Enwereji v. State Farm Fire & Casualty Co.

• Decision Date: 28 July 2011
• Docket Number: CIVIL ACTION NO. 10-cv-4967
• Citation: Enwereji v. State Farm Fire & Casualty Co., CIVIL ACTION NO. 10-cv-4967 (E.D. Pa. Jul 28, 2011)
• Parties: JAMES ENWEREJI and BERTHA ENWEREJI, v. STATE FARM FIRE AND CASUALTY CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

JAMES ENWEREJI and BERTHA ENWEREJI,

v.STATE FARM FIRE AND CASUALTY CO.

CIVIL ACTION NO. 10-cv-4967

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Dated: July 28, 2011

MEMORANDUM RE: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Baylson, J.

I. Introduction

Plaintiffs James Enwereji and Bertha Enwereji ("Plaintiffs") are insurance policyholders who submitted a claim to Defendant State Farm Fire and Casualty Company ("State Farm" or "Defendant") for damages to their slate tile roof. Defendant issued two payments to Plaintiffs to cover the cost of repairs, including replacing the damaged slate tiles. Plaintiffs, however, claim that Defendant should pay the cost of replacing their entire roof, not merely the damaged slate tiles. Defendant contends that it fulfilled its obligations under the insurance contract and has filed a Motion for Summary Judgment (ECF No. 16).

The legal question before the Court is a determination of Defendant's coverage obligation under the parties' insurance contract. The Court must also evaluate whether there is evidence in the record to support a claim of bad faith under Pennsylvania law. The Court finds that based on the undisputed facts, Defendant has fulfilled its coverage obligations and has acted in good faith. Defendant is entitled to summary judgment as a matter of law.

II. Factual and Procedural History

Plaintiffs held a State Farm homeowners insurance policy, Policy Number 78-PM-6166-2 ("the Policy"), effective from December 22, 2009 to December 22, 2010, for property located at 6531 N. 11th Street Philadelphia, PA 19126 ("Plaintiffs' property"). Policy, Ex. B.¹ The Certified Renewal Certificate indicates that Plaintiffs selected the loss settlement option called "A2 Replacement Cost - Common Construction." Certificate, Ex. B. Section A2 of the Policy states in relevant part:

We will pay the cost to repair or replace with common construction and for the same use on the premises shown in the Declarations, the damaged part of the property covered under SECTION I - COVERAGES, COVERAGE "A" DWELLING, except for wood fences, subject to the following:

(1) we will pay only for repair or replacement of the damaged part of the property with common construction techniques and materials commonly used by the building trades in standard new construction. We will not pay the cost to repair or replace obsolete, antique or custom construction with like kind and quality. . .

Policy at 11.

Plaintiffs filed a claim with State Farm following the ice and snow storms that occurred on or about February 16, 2010. Fire Claim Service Record, Ex. A at SF001. The claim was reported to State Farm on February 26, 2010. Id. at SF004, SF011. On March 4, 2010, State Farm's representative Brandon Milton ("Milton") inspected Plaintiffs' property. Id. at SF010. Plaintiffs' representative, Daniel Monaco ("Monaco") of Certified Public Adjusters ("CPA"), was present for the inspection.² Id. Milton observed damage to the gutters, soffit, and fascia; found four slate roofing tiles on the ground; and referred the property to the "2 story steep team"for further inspection of the roof. Id. On March 22, 2010, State Farm conducted a second inspection of the property with Monaco present, which found damage to 79 slate roofing tiles, the gutter, the plastic gutter guard, and the fascia. Id. at SF009. The following day, State Farm issued a draft to Plaintiffs to cover "slate roof repair, gutters, soffit/fascia repair." Id. The draft amount equaled the estimated replacement cost value of $7,671.76, minus depreciation and the deductible, for a net actual cash value payment of $1,128.50. Estimate, Ex. C. State Farm sent a cover letter with the statement of loss and the draft (Ex. D) to Plaintiffs on March 23, 2010.

Monaco, on behalf of Plaintiffs, sent State Farm a letter on April 5, 2010, rejecting the offer as "totally unacceptable" and contending that the proposed "repair is neither the same like kind or quality as what was on the property, therefore a total replacement is necessary." Ex. E at SF099. Monaco also wrote that "[r]egarding the potential for Bad Faith, you are also taking an enormous depreciation on the repairs, which as you know, no depreciation is to be taken on minimum repairs." Id. at SF100. The letter requested that State Farm revise its estimate and threatened legal action. Id. On April 21, 2010, Monaco sent State Farm a letter indicating that Plaintiffs had not accepted State Farm's estimate. Ex. H at SF091. Monaco also sent CPA's March 2, 2010 estimate of the damage to Plaintiffs' property as $72,844.60. Ex. I at SF087. Plaintiffs' estimate includes replacement of 1250 slate shingles. Id. Ex. I at SF088.

On June 3, 2010, State Farm retained Doug Weiss ("Weiss") of Rainmasters Inc. to inspect Plaintiffs' property a third time. Letter, June 14, 2010, Ex. F. Weiss found "slates missing, cracked slates, slates out of place," as evidenced in the photographs attached to his report, and estimated that 100 slate tiles needed replacement. Id. Based on Weiss's report, State Farm prepared a revised estimate of the replacement cost value, which totaled $13,134.44, minusthe depreciation and deductible, for a net actual cash value payment of $5,677.23. Ex. G at SF156. On August 4, 2010, State Farm issued a check for $4,548.67 to cover the amount in excess of the first draft issued to Plaintiffs. Ex. G.³

On August 6, 2010, Monaco sent a letter to State Farm stating: "We received your supplemental estimate along with the secondary payment. . . At this time we will accept and process this as a partial payment #1 as we continue to negotiate this claim." Ex. J at SF080. Plaintiffs admit that they accepted both drafts in partial payment of the claim. Pls.' Resp. Def.'s Mot. Summ. J. ¶ 18.

On November 19, 2010, Weiss sent a letter to State Farm, in which he evaluated Monaco's April 5, 2010 letter and estimate. Letter, Ex. K. Weiss explained that the pictures he took of the roof during his inspection revealed that the roof, originally constructed in 1920, "has been repaired many times previously. Some of the repairs were proper (ie. using new pieces of slate to replace damaged pieces) and some repairs were done improperly (slate roofing sealed with roof cement)." Id. at 1, 2. Weiss also wrote that it was "standard in the slate roofing industry to remove broken, or split slate shingles and replace them with new pieces of slate," and that his conclusions relied on the award-winning industry manuals, "Slate Bible" and "The Slate Book." Id. Weiss explained that replacement tiles of "like kind and quality" in size, thickness, and shade are "not unusual and are standard for roofing," and available from several distributors. Id. at 2.

On August 9, 2010, Plaintiffs filed a Complaint against Defendant in the Court ofCommon Pleas of Philadelphia County, Pennsylvania, August Term 2010, Docket No. 01212. Compl. (Ex. A to Def.'s Notice of Removal, ECF No. 1). The Complaint alleges breach of contract (Count I) and bad faith in violation of 42 Pa. Cons. Stat. Ann. § 8371 (Count II). Plaintiffs seek compensatory damages, punitive damages, attorney fees, costs, and interest.⁴ Defendant removed the case to federal court on September 23, 2010 on the basis of diversity jurisdiction. (ECF No. 1) Defendant filed this Motion for Summary Judgment on April 29, 2011 and attached record evidence as exhibits.⁵ (ECF No. 16) Plaintiffs filed their response on May 19, 2011 and did not file any additional evidence. (ECF No. 18) Defendant replied on June 9, 2011.⁶ (ECF No. 20)

III. The Parties' Contentions

With respect to the breach of contract claim, Defendant asserts that it complied with the Policy. Defendant contends that under the coverage level Plaintiffs chose ("common construction"), Plaintiffs are entitled to the cost of repairs using materials that are "standardized and akin to what is provided in new construction," not the cost of replacing the entire roof or the cost of replacing obsolete, antique, or custom materials with "like kind or quality." Def.'s Mem. Law. 6, 8. With respect to the bad faith claim, Defendant contends that Plaintiffs have notproduced any evidence to meet their burden to show that Defendant lacked a reasonable basis for denying Plaintiffs' claim for the cost of total roof replacement, and that Defendant knew or recklessly disregarded its lack of a reasonable basis. Id. at 9-11.

In response, Plaintiffs contend that Defendant should pay to replace the entire roof because "there is no evidence that the slate shingles currently on the market are sufficiently similar to those on Plaintiffs' roof to restore them to pre-loss condition." Pls.' Mem. Law. Opp'n 3. Plaintiffs argue there is a dispute of material fact as to whether repairs using materials on the market could return Plaintiffs to their pre-loss condition. Id. at 5. Additionally, Plaintiffs contend that Defendant acted in bad faith by not assessing whether "there was material on the market that met the requirements of the policy," and by "fail[ing] to do a thorough and complete inspection prior to making its coverage decision regarding the replacement of the entire roof." Id. at 8.

IV. Standard of Review

A district court should grant a motion for summary judgment if the movant can show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).⁷ A dispute is "genuine" if "the evidence is such that areasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is "material" if it "might affect the outcome of the suit under the governing law." Id.

Where the nonmoving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by showing the district court that "there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v....