United States District Court, W.D. Pennsylvania
J. Schwab United States District Judge
Burgunder (“Plaintiff') initiated this action on
September 1, 2017, against United Specialty Insurance Company
(“Defendant') for breach of contract and for bad
faith in violation of Pennsylvania's bad faith statute,
42 Pa. Con. Stat. Ann. § 8371. Plaintiff had sought
payment under his insurance policy after two buildings on his
property sustained damage but was denied. Currently pending
before the Court is Defendant's Motion for Summary
Judgment, its brief in support thereof, and its concise
statement of material facts. (Docs. 37, 38, 39.) Plaintiff
filed a response thereto along with a counterstatement of
material facts. (Doc. 44, 45, 46.) Summary judgment was
denied by order on May 1, 2018. This is the memorandum
opinion relating to that decision.
is the owner of 116 New York Avenue in Rochester,
Pennsylvania. (Docs. 39 ¶ 5; 46 ¶ 5 8.) Plaintiff
purchased a Commercial Lines Policy from Defendant that
provided coverage for two buildings on his property from June
3, 2016, until June 3, 2017. (Docs. 39 ¶ 9; 46 ¶
9.) The amount of Property Damage Coverage available for
Building 1 and Building 2 is $300, 000 and $50, 000,
respectively. (Docs. 39 ¶ 20; 46 ¶ 20.) On April 1,
2017, retaining walls on a neighboring property failed.
(Docs. 39 ¶ 7; 46 ¶ 7.) Both buildings were damaged
and were subsequently condemned and demolished. (Docs. 39
¶ 8; 46 ¶ 8.)
reported his loss to Defendant, and Daniel Green was assigned
as the claims representative. (Docs. 39 ¶ 21; 40-4 at
33.) On April 6, 2017, per Defendant's request, Erik
Swanson of VeriClaim, an independent adjusting firm,
inspected the property and was unable to discover who owned
the retaining walls that failed. (Docs. 39 ¶¶ 24,
25, 27; 46 ¶¶ 24, 25, 27.) His report, however, did
mention that the walls at issue were likely not part of
Plaintiff's property based on an “Indenture to
Deed”. (Doc. 40-8, 3.) With Green's permission,
Swanson, retained an engineer to further evaluate the loss.
(Docs. 39 ¶ 29; 46 ¶ 29.)
then sent a Partial Denial of Coverage and Reservation of
Rights letter to Plaintiff. (Docs. 39 ¶ 30; 44 ¶
30.) Robert L. Smith, P.E., Defendant's expert, authored
a report outlining his investigation and conclusions. (Docs.
39 ¶ 33; 44 ¶ 33.) Smith found that the retaining
walls were not designed properly, were not constructed in
accordance with acceptable standards, and were not properly
maintained. (Docs. 39 ¶ 34; 46 ¶ 34.) On May 8,
2017, after receiving the engineering expert's
conclusion, Mr. Green denied coverage based upon Mr.
Smith's conclusion that the loss was caused by the
lateral forces of the earth coupled with the walls'
inadequate design, construction, and maintenance. (Docs. 39
¶ 35; 46 ¶ 35.) Mr. Green's opinion was based
solely on his expert's conclusion and he did not consult
counsel and was unaware of Pennsylvania law. (Docs. 40-4 at
49, 56, 57; 46 ¶¶ 40-41.)
April 2, 2018, Plaintiff's expert Richard A. Bragg,
Ph.D., P.E., authored a report. (Docs. 39 ¶ 36; 46
¶ 36.) In his report, Bragg concurred with
Defendant's engineer that the retaining walls that failed
were not properly designed, constructed, or maintained and
that design and construction flaws were the cause of its
failure. (Docs. 39 ¶ 37; 46 ¶ 37.) Bragg concluded
that the walls' failures were not the result of a
landslide and did not induce a landslide. (Doc. No. 46 ¶
42; 47 at 7.) Dr. Bragg also concluded that:
[a)] Failure of the retaining walls was the direct cause of
damage to the 1-story structure located on the Burgunder
property. The southwest corner of this building was founded
on fill that was located within the zone of plastic
equilibrium in the fill retained by the walls. Collapse of
the walls resulted in simultaneous collapse of support for
the southwest corner of the building foundation provided by
the fill retained by the wall.
[b)] The failure of the walls was initiated by the structural
collapse of the brick retaining wall located below the timber
retaining wall. The lower brick wall was inadequately
designed/constructed to retain soil fill to near its top (a
height of about 12 feet). Nonetheless, the timber wall placed
additional lateral loading on the brick wall and contributed
to its ultimate collapse.
[c) T]he two buildings located on the Burgunder property were
condemned at the same time and that the failure of the
retaining walls was the primary consideration for the
(Doc. No. 46 ¶ 43.)
Standard of Review
judgment may be granted if, drawing all inferences in favor
of the non-moving party, “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); see also Melrose, Inc. v. City of
Pittsburgh, 613 F.3d 380, 387 (3d Cir. 2010). A fact is
“material” if proof of its existence or
non-existence might affect the outcome of the suit under
applicable law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986); see also Lamont v. New Jersey,
637 F.3d 177, 181 (3d Cir. 2011). Disputes must be both: (1)
material, meaning concerning facts that will affect the
outcome of the issue under substantive law; and (2) genuine,
meaning there is sufficient evidence supporting the claimed
factual dispute “to require a jury or judge to resolve
the parties' differing versions of the truth at
trial.” In re Lemington Home for the Aged, 659
F.3d 282, 290 (3d Cir. 2011) (internal citations omitted).
moving for summary judgment has the initial burden of
supporting its assertion that fact(s) cannot be genuinely
disputed by citing to particular parts of materials in the
record- i.e., depositions, documents, affidavits,
stipulations, or other materials-or by showing that: (1) the
materials cited by the non-moving party do not establish the
presence of a genuine dispute, or (2) the non-moving party
cannot produce admissible evidence to support its fact(s).
Fed.R.Civ.P. 56(c)(1). The moving party may discharge its
burden by “pointing out to the district court”
the “absence of evidence to support the nonmoving
party's case.” Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). “[T]he nonmoving party bears
the ultimate burden of proof” for the claim in
question. Conoshenti v. Pub. Serv. Elec. & Gas
Co., 364 F.3d 135, 140 (3d Cir. 2004) (quoting
Singletary v. Pa. Dept. of Corr., 266 F.3d 186, 192
n.2 (3d Cir. 2001)).
in order to defeat a motion for summary judgment, the
non-moving party must support its assertion that fact(s) are
genuinely disputed by citing to particular parts of materials
in the record, or by showing that: (1) the materials cited by
the moving party do not establish the absence of a genuine
dispute, or (2) the moving party cannot produce admissible
evidence to support its fact(s). Fed.R.Civ.P. 56(c)(1). When
determining whether there are any genuine issues of material
fact, all inferences should be drawn in favor of the
non-moving party. Berckeley Inv. Grp., Ltd. v.
Colkitt, 455 F.3d 195, 201 (3d Cir. 2006). In reviewing
a motion for summary judgment, the court does not make
credibility determinations, and summary judgment is
“inappropriate when a case will turn on credibility
determinations.” El v. Se. Pa. Transp. Auth.,
479 F.3d 232, 237-38 (3d Cir. 2007) (citing
Anderson, 477 U.S. at 255).
parties agree in this diversity action that Pennsylvania law
Count I-Breach of Contract
asserts three reasons why Plaintiff's loss is not covered
under the USIC Policy: the earth movement exclusion, the
maintenance exclusion, and the fact that collapses are only
covered in limited situations under the policy.
Defendant's arguments are without merit and, as such,
Defendant's Motion for Summary Judgment as to Count I,
breach of contract, has been denied.
prevail on a contract claim under Pennsylvania law, a
plaintiff must show ‘(1) the existence of a contract,
including its essential terms, (2) a breach of the contract;
and, (3) resultant damages.'” Reeves v.
Travelers Cos., --F.Supp.3d --, 2017 WL 4930900, at *2
(E.D. Pa. Oct. 31, 2017) (quoting Meyer, Darragh,
Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone
Middleman, P.C., 137 A.3d 1247, 1258 (Pa. 2016)). Under
Pennsylvania law, the “‘interpretation of an
insurance contract regarding the existence or non-existence
of coverage is generally performed by the Court.'”
Gardner v. State Farm Fire & Cas. Co., 544 F.3d
553, 558 (3d Cir. 2008) (citing Donegal Mut. Ins. Co. v.
Baumhammers, 938 A.2d 286, 290 (2007)).
[an insurance] policy is a contract, the court's duty is
to ascertain the intent of the parties as manifested in the
language of the agreement.” E. Associated Coal
Corp. v. Aetna Cas. & Sur. Co., 632 F.2d 1068, 1075
(3d Cir. 1980). “A policy must be read as a whole and
its meaning construed according to its plain language.”
Meyer v. CUNA Mut. Ins. Soc., 648 F.3d 154, 163 (3d
Cir. 2011). A policy should be interpreted to “give
effect to all of its provisions.” Am. Auto. Ins.
Co. v. Murray, 658 F.3d 311, 321 (3d Cir. 2011)
(internal citation and quotation omitted). “[I]f the
court is ‘forced to choose between two competing
interpretations of an insurance policy, we are bound, as a
matter of law, to choose the interpretation which allows us
to give effect to all of the policy's
language.'” Gen. Refactories Co. v. First State
Ins. Co., 94 F.Supp.3d 649, 661 (E.D. Pa. 2015) (quoting
Clarke v. MMG Ins. Co., 100 A.3d 271, 276 (Pa.
an ambiguity exists is a question of law.” Viera v.
Life Ins. Co. of N. Am., 642 F.3d 407, 419 (3d Cir.
2011) (internal citation and quotation omitted). “The
court should read policy provisions so as to avoid
ambiguities, if the plain language of the contract permits[,
]” and should not torture the language of the policy to
create an ambiguity. E. Associated Coal Corp., 632
F.2d at 1075. An insurance contract is ambiguous where it:
“(1) is reasonably susceptible to different
constructions, (2) is obscure ...