Doherty v. Allstate Indem. Co.
| Decision Date | 06 April 2017 |
| Docket Number | CIVIL ACTION NO. 15-05165 |
| Parties | MARY LOU DOHERTY, JAMES DOHERTY, and JOHN DOHERTY, Plaintiffs, v. ALLSTATE INDEMNITY COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
MEMORANDUM
Plaintiffs Mary Lou Doherty and her sons James and John own numerous properties which they rent, primarily to college students.1 This case pertains to two of them, halves of a twin dwelling unit with a shared wall located at 949 and 951 Glenbrook Avenue, Bryn Mawr, Pennsylvania. Bryn Mawr is located in Radnor Township. Doherty acquired title to the properties from her mother and has been responsible for managing and maintaining them since 1975 or 1976. See (Doherty Dep., ECF No. 132, Ex. LL, at 15:1-18:7).
Doherty insured the properties with Allstate in 2005. In 2014, tenants complained about their condition and Radnor Township cited Doherty for numerous violations of the Township's Rental Housing Code. The Township subsequently revokedthe Dohertys' rental licenses for the properties and then sued the Dohertys for, among other things, refusing to allow inspections of the units.
Doherty thereafter sued Allstate claiming that the insurer was required to compensate her for the damage which precipitated the notices of violations and revocations. She also contends that Allstate is obligated to defend her family against the Township's lawsuit. Doherty claims as well that in its dealings with her, Allstate violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, -9.2(a), and the Commonwealth's bad faith statute, 42 Pa. Cons. Stat. § 8371.
After an extensive procedural history, Allstate filed a motion for summary judgment as to all of Doherty's claims. The Court grants the motion and dismisses the case for the reasons which follow.
In November 2005, Doherty began researching online for landlord property insurance policies. (ECF No. 92-1, ¶¶ 27-28.) She found a brochure for Allstate's Landlords Package Insurance Policy ("the Landlords Policy" or "the Policy"). (Id. ¶ 29); (ECF No. 144-11.) On December 1, 2005, Doherty met with Thomas McKeon ("Mr. McKeon") of the McKeon Agency and Lynn Fredricks, the McKeon office manager, to discuss her insurance needs. (ECF No. 92-1, ¶ 30); (McKeon Dep., ECF No. 132, Ex. V, at 16:15-18.) The McKeon Agency ("McKeon") is a small office of sales agents who are licensed to sell Allstate insurance policies and, to a limited extent, provide customerservice on those accounts.2 See (McKeon Dep., at 18:8-9, 27:11-14, 42:8-13, 53:2-7). McKeon does not, however, handle claims or have any role in the claims adjusting process. See (id. at 42:8-13, 53:2-7). If a customer purports to have a claim, McKeon's role is to help connect them to Allstate's claims department. See (id.). This can take the form of directly transferring a customer who is on the telephone to the claims department, informing the customer of the different ways in which he can open a claim or opening a claim for the customer themselves. See (id. at 42:8-44:3). In sum, Mr. McKeon testified that (Id. at 53:2-7.)
Doherty alleges that at her December 1 meeting with Mr. McKeon and Fredricks, she was seeking the "best possible landlord-related property insurance." (ECF No. 92-1, ¶ 27.) Though it is unclear from her Second Amended Complaint exactly what Doherty communicated to Mr. McKeon and Fredricks, Doherty claims she "explained to Defendant's Agents the concerns and needs of the Plaintiffs as identified in the foregoing paragraphs," informed them that she wanted to insure ten or more properties and stated that if Allstate was unable to provide such assurances of coverage, she would be leaving to continue her search. (Id. ¶ 31.) Doherty contends that in response, "Defendant's Agents assured [her] that its [Landlords Policy] was the best possible coverage" for the properties, (ECF No. 92-1, ¶ 32), and "maderepresentations that its [Landlords Policy] had better benefits, advantages, and conditions" than those offered by other insurers, (id. ¶ 40).
On or around December 19, 2005, McKeon employees inspected the properties and executed individual declaration pages for the policies covering each. (Id. ¶¶ 37-38); (ECF No. 144-12.) According to Doherty, McKeon provided these initial declaration pages to Doherty in a folder "to support and confirm the representations being made to Plaintiffs." (ECF No. 92-1, ¶ 39.) Doherty accepted the documentation, left McKeon, stopped looking for other insurance providers and cancelled all of Plaintiffs' existing policies. (Id. ¶¶ 43-45.) Doherty claims she "justifiably relied on the representations of Defendants that the desired coverages would be expressed in and through the contracts." (Id. ¶ 47.) Doherty also claims that McKeon "failed to advise [her] of any exclusions which were applicable" and "failed to give [her] a copy of the insurance contracts, or give [her] the opportunity to review the insurance contract." (Id. ¶¶ 46, 48.) Doherty received a copy of the policy in the mail a few weeks later. See (Doherty Dep., at 46:6-20); (McKeon Dep., at 47:12-48:2). Thereafter, Doherty renewed the Policy annually, each time receiving renewal declaration pages3 and a copy of the same Policy. See (Doherty Dep., at 101:16-102:1); (Tr. of Hr'g 2, at 8:3-15, ECF No. 172); (ECF No. 1, at 3).
The Landlords Package Insurance Policy, Policy Number 908879295, covers the Glenbrook properties.4 The "Landlord Package Policy Declarations" contains an overview of the "Policy Coverages and Limits of Liability." (ECF No. 132-4.) Page 3 of the declarations states: (Id.) It then lists four documents: Landlords Package Policy Form AS84, Notice of Terrorism Insurance Cov. Form AP3337-2, Pennsylvania LPP Amendatory End. AS122-2, and Standard Fire Policy Provisions form AS277-2. (Id.) The Policy thus consists of five separate documents, two of which are relevant here: the declaration pages, which contain the Policy Declarations, and the Landlords Package Policy Form AS84, which contains the policy terms, conditions and exclusions.
The Landlords Policy offers myriad "coverages," three of which—coverages A, B and D—are at issue in this case. See (ECF No. 132-5, at 7). Coverage A is titled "Dwelling Protection." It covers property damage to an insured's dwelling and attached structures at the residence premises. (Id. at 6.) Coverage B is titled "Other Structures Protection" and covers property that is separated from an insured's dwelling by a clear space. (Id.) The Policy enumerates what losses are insured under each of the various coverages. It states:
We will cover sudden and accidental direct physical loss to property described in Coverage A—Dwelling Protection and Coverage B—Other Structures Protection except as limited or excluded in this policy.
(Id. (emphasis in original).)
The Policy then sets forth various limitations and exclusions. Under the heading "Losses We Do Not Cover Under Coverages A and B," the Policy explains that Allstate does not cover losses to the property caused by, among other things:
(Id. at 7-9 (emphasis in original).)
The Policy also excludes from coverage losses caused by vandalism, defined in the Policy as 5 (Id. at 3, ¶ 12; id. at 9, ¶ 18.)
Similarly excluded from coverage are losses caused by "[a]ny act of a tenant, or guests of a tenant, unless the act results in sudden and accidental physical damage" caused by specifically enumerated sources.6 (Id. at 9, ¶ 19.)
Losses caused by "faulty, inadequate or defective . . . maintenance" are not covered. (Id. at 10, ¶ 21.) Nor are losses "[c]onsisting or caused by mold, fungus, wet rot, dry rot or bacteria," including "any loss which, in whole or in part, arises out of, is aggravated by or results from mold, fungus, wet rot, dry rot or bacteria." (Id.)
Coverage D covers specified losses of fair rental income and will be discussed in more detail infra in subsection III.A.vi. (Id. at 14.) Section III of the Policy, titled "Optional Protection," provides, as its title suggests, optional coverage which the insured...
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