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Sypherd Enterprises, Inc. v. Auto-Owners Insurance Co.

United States District Court, W.D. Pennsylvania, Pittsburgh.

November 21, 2019

SYPHERD ENTERPRISES, INC., A DOMESTIC CORPORATION; Plaintiff,
v.
AUTO-OWNERS INSURANCE COMPANY, A FOREIGN CORPORATION; Defendant,

          OPINION

          Marilyn J. Horan, United States District Judge.

         Plaintiff, Sypherd Enterprises Inc ("Sypherd"), brings the within action against Defendant, Auto-Owners Insurance Company ("Auto-Owners"), for claims of Breach of Contract and Bad Faith pursuant to 42 Pa.C.S. § 8371 arising from a water damage claim on Sypherd's property. Auto-Owners moves for summary judgment pursuant to Fed.R.Civ.P. 56. (ECF No. 43). The parties provided briefs, appendices, and concise statements of material facts (ECF Nos. 44, 45, 46, 47, 48, and 49), and the matter is now ripe for decision.

         For the following reasons, Auto-Owners' Motion for Summary Judgment will be granted.

         I. Background

         Sypherd operates a restaurant/grill/tavern known as the Souper Bowl located at 910 5thAvenue, Pittsburgh, Pennsylvania. (ECF No. 46 at ¶ 3). On November 29, 2016, the Souper Bowl suffered property damage when a "water supply pipe in the immediate vicinity of Plaintiffs 5th Avenue premises failed and/or burst, causing a large quantity of water to flow into and around the premises." Id. at ¶¶ 2, 12, 22-23. Mr. Sypherd testified that he noticed water coming out of his pipes, walls, toilets, and drains. (ECF No. 47-1 at p. 49). He also testified that the drain in the basement of the premises was "totally clogged." Id. The Pittsburgh Water and Sewer Authority ("PWSA") performed the repairs to the broken water line.[1] (ECF No. 46 at ¶ 25). Sypherd subsequently sought coverage for the water damage under its Policy with Auto-Owners. Following the incident, Dave Barr, a claims adjuster, inspected the Souper Bowl on behalf of Auto-Owners and reported that the damage was caused by surface water from the water main break leaking through the back wall of the building. Id. at p. 24-25. On December 2, 2016, Auto-Owners denied coverage based upon the following coverage exclusions in its Policy:

CAUSES OF LOSS-SPECIAL FORM
B. EXCLUSIONS
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
g. Water
(1) Flood; surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);
(2) Mudslide or mudflow;
(3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump, or related equipment;
(4) Water under the ground surface pressing on, or flowing or seeping through;
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings;
Or
(5) Waterborne material carried or otherwise moved by any of the water referred to in Paragraph (1), (3) or (4), or material carried or otherwise moved by mudslide or mudflow.
This exclusion applies regardless of whether any of the above, in Paragraphs g. (1) through (5) is caused by an act of nature or is otherwise caused.

(ECF No. 47-1 at p. 18). While not cited in Auto-Owners's denial letter, the Policy contains an endorsement which deletes subparagraph g(3). Id. at p. 23. In its Answer, Auto-Owners also cited to additional portions of the policy as a basis to deny coverage:

e. Utility Services The failure of power, communication, water or other utility service supplied to the described premises, however caused, if the failure:
(1) Originates away from the described premises; or
(2) Originates at the described premises, but only if such failure involves equipment used to supply the utility service to the described premises from a source away from the described premises.
Failure of any utility service includes lack of sufficient capacity and reduction in supply. Loss or damage caused by a surge of power is also excluded, if the surge would not have ...

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