BRODZINSKI v. STATE FARM FIRE AND CASUALTY COMPANY
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE R. BARCLAY SURRICK ON 8/25/17. 8/25/17 ENTERED AND COPIES E-MAILED.(kw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
STATE FARM FIRE AND CASUALTY
AUGUST 25, 2017
Presently before the Court is the Motion for Partial Summary Judgment of Defendant
State Farm Fire and Casualty Company. (ECF No. 13.) For the following reasons, Defendant’s
Motion will be granted.
This lawsuit arises from an insurance coverage dispute. Plaintiff Darryl Brodzinski seeks
damages from Defendant State Farm Fire and Casualty Company for Defendant’s failure to pay
benefits to Plaintiff under a homeowner’s insurance policy. Plaintiff asserts claims against
Defendant for breach of contract and bad faith. In this Motion, Defendant seeks summary
judgment with respect to the bad faith claim.
Plaintiff resides at 59 Berrywood Lane, Dresher, Pennsylvania. Plaintiff alleges that on
March 9, 2016, water escaped from a condensation line on an air conditioning unit, and caused
damage to his basement. (Compl. ¶ 5.) Plaintiff’s home was insured under a homeowner’s
insurance policy issued by Defendant State Farm (the “Policy”). (Id. ¶ 4.) Plaintiff retained
Hillis Adjustment Agency to investigate his claim. (Pl.’s Resp. Ex. A., ECF No. 15.) Ralph
Palaia, a public insurance adjuster from Hillis, was assigned to handle the investigation and to
submit Plaintiff’s claim to State Farm. (Id.) Palaia prepared an estimate of the costs of repairs
totaling $38,307.97. (Estimate, Def.’s Mot. Ex. A.) Palaia submitted the estimate to State Farm
on March 30, 2016. (Id.; Def.’s Mot. ¶ 4.)
On April 26, 2016, State Farm’s claims adjuster, Rob Henry, inspected Plaintiff’s
property. (State Farm Denial, Def.’s Mot. Ex. B.) Palaia was present during the inspection.
(Id.) Henry discussed with Palaia his conclusion that the damage was not covered by the Policy.
After his inspection, Henry sent Plaintiff a claim denial letter from State Farm. In the denial,
Henry stated that “the basement water damage is not covered under the Homeowners Policy.”
(Id.) He explained that he “observed evidence of mold, rot, and deterioration damage to the
building materials.” (Id.) Henry stated that “Mr. Palaia explained the air conditioning
condensation line was likely [the] cause of the damage, and that bleach was sprayed onto the
carpet and walls in an attempt to remove the mold.” (Id.) Henry sited sections of the policy that
supported his conclusion that the damage was not covered by the Policy. Specifically, he cited
the provision of the Policy that excludes coverage for: (1) damage caused by “continuous or
repeated seepage or leakage of water” from an air conditioning system, “which occurs over a
period of time”; (2) water damage, caused by flood, surface water, or water below the surface of
the ground, if concurrently caused by another excludable event; and (3) damage caused by the
use of improper materials in the construction or repair of the property, or improper maintenance.
On June 10, 2016, Palaia sent a letter to State Farm, requesting that it reconsider the
denial of Plaintiff’s claim. (June 10, 2016 Hillis Ltr., Def.’s Mot. Ex. D.) Palaia stated in the
letter that “[t]he insured’s policy covers accidental discharge from a plumbing system and this
loss was caused by an air conditioning condensate line that leaked and caused damage to his
dwelling.” (Id.) Palaia also stated in the letter that this was a “one time occurrence and not due
to repeated seepage.” (Id.) According to Palaia, the air conditioner condensate line leaked and
caused water to be discharged into the furnace. (Id.) He stated that the water damage that is
seen throughout the furnace and air filter supports his conclusion. Palaia further stated that the
water traveled from the heater throughout the basement and caused damage to the walls, the
carpet, and to the contents in the rooms. (Id.)
Claims adjusters at State Farm reviewed Palaia’s request to reconsider the denial, and
determined that Plaintiff submitted no additional information that would alter their decision to
deny coverage. (Claims Notes SF019-SF020, Def.’s Mot. Ex. B.) On July 27, 2016, State Farm
advised Palaia that there would be no change in their coverage decision with regard to Plaintiff’s
On October 26, 2016, Plaintiff filed a Complaint in the Philadelphia County Court of
Common Pleas. (Compl., Notice of Removal Ex. A.) On November 11, 2016, State Farm
removed the case to this Court. The Complaint asserts two counts: (1) breach of contract; and
(2) bad faith. On March 5, 2017, State Farm filed the instant Partial Motion for Summary
Judgment. On March 26, 2017, Plaintiff filed a Response to the Motion.
Under Federal Rule of Civil Procedure 56(a), summary judgment is proper “if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” A dispute is “genuine” if there is a sufficient evidentiary basis on
which a reasonable jury could return a verdict for the non-moving party. Kaucher v. Cty. of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986)). “[A] factual dispute is material only if it might affect the outcome of the suit under
governing law.” Id. The court must view the evidence in the light most favorable to the nonmoving party. Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011). However, “unsupported
assertions, conclusory allegations, or mere suspicions” are insufficient to overcome a motion for
summary judgment. Schaar v. Lehigh Valley Health Servs., Inc., 732 F. Supp. 2d 490, 493 (E.D.
Pa. 2010) (citing Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989)).
Where the nonmoving party bears the burden of proof at trial, the moving party may
identify an absence of a genuine issue of material fact by showing the court that there is no
evidence in the record supporting the nonmoving party’s case. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); UPMC Health Sys. v. Metro. Life Ins. Co., 391 F.3d 497, 502 (3d Cir.
2004). If the moving party carries this initial burden, the nonmoving party must set forth specific
facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(c) (“A party asserting
that a fact . . . is genuinely disputed must support the assertion by . . . citing to particular parts of
materials in the record . . . .”); see also Matsushita Elec. Indus. Co., Ltd., v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986) (noting that the nonmoving party “must do more than simply show that
there is some metaphysical doubt as to the material facts” (citation omitted)). “Where the record
taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is
no ‘genuine issue for trial.’” Matsushita, 475 U.S. at 587 (citation omitted).
Plaintiff alleges that State Farm’s denial of his claim constitutes bad faith. Specifically,
Plaintiff argues that: (1) State Farm failed to cite a factual basis for its denial of the claim;
(2) State Farm unreasonably relied on an ambiguous and unenforceable policy exclusion for loss
caused by continuous or repeated seepage, “which occurs over a period of time,” (Compl. ¶ 15);
and (3) there was no evidence to support another exclusion cited by State Farm—that the damage
was the product of concurrent groundwater entering the property or repeated seepage or leakage
of water. State Farm seeks summary judgment on Plaintiff’s bad faith claim. State Farm argues
that at all times it acted in good faith when investigating and ultimately denying Plaintiff’s claim.
Under Pennsylvania’s bad faith statute, courts may award interest, punitive damages,
costs and attorneys’ fees, in actions arising under an insurance policy, if it is determined that the
insurer has acted in bad faith towards the insured. 42 Pa. Stat. and Cons. Stat. Ann. § 8371.
The term “bad faith” is not defined in the statute. The Pennsylvania Superior Court has
stated that bad faith includes “any frivolous or unfounded refusal to pay proceeds of a policy.”
Terletsky v. Prudential Prop. and Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994)
(quoting Black’s Law Dictionary 139 (6th ed. 1990)). “‘For purposes of an action against an
insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach
of a known duty (i.e., good faith and fair dealing), through some motive of self-interest or ill
will; mere negligence or bad judgment is not bad faith.’” Keefe v. Prudential Prop. & Cas. Ins.
Co., 203 F.3d 218, 225 (3d Cir. 2000) (quoting Terletsky, 649 A.2d at 688).
An insured bringing a bad faith claim must prove by clear and convincing evidence that
the insurer “(1) did not have a reasonable basis for denying benefits under the policy; and
(2) knew or recklessly disregarded its lack of reasonable basis in denying the claim.” W.V.
Realty, Inc. v. N. Ins. Co., 334 F.3d 306, 312 (3d Cir. 2003) (citing Keefe, 203 F.3d at 225). The
“clear and convincing” evidentiary standard requires that bad faith be proven through evidence
that is so “clear, direct, weighty and convincing so as to enable the court to make its decision
with a clear conviction.” Polselli v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 752 (3d Cir.
1994) (citations omitted). In other words, it must be proven and “not merely insinuated.”
Terletsky, 649 A.2d at 688; see also J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d
Cir. 2004) (“Thus, the plaintiff’s burden in opposing a summary judgment motion is
commensurately high in light of the substantive evidentiary burden at trial.” (citation omitted)).
Based upon our review of the record, we are satisfied that Plaintiff has failed to show by
clear and convincing evidence that State Farm acted in bad faith. Specifically, Plaintiff has
failed to assert facts sufficient to demonstrate that State Farm (1) lacked a reasonable basis for
denying Plaintiff’s insurance claim, and (2) knew or recklessly disregarded its lack of reasonable
basis for that denial. Upon receiving the damages estimate from Plaintiff’s public adjuster, State
Farm immediately sought to schedule a site inspection of Plaintiff’s home, and coordinated to
have Palaia present during the inspection. At the inspection, State Farm’s adjuster, Rob Henry,
observed various parts of the basement, and concluded that the Policy did not provide coverage
for at least three reasons. Henry concluded that the Policy did not cover the water damage in
Plaintiff’s basement because the damage appeared to be caused by a repeated leakage of water
from multiple sources that had caused mold, rot, and deterioration. Henry explained these
reasons to Palaia. Henry also explained the things he observed during the inspection, and the
reasons they were not covered under the policy in the denial letter that was sent to Plaintiff.
There is no evidence in the record demonstrating that State Farm failed to properly investigate
Plaintiff’s claim. See Condio v. Erie Ins. Exch., 899 A.2d 1136, 1142 (Pa. Super. Ct. 2006)
(“Bad faith conduct also includes lack of good faith investigation into facts.” (citation omitted)).
Moreover, there is no evidence in the record showing that State Farm’s denial of Plaintiff’s claim
was “frivolous or unfounded,” or that it was motivated by “self-interest or ill will,” Terletsky,
649 A.2d at 688 (citation omitted). The evidence reveals that State Farm acted reasonably and in
good faith at all times during the claims investigation and handling process. Plaintiff’s
arguments are unavailing.
Contrary to Plaintiff’s allegations, State Farm provided a factual basis to support its
denial of Plaintiff’s claim. In the denial letter to Plaintiff, Henry stated:
Thank you for the courtesy you extended during my inspection of your claim on
April 26, 2016. As I reviewed with your public adjuster, Ralph Palaia, the
basement water damage is not covered under the Homeowner’s Policy. During
the inspection, I observed evidence of mold, rot, and deterioration damage to the
building materials. Mr. Palaia explained the air conditioning condensation line
was likely cause of the damage, and that bleach was sprayed onto the carpet and
walls in an attempt to remove the mold. I also observed water damage in and
around the basement window, which I explained would also not be covered.
(Denial Ltr.) In fact, during the inspection, Henry explained to Palaia the factual basis for his
decision to deny Plaintiff’s claim. In State Farm’s claim file, Henry included the following note:
Determination of Coverage: Water has been leaking in basement for a period of
time, there is mold growing up drywall, doors and trim are beginning to rot. (see
photos). Explained to [Public Adjuster] Ralph Palaia repeated leakage and
seepage is not covered along with the mold. Explained will mail out denial letter
explaining. He understood.
(Def.’s Mot. Ex. B. at SF021.) Also included in the denial letter are the specific provisions of
the Policy that preclude coverage based on the findings outlined by Henry. 1 State Farm provided
an adequate factual basis to support its denial of Plaintiff’s claim.
In addition, Plaintiff’s argument that State Farm improperly relied on an ambiguous
exclusion to deny coverage is without merit. Plaintiff contends that State Farm acted in bad faith
because the policy language concerning “continuous or repeated seepage or leakage,” which
“occurs over a period of time” is vague and ambiguous. (Denial Ltr.)
For example, the Policy does not provide coverage for damages caused by “continuous
or repeated seepage or leakage of water or steam” from an air conditioning unit, “which occurs
over a period of time.” (Denial Ltr.) The Policy also does not provide coverage for “mold,
fungus or wet or dry rot” or for damage caused by subsurface or ground water. (Id.)
Where “the language of the contract is clear and unambiguous, a court is required to give
effect to that language.” Liberty Mut. Ins. Co. v. Sweeney, 689 F.3d 288, 293 (3d Cir. 2012)
(quoting Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983)).
However, if a provision of a policy is ambiguous, courts generally construe the provision in the
insured’s favor. Gardner v. State Farm Fire & Cas. Co., 544 F.3d 553, 558 (3d Cir. 2008). A
provision in an insurance policy is ambiguous if “it is reasonably susceptible of different
constructions and capable of being understood in more than one sense.” Id. (citations and
internal quotation marks omitted). If possible, courts must interpret an insurance policy to avoid
ambiguity and give effect to all of its provisions. Am. Auto Ins. Co. v. Murray, 658 F.3d 311,
321 (3d Cir. 2011).
The phrase “occurs over a period of time” is not defined by the Policy. However, this
does not render the phrase ambiguous. See Simon Wrecking Co. v. AIU Ins. Co., 350 F. Supp. 2d
624, 636 (E.D. Pa. 2004) (“The mere fact that a term used in the policy is not defined does not
make the policy ambiguous.”). Rather, “[w]here critical terms are left undefined in a policy,
Pennsylvania case law instructs that ‘words of common usage in an insurance policy are to be
construed in their natural, plain, and ordinary sense, and we may inform our understanding of
these terms by considering their dictionary definitions.’” Canal Ins. Co. v. Underwriters at
Lloyd’s London, 435 F.3d 431, 435-36 (3d Cir. 2006) (quoting Madison Const. Co. v.
Harleysville Mut. Ins. Co., 735 A.2d 100, 108 (1999)).
“Period” is defined as “a portion of time determined by some reoccurring phenomenon.”
Miriam-Webster’s Collegiate Dictionary 861 (10th ed.). When reading “period of time” in the
context of the entire exclusion—particularly the language “continuous or repeated seepage or
leakage”—it is apparent that the Policy does not provide coverage for damage that occurs due to
events that are continuous or repeated. In contrast, the Policy would provide coverage for
damage that is caused by single, isolated events that do not occur over a period of time. There is
nothing that is ambiguous about the phrase “over a period of time” when read in the context of
the entire exclusion. See, e.g., Fifth v. State Farm Ins. Co., No. 11-7440, 2014 WL 1253542, at
*5 (D.N.J. Mar. 25, 2014) (finding exclusion for leakage and seepage of water “over a period of
time” unambiguous, and concluding that leakage over the course of one month fit within the
Even if the phrase were ambiguous, this does not mean that State Farm engaged in bad
faith by denying Plaintiff’s claim. If a phrase in an insurance policy is ambiguous, it simply
means that the phrase is susceptible to reasonably different interpretations. The fact that State
Farm may have interpreted the phrase differently than Plaintiff is not sufficient to support a bad
faith claim. An insurer’s “mere negligence” or “bad judgment” does not amount to bad faith.
Terletsky, 649 A.2d at 688 (citation omitted); see also Bostick v. ITT Hartford Group, Inc., 56 F.
Supp. 2d 580, 587 (E.D. Pa. 1999) (“Bad faith cannot be found where the insurer’s conduct is in
accordance with a reasonable but incorrect interpretation of the insurance policy and the law.”)
Finally, State Farm acted reasonably in denying coverage because the evidence supports
a finding that the anti-concurrent causation section of the Policy applies. 2 That section prohibits
That anti-concurrent exclusion provides as follows:
We do not insure under any coverage for any loss which would not have occurred
in the absence of one or more of the following excluded events. We do not insure
for such loss regardless of: (a) the cause of the excluded event; or (b) other
causes of the loss; or (c) whether other causes acted concurrently or in any
sequence with the excluded event to produce the loss; or (d) whether the event
occurs suddenly or gradually, involves isolated or widespread damage, arises
from natural or external forces, or occurs as a result of any combination of these:
coverage when damage is caused by a specific excluded loss, such as surface water or
underground water. After Plaintiff filed the Complaint, State Farm provided expert evidence
showing that the damages being claimed by Plaintiff were the result of repeated leaks and
seepages from multiple water sources at Plaintiff’s property. Specifically, engineer Gary
Popolizio, concluded that:
the basement has experienced the effects of multiple water/moisture sources and
inflow events that have occurred at multiple times and dates that include, but not
limited to, the following:
Ground and surface water. 3
A lack of sufficient ventilation and airflow.
Water heater leaks.
Condensate drain line discharges.
(Popolizio Report 7, Def.’s Mot. Ex. F.) Popolizio provided specific factual observations to
support each of these conclusions. For example, with respect to ground and surface water,
Popolizio stated that “[t]he variable degree of stain marks, rot, and wicking action present is
indicative of an ongoing issue not related to a singular event.” (Id.)
Water Damage, meaning:
flood, surface water, waves, tidal water, tsunami, seiche,
overflow of a body of water, or spray from any of these, all
whether driven by wind or not;
water below the surface of the ground, including water
which exerts pressure on, or seeps or leaks through a
building, sidewalk, driveway, foundation, swimming pool
or other structure.
(Denial Ltr. 2)
At his deposition, Plaintiff testified that surface water had entered a window in the
basement during Hurricane Sandy, which occurred on October 29, 2012. (Pl.’s Dep. 49-50,
Def.’s Mot. Ex. E.) Plaintiff did not submit a claim for this event.
Plaintiff has submitted no conflicting expert evidence. The only evidence Plaintiff
proffered was the estimate of damages submitted by his public adjuster, Palaia, and the letter
from Palaia stating his belief that the cause of the damage was a “one time occurrence” and “not
due to any repeated seepage.” (June 10, 2016 Hillis Ltr.) Palaia’s conclusion contradicts
Henry’s conclusion. While this may create a factual dispute as to coverage, it does not
demonstrate bad faith on the part of State Farm. It was not unreasonable for State Farm to deny
coverage based on Henry’s determination that the water damage was caused by repeated
leakages of water that had caused mold, rot, and deterioration. Plaintiff has failed to show by
clear and convincing evidence that State Farm acted unreasonably in its denial of his insurance
claim. There is no genuine issue of material fact for trial. Accordingly, judgment in favor of
State Farm is appropriate with respect to Plaintiff’s bad faith claim under Pennsylvania law.
For these reasons, Defendant’s Motion for Partial Summary Judgment will be granted.
An appropriate Order follows.
BY THE COURT:
R. BARCLAY SURRICK, J.
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