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Aaron v. State Farm Fire and Casualty Co.

United States District Court, E.D. Pennsylvania

March 30, 2018

TODD AARON, M.D., Plaintiff,


          GERALD J. PAPPERT, J.

         Todd Aaron's home was damaged when a tree fell onto its roof during a storm. He sued his insurer, State Farm Fire and Casualty Company, after a disagreement arose over State Farm's handling of the claim and the cost to repair the house. Aaron asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty and statutory bad faith. The Court granted State Farm's motion to dismiss and strike various claims and alleged damages, leaving only the breach of contract and bad faith counts. (ECF Nos. 13 & 14.)

         At the close of discovery, State Farm moved for summary judgment on Aaron's bad faith claim, as well as those aspects of the breach of contract claim seeking damages for lost income and purported diminution in the value of his Mercedes. (ECF No. 57.) After holding oral argument (ECF No. 78), the Court granted the motion in its entirety (ECF No. 79). The reasons for entering judgment in favor of State Farm with respect to the lost income and devalued car were stated on the record at the hearing. This Memorandum explains the Court's decision on the bad faith claim.


         On July 23, 2016, a large tree fell onto the front first floor bedroom of Aaron's home, causing significant damage. (Pl.'s Resp. in Opp'n, Ex. B, ECF No. 63; Def.'s Mot. for Summ. J., Ex. H at ¶ 0068-69, ECF No. 57.) He contacted State Farm that day to initiate a claim and on the 24th and 25th, told the insurer the tree caused structural damage and rendered his home uninhabitable. (Def.'s Mot., Ex. H at ¶ 0067-69.) State Farm immediately began working with Aaron to make alternative living arrangements and process his claim. (Id. at ¶ 0066-67, SF0069.)

         On July 29, State Farm claim specialist Ryan Chapple and Aaron inspected the house. (Id. at SF0065-66.) Chapple determined that an expert would be needed to assess, among other things, the possibility of structural damage to the home. (Id.) State Farm thereafter retained Gary L. Popolizio, P.E., a licensed professional engineer and general contractor, to assist in the investigation. (Id. at SF0065; Def.'s Mot., Ex. I.)

         On August 5, Popolizio inspected the home with Aaron and Chapple. (Def.'s Mot., Ex. H at ¶ 0064-65; Def.'s Mot., Ex. K.) In his September 13 report and estimate, Popolizio concluded that the tree damage was “focused primarily toward the front Master Bedroom area where the greatest effects of the impact were visible and included the wood roof framing[.]” (Def.'s Mot., Ex. K at ¶ 1443; see Def.'s Mot., Ex. H at ¶ 0062.) He noted other damage throughout the home, including the need to replace the metal roof and hardwood flooring throughout the first floor. (Id.) The report stated that his estimate was based on the conditions visible at the time of his inspection and that there was the potential that unforeseen damage could be discovered during restoration. (Def.'s Mot., Ex. K at ¶ 1444.) Popolizio recommended that restoration work be done by qualified professionals and that “[i]tems regarding the building structure, components, or load bearing systems . . . be reviewed by an appropriate licensed design professional.” (Id.) Similarly, Popolizio told Chapple that he believed the home was “structurally ok” but said there was a “good chance” reconstruction could expose hidden damage. (Def.'s Mot., Ex. H at ¶ 0064; Resp. in Opp'n, Ex. C (“Chapple Dep.”) at 85:6-17.) Based on his assessment of the damage, he estimated the cost of repairs at $119, 111.16 and State Farm paid Aaron this amount on September 23. (Def.'s Mot., Ex. K at ¶ 1451; Def.'s Mot., Ex. H at ¶ 0023.)[1]

         On November 7, Aaron informed State Farm that its estimate was “significantly less” than those he received from various contractors and that he would be sending an itemized estimate for State Farm's review. (Id. at ¶ 0059.) State Farm noted that any estimate received should be sent to its expert. (Id.) Aaron called again on December 12 to complain that State Farm's estimate was insufficient but, as of that date, had not yet provided State Farm with any estimates from his contractors. (Id. at ¶ 0057.)

         On January 18, 2017, State Farm received a report and estimate from Alex Davis-Booth, a general contractor. (Def.'s Mot., Ex. H at ¶ 0044; Def.'s Mot. to Exclude Davis-Booth, Ex. D, ECF No. 58.) The report stated that he “agree[d] with most of [Popolizio's] observations[, ]” however, he also “saw that the main ridge was impacted” and suggested additional repairs to the “superficial and structural damages outlined in [Popolizio's] report[.]” (Def.'s Mot., Ex. N at ¶ 1023, SF1025.) Davis-Booth proposed “removing the finishes to the roof and pitched ceiling on the 2nd floor, 2nd floor hardwood finishes . . . [and] carrying out selective demolition to the first floor structure to assess soundness of supporting framing[.]” (Id. at ¶ 1023.) He further recommended that the “most cost effective way” to repair the home was to “remove the 2nd floor structure from above the 1st floor” to assess the second floor framing and then reconstruct a full second story consistent with current code requirements. (Id. at ¶ 1024.) Davis-Booth estimated the cost of this work to be $288, 614.29. (Id. at ¶ 1027.) State Farm sent the estimate to Popolizio no later than January 19. (Def.'s Mot., Ex. H at ¶ 0044.)

         Popolizio issued a second report and estimate on February 9, following another site inspection and review of Davis-Booth's report and estimate. (Def.'s Mot., Ex. Q.) The purpose of the second inspection was to assess certain items that had not been included in the first review, including the HVAC system, basement and in-ground pool. (Id. at ¶ 0993.) Popolizio's main conclusions regarding damage to the home remained the same. (Id. at ¶ 0997.) Specifically, he stated that Davis-Booth's estimate was “directed toward improvements to the existing home, contains areas and items of work that would be unrelated toward restoring the original dwelling back to its pre-impact condition, and includes costs towards work that was [previously] being considered[.]” (Id. at ¶ 0999.)

         On February 17, State Farm discussed the discrepancy in proposed renovation costs with Aaron, who apparently demanded payment consistent with Davis-Booth's estimate. (Def.'s Mot., Ex. H at ¶ 0037.) State Farm explained that the settlement amount was based on its expert engineer's estimate and opinion, who believed that items in Davis-Booth's estimate were related to improving the home rather than restoring it to its pre-storm condition. (Id.) State Farm offered to put the experts in touch to discuss and resolve any disagreements. (Id.) A similar offer was made in a February 23 letter from State Farm to Aaron. (Def.'s Mot., Ex. R at ¶ 0809.) Shortly thereafter, Aaron retained counsel. (Def.'s Mot., Ex. H at ¶ 0035.)

         State Farm then arranged for Popolizio to inspect Aaron's home a third time on March 17, along with Davis-Booth and Aaron's counsel. (Id. at ¶ 0029-31.) The purpose of this inspection was to meet Davis-Booth at the property and address his concerns. (Def.'s Mot., Ex. T at ¶ 1564.) Specifically, Davis-Booth believed there was “distortion of the framing from the fallen tree” and that “the most economical solution toward repair was to remove the framing members . . . [including] the main ridge, roof framing, portions of the walls, and sections of the floor assembly.” (Id. at ¶ 1565.)

         Following the inspection, Popolizio prepared his third report, dated April 18, which stated that his opinion regarding damage remained the same. (Def.'s Mot., Ex. T.) The report noted a “lack of any evidence of a lateral load imposed on the upper portion of the dwelling of any significance to distort or shift the wood framed assembly” and a “lack of any corresponding separations, cracks, or deformations within the interior finishes reflective of a movement within the wood structure[.]” (Id. at ¶ 1568.) Popolizio found “no evidence that the translation of energy from the fallen tree caused movement within the upper main roof, walls, or floor assemblies within this portion of the home” and no evidence “to support the removal of the 2nd floor assembly.” (Id.)

         Popolizio inspected Aaron's home yet again on July 26, 2017. (Def.'s Mot., Ex. V.) At the time, the home was under construction and the structural components were exposed. (Id. at 3.) Popolizio then prepared his fourth and final report on January 8, 2018, in which he stated that ‚Äúthere continues to remain no evidence that any force from the fallen tree caused a shift or movement ...

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