after claiming that on July 25, 2019, Mrs. Levine noticed significant structural damage to one of the walls in the basement of the house and more specifically that the wall swelled, cracked and bent inward left she filed a claim with State Farm. After the claim was denied, the insurer sued in Linda Levine and Susan Liebeler v. State Farm Fire And Casualty Company Civil Action No. 20-1108, United States District Court, WD Pennsylvania (September 30, 2021). State Farm moved to fire.
Around July 25, 2019, plaintiffs Linda Levine ("Ms. Levine") and Susan Liebeler ("Ms. Liebeler") were co-owners of a home located at 147 Shannon Drive in New Castle, Lawrence County, Pennsylvania. ("Shannon House"). Levine lived in Shannon House full time at the time of the events described in the amended complaint, and Liebeler resides in California.
The Shannon House basement is described as "partially below the ground with four foundation walls," with each foundation wall extending "between five and twelve inches above the ground" and with "the portion of each foundation wall extending above the ground (including the wall that Ms. Levine observed that he bent inward on 25 July 2019) "" was exposed to the elements on the outside. "
The plaintiffs were insured against the risks of loss not excluded by Shannon House on 25 July 2019 an insurance and / or contract for homeowners insurance issued on the same day, Levine reported the damage to the foundation to State Farm and initiated a formal claim under the policy.
State Farm Claim Specialist David C. Smilek ( "Mr. Smilek") visited Shannon House and Ms. Levine in response to her allegation. d to observe and examine the house, during which time he did not perform tests or take measurements. At the end of his visit, “Mr. Smilek told Levine that the homeowner policy did not cover the damage to Shannon House, "and the following day, July 27, 2019, State Farm issued a formal letter to Levine and signed by Smilek (" denial letter ") in which State Farm denied all coverage under the insurance for the losses described in her claims.
The appellant further contends that at or about the same time they initiated their claim with State Farm, that they also initiated a mine reduction claim under an insurance contract issued by the Pennsylvania Department of Environmental Protection ("PA DEP"). According to the amended complaint, a PA DEP engineer carried out an investigation at the Shannon house the day before Smilek's visit and later gave the complainants a report indicating that the damage to the Shannon house was not caused by a sinkhole or a sinking of the mine, several other reasons the damage was possible, including causes covered by the policy.
Count I: Breach of contract
The district court concluded that the plaintiffs failed to claim losses covered by the ordinary language of that policy.
IN SECTION I (“YOUR PROPERTY”) of the current policy here, the INSURANCE UNSURED section contains the following: “1. We do not insure for loss of the property described in coverage A [(the Dwelling)] which consists of or directly and immediately caused by one or more of the hazards listed in points a. Through n. Below, whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arising from natural or external forces or arising out of any combination thereof: … c. freezing, thawing, pressure or weight of water or ice, whether driven by wind or not, to a pool, hot tub or spa, including their filtration and circulation systems, fences, sidewalks, patios, foundations, retaining walls, bulkheads, piers, quays or jetties; l. sedimentation, cracking, shrinkage, bulging or expansion of sidewalks, patios, foundations, walls, floors, roofs or ceilings. . . .
The district court found that the alleged losses related to the damaged foundation wall in the basement – allegedly caused by water hitting the outer foundation wall above the ground during periods of excess rainfall – are clearly excluded from coverage. First, the plaintiffs' alleged losses related to the damaged foundation, described in the amended complaint, occurred as a result of "freezing, thawing, pressure or weight of water or ice… To a… Ground", according to paragraph 1.c.
Courts should never torture the language of a policy to find coverage
When examining the excluded language, it is clear that the policy does not cover the plaintiff's alleged losses. The court did not see any significant difference in the exclusion, given the clear, simple language of the policy and the fact that the simple policy language should be given its natural meaning. cover coverage for plaintiffs here.
Plaintiffs also failed to invoke losses covered by the common language policy and follow in fact, they have failed to state a probable breach of contract under Pennsylvania law.
Count II: Bad Faith – Insufficient Allegations of Inadequate Investigation
Count II of the Amended Complaint alleges that acts and omissions by State Farm in the handling and denial of plaintiff's insurance claims violated 42 Pa. CS § 8371 and constitutes statutory bad faith. Pennsylvania's charter regarding bad faith insurance procedures provides that:
In order to recover from an act of bad faith, the plaintiff must provide clear and convincing evidence (1) that the insurer did not have a reasonable basis to deny benefits to the police and (2) which the insurer knew or ruthlessly disregarded its lack of reasonable grounds.
In addition, the allegation of bad faith is generally an independent action that differs from the contractual requirement. A solution of a claim for cover on the merits in favor of the insurer thus requires that a claim for bad faith is based on the insurance being denied, since the insurer in the circumstances necessarily has a reasonable basis for denying benefits. However, if bad faith is claimed to occur beyond a denial of coverage, the claim of bad faith may apply to this conduct regardless of whether the contract requirement survives.
Therefore, to the extent that the plaintiffs' bad faith claim is based on State Farm's denial of coverage under the policy, termination of Count I for the reasons discussed requires dismissal of Count II as well. To the extent that the plaintiffs' bad faith claim is based on State Farm's alleged failure to conduct an adequate investigation, the plaintiffs simply do not claim sufficient factual allegations in their amended complaint to support such a substantial claim of bad faith.
Although the duration of an adjustment inspection may be relevant to a claim of bad faith, it does not in itself prove bad faith. Although they accept the allegations as true, the plaintiffs have not provided sufficient facts in their amended complaint to support a tangible allegation of bad faith for State Farm's failure to conduct an adequate investigation.
The appellants' amended complaint was rejected in its entirety. without prejudice to the amendment with sufficient facts to state a statement.
Although it was clear to the court that the denial of the claim was correct, even though the investigation lasted only thirty minutes, there was no allegation of a loss that was not ruled out and no evidence to even indicate bad faith. Regardless, the court allowed the plaintiffs a third attempt to bring an action alleging facts sufficient to overcome the clear and unequivocal exclusions or to assert acts that would support a claim that State Farm was torturing in bad faith.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurers and insurers. policyholder.
He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance and claims management attorney and more than 54 years in the insurance industry.
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