PETCOVE et al v. PUBLIC SERVICE ELECTRIC & GAS et al

Filing 25

OPINION. Signed by Judge William H. Walls on 01/08/2019. (ek)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ROBERT PETCOVE and JILL PETCOVE,
Plaintiffs,

OPINION
Civ. No. 1 8-9709-WHW-CLW

V.

PUBLIC SERVICE ELECTRIC & GAS, and AIG
PROPERTY CASUALTY COMPANY
Defendants.
Walls, Senior District Judge

In this breach of contract action, Defendant AIG Property Casualty Company (“AIG”)
moves to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). ECF No. 19.
Plaintiffs Robert Petcove and Jill Petcove (collectively, “Plaintiffs”) oppose. ECF No. 23.’
Decided without oral argument under federal Rule of Civil Procedure 78, the motion to dismiss
is denied.
FACTUAL BACKGROUND2

Plaintiffs are husband and wife who previously lived at 23 Furlong Drive, Cherry Hill,
New Jersey (the “Property”). Compi.

At all times relevant to this action, AIG insured the

¶ 1.

Property against damage under an insurance policy with Plaintiffs (the “Policy”). Id.

¶ 8; see

also ECF No. 19-4.
Plaintiffs moved to Florida around July 1, 2017, but Mr. Petcove continued visiting the
Property every few weeks. Compl.

12. Plaintiffs’ relatives lived on the Property from July

¶J 9,

The Court notes that Plaintiffs did not timely file theft opposition to AIG’s motion. ECF No. 23. Nor did
MG timely file its reply brief. ECF No. 24.
2
Unless stated otherwise, all facts are drawn from Plaintiffs’ Complaint (“Compl.”), ECF No. 1. These facts
are taken as true for the purpose of the Defendants’ motion. See Cuevas v. Wells Fargo Bank, NA., 643 F. App’x
124, 125-26 (3d Cir. 2016) (quoting McTernan v. City of York, 577 F.3d 521, 526 (3d Cir. 2009)) (“[I]n deciding
a motion to dismiss, all well-pleaded allegations
must be taken as true and interpreted in the light most favorable
to the plaintiffs, and all inferences must be drawn in favor of them.”).
.

.

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through mid-November 2017. Id.

¶ 12.

After mid-November, Plaintiffs’ friends, family, and

workers checked on the Property occasionally. Id.
November 2017. Id.

¶ 14.

Plaintiffs listed the Property for sale in

¶ 13.

On January 3, 2018, Plaintiffs’ realtor visited the Property and told Mr. Petcove that the
Property was cold. Id.

¶ 16.

Defendant Public Service Electric & Gas (“P$E&G”), which had

provided electric service to the Property, advised Mr. Petcove that same day that it had
discontinued electric service on December 5, 2017 due to non-payment. Id.

¶ 18.

Mr. Petcove

alleges that he never received any billing statements from PSE&G despite having notified the
U.S. Postal Service of his new address in Florida. Id.

¶J 10,

19. After Mr. Petcove went online

and paid the outstanding charges, PSE&G reactivated electricity at the Property at approximately
1:00pm on January 5, 2018. Id. ¶J20, 24-25.
Later that evening, Plaintiffs’ friend checked on the Property and noticed water
throughout the house. Id.

¶ 26.

Plaintiffs explain that, on or about that same day, frozen pipes

burst and damaged the Property. Id.

¶J 27, 28.

Plaintiffs sought coverage for the damage from AIG under their Policy. Id.

¶ 29.

AIG

refused to provide coverage on the grounds that Plaintiffs failed “to exercise ‘reasonable care’ to
properly maintain heat at the premises.” Id.

¶ 31; ECF No.

19-3 at i. Plaintiffs disagree,

arguing that they “took all reasonable steps to maintain heat in the Property.” Comp.

¶ 32; see

also ECF No. 23-1 at 5-11.
Plaintiffs sued AIG to enforce the parties’ Policy, and also sued PSE&G for “the cost to
repair and/or replace the damage to the Property” because PSE&G “did not send bills for

In the course of MG’ s investigation, it conducted an Examination Under Oath of Mr. Petcove. ECF No. 19
at 6; ECF No. 19-5.
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service” or “advise [Plaintiffs] that the shut off was to occur[.]” Id.

¶J 32-34.

Plaintiffs assert

claims for:
(1)
(ii)

breach of contract against P$E&G (Count 2); and

(iii)
Id.

breach of contract against AIG (Count I);

negligence against PSE&G (Count 3).

¶J 36-48.

AIG moves to dismiss Count 1. ECF No. 19.
STANDARD OF REVIEW

Rule 12(b)(6) allows for dismissal where the non-moving party fails to state a claim upon
which relief can be granted. “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombty, 550 U.S.
544, 570 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. “A pleading that offers labels and conclusions or a formulaic recitation of the
elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked
assertions devoid of further factual enhancement.” Id. (internal quotation marks omitted).
“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged—but it has not ‘shown’—that the pleader is entitled to
relief.” Id. at 679.
In assessing a plaintiffs claims, a district court may consider the allegations of the
complaint, as well as documents attached to or specifically referenced in the complaint. See
Sentinel Trust Co. v. Universal Bonding Ins. Co., 316 F.3d 213, 216 (3d Cir. 2003); Charles A.
Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ.

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§

1357 (3d ed. 2004). “A ‘document integral

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to or explicitly relied on in the complaint’ may be considered ‘without converting the motion [to
dismiss] into one for summary judgment.” Mete v. Fed. Reserve Bank ofNY, 359 F.3d 251,
256 n.5 (3d Cir. 2004) (citing In reBurlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d
Cir. 1997)).
DISCUSSION
1. The Court Will Not Consider Robert Petcove’s Examination Under Oath.

AIG’s motion relies in large part on Mr. Petcove’s testimony from an Examination Under
Oath (“EUO”) taken during AIG’s investigation of Plaintiffs’ insurance claim. See, e.g., ECF
No. 19 at 6-10 (citing ECF No. 19-5). AIG attaches Mr. Petcove’s testimony to its motion, ECF
No. 19-5, but does not attempt to explain why the Court can consider this document at the
12(b)(6) phase. Nor does either party argue that AIG’s motion to dismiss should be converted to
a summary judgment motion. Notwithstanding the fact that both parties cite Mr. Petcove’s EUO
in their briefs, see ECF Nos. 19, 23-1, the Court will not consider it at this time.
The Court cannot accept an EUO in deciding a Rule 12(b)(6) motion. Indeed, the Federal
Rules of Civil Procedure limit the materials a Court may consider at this stage. When ruling on a
motion to dismiss, courts may consider only the complaint, “documents incorporated into the
complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citing Wright & Miller, Fed. Prac. &
Proc. Civ.

§

1357 (3d ed. 2004 and Supp. 2007)). Courts may take judicial notice of “matters of

public record,” such as a judicial decision, Sands v. McCormick, 502 F.3d 263, 268 (3d Cir.
2007), or an address, Eteam, Inc v. Hilton Worldwide Holdings, Inc., No. 15-5057
(WHW)(CLW), 2016 WL 54676, at *2 (D.N.J. Jan. 5, 2016); and of “matters of common
knowledge,” such as basic economic conditions, Ohio Belt Tel. Co. v. Pub. Utilities Comm ‘n of

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Ohio, 301 U.s. 292, 301 (1937), or the historical events of a Senator’s political career, United
States v. Menendez, 109 F. Supp. 3d 720, 726 (D.N.J. 2015). A document is incorporated by
reference into a complaint if it is “integral” to the complaint or if the complaint is “based” on that

document. Schmidt v. Skolas, 770 F.3d 241, 249-50 (3d Cir. 2014). Mr. Petcove’s EUO falls
into neither of these categories. The Complaint is not “based” on the EUO, nor is it a matter of
public record or general knowledge. Rather, it is an extraneous document produced in the course
of a private dispute between AIG and Plaintiffs. The EUO cannot be considered in deciding
AIG’s motion to dismiss.
The Court may only consider Mr. Petcove’s EUO if it converts AIG’s 12(b)(6) motion
into one for summary judgment. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6)
or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion
must be treated as one for summary judgment under Rule 56.”); Wright & Miller, Fed. Prac. &
Proc. Civ.

§ 1366 (3d ed.) (“Once the district court decides to accept matters outside of the

pleadings,.. the judge must convert the motion to dismiss into one for summary judgment[.]”).
.

This court has complete discretion to accept such materials beyond the pleadings. Morse v.
Lower Merion School Dist., 132 F.3d 902, 905 n.3 (3rd Cir. 1997). But a “court should
not convert a motion

.

.

.

when little or no discovery has occurred,” Kurdyla v. Pinkerton Sec.,

197 F.R.D. 128, 131 (D.N.J. 2000), which is the case here.
The only other federal court to consider converting a motion to dismiss into a summary
judgment motion based solely on the submission of an EOU agrees. In Cont ‘1 Ins. Co. v.
Muradyan, the court “decline[d] Plaintiffs suggestion that it review Defendant’s Examination
Under Oath testimony, thereby converting Plaintiffs motion into a motion for summary
judgment—prior even to the mandatory scheduling conference.” No. CV 03-35 1 NM (EX),

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2003 WL 22096119, at *4 (C.D. Cal. June 4, 2003). For the same reasons, this Court will not
convert AIG’s motion into one for summary judgment or consider Mr. Petcove’s EUO.
2. Plaintiffs Have Stated a Claim for Breach of Contract Against AIG.

AIG moves to dismiss Plaintiffs’ breach of contract claim on the grounds that Plaintiffs
“failed to use reasonable means to maintain heat at the [P]roperty.” ECF No. 19 at 11. The
elements of a breach of contract claim are “(1) a contract between the parties; (2) a breach of that
contract; (3) damages flowing therefrom; and (4) that the party stating the claim performed its
own contractual obligations.” Frederico v. Home Depot, 507 f.3d 188, 203 (3d Cir. 2007).
These four elements are satisfied. According to the Complaint, the Policy is a valid
contract between Plaintiffs and AIG. Compl.

¶J 7, 37.

Plaintiffs allege that AIG has breached

that contract by failing to provide full coverage for Plaintiffs’ property damage. Id.
40. Plaintiffs also claim damages in the form of uncovered losses. Id.

¶J 31-33, 39-

¶J 28, 31, 35.

Plaintiffs allege that they “performed all of their duties under the Policy.” Id.

¶ 37.

finally,
Plaintiffs

have adequately alleged all four elements of their breach of contract claim.
AIG’s only contention to the contrary is that Plaintiffs “failed to use reasonable means to
maintain heat at the [P]roperty.” ECF No. 19 at 11. AIG points to one of the “Conditions” of
the Policy, which reads,
[Plaintiffs] must use reasonable care to maintain heat in [their] residence or shut
off and drain the water system or appliances if the home is vacant, unoccupied or
being constructed. [AIG] do[es] not cover any loss caused by water freezing in a
plumbing, heating, or air conditioning system or household appliance if
reasonable care has not been exercised.
ECF No. 19 Ex. C Part IV(H). AIG does not connect the alleged provision to satisf’ this
condition to an element of Plaintiffs’ claim, but they seem to be arguing that Plaintiffs did not
perform their own contractual obligations under the Policy.

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Assessing AIG’ s contention involves resolving a factual issue: whether Plaintiffs
adequately maintained heat on the Property. The Court cannot reach this factual question at this
stage. For the purposes of AIG’s motion to dismiss, the Court must take all of Plaintiffs’ factual
allegations as true. McTernan, 577 F.3d at 526. Plaintiffs have plausibly alleged that they
satisfied their contractual obligations, Compl.

¶ 37, and the Court need look no further.

AIG’s cited cases are not to the contrary. AIG does not reference any in-Circuit decision
in which a court granted a motion to dismiss on the grounds that the insured failed to exercise
reasonable care.
Dooley v. Scottsdale Ins. Co., No. CIV.A. 12-1838 JEL’K, 2015 WL 685811 (D.N.J. Feb.
18, 2015), AIG’s only New Jersey decision, is wholly inapposite, first, as AIG acknowledges,
Dooley did not involve a motion to dismiss but instead an insurer’s motion for summary
judgment—following both fact and expert discovery. Id. at *7..9• And the Dooley court denied
the insurer’s motion for summary judgment on the breach of contract claim. Id. at *7..$•4
Fazianas v. Allstate Ins. Co., No. CV 16-2018, 2016 WL 3878185 (E.D. Pa. July18,
2016) is similarly unpersuasive. The insurance company filed an EUO (and several other
extraneous exhibits) along with its motion for judgment on the pleadings, which the court
converted to a motion for summary judgment. Id. at *1..2. After considering the EUO—in
which the insured admitted to failing to take any precautions to ensure that his thermostat battery
would not run out and did not arrange for anyone to check on his residence during his absence—
the court granted summary judgment to the insurer. Id. at *5 This Court has already excluded
the proffered EUO, and Plaintiffs here—taking the allegations in their Complaint as true—

MG states that Dooley “granted summary judgment in favor of the insurer.” ECF No. 19 at 12. This is
technically true, as the court granted summary judgment to the insurer on the insured’s bad faith claim. Dootey,
2015 WL 685811 at * 8, But the court denied summary judgment on the insured’s breach of contract claim, Id. at
*78the same type of claim Plaintiffs bring here.

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showed significantly more care than the insured in Pazianas. Likewise in Jugan v. Econ.
Premier Assurance Co., where the court granted summary judgment to the insurer following
extensive fact and expert discovery. No. CV 15-4272, 2016 WI 3632724, at *7 (E.D. Pa. July 7,
2016), aff’d sub nom. Jugan v. Econ. PremierAssurance Co., 728 F. App’x 86 (3d Cir. 2018).
AIG finally cites a litany of state court cases—none from New Jersey—and one District
of Minnesota decision for the propositions that an insured landowner need only have “notice of
nonpayment” and must take “affirmative steps” to maintain heat in a residence. ECF No. 19 at
14-15. AIG argues that these cases demonstrate that Plaintiffs did not take reasonable steps to
maintain heat at the Property. Id. Whether Plaintiffs exercised reasonable care may ultimately
be a question for summary judgment.5 But, given the allegations in Plaintiffs’ Complaint, it is
inappropriate for resolution on a motion to dismiss.
CONCLUSION

AIG’s motion to dismiss (ECF No. 19) is denied. An appropriate order follows.

DATE:

tf

Senior United States District Court Judge

Indeed, MG acknowledges that its District of Minnesota case was decided on summary judgment. ECF
No. 19 at 15 (discussing Elkin v. State farm Ins. Co., No. CIV. 11-3652 PAM!JJG, 2013 WL 3340126 (D. Minn.
July 2, 2013)).
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