire. Id. at 2. Upon his death the
townhouse passed to his Estate. His daughters were named
Co-Administrators of the Estate. Id.
time of the fire, the townhouse was insured by plaintiff
State Farm Fire and Casualty Company. Id. The
property was subject to a primary mortgage secured by Bank of
America, N.A. (“Bank of America”). Id.
at Ex. D; Memo. Supp. Pl.'s Resp. Opp. to Def.'s
Grimley's Motion in Limine at 3 (Document No. 85, filed
August 21, 2017). The insurance policy contained a standard
mortgage clause, stating “[i]f a mortgagee is named in
this policy, any loss payable under Coverage A shall be paid
to the mortgagee and [the insured], as interests
appear.” Memo. Supp. Pl.'s Resp. Opp. at 7, Ex.
A. Accordingly, Bank of America had an insurable interest in
the property under the policy. Id. at 4.
March 18, 2013, Bank of America filed an action in
foreclosure on the subject property against the Marland
Estate. Def. Grimley's Mot. in Limine, Ex. F. Bank of
America sold the subject property on September 25, 2013, to
Federal Home Loan Mortgage at a sheriff's sale for $2,
213.90. Federal Home Loan Mortgage later sold the home to a
buyer for $204, 900.00. Def. Grimley's Mot. in Limine,
12, 2013-after Bank of America initiated the foreclosure
action, but prior to the sale of the property to Federal Home
Loan Mortgage-plaintiff issued a check in the amount of $365,
446.11 to the Bank pursuant to the standard mortgage clause
in reimbursement of certain property damage covered under the
insurance policy. Memo. Supp. Pl.'s Resp. Opp. at 4. That
check was issued to Bank of America after State Farm
attempted on two occasions to pay the insurance proceeds to
the Marland Estate, which did not accept the check.
Id. The Bank did not deposit the check issued by
State Farm until January 2016. Id.
Grimley filed this motion in limine to preclude
plaintiff from introducing evidence at trial of the payment
in the amount of $365, 446.11 made to Bank of America.
Grimley argues that State Farm is not entitled to recover the
amount paid to Bank of America because the Bank's failure
to cash the check until nearly three years after State Farm
issued the check rendered the payment voluntary. In response,
State Farm claims that it had a legal obligation to pay Bank
of America the insurance proceeds pursuant to the standard
mortgage clause at the time it sent its check to the Bank,
and it should not be precluded from recovery based on the
Bank's delay in depositing the check. For the reasons
that follow, the Court agrees with State Farm and denies
defendant Grimley's Motion in Limine to Preclude Evidence
of All and/or Some of the Damages.
“is an equitable doctrine involving the right of legal
substitution” and “is granted as a means of
placing the ultimate burden of a debt upon the one who in
good conscience ought to pay it.” Kaiser v. Old
Republic, 741 A.2d 748, 754 (Pa. Super. Ct. 1999). The
doctrine of subrogation allows an insurance company “to
stand in the shoes of the insured and assert the
insured's rights against the tortfeasor.”
Pennsylvania law, an insurance company is not entitled to
subrogation if the insurance payment was voluntary. See
Union Joint Stock Land Bank of Detroit, Michigan v.
Byers, 100 F.2d 82, 84 (3d Cir. 1938) (citations
omitted) (“subrogation will not be decreed in favor of
a mere volunteer who without any duty, legal or moral, loans
money to pay the debt of another.”); Great Northern
Ins. Co. v. Greenwich Ins. Co., 2008 WL 2048354 (W.D.
Pa. May 12, 2008); Kemper v. National P&C Companies
v. Smith, 615 A.2d 372, 376 (Pa. Super. Ct. 1992). A
volunteer is “a stranger or intermeddler who has no
interest to protect and is under no legal or moral obligation
to pay under the circumstances.” Massachusetts
Bonding & Ins. Co. v. Car & General Ins. Corp.,
152 F.Supp. 477, 482 (E.D. Pa. 1957). Instead, “the
payor must have acted under compulsion, and it is only in
cases where the person paying the debt of another will be
liable in the event of default or is compelled to pay in
order to protect his own interests, or by virtue of legal
process, that equity substitutes him in the place of the
creditor . . . .” Kaiser, 741 A.2d at 754
(quoting Home Owners' Loan Corp. v. Crouse, 30
A.2d 330, 331 (Pa. Super. Ct. 1943)). An insurance payment is
not voluntary, however, “if it is made with a
reasonable or good faith belief in an obligation or personal
interest in making that payment.” IAP Worldwide
Services, Inc. v. UTi United States, Inc., No.
04-CV-4218, 2006 WL 305443, at *10 (E.D. Pa. Feb. 8, 2006).
contends that State Farm's payment to Bank of America was
voluntary because, at the time that Bank of America deposited
the check, Bank of America no longer had an interest in the
subject property and therefore had no right to payment under
the insurance policy. In response, State Farm asserts that it
is the date the check was issued, rather than the date the
check was deposited, that is dispositive. At the time State
Farm issued the check to Bank of America in 2013, it argues
it was under a legal obligation to pay the Bank as the
mortgagee of the subject property. When Bank of America
deposited the check in January 2016, it had sold the property
and failed to obtain a deficiency judgment, and therefore no
longer had any interest in the subject property. So, if the
payment was deemed to have been made in January 2016 when
Bank of America deposited the ...