Monthly Archive for September, 2013
Plaintiff’s Motion for Reconsideration of the Memorandum and Order dismissing her First Amended Class Action Complaint was denied. Plaintiff brought suit asserting claims of breach of contract, violation of the Unfair Trade practices and Consumer Protection Law, unjust enrichment, and statutory bad faith on behalf of herself and similarly situated individuals. Plaintiff’s allegations related to her claim that she purchased automobile insurance for her antique and classic vehicles from the insurer which were purported to provide stacked uninsured and underinsured coverage while the policies actually only provided unstacked coverage. The insurer filed a motion to dismiss, and the District Court judge granted the motion finding no breach of contract because the policy did not provide for stacking, no violations of the UTPCPL, and no unjust enrichment because the policy was valid. The bad faith claim was dismissed for failure to state a claim because it “was not related to Foremost’s performance of its contractual obligations of defense and indemnification or payment of a loss,” as required by the statute.
Plaintiff filed a Motion for Reconsideration seeking reconsideration of the case law the court applied, as well as the dismissal of her UTPCPL and statutory bad faith claims. The court quickly refused reconsideration of the UTPCPL and statutory bad faith claims as plaintiff merely restated her previous arguments, failing to meet the requirements for reconsideration.
The court denied the motion for reconsideration because granting plaintiff’s motion and its attempt to make a new argument, despite plaintiff’s previous opportunity to address the argument raised by the insurer via a response to the insurer on the initial motion, would have given plaintiff an improper “second bite at the apple.” The court further found even if it granted the motion for reconsideration, plaintiff had failed to demonstrate that relying on the disputed case law was a clear error of law.
Date of Decision: July 1, 2013
Grudkowski v. Foremost Ins. Co., No. 3:CV-12-1847, 2013 U.S. Dist. LEXIS 91848 (M.D.Pa. July 1, 2013) (Caputo, J.).
The court granted the insurer’s Motion for Summary Judgment. Plaintiff brought suit alleging the insurer improperly denied coverage after an apartment building owned by plaintiff was destroyed by a fire and plaintiff provided proper and timely notice of the claim. The insurer denied coverage based on the insurance application, which stated the property was equipped with an automatic sprinkler system, when in reality, no such system existed.
Plaintiff alleged this denial was improper because the final Commercial Insurance Application was prepared and submitted without being reviewed by plaintiff’s president, and that the Protective Safeguards Endorsement (PSE) contained in the policy, requiring plaintiff to “maintain” an automatic sprinkler system, was ambiguous because no such system existed.
Plaintiff obtained its insurance policy through Cohen-Seltzer, a professional insurance agency, with effective dates of August 8, 2008 to August 8, 2009. The policy was then renewed for 2009-2010. The insurance application was completed by plaintiff’s employee and submitted to Cohen-Seltzer. Plaintiff’s employee was authorized to sign documents such as a commercial insurance application form, and was aware that she had the authority to do so.
In the 2009-2010 application, the employee stated the property was “100% sprinklered.” The 2008-2009 insurance application also indicated the property was 100% sprinklered. Cohen-Seltzer used these documents to create and submit a Commercial Insurance Application to the insurer to obtain the requested policy.
The insurer issued the policy based on the fact the property was 100% sprinklered, and also reduced the policy premium by approximately 40% because of this representation. During its investigation of the fire, the insurer learned the building did not have a sprinkler system, and denied coverage based on the plain words of the PSE.
Because the PSE “clearly and unambiguously” made “maintenance” of an automatic sprinkler system a condition of the insurance, the condition was breached by the absence of a sprinkler system.
Furthermore, any damage caused by the fire was not covered due to an exclusion of any loss or damage caused by a fire if the insured failed to maintain the sprinkler system in operative condition. Because the absence of a sprinkler system was a clear violation of the policy, the court found in favor of the insurer, finding no genuine issues of material fact remained.
Finally, because the insurer properly denied coverage, the bad faith claim was dismissed as well.
Date of Decision: June 17, 2013
Yera, Inc. v. Travelers Cas. Ins. Co. of Am., Sept. Term 2011, No. 2141, 2013 Phila. Ct. Cm. Pl. LEXIS 191 (C.C.P. Phila. June 17, 2013) (Snite, J.)
The court was asked to determine whether the defendants “all risk” insurance policy covered claims for property damage and remediation arising from fluids released by a decomposing human body. The insurer asserted that the policy excluded coverage for the property damage and remediation, denied the claim, and brought suit seeking declaratory judgment.
The defendant-policyholders filed cross-claims for compensatory damages, bad faith, and Pennsylvania Unfair Insurance Practices Act violations. Typically in determining coverage under an “all risk” policy, the insured bears the burden of demonstrating a covered loss has occurred, after which the burden shifts to the insurer to demonstrate the loss falls within a policy exclusion.
In this case, however, neither party disputed that the occurrence was covered; rather, the insurer argued it fell within three exclusions: (1) the microorganism exclusion, (2) the seepage exclusion, and (3) the pollutants exclusion.
The insurer first argued bacteria was present in the bodily fluids that caused the damage to the property, excluding the damages because a “microorganism” caused them. Although no testing was done on the fluids, the insurer presented expert testimony that the decomposition indicated signs of bacteria, corroborated by defendant’s own testimony as to the scene of the apartment where the body was discovered, to support its contention bacteria was present in the fluids. Defendant argued the evidence was insufficient because no direct testing had been done on the fluids.
The court disagreed, holding bacteria was present in the fluids and had caused the property damage, causing the occurrence to fall within the microorganism exclusion.
Next the court considered the seepage exclusion, which required showing (1) “seepage” had occurred, defined by an “element of movement” under Pennsylvania case law, and (2) that the fluids themselves were regulated as a hazardous material. The carrier presented evidence the bodily fluids had purged from the deceased body and spread across the decedent’s apartment and into the apartment below.
Furthermore, the Occupational Safety and Health Administration defines bodily fluids as “potentially infectious materials.” The defendants argued there was no evidence the bodily fluids posed a danger to human health. The court found the deceased body’s expulsion of the bodily fluids constituted seepage because there had been “movement” as required by Pennsylvania case law, and that the bodily fluids were a “regulated pollutant” under OSHA regulations. Thus, the court found in favor of the insurer, holding the seepage exclusion applied.
Finally, the court considered the pollutants exclusion, but elected not to rule on whether or not biological material constituted a pollutant as jurisdictions are split on the issue and coverage had already been precluded by the two previous exclusions. Finding there was no coverage available, the court ruled in the insurer’s favor on the defendant’s counterclaim alleging bad faith.
Date of Decision: June 25, 2013
Certain Underwriters at Lloyd’s London Subscribing to Policy No. SMP3791 v. Creagh, No. 12-571, 2013 U.S. Dist. LEXIS 89346 (E.D. Pa. June 25, 2013) (DuBois, J.).
This decision was affirmed on April 14, 2014.