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Allstate Vehicle and Property Insurance Co. v. Philadelphia Housing Authority

United States District Court, E.D. Pennsylvania

July 11, 2019

ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY a/s/o FELIX AND EVELYN TORRES
v.
PHILADELPHIA HOUSING AUTHORITY

          MEMORANDUM OPINION

          Savage, J.

         Plaintiff Allstate Vehicle and Property Insurance Company filed this subrogation action against defendant Philadelphia Housing Authority (“PHA”) for damages sustained to its insured's home caused by a fire that originated in an adjacent vacant building owned by the PHA. Moving to dismiss the complaint, the PHA argues that, as a Commonwealth agency, it is entitled to immunity under the Pennsylvania Sovereign Immunity Act, 42 Pa.C.S. § 8521. Allstate admits that the PHA is a Commonwealth agency, but contends that the real estate exception, 42 Pa.C.S. § 8522(b)(4), applies, exposing the PHA to liability for the damage to the Torres property.

         Because the fire was caused by a trespasser and not by an artificial condition or a defect of the PHA's real estate, the exception does not apply. Therefore, we shall grant the motion.

         Factual Background

         On January 14, 2018, a fire occurred at 1420 North 7th Street, in Philadelphia, Pennsylvania, a vacant property owned by the PHA.[1] The fire spread to the adjacent property owned by Allstate's insured, Felix Torres[2], causing substantial damage.[3]Allstate provided a homeowner's insurance policy covering the loss.[4] Allstate, as subrogee of Mr. Torres, brought this action against the PHA to recover payments made.[5]

         In its amended complaint, Allstate alleges that the PHA property had been vacant and abandoned since 2005, allowing vagrants to squat there.[6] This “open and dangerous condition” was notorious and the subject of numerous complaints to the City.[7] Allstate alleges the PHA allowed the property to deteriorate over the years.[8] It was stripped of copper pipes and wiring.[9] It was “dangerous, unsecure, and unstable.”[10]

         In 2012, the Department of Licensing and Inspections (“L&I”) issued a violation under Philadelphia Property Maintenance Code 302.2/4, for failure to clean and maintain the lot.[11] In 2015, L&I issued three violations, declaring the building an “Unsafe Structure” under Philadelphia Property Maintenance Code 108.1.1 and ordering demolition.[12] Instead of demolishing the property, the PHA allowed it to deteriorate.[13] On May 30, 2017, L&I issued a violation for failing to register the property as vacant.[14] Despite the order to demolish the property and cure the violations, the PHA did nothing.[15]

         On January 14, 2018, a fire started in the kitchen area of the property. According to the amended complaint, the “Fire Marshal opined that the fire was caused by a vagrant who had been known to stay freely” at the property.[16]

         Asserting a negligence claim, Allstate alleges that had the original property been safe and secure or properly demolished, the fire would not have occurred.[17] Allstate also avers that the Philadelphia Property Maintenance Code required the PHA to fasten windows and doors and keep them in good repair.[18] Additionally, it claims the PHA had notice that the property was unsafe, unstable, and unsecure to trespassers, and the PHA had a duty to repair property that presented a risk to neighboring properties.[19]

         Discussion

         Although immunity is an affirmative defense, a complaint may be dismissed pursuant to a 12(b)(6) motion when the affirmative defense appears on its face. Leveto v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001); ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); see also 5B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004). Immunity “‘will be upheld on a 12(b)(6) motion only when the immunity is established on the face of the complaint.'” Leveto, 258 F.3d at 161 (citing Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir. 1996); Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir. 1998); Santamorena v. Georgia Military College, 147 F.3d 1337, 1340 (11th Cir. 1998)). Thus, we may not consider facts beyond those alleged in the complaint.

         The Pennsylvania Sovereign Immunity Act granted the Commonwealth and its agencies[20] immunity from tort liability. 42 Pa.C.S. § 8521. At the same time, it created nine exceptions to immunity, imposing liability against local agencies in certain enumerated circumstances. 42 Pa.C.S. § 8522(b). At issue here is the real estate exception. 42 Pa.C.S. § 8522(b)(4). As are all exceptions, it is narrowly interpreted. Jones v. SEPTA, 772 A.2d 435, 440 (Pa. 2001); Mascaro v. Youth Study Center, 523 A.2d 1118, 1123 (Pa. 1987); Kiley by Kiley v. City of Philadelphia, 645 A.2d 184, 186 (Pa. 1994).

         Under the real estate exception, a Commonwealth agency may be liable for injury caused by “a dangerous condition of Commonwealth agency real estate” which causes injury. 42 Pa.C.S. §8522(b)(4). A plaintiff “must allege that the dangerous condition derived, originated or had as its source the Commonwealth realty itself, if it is to fall within the Sovereign Immunity Act's real estate exception.” Jones v. SEPTA, 772 A.2d at 443 (internal citations omitted). “In other words, . . . the Commonwealth may not raise the defense of sovereign immunity when a plaintiff alleges, for example, that a substance or an object on Commonwealth realty was the result of a defect in the property or in its construction, maintenance, repair or design.” Id. at 443-44.

         A plaintiff seeking to invoke the exception must establish that (1) he could, absent immunity, recover damages from the person who caused the injury; and (2) the injury was caused by the agency's negligence, rendering the property unsafe for its intended use and creating a dangerous condition or defect in the real estate which causes the injury. Snyder v. Harmon, 562 A.2d 307, 312 (Pa. 1989); Williams v. Phila. Hous. Auth., 873 A.2d at 85-86; Mascaro, 523 A.2d at 1123.

         As to the first requirement, Allstate has stated a cause of action against PHA for negligence in allowing its property to fall into a state of disrepair, rendering it unsafe and dangerous. See Sections 364 and 448 of the Restatement of Torts (Second). Pennsylvania courts have consistently “held landowners liable for failing to take precautions against unreasonable risks that stem directly or indirectly from the property including the contemplated acts of third parties, whose crimes are facilitated by the condition of the property.” Mascaro, 523 A.2d at 1122 (collecting cases).

         Allstate alleges that the fire was caused by a vagrant who was known to squat in the PHA's dilapidated and unsecured property.[21] Despite numerous citations for City Code violations and orders to secure the property, PHA did nothing to prevent others from entering the property.[22] PHA's failure to secure the property increased the risk of a squatter causing a fire on the property.[23]

         As alleged in the complaint, PHA was negligent in permitting its property to fall into disrepair, creating an unreasonable risk to the adjacent property, specifically the predictable acts of a third party. Therefore, Allstate has stated a cause of ...


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