Verdetto et al v. State Farm Fire & Casualty Company

Filing 47

MEMORANDUM re 37 MOTION for Reconsideration re 36 Order on Motion for Summary Judgment filed by Michael Verdetto, Deborah Verdetto Signed by Honorable A. Richard Caputo on 3/6/12. (jam, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
MICHAEL VERDETTO and DEBORAH
VERDETTO,
CIVIL ACTION NO. 3:10-CV-1917
Plaintiffs,
(JUDGE CAPUTO)

v.
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant.

MEMORANDUM
Presently before the Court is Plaintiffs’ Motion for Reconsideration (Doc. 37) of the
Court’s November 23, 2011 Order (Doc. 36) granting Defendant’s Motion for Summary
Judgment. Because the Court did not commit clear error in granting Defendant’s summary
judgment motion, Plaintiffs’ Motion for Reconsideration will be denied.
BACKGROUND
This action arises out of an insurance dispute between Plaintiffs, Michael and
Deborah Verdetto, and State Farm Fire and Casualty Company. As set forth in greater
detail in the November 23, 2011 Memorandum and Order (Doc. 36), in 2008, Plaintiffs
rented a house in Avoca, Pennsylvania. To protect their personal property, Plaintiffs
purchased renters insurance from State Farm for $50,000.00 of contents coverage.
Approximately six months later, Plaintiffs decided to vacate the Avoca property and relocate
to Forty Fort, Pennsylvania. On May 15, 2009, before Plaintiffs had completed their move
from Avoca to Forty Fort, the Avoca home caught on fire. Arson was ultimately determined
to be the cause of the fire.
After the fire, Plaintiffs contacted State Farm to recover for the damaged contents

in the Avoca property at the time of the fire. Plaintiffs informed State Farm that although
they were in the process of moving to the Forty Fort property at the time of the fire, a
number of personal contents were still in the Avoca property when the fire occurred. In the
weeks following the fire, however, State Farm became aware of a number of “red flags”
relating to Plaintiffs’ contents claim.
Given the numerous “red flags”, State Farm determined that further investigation of
the fire and Plaintiffs’ claim was necessary. Nevertheless, despite a contractual duty to do
so, Plaintiffs refused to cooperate with the investigation or provide State Farm with
documents and records relevant to State Farm’s investigation. As a result of Plaintiffs’
conduct and State Farm’s own extensive investigation, State Farm denied Plaintiffs’
contents claim for lack of cooperation.
Plaintiffs then commenced this action against State Farm alleging claims for bad faith
and breach of contract. Following discovery, State Farm moved for summary judgment
(Doc. 24). On November 23, 2011, State Farm’s Motion for Summary Judgment was
granted (Doc. 36).
Plaintiffs filed a Motion for Reconsideration (Doc. 37) on December 5, 2011.
Plaintiffs argue that the Court committed clear error in finding that State Farm acted
reasonably in investigating Plaintiffs’ claim and that Plaintiffs materially breached the terms
of the renters policy by refusing to cooperate with State Farm’s investigation. The motion
has been briefed and is ripe for review.
LEGAL STANDARD
A motion for reconsideration is governed by Rule 59(e) of the Federal Rules of Civil
Procedure, which allows a party to move to alter or amend a judgment within twenty-eight
2

(28) days of entry. Fed. R. Civ. P. 59(e). “The purpose of a motion for reconsideration is
to correct manifest errors of law or fact or to present newly discovered evidence.” Harsco
Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.1985) (citation omitted). A judgment may be
altered or amended if the party seeking reconsideration establishes at least one of the
following grounds: “(1) an intervening change in controlling law; (2) the availability of new
evidence that was not available when the court granted the motion summary judgment; or
(3) the need to correct a clear error of law or fact or to prevent manifest injustice.” Max's
Seafood Café, by Lou Ann, Inc., v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999). “A motion
for reconsideration is not to be used as a means to reargue matters already argued and
disposed of or as an attempt to relitigate a point of disagreement between the Court and
the litigant.” Ogden v. Keystone Residence, 226 F. Supp. 2d 588, 606 (M.D. Pa. 2002).
“[R]econsideration motions may not be used to raise new arguments or present evidence
that could have been raised prior to the entry of judgment.” Hill v. Tammac Corp., No. 05
1148, 2006 WL 529044, at *2 (M.D. Pa. Mar. 3, 2006). Lastly, the reconsideration of a
judgment is an extraordinary remedy, and such motions should be granted sparingly.
D'Angio v. Borough of Nescopeck, 56 F.Supp.2d 502, 504 (M.D. Pa.1999).
DISCUSSION
Because Plaintiffs merely reassert the same law, facts, and arguments they relied
upon in opposing State Farm’s summary judgment motion, Plaintiffs’ Motion for
Reconsideration will be denied.
As to Plaintiffs’ bad faith claim, Plaintiffs may recover if they show: “(1) that [State
Farm] lacked a reasonable basis for denying benefits; and (2) that [State Farm] knew or

3

recklessly disregarded its lack of reasonable basis.” Klinger v. State Farm Mut. Auto. Ins.
Co., 115 F.3d 230, 233 (3d Cir. 1997). A “reasonable basis” for investigating a claim exists
when the insurer “demonstrates the existence of certain ‘red flags.’” Tangle v. State Farm
Ins. Co., no. 08-112, 2010 WL 3420661, at *4 (W.D. Pa. Aug. 4, 2010) (quoting Aquila v.
Nationwide Mut. Ins. Co., no. 07-2696, 2008 WL 5348137, at *8 (E.D. Pa. Dec. 15, 2008)).
In the instant action, as noted in the November 23, 2011 Memorandum (Memo. at 8, Doc.
36), a number of significant “red flags” provided State Farm a reasonable basis for
investigating Plaintiffs’ claim. Thus, it was not clear error to grant State Farm summary
judgment on Plaintiffs’ bad faith claim.
As to Plaintiffs’ breach of contract claim, Pennsylvania law requires an insured to
cooperate with an insurer’s investigation of a covered loss. See Habecker v. Peerless Ins.
Co., no. 07-0196, 2008 WL 4922529, at *4 (M.D. Pa. Nov. 14, 2008) (internal citations
omitted); see also Murphy v. Fed. Ins. Co., no. 02-2541, 2006 WL 156944, at *4 (E.D. Pa.
Jan. 18, 2006). If an insured fails to cooperate, an insurer’s coverage obligations are
excused if the breach is more than a “mere technical departure” from the terms of the policy
and the insurer’s interest is prejudiced. Habecker, 2008 WL 4922529, at *4. Here, the
information requested by State Farm was critical to a determination of the veracity of
Plaintiffs’ contents claim. Plaintiffs’ failure to comply with State Farm’s requests was more
than a technical departure from the terms of the renters policy which severely prejudiced
State Farm’s interest. As such, it was not clear error to grant summary judgment to State
Farm on Plaintiffs’ breach of contract claim.

4

CONCLUSION
For the reasons stated above, Plaintiffs’ Motion for Reconsideration (Doc. 37) will be
denied.
An appropriate order follows.

March 6, 2012
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

5