Lancaster v. Nationwide Mutual Fire Insurance Company

Filing 13

MEMORANDUM (Order to follow as separate docket entry) re 6 MOTION to Dismiss Count I of Plaintiff's Complaint for Breach of Contract filed by Nationwide Mutual Fire Insurance Company. Signed by Honorable Malachy E Mannion on 7/24/17. (bs)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
SARAH LANCASTER,

:

Plaintiff,

:

v.

:

NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY,

CIVIL ACTION NO. 3:16-2438
(JUDGE MANNION)

:
:

Defendant.
:
MEMORANDUM
Before the court is a partial motion to dismiss filed by the defendant
Nationwide Mutual Fire Insurance Company (“Nationwide”). (Doc. 6). The
defendant seeks to dismiss a breach of contract claim brought by the plaintiff
Sarah Lancaster who is insured under an insurance policy with Nationwide.
Based on the foregoing, the defendant’s motion will be GRANTED.

I.

FACTUAL AND PROCEDURAL BACKGROUND1
This case arises out of a May 21, 2015 fire that occurred at the plaintiff’s

residence located at 106 Hope Way, Scranton, Pennsylvania. (Doc. 1, ¶¶1,
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The facts alleged in the plaintiff’s complaint are accepted as true in
considering the defendant’s motions to dismiss. See Batchelor v. Rose Tree
Media Sch. Dist., 759 F.3d 266, 271 (3d Cir. 2014); Fleischer v. Standard Ins.
Co., 679 F.3d 116, 120 (3d Cir. 2012).

5). The plaintiff sustained damages to her home with an estimated cost of
repair in excess of $75,000.00. (Id.). The plaintiff alleges she was insured by
Nationwide for accidental fire damage at the time of the fire. (Id., ¶4).
Nationwide is an insurance corporation incorporated in Ohio with a place of
business in Scranton, Pennsylvania.2 (Id., ¶2).
Within a day of the fire, the plaintiff submitted a claim for the loss to
Nationwide. (Id., ¶6). Written notice was also forwarded on May 29, 2015,
August 11, 2015, and September 9, 2015. (Id., ¶7). Nationwide denied the
plaintiff’s claim asserting that the plaintiff’s policy had been cancelled due to
non-payment. (Id., ¶8).
The plaintiff asserts that her insurance policy requires thirty-day notice
to the plaintiff before cancellation by Nationwide and that renewal of the policy
is required unless this notice is provided. (Id., ¶¶13, 15). The plaintiff also
asserts that her insurance policy requires Nationwide to notify the plaintiff’s
mortgagee, Habitat for Humanity, of cancellation at least ten days prior to the
cancellation. (Id., ¶17). Nationwide never mailed the plaintiff notice of the

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Nationwide’s principle place of business is in Ohio. See Habitat for
Humanity of Lackawanna Cty., Inc. v. Nationwide Mut. Fire Ins. Co., No. 3:16cv-00364-MEM, (Doc. 1, ¶7) (M.D. Pa. Mar. 1, 2016). This court’s subject
matter jurisdiction is therefore premised on the existence of diversity of
citizenship. 28 U.S.C. §1332(c)(1).
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premium required to renew or maintain the policy prior to cancellation and did
not provide any notice to the plaintiff of the intended cancellation. (Id., ¶¶12,
14). In addition, Nationwide did not notify Habitat for Humanity of the
cancellation. (Id., ¶18). Nonetheless, Nationwide did not renew the policy
when it expired and the plaintiff’s claim for the May 21, 2015 fire was denied.
(Id., ¶¶8,16).
On December 9, 2016, the plaintiff filed a complaint in this court alleging
two counts against Nationwide, breach of Contract (Count I) and bad faith in
violation of 42 PA. CONS. STAT. §8371, Pennsylvania’s bad faith statute (Count
II).3 (Doc. 1). On February 13, 2017, Nationwide filed the current, partial
motion to dismiss Count I, along with a brief in support. (Docs. 6–7).
Nationwide’s motion seeks to dismiss the plaintiff’s breach of contract claim
based on a one-year limitations clause for filing suit under the policy. To date,

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There is also an action pending before this court between the plaintiff’s
mortgagee, Habitat for Humanity, and Nationwide. Habitat for Humanity of
Lackawanna Cty., Inc. v. Nationwide Mut. Fire Ins. Co., No. 3:16-cv-00364MEM (M.D. Pa.). On March 1, 2016, Nationwide filed a notice of removal in
this court as it related to a state court action filed by Habitat for Humanity on
January 26, 2016. See id., Doc. 1 (M.D. Pa. Dec. 9, 2016). Habitat for
Humanity’s state court action is identical to the plaintiff’s action here. Their
complaint alleges breach of contract (Count I) and a violation of
Pennsylvania’s bad faith statute. Id., Doc. 1-1. On March 23, 2017, the court
consolidated both cases for purposes of discovery only. (Doc. 12).
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the plaintiff has not responded to Nationwide’s motion. The motion is now ripe
for review.

II.

STANDARD OF REVIEW
The defendant’s motion to dismiss is brought pursuant to the Federal

Rule of Civil Procedure Rule 12(b)(6). This rule provides for the dismissal of
a complaint, in whole or in part, if the plaintiff fails to state a claim upon which
relief can be granted. FED. R. CIV. P. 12(b)(6). The moving party bears the
burden of showing that no claim has been stated, Hedges v. United States,
404 F.3d 744, 750 (3d Cir. 2005), and dismissal is appropriate only if,
accepting all of the facts alleged in the complaint as true, the plaintiff has
failed to plead “enough facts to state a claim to relief that is plausible on its
face,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (abrogating “no
set of facts” language found in Conley v. Gibson, 355 U.S. 41, 45–46 (1957)).
The facts alleged must be sufficient to “raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555. This requirement “calls for
enough fact[s] to raise a reasonable expectation that discovery will reveal
evidence” of necessary elements of the plaintiff’s cause of action. Id. at 556.
Furthermore, in order to satisfy federal pleading requirements, the plaintiff
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must “provide the grounds of his entitlement to relief,” which “requires more
than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Phillips v. County of Allegheny, 515 F.3d 224,
S31 (3d Cir. 2008) (brackets and quotations marks omitted) (quoting
Twombly, 550 U.S. at 555).
In considering a motion to dismiss, the court generally relies on the
complaint, attached exhibits, and matters of public record. Sands v.
McCormick, 502 F.3d 263 (3d Cir. 2007). The court may also consider
“undisputedly authentic document[s] that a defendant attaches as an exhibit
to a motion to dismiss if the plaintiff’s claims are based on the [attached]
documents.” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998
F.2d 1192, 1196 (3d Cir. 1993). Moreover, “documents whose contents are
alleged in the complaint and whose authenticity no party questions, but which
are not physically attached to the pleading, may be considered.” Pryor v. Nat’l
Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002). However, the
court may not rely on other parts of the record in determining a motion to
dismiss. See Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250,
1261 (3d Cir. 1994).

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Lastly, the court should grant leave to amend a complaint before
dismissing it as merely deficient. See, e.g., Fletcher-Harlee Corp. v. Pote
Concrete Contractors, Inc., 482 F.3d 247, 252 (3d Cir. 2007); Grayson v.
Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver,
213 F.3d 113, 116-17 (3d Cir. 2000). "Dismissal without leave to amend is
justified only on the grounds of bad faith, undue delay, prejudice, or futility."
Alston v. Parker, 363 F.3d 229, 236 (3d Cir. 2004).

III.

DISCUSSION
Nationwide’s motion is based on a limitations period provided for in the

plaintiff’s policy. This provision states that “[a]ny action must be started within
one year after the date of loss or damage.” (Doc. 6-2 at 34, ¶8).4 The court

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The plaintiff did not submit a copy of her policy as an exhibit attached
to her complaint. As explained above, however, the court may consider
“undisputedly authentic document[s] that a defendant attaches as an exhibit
to a motion to dismiss if the plaintiff’s claims are based on the [attached]
documents.” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998
F.2d 1192, 1196 (3d Cir. 1993). The plaintiff has not disputed the authenticity
of the defendant’s attachment and the policy attached identifies the plaintiff
as the insured. (Doc. 6-2 at 13). The plaintiff’s breach of contract claim clearly
arises out of this policy. Accordingly, the court will consider this document in
ruling on Nationwide’s partial motion to dismiss.
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agrees that this provision is controlling and will grant Nationwide’s motion to
dismiss Count I of the plaintiff’s complaint.
There is no dispute that Pennsylvania law governs this action. “Under
Pennsylvania law, an insurance contract is governed the law of the state in
which the contract was made.” Meyer v. CUNA Mut. Ins. Soc’y, 648 F.3d 154,
162 (3d Cir. 2011). The Supreme Court of Pennsylvania has set forth clearly
established rules for the interpretation of insurance contracts, generally.
The task of interpreting an insurance contract is
generally performed by a court rather than by a jury.
The purpose of that task is to ascertain the intent of
the parties as manifested by the terms used in the
written insurance policy. When the language of the
policy is clear and unambiguous, a court is required
to give effect to that language. When a provision in a
policy is ambiguous, however, the policy is to be
construed in favor of the insured . . . . Contractual
language is ambiguous if it is reasonably susceptible
of different constructions and capable of being
understood in more than one sense. Finally, in
determining what the parties intended by their
contract, the law must look to what they clearly
expressed. Courts in interpreting a contract, do not
assume that its language was chosen carelessly.
401 Fourth Street, Inc. v. Investors Ins. Grp., 879 A.2d 166, 171 (Pa. 2005)
(internal citations, quotations, and alterations omitted).
Like other policy provisions, “[i]t is well settled that a limitation on the
time for bringing suit under an insurance contract is a contractual undertaking
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between the parties to the contract which is both valid and reasonable.”
Kramer v. State Farm Fire & Cas. Ins. Co., 603 A.2d 192, 193 (Pa. Super. Ct.
1992) (citing Lardas v. Underwriters Ins. Co., 231 A.2d 740 (Pa. 1967)).
“Numerous courts have held that contractual limitations period[s] requiring the
filing of suit within one year after the inception of loss or damage are
reasonable.” Moran Indus., Inc. v. Netherlands Ins., Co., No. 4:12-cv-01435,
2014 WL 643723, at *4 (M.D. Pa. Feb. 19, 2014); see also Fennell v.
Nationwide Mut. Fire Ins. Co., 603 A.2d 1064, 1068 (Pa. Super. Ct. 1992)
(collecting cases). Such provisions will be upheld unless they are waived. The
insurer waives this provision when “the actions of the insurer lead the insured
to believe the contractual period will not be enforced or where the insured’s
failure to comply is induced by the actions of the insurer.” Kramer, 603 A.2d
at 193 (internal citation omitted).
Here, the plaintiff’s policy clearly provides that “[a]ny action must be
started within one year after the date of loss or damage.” (Doc. 6-2 at 34, ¶8).
The fire at the plaintiff’s residence occurred on May 21, 2015. (Doc. 1, ¶5).
The plaintiff filed suit in this court on December 9, 2016, over a year after the
date of loss. The plaintiff has not alleged that Nationwide led her to believe
the one-year limitations period would not be enforced or that Nationwide

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committed any actions that induced her to file her complaint after the one year
deadline. See Kramer, 603 A.2d at 193. As such, the court must enforce the
one-year limitations period the parties agreed to. Any amendment to the
breach of contract claim would be futile based on the clear language in the
policy. Accordingly, the court will grant the defendant’s motion and dismiss the
plaintiff’s breach of contract claim with prejudice. An appropriate order will
follow.

s/ Malachy E. Mannion
MALACHY E. MANNION
United States District Judge
DATED: July 24, 2017
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