Turner et al v. State Farm Fire and Casualty Company

Filing 47

MEMORANDUM (Order to follow as separate docket entry)For the reasons discussed above, the Court determines that no reasonable juror could conclude that the Defendant exhibited bad faith as defined in Verdetto v. State Farm, supra at 484 ( and as affi rmed at 510 Fed. Appx. 209 (3d. Cir. 2013)). This would be true even if the operative evidentiary standard was by a mere preponderance of the evidence. Where, as here, the standard for proving a bad faith claim is provision of clear and convincing evidence (See Polselli, ante at 7), it is unthinkable that reasonable jurors could find for Plaintiffs on this issue. Accordingly, Plaintiffs count sounding in bad faith must be dismissed. An Order consistent with the forgoing determinations will be filed contemporaneously.Signed by Honorable Richard P. Conaboy on 5/30/17. (cc)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
Ronald Turner and
Bonnie Coenen

:
:
:
: Case No. 3:15-CV-906
:
:(Judge Richard P. Conaboy)

Plaintiffs
v.
State Farm Fire & Casualty Company

:

Defendant

:
Memorandum

A.

Background.
We consider here a Motion for Summary Judgment (Doc. 35) filed

by Defendant State Farm Fire & Casualty Company (“State Farm”)on
March 27, 2017.

Plaintiffs Robert Turner and Bonnie Coenen filed

this lawsuit against State Farm as a result of a fire that
destroyed their residence in Shickshinny, Pennsylvania on December
24, 2013.

Plaintiffs had an insurance policy with State Farm that

covered their home and its contents.

They allege that State Farm

refused to pay for certain covered damages under that policy and
unreasonably delayed payment on other lost property.

Their

Complaint (Doc. 1, Exhibit A) sets forth causes of action for
breach of contract and bad faith.
State Farm contends that it reasonably and promptly
compensated Plaintiffs for all covered losses and that any delay in
payment was a result of Plaintiffs’ failure to perform their
obligations under their policy with State Farm.

The parties have

briefed their positions (Docs. 36, 41, and 45) and this motion is
now ripe for disposition.
B.

Undisputed Facts.1
1.

On or about April 6, 2015 Plaintiffs commenced the

instant lawsuit by complaint filed in the Luzerne County Court of
Common Pleas.
2.

On May 5, 2015, State Farm removed this case to the

United States District Court for the Middle District of
Pennsylvania.
3.

Plaintiffs’ complaint alleges causes of action for breach

of contract and bad faith against State Farm arising out of a
homeowners’ claim submitted by the Plaintiffs.
4.

On or about December 24, 2013, the Plaintiffs “sustained

a loss and damages” due to a fire in their residence located at 414
Bloomingdale Road, Shickshinny, Pennsylvania.
5.

The Plaintiffs’ residence was insured under a homeowners

policy of insurance issued by State Farm - - Policy # 78-DJ-F880-5.
6.

The policy provided coverage as follows: (a) $193,200.00

for the structure; (b) $144,900.00 for personal property; and (c)
loss of use as determined by the actual loss sustained.
7.

The Plaintiffs never rebuilt their home after the fire.

8.

The Plaintiffs have not contacted any contractors about

1

The “Undisputed Facts” in the context of this Memorandum have been compiled by crossreferencing Defendant’s Statement of Undisputed Facts (Doc. 37) with Plaintiffs’ Answer (Doc. 39)
thereto.
2

rebuilding their home.
9.

State Farm paid Defendant $193,200.00 for the loss of the

structure on or about March 20, 2014.2
10.

On the date after the fire State Farm Agent, Robert

Thompson, advanced the Plaintiffs $2,000.00 on their personal
property coverage.
11.

On December 26, 2013, State Farm claim representative Ray

Moncavage wrote to the Plaintiffs and advised that there was
additional coverage under “Option OL-Building Ordinance or Law.”
This is additional coverage that is payable when such costs are
incurred, and the letter set forth the policy language concerning
such coverage.
12.

Mr. Moncavage also indicated to Plaintiff Coenen that she

would need to complete a Personal Property Inventory.
13.

Mr. Moncavage requested that Plaintiff Coenen provide

drawings of the layout of the home in January of 2014 in order that
he could prepare an estimate.
14.

On or about March 4, 2014, Plaintiff Coenen retained a

public adjustor, Scott Seeherman, to represent her concerning her
claim with State Farm.
15.

Mr. Seeherman had dealt with Mr. Moncavage in the past,

had not had any problems working with him, and confirmed that there
2

While Plaintiffs allege that State Farm did not make payment until August of 2014, their
allegation is completely undocumented and the record clearly indicates that State Farm paid the
policy limits for the structure less than three months after the loss occurred.
3

was good communication between the two.
16.

Mr. Seeherman contacted State Farm soon after his

retention and requested an additional advance payment on
contents/personal property in the amount of $10,000.00
17.

State Farm then issued a check in the amount of

$10,000.00 as requested by Mr. Seeherman on March 4, 2014.
18.

At the time he was retained, Mr. Seeherman advised

Plaintiff Coenen that she needed to prepare a “personal property
inventory” to submit her personal property claim.
19.

Mr. Seeherman informed Mr. Coenen that the submission of

personal property inventory was standard practice in all total loss
situations.
20.

Plaintiff Coenen did not submit a personal property

inventory to State Farm until June 19, 2015 - - some 16 months
after Mr. Seeherman informed her that the form was required to
resolve the personal property loss aspect of her claim and some 18
months after the fire.
21.

On July 29, 2015 - - 10 days after Plaintiff Coenen

submitted her personal property inventory - - State Farm issued a
check in the amount of $75,000.00 which represented “an advance on
contents”.
22.

On October 7, 2015, State Farm issued an additional

payment in the amount of $60,400.00 in recognition of Plaintiff’s
personal property claim.

4

23.

By October 7, 2015, State Farm had paid Plaintiffs a

total of $147,400.00, an amount that equaled Plaintiffs’ total
personal property coverage under the applicable policy, plus
$2,500.00 for jewelry coverage.
24.

Mr. Seeherman, Plaintiffs’ adjustor, acknowledged that

“if there’s no additional coverage, there’s no additional payment.”
Seeherman Deposition at 76.
25.

Following the fire, Plaintiffs stayed with Plaintiff

Coenen’s daughter at her home for three months.
26.

Plaintiffs were not charged rent by Plaintiff Coenen’s

daughter during their three-month stay at her home.
27.

After staying three months with Plaintiff Coenen’s

daughter, Plaintiffs moved to the Woodlands Hotel and remained
there through December of 2015.
28.

State Farm paid for the Plaintiffs’ living expenses

during the nine months they stayed at the Woodlands Hotel.
29.

Plaintiff Coenen has acknowledged that she discussed

alternative housing arrangements with Mr. Moncavage and that he
referred her to a company called VIP Insurance Housing Options.
30.

On April 1, 2015, State Farm issued a check to Plaintiff

Coenen’s daughter in the amount of $4,258.07 in payment of
Plaintiffs’ rental debt for the first three months of 2014.
31.

The amount paid to Plaintiff Coenen’s daughter was

arrived at by prorating the actual time Plaintiff spent in her home

5

at the rate, $1,500.00 per month, that she charged.
32.

Plaintiffs have not sought additional living expenses

under the applicable policy beyond what State Farm has paid and
Plaintiffs acknowledge that they have been paid in full for their
alternative living expenses.
33.

Plaintiffs continue to claim that they are owed $9,660.00

for “trees, shrubs, and other plants” that were destroyed in the
fire.
34.

State Farm had no more direct contact with Plaintiffs

after March of 2014 when they retained Mr. Seeherman as their
adjustor.
35.

Plaintiffs acknowledge that State Farm never

misrepresented any of the available coverages under the policy.
C.

Summary Judgment Standard.
Summary judgment is appropriate when the movant demonstrates

there is no “genuine issue as to any material fact.”
P. 56(a).

Fed. R. Civ.

“[T]his standard provides that the mere existence of

some alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
An issue is genuine only if there is a sufficient evidentiary
basis on which a reasonable jury could find for the non-moving
party, and a factual dispute is material only if it might affect

6

the outcome of the suit under governing law.”

Kaucher v. County of

Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson, 477 U.S.
at 248).

In determining whether a genuine issue of fact exists, a

court must resolve all factual doubts and draw all reasonable
inferences in favor of the nonmoving party.

Conoshenti v. Public

Serv. Elec. & Gas., 364 F.3d 135, 140 (3d Cir. 2004) (citation
omitted).
The initial burden is on the moving party to show an absence
of a genuine issue of material fact.

Celotex Corp. V. Catreet, 477

U.S. 317, 330 (1986) (citations omitted).

The moving party may

meet this burden by “pointing out to the district court[] that
there is an absence of evidence to support the nonmoving party’s
case when the nonmoving party bears the ultimate burden of proof.”
Id. at 325.

The non-moving party may not rest on the bare

allegations contained in his or her pleadings, but is required by
Federal Rule of Civil Procedure 56 to go beyond the pleadings by
way of affidavits, depositions, answers to interrogatories or the
like in order to demonstrate specific material facts which give
rise to a genuine issue.

Id. At 324.

Where underlying facts are in dispute, the facts are viewed in
the light most favorable to the non-moving party.

Abramson v.

William Patterson College of N.J., 260 F.3d 265, 267 (3d Cir. 2001)
(citing Drinkwater v. Union Carbide Corp., 904 F.2d 853, 854 N.1
(3d Cir. 1990).

“In considering a motion for summary judgment, a

7

district court may not make credibility determinations or engage in
any weighing of evidence.”

Anderson, 477 U.S. at 255.

Therefore,

when evidentiary facts are in dispute, when the credibility of
witnesses may be in issue, or when conflicting evidence must be
weighed, a full trial is usually necessary.
D.

Discussion.
The record developed by the parties discloses that State Farm

has paid no less than $347,000.00 to Plaintiffs under the
applicable policy of insurance to date.3

Plaintiffs have

acknowledged that State Farm has reimbursed them in full for the
value of their structure, the value of their personal property, and
their alternative living expenses.

The remaining compensation

Plaintiffs claim to be due and owing under the policy is the sum of
$16,789.02 for restorative landscaping and debris removal.
sum is sought in a count sounding in breach of contract.4

This
Because

it is clear to the Court that factual issues remain before it can
be determined whether Plaintiffs are owed this additional
$16,789.02 or any part thereof, the breach of contract count will
stand.
However, the real bone of contention here is Plaintiffs’

3

State Farm has also paid the cost of nine months lodging at the Woodlands Hotel. This sum
has not been quantified in the record.
4

The complaint sought only $9,660.00 (See Doc. 1-2 at Paragraph 9) and Plaintiffs added an
additional $7,129.02 for removal of debris in their brief. (Doc. 41 at 11).
8

second count sounding in bad faith pursuant to 42 Pa. CSA § 8371.
Section 8371 provides that:
In an action under an insurance policy, if the Court
finds that the insurer has acted in bad faith toward
the insured, the Court may take all the following
actions:
(1) Award interest on the amount of the claim from
the date the claim was made by the insured in an
amount equal to the prime rate of interest plus 3%.
(2)

Award punitive damages against the insurer.

(3)

Assess court costs and attorney fees against

the insurer.
Interestingly, the statute does not define “bad faith”.

However,

numerous courts interpreting the statute have identified the
criteria which must be met to make out a bad faith claim under
Pennsylvania law.

The standard for determining whether bad faith

exists has been described by our Circuit Court:
“Bad faith” on the part of an insurer is any
frivolous or unfounded refusal to pay the proceeds
of a policy; it is not necessary that such refusal
be fraudulent.

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

9

dealing)through some motive of self-interest or ill
will; mere negligence or bad judgment is not bad
faith.
Northwestern Mutual Life Insurance Company v. Babayan, 430
F.3d 121, 137 (3d. Cir. 2005)(quoting Terletsky v. Prudential
Property and Casualty Insurance Company, 649 A.2d 680, 688
(Pa.Super.1994).
To succeed on a bad faith claim, a Plaintiff must
demonstrate “(1) that the insurer lacked a reasonable basis
for denying benefits; and (2) that the insurer knew or
recklessly disregarded its lack of reasonable basis.”
Verdetto v. State Farm Fire and Casualty Company, 837 F.Supp
2d. 480, 484 (M.D.Pa. 2011), affirmed 2013 W.L. 175175 (3d.
Cir. January 17, 2013)(quoting Klinger v. State Farm Mutual
Insurance Company, 115 F.3d 230, 233 (3d. Cir. 1997).

In

addition, a Plaintiff must demonstrate bad faith by clear and
convincing evidence.

Polselli v. Nationwide Mutual Fire

Insurance Company, 23 F.3d 747, 751 (3d. Cir. 1994).

For an

insurance company to show that it had a reasonable basis to
deny or delay paying a claim it need not demonstrate that its
investigation yielded the correct conclusion, or that its
conclusion more likely than not was accurate.

Krisa v.

Equitable Life Assurance Company, 113 F.Supp 2d. 694, 704
(M.D.Pa. 2000).

The insurance company is not required to show

10

that “the process by which it reached its conclusion was
flawless or that the investigatory methods it employed
eliminated possibilities at odds with its conclusion.”

Id.

Instead, an insurance company must show that it conducted a
review or investigation sufficiently thorough to yield a
reasonable foundation for its action.

Id.

“The ‘clear and

convincing’ standard requires that the Plaintiff show ‘that
the evidence is so clear, direct, weighty and convincing as to
enable a clear conviction without hesitation, about whether or
not the defendants acted in bad faith.’” J.C. Penney Life
Insurance Company v. Pilosi, 393 F.3d 356, 367 (3d. Cir.
2004).
The record the parties have developed makes it clear that
any delay experienced by Plaintiffs in their receipt of just
compensation under the subject policy was in that area of the
policy providing coverage for the loss of personal property.5
We start our analysis with the recognition that the rights and
obligations of the parties are governed by the contract of
insurance between them.

That contract includes an unambiguous

provision that specifies:

5

We note that Plaintiffs’ inaccurately allege that they did not receive $193,200.00 in
compensation for the destruction of their structure until August 4, 2014. See Doc. 41 at 1. In fact,
however, the record documents that Defendant tendered the $193,200.00 policy limits for loss of the
structure on March 20, 2014. See Doc. 46, Exhibits 34 and 35. The provision of the policy limits
for the destruction of the structure within less than three months of the date of the loss was
categorically prompt enough to counter any allegation of unreasonable delay on this point.
11

2. Your Duties After Loss.
After a loss to which this insurance may apply you [the
insured party] shall see that the following duties are
performed:
...
c.

Prepare an inventory of damages or stolen personal

property.

Show in detail the quantity, description, age,

replacement cost and amount of loss.

Attach to the

inventory all bills, receipts and related documents that
substantiate the figures in the inventory.
...
e.

Submit to us [the insurer] within 60 days after the

loss your signed, sworn proof of loss which sets forth,
to the best of your knowledge and belief:
...
(6) an inventory of damaged or stolen personal property
as described in 2.c.
Doc. 46-1, Exhibit 2 at 13.6
This unambiguous provision of the contract places, to a
great extent, the responsibility for the timing and amount of
payments received in the hands of the insured.

Plaintiffs

were required to produce some basis for the insurance company
to make appropriate reimbursements for the loss of personal

6

This Exhibit is a certified copy of the policy in question.
12

property.

This the Plaintiffs simply did not do until June

19, 2015 - - some 18 months after the fire, some 18 months
after Mr. Moncavage first informed them of their obligation to
provide documentation of the lost property, and some 16 months
after the public adjustor they retained echoed Mr. Moncavage’s
message.7
In short, Plaintiffs’ failure to perform their reporting
duty under the contract impeded, wittingly or unwittingly,
State Farm’s investigation of their claim.

Thus, the delay in

payment for the value of their personal property was a direct
result of Plaintiffs’ failure to perform their contractual
duties and, as such, may not serve as an appropriate basis for
a finding of bad faith on Defendant’s part.

Stated another

way, Plaintiffs may not now seek to profit due to their lack
of action.
Plaintiffs’ stated rationale for asserting that Defendant
acted in bad faith is the repeated mantra that Defendants knew
that “no contents were salvageable”.
, 13, 15, and 21 through 41.
be

See Doc. 39 at ¶¶ 9, 11

While Plaintiffs’ assertion may

true, it is not probative of unreasonable delay on

Defendant’s part.

Defendant transmitted an advance against

lost personal property of $2,000.00 one day after the fire.
7

It should also be noted that Mr. Moncavage transmitted additional letters advising Plaintiffs
of their obligation to provide the personal property inventory on 12 other occasions. See Doc. 36-1,
Exhibits 4, 6, 10-14 and 16-21.
13

When Plaintiffs’ adjustor requested an additional advance on
March 4, 2014, Defendant immediately furnished an additional
advance in the amount of $10,000.00.

The fact that Plaintiffs

had experienced a total loss begged the question of the value
of that loss.

If a person loses personal property the value

of which is completely unquantified, this would not justify
the insurer’s provision of policy limits in excess of
$144,000.00 as existed here.

Defendant justifiably waited for

Plaintiffs to provide some documentation of the magnitude of
their loss and the Court will not fault State Farm for
expecting Plaintiffs to perform under the contract of
insurance.
The record discloses that on June 29, 2015 State Farm
finally received the personal property inventory that it had
repeatedly requested Plaintiffs to provide for more than 18
months.

On July 15, 2015, Plaintiffs forwarded an amended

personal property inventory to State Farm.

Two weeks later,

on July 29, 2015, State Farm transmitted a check for
$75,000.00 as an “advance”.

On October 7, 2015, State Farm

forwarded an additional check in the amount of $60,400.00.
Thus, Plaintiffs received the entire reimbursement of their
policy limits for loss of personal property within 11 weeks of
their provision of the amended personal property inventory.
The Court cannot regard this as an unreasonable delay

14

justifying any additional compensation for bad faith.8
For the reasons discussed above, the Court determines
that no reasonable juror could conclude that the Defendant
exhibited “bad faith” as defined in Verdetto v. State Farm,
supra at 484 ( and as affirmed at 510 Fed. Appx. 209 (3d. Cir.
2013)).

This would be true even if the operative evidentiary

standard was by a mere preponderance of the evidence.

Where,

as here, the standard for proving a bad faith claim is
provision of clear and convincing evidence” (See Polselli,
ante at 7), it is unthinkable that reasonable jurors could
find for Plaintiffs on this issue.

Accordingly, Plaintiffs’

count sounding in bad faith must be dismissed.

An Order

consistent with the forgoing determinations will be filed
contemporaneously.
BY THE COURT
S/Richard P. Conaboy
Honorable Richard P. Conaboy
United States District Court

Dated: May 30, 2017

8

It should be noted that an additional factor that can serve as the basis for a bad faith claim is
any misrepresentation by the insurer of available coverages under a policy. However, Plaintiffs have
acknowledged that no such misrepresentation occurred. (Doc. 37, P. 63; Doc. 39, P. 63).
15