Opinion
Civil Action No. 03-6027.
September 22, 2004
MEMORANDUM AND ORDER
We are asked once again to determine if the Plaintiff had an insurable interest in a property located at 15 Somerset Drive in Coatesville on March 9, 2003, when it was damaged by a fire. Prior to the fire, a writ of execution had issued to the Sheriff, based on a foreclosure action filed by the Plaintiff's mortgagee, Eastern Savings Bank, FSB, and the property had been conveyed from the Office of the Sheriff to Tiger Real Estate, Inc., a subsidiary of Eastern Savings Bank. When we faced this issue in addressing Allstate's Motion for Judgment on the Pleadings, we concluded that Mr. Hoggard's continued possession of the property was sufficient to establish an insurable interest in the property. We also concluded that issues of material fact precluded the court from granting judgment in Allstate's favor on the claim that Mr. Hoggard's renewal of the policy without disclosing that the title had transferred constituted a material misrepresentation. We now address these issues, supplemented by additional evidence, in the summary judgment forum.
Summary Judgment Standard
Summary judgment is warranted where the pleadings and discovery, as well as any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.Pr. 56. The moving party has the burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In response, the non-moving party must adduce more than a mere scintilla of evidence in its favor, and cannot simply reassert factually unsupported allegations contained in its pleadings. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Celotex Corp. v. Catrett, supra at 325; Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989).
When ruling on a summary judgment motion, the court must construe the evidence and any reasonable inferences drawn from it in favor of the non-moving party. Anderson v. Liberty Lobby, supra at 255; Tiggs Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). Nevertheless, Rule 56 "mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, supra, at 323.
Insurable Interest
As previously stated, we must first determine if Mr. Hoggard had an insurable interest in the insured property at the time of the fire. As explained in our earlier Memorandum, Pennsylvania has adopted the factual expectation theory to determine if an insurable interest exists. See Seals v. Tioga County Grange Mutual Insurance Co., 359 Pa.Super. 609, 619-20 (1987). Thus, "anyone has an insurable interest who derives pecuniary benefit or advantage from the preservation or continued existence of the property or who will suffer pecuniary loss from its destruction.Luchansky v. Farmers Fire Insurance Co., 357 Pa.Super. 136, 138 (1986) (citing 43 Am.Jur. 2d Insurance § 943; 4 Appleman, Insurance Law and Practice § 21).
In ruling on the prior Motion, we relied, in part, on the New Jersey Supreme Court's decision in Miller v. New Jersey Insurance Underwriting Association, 82 N.J. 594, 414 A.2d 1322 (1980). There, the New Jersey Supreme Court found that an assured's continued possession of a property was sufficient to establish an insurable interest, despite a tax foreclosure proceeding, the entry of judgment, and the loss of title. In its motion for Summary Judgment, Allstate attempts to distinguishMiller from Hoggard, alleging that the assureds in Miller did not have knowledge of the sale of their property. After carefully reviewing the Miller opinion, we disagree with Allstate's reading of Miller, and, in either event, do not believe that the Court's determination of an insurable interest hinged on this fact.
We also note that the evidence produced by Allstate to establish that Mr. Hoggard was aware that the property had been sold is inconclusive. Mr. Hoggard has produced evidence supporting his deposition testimony that he thought the sale had been stopped and that he was attempting to refinance the mortgage. See infra, at 5-6.
The New Jersey Supreme Court noted that the assureds inMiller claimed that they did not receive notice of the proceedings before entry of judgment of foreclosure. However, the Court also stated that the insurance company claimed that it could prove that the assureds did, in fact, have knowledge by way of correspondence sent to the assureds. Miller, at 597-98. Thus, we do not believe that the distinction that Allstate attempts to draw actually exists.
Moreover, regardless of whether the assureds in Miller had knowledge of the foreclosure, our reading of the opinion reveals that it was their continued occupation of the properties that yielded them an insurable interest.
After the foreclosure proceedings, [the assureds] continued to occupy their respective premises, and Miller continued to operate his furniture business and collect rents at [the insured premises]. From their perspective, they could reasonably believe that their fire insurance policies protected them from losses they might suffer upon destruction of their premises. Their continuing possession left plaintiffs with insurable interests of value. [The assureds] did not lose all reasonable expectations concerning their properties merely because they lost title to them. To deny recovery would create a windfall for the insurance company and ignore what we conceive to be the reasonable expectations of the parties.Miller, at 602. This reading is consistent with the Pennsylvania Superior Court's discussion of insurable interest inLuchansky, supra, as we quoted in the earlier Memorandum,
[A] right of property is not an essential ingredient of an insurable interest; any limited or qualified interest, whether legal or equitable, or any expectancy of advantage, is sufficient. It does not matter in what way such benefit arises or the reason loss would occur thereby, limited presumably by dictates of public policy — if such benefit would be lost by destruction of the subject matter, that interest is insurable.Luchansky, at 139.
Here, Mr. Hoggard continued to reside in his home for five months until the fire. He derived a benefit from the continued existence of the property and suffered a loss from its destruction. As we concluded in the earlier Memorandum, "we believe Mr. Hoggard's continued possession of the property is sufficient to establish an insurable interest." (Memorandum and Order, 4/26/04, at 7). This conclusion, however, does not constitute any judgment on the value of such interest. The Plaintiff shall be afforded the opportunity to establish the value of his insurable interest at the time of trial. Material Misrepresentation
We suspect that Mr. Hoggard's interest in a house foreclosed upon and sold at Sheriff's Sale would be a fraction of its true value, considering that his interest is merely housing until such time as he would have been evicted. See In re Johnson, 141 B.R. 838, 848-49 (D.N.J. 1992) (citing Miller v. New Jersey Insurance Underwriting Assn., 188 N.J. Super. 175, 185-86 (App.Div. 1983)) (discussing the insurable interest the Superior Court found each of the assureds had on remand inMiller, 82 N.J. 594).
In our prior decision, we concluded that issues of material fact precluded summary judgment on Allstate's claim that Mr. Hoggard's failure to inform the company of the change of title constituted a material misrepresentation for purposes of the insurance contract. In the remainder of Allstate's Motion for Summary Judgment, we are asked to revisit this decision in light of information allegedly establishing that Mr. Hoggard had knowledge that he was no longer the owner of the property. Allstate claims that Mr. Hoggard's failure to notify his insurance carrier of the change in title constituted both a breach of the insurance contract and a material misrepresentation. After reviewing the evidence presented by both sides in support/defense of the summary judgment motion, we again conclude that issues of material fact preclude judgment at this stage.
Allstate argues that only Mr. Hoggard's self-serving statements support his contention that he was unaware of the sale of his property. Allstate has now presented evidence allegedly establishing Mr. Hoggard's knowledge of the sale. Allstate has attached to its Motion the docket entries from the foreclosure action. Those entries indicate that the writ of execution was posted on the house on four separate occasions. Mr. Hoggard was served with a notice of the Sheriff's Sale on July 16, 2002. (Docket Entries attached to Motion, at Exhibit D). Additionally, Allstate has attached a copy of a "Notice to Vacate," dated November 12, 2002, indicating that Eastern Savings Bank had purchased the property at Sheriff's Sale. (Exhibit K). The letter was sent via certified mail to Mr. Hoggard at the insured premises. Based on this additional information, Allstate argues that Mr. Hoggard was aware of the change in title and failed to inform the insurance carrier, constituting a breach of the contract and a material misrepresentation.
In response to the motion, Mr. Hoggard again relies on his deposition testimony, in which he denied knowledge that the Sheriff's Sale took place. Specifically, Mr. Hoggard stated that when he became aware of the impending Sheriff's Sale, he went to American Finance Four Life and gave them a bank check to stop the Sheriff's Sale. (Hoggard Dep., at 27). Evidence of the check was presented at the deposition. Unfortunately, Mr. Hoggard did not remember the details of how this company intended to stop the Sheriff's Sale and any documentation that he received was destroyed in the fire.
Contrary to Allstate's assertion that only Mr. Hoggard's own deposition testimony supported his contention that he was unaware that the property had been sold, however, the Plaintiff has now presented the Court with evidence to support his belief/disbelief. On October 8, 2002, a Vice President of My Financial Services 4 L.I.F.E., ("MFS4L"), wrote to Eastern Savings Bank, on behalf of Mr. Hoggard, attempting to purchase the property out of foreclosure. (Exhibit D, attached to Response). This was just ten days before the Sheriff's Sale. Moreover, telephone logs from Eastern Savings Bank establish that the bank was receiving calls from MFS4L on behalf of Mr. Hoggard in February and March of 2003.
Marcia clld from my financial services 215-568-2128 — sd bor clld her and wanted to know if house sold yet . . she told him they closed their file . . I told her to refer him to our atty . . let stella know
(Log entry, 2/12/2003).
SSI SHOWS 2/12: ellen called she rec'd a call from a loan offcr they were trying to do a loan for mr. hoggard but obviously was turned down. he also ask when the new people were moving into the house . . . he is still in the property. must be in denial . . . logn eviction.
(Log entry, 3/12/2003).
Based on the log entry from February 12, 2003, it does not appear that Mr. Hoggard was aware that the property had already been sold. Since there is a material issue of fact concerning Mr. Hoggard's knowledge of the change of ownership of the house, summary judgment is inappropriate.
An appropriate Order follows.
ORDER
AND NOW, this 22nd day of September __, 2004, upon consideration of the Defendant's Motion for Summary Judgment, the response, thereto, the exhibits attached to each, and for the reasons stated in the accompanying Memorandum, IT IS HEREBY ORDERED that the Motion is DENIED.