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Gardner v. State Farm Fire and Casualty Co.

July 22, 2008

NICOLE GARDNER, AS ADMINISTRATRIX OF THE ESTATE OF SHARON ANN GARDNER, DECEASED AS ASSIGNEE OF KEVIN HARPER, APPELLANT
v.
STATE FARM FIRE AND CASUALTY COMPANY



On Appeal from the United States District Court for the Western District of Pennsylvania (Case No. 05-cv-1055) District Judge: The Honorable Gary L. Lancaster.

The opinion of the court was delivered by: Padova, Senior District Judge

PRECEDENTIAL

Argued May 13, 2008

Before: McKEE and ROTH, Circuit Judges, and PADOVA, Senior District Judge*fn1

OPINION OF THE COURT

Nicole Gardner ("Appellant") appeals the order of the United States District Court for the Western District of Pennsylvania granting summary judgment in favor of State Farm Fire and Casualty Company ("State Farm"), and denying summary judgment in Appellant's favor. At issue is the District Court's disposition of Appellant's claims arising out of State Farm's refusal to defend or indemnify its insured, Kevin Harper, in connection with negligence claims Appellant asserted against Harper in a state court action. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

I.

Kevin Harper purchased a residence on Sole Street in McKeesport, Pennsylvania (the "Property") sometime in the 1980's. Harper lived at the Property until March 1, 2002, when he moved in with his girlfriend on Scott Street, around the corner from the Property. To maintain the mortgage on the Property, he rented it to Appellant pursuant to a March 1, 2002 written lease agreement. Although the initial term of the lease agreement was six months, Appellant continued to rent the Property until February 1, 2003, when Harper evicted her on account of her failure to keep current on the rent. Meanwhile, on August 29, 2002, Appellant's mother, Sharon Ann Gardner ("Appellant's Mother"), slipped and fell on the sidewalk outside the Property and was injured.

Harper had a Homeowner's Insurance Policy with State Farm (the "Policy"). On March 7, 2003, Appellant advised State Farm of her Mother's fall and resulting injuries. As a result, State Farm conducted an investigation, which included obtaining the statements of Appellant and Harper. Pursuant to that investigation, State Farm learned for the first time that Harper was renting out the Property. On April 4, 2003, State Farm sent a letter to Harper, denying coverage and explaining that the Policy "does not offer coverage for bodily injury when the property is held for rental and is no longer occupied by the insured." App. at A189.

On March 31, 2004, Appellant's Mother passed away. On August 25, 2004, Appellant filed a negligence action against Harper on behalf of her Mother's estate in the Court of Common Pleas of Allegheny County (the "State Court Action"). In a September 10, 2004 letter to Harper, State Farm reiterated that because Harper "held the residence premises for rental and did not occupy any part of it when this accident occurred," it was denying coverage and would not provide him with a defense to Appellant's claims. App. at A195. Appellant obtained an entry of default against Harper in the State Court Action on May 18, 2006, and the court entered judgment against Harper in the amount of $1,664,757.52, plus costs and interest, on June 16, 2006.

On April 8, 2005, Appellant's counsel filed a Praecipe for Writ of Summons in the Court of Common Pleas of Allegheny County, and captioned the case Kevin Harper v. State Farm Fire & Cas. Co., even though Appellant had not received an assignment of Harper's rights against State Farm and Harper had not authorized Appellant's counsel to act on his behalf. Subsequently, on June 22, 2005, Harper assigned his rights against State Farm to Appellant (the "Assignment"), and Appellant executed the Assignment on June 29, 2005. That same day, Appellant served the Praecipe for Writ of Summons on State Farm. Exactly one month later, on July 29, 2005, State Farm removed the action to federal court. On September 14, 2005, Appellant's counsel filed a Complaint against State Farm, again in Harper's name, and on December 6, 2005, counsel filed a motion pursuant to Federal Rule of Civil Procedure 17 to substitute Appellant, as administratrix of her Mother's estate, as the real party in interest. The District Court granted that motion on December 13, 2005.

Appellant's Complaint in this case asserts six claims: breach of contract, breach of fiduciary duty, negligence, statutory bad faith pursuant to 42 P. S. § 8371, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (the "UTPCPL"), 73 P. S. § 201-1 et seq., and a claim for punitive damages. Appellant's essential complaint is that State Farm breached its contractual and statutory duties to Harper by refusing to defend Appellant's suit against him, failing to indemnify him for the judgment against him, and failing to evaluate the case in good faith. At the completion of discovery, both parties filed motions for summary judgment. The District Court granted State Farm's motion, denied Appellant's cross-motion, and entered judgment in State Farm's favor.

II.

Appellant asks us to find that the District Court erred in granting summary judgment in State Farm's favor and denying judgment in her favor.*fn2 Our standard of review of a grant of summary judgment is plenary. See Fed. Home Loan Mortgage Corp. v. Scottsdale Ins. Co., 316 F.3d 431, 443 (3d Cir. 2003). In reviewing the decision of the District Court, we assess the record using the same summary judgment standard that guides the district courts. See Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir. 2000). To prevail on a motion for summary judgment, the moving party must demonstrate ...


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