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

United States District Court, E.D. Pennsylvania

October 10, 2019



          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. Dismissing the amended complaint, [1] we held that the PHA, as a Commonwealth agency, was entitled to immunity because the real estate exception of the Pennsylvania Sovereign Immunity Act, 42 Pa.C.S. § 8522(b)(4), did not apply. We reasoned that the amended complaint alleged that the fire was caused by a trespasser and not by an artificial condition or a defect of the PHA's real estate.[2]

         In its second amended complaint, [3] Allstate alleges that there were three defects in the PHA real estate that caused or contributed to causing the fire. The PHA has moved again to dismiss.

         We conclude that Allstate has alleged facts that bring the claim within the real estate exception, exposing the PHA to liability. Those facts, if proven, will show that the PHA filed to maintain and repair its property, creating a dangerous condition that caused or contributed to the cause of the fire. Therefore, we shall deny the PHA's motion.

         Factual Background

         On January 14, 2018, a fire occurred in a vacant property owned by the PHA.[4]The fire spread to the adjacent property owned by Allstate's insured, Felix Torres, [5]causing substantial damage.[6] Pursuant to the homeowner's insurance policy covering the loss, Allstate paid for the repairs to its insured's property.[7]

         In its second amended complaint, Allstate alleges that the PHA property had been vacant and abandoned since 2005.[8] The building had no lighting, electricity, running water, or working smoke detectors; and, it had “broken, non-existent, or non-functioning locks, doors, and/or windows.”[9] Vagrants stripped the copper pipes and wiring.[10]

         Numerous complaints regarding the “dangerous condition” of the building had been reported to the City of Philadelphia.[11]

         In 2012, the Department of Licenses and Inspections (“L&I”) issued a violation for failure to clean and maintain the lot.[12] Three years later, L&I issued three violations, declaring the building an “Unsafe Structure” and ordering demolition.[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 and allowed the building to “continue to deteriorate from its already unsafe condition.”[15]

         On January 14, 2018, a fire started in the kitchen area of the property.[16] The “Fire Marshal was unable to determine the cause of the fire.”[17]

         Allstate alleges that the fire could not be extinguished and spread because there was no running water or working smoke detectors.[18] Additionally, the lack of locks, doors, and windows allowed anyone, including squatters, to enter the property.[19] Allstate alleges that the PHA breached its duty to maintain its property in a safe condition.[20] It contends that had the property been safe and secure with working locks, utilities, and smoke detectors, or alternatively, been properly demolished, the fire would not have occurred, spread, and caused damage to its insured's property.[21]

         In moving to dismiss, the PHA argues that, as a Commonwealth agency, it enjoys sovereign immunity.[22] It disputes Allstate's contention that the real estate exception applies.[23] It argues that the fire was started by a third party and was not caused by a condition of the real estate.[24]

         Discussion [25]

         The Pennsylvania Sovereign Immunity Act grants the Commonwealth and its agencies[26] immunity from tort liability, unless one of eight exceptions applies. The real estate exception exposes a Commonwealth agency to liability for injury caused by “a dangerous condition of Commonwealth agency real estate.” 42 Pa.C.S. § 8522(b)(4).

         To impose liability under the real estate exception, the plaintiff must satisfy three requirements. The plaintiff must show: (1) the injury was caused by a dangerous condition; (2) the dangerous condition was a condition of the real estate; and (3) absent immunity, it could recover damages from the person who caused the injury. Cagey v. Commonwealth, 179 A.3d 458, 463 (Pa. 2018) (citations omitted). Allstate's allegations meet this test.

         Addressing the first and second requirements, the PHA argues that the fire did not derive, originate, or have as its source the PHA real estate itself.[27] The cause, according to the PHA, was a squatter, and the PHA had no obligation to anticipate the acts of squatters.[28] It contends that Allstate's second amended complaint fails to allege that a dangerous condition of the property caused the harm.[29]

         Allstate counters that the second amended complaint sufficiently alleges that the physical condition of the property itself caused its insured's damages.[30] It avers that three conditions caused or contributed to the fire:[31] (1) the property was not secure, allowing trespassers to access it;[32] (2) the property lacked running water, utilities, and working smoke detectors, which contributed to the spread of the fire;[33] and (3) the property was structurally unsound, resulting in its collapse in the fire.[34] Allstate alleges that these conditions made the property dangerous and unsafe.[35] It alleges that the conditions resulted from the PHA's failure to maintain and repair its property. Despite being on clear notice, the PHA did nothing to maintain its property and allowed it to be occupied by trespassers in its dangerous condition.

         “The term ‘dangerous condition' is unambiguous and plainly encompasses any condition that presents a danger.” Cagey, 179 A.3d at 464. The PHA argues that the property's dangerous condition may have facilitated the plaintiffs' harm, but it did not cause it.[36] We disagree. Construed in favor of Allstate, the alleged facts show that the property's condition did not merely facilitate the injury. The defects in the property caused or contributed to the fire. It was foreseeable that unauthorized persons would enter the unsecured building and act recklessly, causing harm to the property and adjacent properties. Not only was it foreseeable, the PHA knew about it. L&I had ordered the property sealed and the PHA had received complaints of squatters in the property.

         Allstate has also sufficiently pled that the dangerous condition derived, originated from, or had as its source the PHA real estate. It has alleged that the property was “unsafe for the purpose for which it was intended.” Dean v. Dep't of Transportation, 751 A.2d 1130, 1134 (Pa. 2000). The doors, windows, locks, and smoke alarms were either non-operable or non-existent. The property was so unstable and unsafe that L&I ordered its demolition. Consequently, it was not fit for its intended use as a habitable dwelling. In essence, Allstate alleges that a dangerous condition allowing unfettered access to the property by trespassers existed and that condition was created by a defect in the maintenance and repair of the property.

         Allstate alleges that the doors, locks, windows, and smoke alarms were either inoperative or non-existent. If they did not exist, they were not a part of the property. However, if they were inoperative, they were a condition of the property.

         Allstate also alleges that the property was structurally unsound. The structural integrity of the property is a condition of the property. If it was compromised by the PHA's failure to maintain it, it was a dangerous condition and defect in the property. When the property collapsed as a result of the dangerous condition, it caused the harm to Allstate's insured's property.

         Allstate's allegations, if proven, show that the PHA's negligent failure to maintain and repair its property made it unsafe, and a dangerous condition or defect in the real estate caused the insured's harm. See Thornton v. ...

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