Mary Doherty v. Allstate Indemnity ( 2018 )


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  •                                                                 NOT PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    _____________
    No. 17-1860
    _____________
    MARY L. DOHERTY;
    JAMES DOHERTY;
    JOHN DOHERTY,
    Appellants
    v.
    ALLSTATE INDEMNITY COMPANY
    ______________
    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE EASTERN DISTRICT OF PENNSYLVANIA
    (D.C. Civ. Action No. 2:15-cv-05165)
    District Judge: Honorable Gerald J. Pappert
    ______________
    Submitted Under Third Circuit L.A.R. 34.1(a)
    April 20, 2018
    ______________
    Before: GREENAWAY, JR., RENDELL, and FUENTES, Circuit Judges.
    (Opinion Filed: May 25, 2018)
    ______________
    OPINION*
    ______________
    *
    This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
    constitute binding precedent.
    GREENAWAY, JR., Circuit Judge.
    Appellants-insureds Mary Doherty, James Doherty, and John Doherty (“the
    Dohertys”) seek review of the District Court’s order of April 6, 2017 granting summary
    judgment on their breach of contract, bad faith, and unfair trade practices claims in favor
    of Appellee-insurer Allstate Indemnity Company (“Allstate”). For the reasons below, we
    will affirm the order of the District Court.
    I.   FACTS
    In December 2005, Mary Doherty met with Thomas McKeon of the McKeon
    Agency (“McKeon”)—an agency that is licensed to sell Allstate insurance policies—and
    his associate to discuss her insurance needs for two properties located in Bryn Mawr,
    Pennsylvania. The Dohertys allege that she told the agency she was seeking the “best
    possible landlord-related property insurance” and that the agency “assured [her] that its
    [Landlord Policy] was the best possible coverage” for her properties. App. 5.
    The Dohertys soon thereafter insured their properties with an Allstate policy
    (hereinafter “the Policy”). The Policy enumerates the losses that it ensures. It provides,
    inter alia:
    We will cover sudden and accidental direct physical loss to
    property described in Coverage A—Dwelling Protection and
    Coverage B—Other Structures Protection except as limited
    or excluded in this policy.
    App. 1068. As their names suggest, Coverage A covers property damage to an insured’s
    dwelling and attaching structures, while Coverage B insures property that is separated from
    a dwelling by a clear space. Both coverages were included in the Policy. Furthermore,
    2
    under the heading “Losses We Do Not Cover Under Coverages A and B,” the Policy
    disclaimed coverage relating to, inter alia, below surface substances, enforcement of
    building codes and ordinances, wear and tear, and seepage. App. 1068-69. The Policy
    also excluded from coverage losses caused by vandalism, as well as losses caused by “[a]ny
    act of a tenant, or guests of a tenant, unless the act results in sudden and accidental direct
    physical loss” resulting from a list of enumerated sources. App. 1070.
    On October 21, 2013, the Dohertys leased the insured properties to two groups of
    student tenants. The leases were supposed to run from June 1, 2014 to May 31, 2015.
    However, the tenants broke the lease on August 31, 2014, in light of the fact that the
    dwellings were uninhabitable—extensive damage to the properties existed, “including but
    not limited to broken windows, buckled hardwood floors, water stains and ceiling damage,
    removed and damaged fixtures and doors, detached ceiling lights and smoke alarms, water
    damage in the basement, peeling paint, an overgrown lawn, dirty floors and surfaces, a
    broken stove and refrigerator and trash and mice droppings.” App. 10-11.
    The police and Radnor Township Code Official Ray Daly responded to the tenants’
    complaints and documented the property damage and code violations. Daly subsequently
    returned to the dwellings to post notifications of violation that enumerated various code
    infractions and ordered Doherty to remedy them. Radnor Township ultimately revoked the
    student rental licenses for the properties due to the violations. Then, on September 24,
    2014, the Township sued the Dohertys in the Delaware County Court of Common Pleas.
    It alleged that the properties were uninhabitable and that the Dohertys failed to allow
    3
    Township officials to inspect the premises in conformity with the Township’s Rental
    Housing Code.
    Just prior to when the lawsuit was filed, Mary Doherty faxed a letter to McKeon
    and to Allstate’s corporate office on September 6, 2014, stating that she was making a
    claim for property damage and loss of rent. Allstate misplaced the letter in a file of a pre-
    existing claim involving the Dohertys. Then on October 4, 2014, Mary Doherty faxed
    another letter, inquiring why there had been no response to her previous communication.
    McKeon received the letter and had an associate call and speak with her on the same day.
    The associate communicated that Doherty could set up a claim by calling 1-800-
    ALLSTATE, and then followed up with an e-mail. The Dohertys did not comply, and a
    claim was therefore not opened at that time.
    Meanwhile, the Dohertys hired John Rush, a home repair contractor, to estimate the
    damage, prepare a report, and repair the properties. Then, in November 2014—despite the
    fact that the Township had revoked her rental license—they leased one of the units to Devin
    Good and other student renters. Good, however, contends that he spoke with the Township
    shortly after attempting to move in and was told that he could not do so due to the
    deplorable living conditions.
    On July 30, 2015, Mary Doherty sent another letter to McKeon to complain about
    Allstate’s refusal to acknowledge her claim. She notified Allstate that the Doherty’s
    damages approached $400,000 and that the Township’s September 2014 lawsuit invoked
    Allstate’s duty to defend. Allstate opened a claim on August 7, 2015, and its claim adjustor,
    Tiara Myrick, called Mary Doherty. In a voicemail, Myrick provided her with a claim
    4
    number and left another message to this effect on August 11. Mary Doherty responded by
    sending another letter on the same day, contending that “[t]here seems to be some
    confusion in Allstate’s claims handling process.” App. 19. Myrick tried communicating
    with Doherty thereafter, but Doherty “respond[ed] with numerous legal documents.” App.
    20. Additional attempts by Myrick to contact Mary Doherty were futile.
    The Dohertys filed their initial complaint against Allstate in Delaware County for
    breach of contract, contending that Allstate was required to compensate them for the
    damage that precipitated the notices of violations and revocations of the renting licenses.
    Allstate removed the case to the United States District Court for the Eastern District of
    Pennsylvania. The Dohertys then amended their complaint to add claims under the
    Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa.
    Stat. and Cons. Stat. Ann. § 201-1, -9.2(a) (West 2008), and Pennsylvania’s bad faith
    statute, 42 Pa. Stat. and Cons. Stat. Ann. § 8371 (West 2017). Allstate filed its motion for
    summary judgment on January 13, 2017, and the Dohertys purported to “verify” the
    allegations in her complaint thereafter. In their response to the motion, the Dohertys
    submitted a report from their proposed expert, James Wagner, a public insurance adjuster,
    estimating the damage sustained and the costs of the necessary repairs, as well as from
    David Cole, who opined that Allstate’s conduct rose to the level of statutory bad faith. The
    District Court granted summary judgment on all three claims in favor of Allstate. The
    Dohertys timely filed this appeal.
    5
    II.   DISCUSSION1
    On appeal, the Dohertys make various arguments contending that the District Court
    erred in granting summary judgment regarding their breach of contract, bad faith, and
    UTPCPL claims. “Our review of the District Court’s [summary judgment] decision is
    plenary, and we apply the same standard as the District Court to determine whether
    summary judgment was appropriate.” State Auto Prop. & Cas. Ins. Co. v. Pro Design,
    P.C., 
    566 F.3d 86
    , 89 (3d Cir. 2009). Thus, summary judgment is properly granted “if the
    movant shows that there is no genuine dispute as to any material fact and the movant is
    entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). For the reasons below, we
    will affirm the order of the District Court.
    As a threshold matter, the Dohertys contend throughout their brief that the Policy
    was an “all-risk” policy. An “all-risk” policy is a “policy that by definition ‘covers every
    kind of insurable loss except what is specifically excluded.’” Betz v. Erie Ins. Exch., 
    957 A.2d 1244
    , 1256 (Pa. Super. Ct. 2008) (quoting Black’s Law Dictionary 815 (8th ed.
    2004)). That is, if the Policy does in fact cover “all-risk,” then all they must do is prove
    the fact that there was a loss in order to recover. See Intermetal Mexicana, S.A. v. Ins. Co.
    of N. Am., 
    866 F.2d 71
    , 75 (3d Cir. 1989) (“Under an ‘all-risk’ policy, the only questions
    which need be decided . . . are whether [the plaintiff] has suffered a loss and, if so, whether
    such loss is excluded from coverage under the policy.” (internal quotation marks omitted)
    1
    The District Court had jurisdiction under 28 U.S.C. § 1332(a), and we have appellate
    jurisdiction pursuant to 28 U.S.C. § 1291.
    6
    (quoting Plaza 61 v. N. River Ins. Co., 
    446 F. Supp. 1168
    , 1170 (M.D. Pa. 1978), aff’d,
    
    558 F.2d 822
    (3d Cir. 1978))). However, the Dohertys’ argument is contradicted by the
    plain language of the Policy, which provides that it “cover[s] sudden and accidental direct
    physical loss to [the] propert[ies].” App. 1068 (emphasis added). The Policy therefore
    covers only “sudden and accidental” loss, and the Dohertys failed to adduce any evidence
    that the damage to their properties was anything more than wear and tear and general lack
    of maintenance. We will therefore affirm the District Court’s finding that the damage fell
    outside of the ambit of the Policy.2
    The Dohertys put forth five additional primary arguments, none of which is
    sufficient to create a genuine dispute of material fact or to show that Allstate is not entitled
    to judgment as a matter of law.
    First, the Dohertys contend that the District Court relied on hearsay evidence in
    granting summary judgment in favor of Allstate. However, they do not state what evidence
    that the District Court relied on constituted hearsay—instead, they only conclusively assert
    their “objections were based upon a plausible argument that the proffered evidence was
    2
    On this basis, we reject the Dohertys’ argument that the District Court erred by granting
    summary judgment in Allstate’s favor on their breach of contract claim. Furthermore, the
    Dohertys contend that the District Court was compelled to apply a so-called “mend and
    hold” doctrine because, according to them and without any further explanation, “the record
    shows that Allstate has impermissibly attempted to change the basis for its denial of the
    Dohertys’ claim.” Appellee Br. at 53 (citing Railway Co. v. McCarthy, 
    96 U.S. 258
    , 267-
    68 (1877)). To the contrary, Allstate has consistently maintained throughout this litigation
    that the Policy is not an “all-risk” policy, and that the damage that occurred was not
    “sudden and accidental,” which—as 
    discussed supra
    —we agree with.
    7
    inadmissible-as [sic] unauthenticated and containing multiple levels of hearsay.”
    Appellant Br. at 33. Regardless, contrary to the Dohertys’ assertions, the record reflects
    that the District Court adequately accounted for their hearsay objections below. See App.
    11 n.9 (“While several documents referenced here arguably contain hearsay and may not
    be considered in deciding whether or not to grant summary judgment on Doherty’s breach
    of contract claim, they are relevant and appropriately considered when assessing her bad
    faith claim as they were part of Allstate’s investigation and coverage decision.”).3
    Second, the Dohertys curiously argue that the District Court “improperly weighed
    Mary Doherty’s credibility” because it, inter alia, “repeatedly discusse[d] Mrs. Doherty’s
    advanced education and knowledge of legal matters” and relied on her testimony made at
    a pretrial conference where she alleged that Township officials were responsible for
    damaging her properties and which was held before she decided to retain counsel. App.
    Br. at 37. However, the District Court did no such thing. Rather, the District Court made
    clear that, at the pretrial conference, “Doherty was not under oath and her statements that
    day are not record evidence.” App. 23 n.22. Rather, the District Court discussed her
    3
    The Dohertys also argue that “large portions of Allstate’s evidence is hearsay” and that
    “the district court was required to exclude it from consideration in its analysis of Allstate’s
    summary judgment motion.” Appellant Br. at 48. However, they do not identify what
    evidence was hearsay, nor do they cite any precedential case of this Court to support their
    position. We therefore decline to find that the District Court erred on this basis.
    Regardless, inadmissible hearsay is not grounds for reversal where there was “sufficient
    evidence without [the improperly admitted evidence] to support the district court’s
    conclusion.” Blackledge v. Blackledge, 
    866 F.3d 169
    , 187 (3d Cir. 2017) (quoting Winston
    ex rel. Winston v. Children & Youth Servs. of Del. Cty., 
    948 F.2d 1380
    , 1391 n.7 (3d Cir.
    1991)).
    8
    statements for the narrow purpose of “show[ing] what Allstate, through its counsel, learned
    about Doherty’s allegations regarding the property damage.”            
    Id. Furthermore, the
    Dohertys’ implication that Mary Doherty’s legal education inured to her detriment finds
    no basis in the record. See United States v. Wilensky, 
    757 F.2d 594
    , 598 (3d Cir. 1985)
    (“[I]n order to reverse on grounds of excessive judicial intervention, the record must . . .
    disclose actual bias” (internal quotation marks omitted)). None of the District Court’s
    analysis constituted error of any kind.4
    In a similar vein, the Dohertys argue that the District Court improperly weighed the
    credibility of their two experts, James Wagner and David Cole. It did not. As to Wagner,
    they contend that the District Court erred in disregarding Wagner’s report—which merely
    contains an itemized list of allegedly necessary repairs and their estimated costs—in
    finding that “the record contains little to no information regarding the alleged damaged
    conditions or the characteristics of those conditions that suggest they occurred suddenly
    and accidentally.” App. 45. It did not—the District Court properly recognized that the
    report did not bear on whether the damage was “sudden and accidental” because it contains
    4
    The Dohertys also argue that the District Court improperly “inferred a negative credibility
    determination on Mrs. Doherty” by referencing the “Chester matter.” Appellant Br. at 36.
    That matter originated with a libel and slander suit brought by Mary Doherty and which
    the defendant, Joanne Chester, spent a considerable amount of attorneys’ fees to defeat.
    Mrs. Doherty subsequently opened a claim with Allstate after Chester attempted to recoup
    her defense costs. The District Court referenced this matter for the sole purpose of
    indicating that Allstate inadvertently “put the [September 6, 2014] letter in the file of a pre-
    existing claim involving the Dohertys (“the Chester file”).” App. 13. The basis of the
    Dohertys’ claim is therefore entirely without merit, as there is no evidence that the District
    Court either misrepresented the facts of the matter or drew any improper inferences about
    her.
    9
    no information as to the manner that the damage occurred. Furthermore, the existence of
    Cole’s report did not preclude the District Court from granting summary judgment on the
    Dohertys’ bad faith claim. See Advo, Inc. v. Phila. Newspapers, Inc., 
    51 F.3d 1191
    , 1198
    (3d Cir. 1995) (“When an expert opinion is not supported by sufficient facts to validate it
    in the eyes of the law, or when indisputable record facts contradict or otherwise render the
    opinion unreasonable, it cannot support a jury's verdict.” (quoting Brooke Grp. Ltd. v.
    Brown & Williamson Tobacco Corp., 
    509 U.S. 209
    , 242 (U.S. 1993))). Here, the record is
    clear that Allstate did not act in bad faith because its misfiling of the September 6, 2014
    letter was inadvertent, and, after recognizing this mistake, repeatedly contacted Mary
    Doherty to instruct her how to open a claim. Thus, the District Court committed no error
    by granting summary judgment despite the contentions set forth in Cole’s report.5
    Third, the Dohertys contend that the District Court improperly found that Mary
    Doherty’s conversion of her pleading into a verified complaint—which, for the purposes
    of summary judgment are treated as affidavits, see Revock v. Cowpet Bay W. Condo. Ass’n,
    
    853 F.3d 96
    , 100 n.1 (3d Cir. 2017)—constituted a sham affidavit. The “sham affidavit”
    doctrine allows courts to disregard “a contradictory affidavit that indicates only that the
    5
    For this reason, we also reject the Dohertys’ argument that the District Court erred by
    granting summary judgment on their bad faith claim under 42 Pa. Stat. and Cons. Stat. Ann.
    § 8371. To prove a bad faith claim in Pennsylvania, “a plaintiff must demonstrate, by clear
    and convincing evidence, (1) that the insurer did not have a reasonable basis for denying
    benefits under the policy and (2) that the insurer knew or recklessly disregarded its lack of
    a reasonable basis in denying the claim.” Rancosky v. Wash. Nat’l Ins. Co., 
    170 A.3d 364
    ,
    377 (Pa. 2017) (emphasis added); see also W.V. Realty, Inc. v. N. Ins. Co., 
    334 F.3d 306
    ,
    312 (3d Cir. 2003). The Dohertys cannot meet this standard because, as 
    discussed supra
    ,
    the Policy did not cover the damage to her properties.
    10
    affiant cannot maintain a consistent story or is willing to offer a statement solely for the
    purpose of defeating summary judgment.” Jiminez v. All Am. Rathskeller, Inc., 
    503 F.3d 247
    , 253 (3d Cir. 2007). In the final version of her pleading-turned-affidavit, Doherty—
    for the first time—alleged that McKeon misrepresented that the Policy would include very
    specific coverage. However, the District Court correctly held that the record did not
    substantiate this allegation in any respect: Mary Doherty never testified to such effect, and
    she failed to submit an actual affidavit to clarify her testimony. We will therefore affirm
    the District Court’s holding that the verified complaint was a sham. See 
    id. (“[I]f it
    is clear
    that an affidavit is offered solely for the purpose of defeating summary judgment, it is
    proper for the trial judge to conclude that no reasonable jury could accord that affidavit
    evidentiary weight and that summary judgment is appropriate.”).
    Fourth, the Dohertys argue that the District Court erred by granting Allstate’s
    motion to quash certain subpoenas seeking additional evidence of Allstate’s policies and
    procedures. “We review the denial of a motion to quash a[] . . . subpoena for abuse of
    discretion.” Wedgewood Vill. Pharmacy, Inc. v. United States, 
    421 F.3d 263
    , 268 n.5 (3d
    Cir. 2005). Here, discovery was supposed to end on November 17, 2016, and the Dohertys
    served upon Allstate four subpoenas to testify and produce documents regarding four
    additional employees who had no ostensible and direct relation to their claims. The denial
    of such an eleventh-hour request is far from an abuse of discretion, which requires that “the
    District Court’s decision rests upon a clearly erroneous finding of fact, an errant conclusion
    of law or an improper application of law to fact.” 
    Id. at 268
    n.5 (quoting NLRB v. Frazier,
    
    966 F.2d 812
    , 815 (3d Cir. 1992)).
    11
    Lastly, the Dohertys argue that the District Court incorrectly dismissed their
    UTPCPL claim because “[t]he Dohertys’ evidence is sufficient to prove Allstate’s
    deceptive conduct.” Appellant Br. at 62. In order to recover under the UTPCPL, a
    plaintiff’s claim must “encompass . . . claims of unfair and deceptive acts or practices in
    the conduct of any trade or commerce.” Ash v. Cont’l Ins. Co., 
    932 A.2d 877
    , 882 (Pa.
    2007).      However, we agree with the District Court that “[t]he most specific
    misrepresentation Doherty testified to in her deposition concerned those purportedly made
    to her by Allstate in pamphlets that told her that she ‘was in good hands.’ This allegation
    fails as a matter of law because this statement—that she was in good hands—constitutes
    mere puffery.” App. 75-76 (citation omitted); see Victaulic Co. v. Tieman, 
    499 F.3d 227
    ,
    236 (3d Cir. 2007) (“Often, marketing material is full of imprecise puffery that no one
    should take at face value.”). The record is devoid of any deceptive or fraudulent behavior
    by Allstate or McKeon, and the Dohertys’ UTPCPL claim therefore fails as a matter of
    law.
    III.     CONCLUSION
    For the aforementioned reasons, we will affirm the order of the District Court.
    12