WILLIAMS v. AMERICAN SECURITY INSURANCE COMPANY
MEMORANDUM OPINION. SIGNED BY HONORABLE JEFFREY L. SCHMEHL ON 9/29/17. 9/29/17 ENTERED AND COPIES E-MAILED.(mas, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
THOMAS P. WILLIAMS, SR.,
AMERICAN SECURITY INSURANCE
Schmehl, J. /s/ JLS
September 29, 2017
Plaintiff, Thomas P. Williams, Sr. (“Plaintiff”), has filed this action alleging that
Defendant, American Security Insurance Company (“ASIC” or “Defendant”), breached
the insurance contract that it had with Kathy Palmer, after Palmer assigned her rights
under the policy to Plaintiff. Defendant filed a motion to dismiss Plaintiff’s Amended
Complaint, claiming that Palmer’s assignment to Plaintiff was invalid, that Plaintiff does
not have an insurable interest in the property and that Plaintiff’s Amended Complaint
does not properly plead damages. For the reasons set forth below, I will deny Defendant’s
Motion to Dismiss.
On January 28, 2016, Palmer suffered water damage due to a pipe break at her
then residence in Bethlehem, Pennsylvania. (Am. Compl. ¶ 4.) At the time of the loss,
Palmer was designated the “Borrower” on an insurance policy issued by ASIC , which
designated Caliber Homes Loans, Inc., Palmer’s mortgagee, as the “Named Insured.”
(Am. Compl. ¶ 6.) On March 11, 2016, Plaintiff purchased Palmer’s property at Sheriff’s
Sale, and the deed reflecting that sale was recorded on April 26, 2016. (Am. Compl. ¶ 8.)
On March 28, 2016, Palmer executed an assignment to Plaintiff which states that it is
assigning to Plaintiff “all of her rights to pursue a claim (chose in action),
negotiate/adjust a claim directly with the insurance company or their agent, and recover
from (American Security Insurance Company) the amount(s) due and/or payable under
(Claim # 0010195744) on account of the casualty loss(es) which occurred as a result of
the water loss at 4375 Holly Court, Bethlehem, PA 18017 around or during January
2016.” (Am. Compl. ¶ 11, Ex. C.)
On April 15, 2016, ASIC denied coverage for the loss, and on May 3, 2016,
Palmer executed a Proof of Loss. (Am. Compl. ¶ 7, Exs. B and F.) On August 8, 2016,
Plaintiff sold the property in question to a third party. (Def’s Mtn to Dismiss, Ex. 4.)
A Rule 12(b)(6) motion to dismiss requires the court to examine the sufficiency of
the complaint. Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84
(1957) (abrogated in other respects by Bell Atlantic Corporation v. Twombly, 550 U.S.
544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). In determining whether a complaint is
sufficient, the court must accept all factual allegations as true, construe the complaint in
the light most favorable to the plaintiff, and determine whether, under any reasonable
reading, the plaintiff may be entitled to relief. Fowler v. UPMC Shadyside, 578 F.3d 203,
210 (citing Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
Although “conclusory” or “bare-bones allegations” will not survive a motion to
dismiss, Fowler, 578 F.3d at 210, a complaint may not be dismissed merely because it
appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the
merits. Phillips, 515 F.3d at 231. Nonetheless, to survive a Rule 12(b)(6) motion, the
complaint must provide "enough facts to raise a reasonable expectation that discovery
will reveal evidence of the necessary element." Id. at 234 (quoting Twombly, 550 U.S. at
556) (internal quotations omitted).
Defendant argues that Plaintiff’s breach of contract claim should be dismissed
because the Assignment is invalid, Palmer did not have an insurable interest in the
property at the time of the Assignment, Plaintiff makes claims outside the scope of the
Assignment, Plaintiff no longer has an insurable interest in the property, and Plaintiff
does not adequately plead damages. As will be discussed more fully below, I find that
Defendant’s arguments fail and ASIC’s motion to dismiss must be denied.
A. Validity of the Assignment
First, Defendant argues that because the policy in question states that “Assignment
of this Certificate will not be valid unless [ASIC gives its] written consent,” (Am. Compl.
Ex. A,) and Palmer executed the Assignment without its consent, the Assignment is
invalid. It is true that Pennsylvania courts have consistently held that an anti-assignment
provision in a policy is enforceable when the insured is attempting to assign the entire
policy to a third party. See The Insurance Adjustment Bureau, Inc., v. Allstate Ins. Co.,
905 A.2d 462 (Pa. 2006); Seneca Ins. Co., Inc., v. Lexington and Concord Search and
Abstract, LLC, 484 F.Supp.2d 374, 378 (E.D. Pa., 2007); Egger v. Gulf Ins. Co., 903
A.2d 1219, 1224 (Pa. 2006). However, “a provision in a policy, prohibiting an
assignment after loss has occurred, is generally regarded as void, in that it is against
public policy.” Egger, 903 A.2d at 1224. The Egger Court found that a “loss” is “the
occurrence of the event, which creates the liability of the insurer.” Id. at 1226. The Court
[A]fter a loss has occurred, the right of the insured or his successor in
interest to the indemnity provided in the policy becomes a fixed and
vested right; [and] . . . is an obligation or debt due from the insurer to the
insured, subject only to such claims, demands, or defenses as the insurer
would have been entitled to make against the original insured.
Egger, 903 A.2d at 1226-1227, quoting Viola v. Fireman’s Fund Ins. Co., 965 F.Supp. 654,
658 (E.D. Pa., 1997).
In the instant matter, the loss in question occurred on January 28, 2016. After that
date, Palmer had a claim to insurance benefits that could be assigned, despite the antiassignment provisions in the policy. The assignable right accrues at the date of loss, even
though payment may not yet be due. See e.g., One Call Property Services, Inc. v. Security
First Ins. Co., 165 So.3d 749 (Fla. App., 4th Dist., 2015). Palmer executed the
Assignment, assigning her right to collect benefits under the ASIC policy, to Plaintiff on
March 28, 2016. This date is clearly after the date of loss; accordingly Palmer’s post-loss
assignment is valid despite the anti-assignment provision contained in the policy.
Next, Defendant argues that the Assignment is invalid because Palmer did not
have an insurable interest in the property to assign to Plaintiff. However, I find
Defendant’s lengthy analysis of insurable interest at the time of the Assignment to be
irrelevant. Defendant does not and cannot dispute the fact that Palmer had an insurable
interest in the property at the time of the loss. That is clearly the relevant date in this
factual scenario. The right that Palmer is permitted to assign accrued at the time of loss,
January 28, 2016. It is irrelevant whether Palmer had an insurable interest in the property
later when she executed the Assignment. It is the date of loss that is critical to this
analysis, not the date of the Assignment. See One Call Prop. Svcs, 165 So.3d 749.
Accordingly, I find Defendant’s argument that Palmer did not have an insurable interest
to convey to be unpersuasive.
B. Plaintiff’s Rights After the Assignment
Next, Defendant argues that even if the Assignment is valid, Plaintiff steps into
Palmer’s shoes and his rights may only rise as high as hers; therefore, Plaintiff cannot
make a claim for costs he incurred after the Assignment because they are not costs
Palmer ever incurred herself before the Assignment. This argument is non-persuasive.
Palmer assigned this claim to Plaintiff in connection with the water damage to her
home. Thus Plaintiff became an assignee of the insurance claim, taking the claim subject
to whatever limitations it had in the hands of Palmer, the assignor. As of the date of loss,
Palmer had a valid claim that could be assigned, and she assigned that claim to Plaintiff.
The law does not require anything more. Defendant is free to assert its “claims, demands
or defenses” against Plaintiff as it could have against Palmer. Egger, 903 A.2d at 1226.
For example, Defendant’s allegations that Palmer failed to timely file a proof of loss as
required by the policy would be one such defense.
C. Plaintiff’s Current Interest in the Property/Damage Allegations
Defendant also argues that because Plaintiff sold the property and no longer has an
insurable interest in it, he should not be permitted to recover under the policy. Plaintiff
does not dispute that he has sold the Property. This fact, however, is irrelevant to the
issue before the court. Palmer had a claim as of the date of loss, which she assigned to
Plaintiff. Plaintiff incurred expenditures for repairs due to the loss. Under the law,
Plaintiff should be permitted to recover any expenses covered by the policy that arose
from the water damage at the property.
Lastly, Defendant argues that Plaintiff has failed to properly allege damages,
which are a necessary element of his breach of contract claim. Plaintiff’s Amended
Complaint states that “Plaintiff is indebted to CityLine for the repairs made to the
residence in the amount of $133,984.80.” (Am. Compl. ¶ 28.) I find that at this stage of
the proceedings, this is a sufficient allegation of damages.
For the foregoing reasons, Defendant’s Motion to Dismiss is denied. An appropriate
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