2008 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-19-2008

Gardner v. State Farm Fire

Precedential or Non-Precedential: Precedential

Docket No. 07-3051

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 07-3051

 

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

____________

Argued May 13, 2008

Before: McKEE and ROTH, Circuit Judges, and PADOVA, 
 *

Hon. John R. Padova, Senior District Judge for the

Eastern District of Pennsylvania, sitting by designation.

2

Senior District Judge*

(Opinion Filed: July 22, 2008)

Jerome W. Kiger (Argued)

Amy B. Kubisiak

1420 Grant Building

Pittsburgh, Pennsylvania 15219

Counsel for Appellant

C. Leon Sherman (Argued)

C. Leon Sherman & Associates, P.C.

20 Stanwix Street, Fifth Floor

Pittsburgh, PA 15222

Counsel for Appellee

___________

OPINION OF THE COURT

___________

PADOVA, Senior District Judge:

Nicole Gardner (“Appellant”) appeals the order of the

United States District Court for the Western District of
3

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
4

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
5

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
6

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. 
7

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 crossmotion, and entered judgment in State Farm’s favor. 

II.

Appellant asks us to find that the District Court erred in
 1

Although an order denying a motion for summary judgment is

not ordinarily final and appealable, it becomes appealable when

accompanied by an order granting a cross-motion for summary

judgment. Nazay v. Miller, 949 F.2d 1323, 1328 (3d Cir. 1991).

8

granting summary judgment in State Farm’s favor and denying

judgment in her favor.1

 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 “that

there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Fed.

R. Civ. P. 56(c). 

 III.
9

Appellant first argues that the District Court erred in

finding that the Policy afforded Harper no coverage for her

claims against him and therefore erred in entering judgment in

State Farm’s favor on her breach of contract and breach of

fiduciary duty claims. This argument is meritless.

In denying coverage for Appellant’s claims, the District

Court relied on the following exclusion in the Policy, i.e., the

“Rental Exclusion.” 

Section II - Exclusions

1. Coverage L [Liability] and Coverage

M [Medical] do not apply to: 

 * * * 

b. bodily injury or property

damage arising out of the

business pursuits of any

insured or the holding for

rental of any part of the

premises by any insured. This

exclusion does not apply: 
10

* * * 

(3) to the rental or

holding for rental of

a residence of yours:

(a) on an occasional

basis for the

exclusive use as a

residence; . . .

App. at A140. 

Appellant argued to the District Court, and continues to

argue, that the Rental Exclusion is inapplicable because

Harper’s rental of the Property was on “an occasional basis” and

was therefore subject to the exception set forth in subparagraph

(3)(a), the “Occasional Basis Exception.” In the alternative,

Appellant argues that the Occasional Basis Exception is

ambiguous and therefore should be construed in Harper’s favor.

Under Pennsylvania law, which the parties agree is
11

applicable here, the “interpretation of an insurance contract

regarding the existence or non-existence of coverage is

generally performed by the court.” Donegal Mut. Ins. Co. v.

Baumhammers, 938 A.2d 286, 290 (Pa. 2007) (quoting

Minnesota Fire and Cas. Co. v. Greenfield, 855 A.2d 854, 861

(Pa. 2004)). “When the language of the policy is clear and

unambiguous, we must give effect to the language.” Id.

(quoting Kvaerner Metals Div. of Kvaerner U.S., Inc. v.

Commercial Union Ins. Co., 908 A.2d 888, 893 (Pa. 2006)). On

the other hand, “where a provision of a policy is ambiguous, the

policy provision is to be construed in favor of the insured and

against the insurer, the drafter of the agreement.” Standard

Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566

(Pa. 1983). Contractual language is ambiguous if “it is

reasonably susceptible of different constructions and capable of

being understood in more than one sense.” Hutchison v.
12

Sunbeam Coal Corp., 519 A.2d 385, 390 (Pa. 1986). 

In rejecting Appellant’s argument that the Occasional

Basis Exception was either ambiguous or plainly applicable

under the circumstances of this case, the District Court

considered the definition of “occasional” in the 2003 edition of

the Merriam-Webster Dictionary, which is, in relevant part: (1)

“of or relating to a particular occasion,” or (2) “encountered,

occurring, appearing, or taken at irregular or infrequent

intervals.” App. at A17 (quoting Merriam-Webster’s Collegiate

Dictionary (Merriam-Webster, 11th Ed. 2003)). The court held

that under either of these definitions, coverage was not available

for Appellant’s claims as Appellant’s rental was neither on a

particular occasion nor taken at irregular or infrequent intervals.

In this regard, the trial court emphasized that Appellant “rented

the property continuously for almost one (1) year which is,

practically speaking, the entire term of the annually renewable
13

policy.” App. at A18. It further stated that requiring coverage

under those circumstances would not be reasonable as it would

distort the meaning of the Policy language and would

“effectively transform a homeowner’s insurance policy into a

landlord’s insurance policy and render the applicable exclusions

meaningless.” App. at A18. 

We agree with the District Court that, under the

circumstances of this case, the Rental Exclusion unambiguously

excludes coverage and the Occasional Basis Exception is

unambiguously inapplicable. Appellant attempts to inject

ambiguity into the Occasional Basis Exception by arguing that

the rental was on the single “occasion” of Harper’s attempting

to get caught up on his mortgage, and that it was likewise

“infrequent” and “irregular” because it occurred for just an 11-

month period over more than 15 years of ownership. However,

these arguments rely on unreasonable interpretations of the
14

Occasional Basis Exception. First, a homeowner’s rental of his

property in order to finance his mortgage is nothing more than

a business pursuit, which is exactly what triggers the application

of the Rental Exclusion in the first place and, thus, cannot also

be the “occasion” that triggers the Occasional Basis Exception.

Second, we reject the assertion that the relevant time period for

assessing the infrequency or irregularity of the rental is the

length of Harper’s ownership rather than the term of the

insurance policy, because the Policy addresses only the policy

term and plainly anticipates that the norm during that term will

be the insured residing at the property, not renting it out. See,

e.g., State Farm Fire & Cas. Co. v. Piazza, 131 P.3d 337, 338

(Wash. App. 2006) (an “‘occasional’ rental should be

interpreted consistent with the purposes of a homeowner’s

insurance policy . . . which means that the circumstances of the

rental must not negate the assumption that the homeowner is still
 2

Our conclusion in this regard is consistent with other

court decisions that have considered the Occasional Basis

Exception. See State Farm Fire & Cas. Co. v. Wonnell, 533

N.E.2d 1131, 1133 (Ill. App. Ct. 1989) (concluding that

tenancy was not “irregular” or “infrequent” and, thus, was not

on an “occasional basis,” where tenant “lived with her

children at the home in question, full-time, for at least seven

months, without interruption”); Ferguson v. State Farm Fire &

Cas. Co., Civ. A. No. 94-36205, 1995 WL 653971, *4 (9th

Cir. Sept. 5, 1995) (finding that three-month tenancy, without

interruption, was not “irregular” or “infrequent” and, thus,

was not on an “occasional basis,” where owner moved away,

was attempting to sell the house, and did not intended to

resume living there, and tenant “only moved out after being

given a notice to quit”). Appellant argues that these cases,

both of which involved owners who did not intend to return to

their premises at the conclusion of the rental, stand for the

proposition that the Occasional Basis Exclusion is only

inapplicable when the owner has no intention of returning to

residence at the rented property. We do not read the cases to

stand for such a proposition. Although both courts took note

that the owners had no intention of returning to the premises

at issue, and used that fact to bolster their conclusions that the

15

the primary resident of the house, despite his or her temporary

absence.”) Thus, where, as here, the term of the policy is one

year, an eleven-month rental is anything but infrequent or

irregular.2

 Accordingly, under either definition of “occasional,”
Occasional Basis Exception did not apply, they did not

establish the per se rule that Appellant suggests. Rather, we

find that the owner’s intention to return is just one additional

fact that may be considered in assessing whether a rental is on

an occasional basis. Here, in spite of Harper’s professed

intent to return to residence at the Property, other factors

plainly establish that the rental was not on an occasional

basis. 

16

the Occasional Basis Exception does not apply to save

Appellant’s claim from the Rental Exclusion. 

We also find that the District Court did not err in finding

no coverage for Appellant’s claims in the State Court Action,

because a second exclusion in the Policy, the “Insured Location

Exclusion,” also precluded coverage. That exclusion provides

as follows:

Section II - Exclusions

1. Coverage L [Liability] and Coverage

M [Medical] do not apply to: 

 * * * 

 d. bodily injury or property
17

damage arising out of any

premises currently owned or

rented to any insured which

is not an insured location..

. . 

App. at A140. The Policy defines “insured location,” in relevant

part, as “the residence premises,” and “any part of any other

premises . . . used by you as a residence.” App. at A126.

“Residence premises” is defined as the premises “where you

reside and which is shown in the Declarations.” Id. 

Harper simply was not residing at the Property at the time

that Appellant’s Mother was injured. Under Pennsylvania law,

an individual’s residence for purposes of an insurance policy is

his “factual place of abode,” which is “a matter of physical

fact.” Amica Mut. Ins. Co. v. Donegal Mut. Ins. Co., 545 A.2d

343, 346 (Pa. Super. Ct. 1988). As such, when a person actually

lives in one location, and sporadically visits, or keeps certain

personal items at, another location, it is the location where he
18

lives that is his residence. Id. (finding that daughter resided with

mother, and not with father, when she only sporadically visited

father and kept certain personal items at his home.) Here, the

undisputed evidence shows that Harper was living on Scott

Street with his girlfriend during the Appellant’s entire lease

term. Appellant nevertheless argues that the Premises remained

at least one of Harper’s “residences” for purposes of the Policy

because he “maintained a close connection with [the Property]

by keeping clothing, furniture, a safe and other personal items

there, keeping a key and using it to enter the [Property]

frequently and without consent, receiving mail there, keeping

the utility bills in his name and having the intent to return to [the

Property], and actually returning there to live after [Appellant]

left.” (App. Br. at 20-21). However, under Pennsylvania law,

these facts are irrelevant to a determination of Harper’s

residence. As “a matter of physical fact,” he was living not at
19

the Property but, rather, was living on Scott Street. Thus, the

Property no longer qualified as an “Insured Location” under the

definition of that term in the Policy, and there was no coverage

under the Policy for any bodily injury that occurred there. 

Appellant argues, in the alternative, that even if State

Farm had no duty to indemnify Harper under the Policy, it

should have at least defended him in the State Court Action as

the duty to defend is determined by the scope of the allegations

in the Complaint and, here, the Complaint specifically alleged

that the Property was Harper’s residence and that he rented it to

Appellant on an occasional basis for the exclusive use as a

residence. See Frog, Switch & Mfg. Co. v. Travelers Ins. Co.,

193 F.3d 742, 746 (3d Cir. 1999) (stating that to determine the

existence of a duty to defend under Pennsylvania law, the

factual allegations of the underlying complaint against the

insured are to be taken as true and liberally construed in favor of
20

the insured). However, the law in Pennsylvania is that an

insurer need only provide a defense “until it [can] confine the

claim to a recovery that the policy [does] not cover.”

Cadwalleder v. New Amsterdam Cas. Co., 152 A.2d 484, 488

(Pa. 1959) (quoting Lee v. Aetna Cas. & Sur. Co., 178 F.2d 750,

752 (2d Cir. 1949)); Belser v. Rockwood Cas. Ins. Co., 791

A.2d 1216, 1219-20 (Pa. Super. Ct. 2002) (stating that duty to

defend remains with the insurer “until it is clear the claim has

been narrowed to one beyond the terms of the policy”). The

record demonstrates that State Farm investigated the facts

underlying Appellant’s claims prior to the commencement of the

State Court Action and properly concluded that there was no

coverage for those claims under the Policy on account of

Harper’s rental of the Property to Appellant. In conducting that

investigation, State Farm was able to “confine the claim to a

recovery that the policy did not cover.” Cadwalleder, 152 A.2d
21

at 488. Accordingly, the District Court correctly concluded that

State Farm did not violate the Policy by refusing to defend

irrespective of Appellant’s conclusory allegations in her

Complaint in the State Court Action.

 IV.

Appellant next argues that the District Court erred in

entering judgment in State Farm’s favor on her negligence and

statutory bad faith claims on statute of limitations grounds. The

statute of limitations for both negligence claims and statutory

bad faith claims pursuant to 42 Pa. Cons. Stat. Ann. § 8371 is

two years. 42 Pa. Cons. Stat. Ann. § 5524; Ash v. Cont’l Ins.

Co., 932 A.2d 877, 885 (Pa. 2007); Sikirica v. Nationwide Ins.

Co., 416 F.3d 214, 225 (3d Cir. 2005) (predicting that

Pennsylvania Supreme Court would apply a two-year limitations

period to a statutory bad faith claim). In this case, State Farm
22

sent a letter to Harper on April 4, 2003, denying coverage for

Appellant’s Mother’s bodily injury claim based on the Rental

Exclusion, and the District Court therefore concluded that the

statute of limitations began to run on that date. See Sikirica

(predicting that Pennsylvania Supreme Court would hold the

limitations period for bad faith claims would begin to run when

coverage was denied.) Approximately two years later, on April

8, 2005, Appellant’s counsel commenced the State Court Action

against State Farm with the filing of a Writ of Summons in

Harper’s name. However, as explained above, Harper had not

authorized the filing of the action in his name and had not yet

assigned his rights against State Farm to Appellant. As he did

not assign those rights to Appellant until June of 2005, the

District Court concluded that the action was not properly

commenced until the Assignment was fully executed on June 29,

2005, more than two years after the April 4, 2003 letter. It
23

therefore found the bad faith and negligence claims to be timebarred. 

 Appellant takes issue with the District Court’s critical

conclusion that the action was not “commenced” for statute of

limitations purposes until the execution of the Assignment. She

specifically argues that Federal Rule of Civil Procedure 15(c)(1)

provides that an amendment that changes the party or the

naming of the party relates back to the date of the original

pleading, so long as the claim asserted arose out of the same

conduct, transaction or occurrence set forth in the original

pleading, as it did here. 

In our view, however, Rule 15(c)(1) is simply not

applicable here, as, by its own terms, it applies only to

amendments to the “party . . . against whom a claim is asserted,”

that is, the defendant. Fed. R. Civ. P. 15(c)(1)(C) (emphasis

added). Indeed, the Advisory Committee Notes to Rule 15
24

explicitly state that the “relation back of amendments changing

plaintiffs is not expressly treated in revised rule 15(c) . . .” and

that “the attitude taken in . . . Rule 15(c) toward change of

defendants extends [only] by analogy to amendments changing

plaintiffs.” Advisory Committee Notes on the 1966

Amendments to the Fed. R. Civ. P. 15. The more applicable

Rule is Federal Rule of Civil Procedure 17, which provides that

“[a]n action must be prosecuted in the name of the real party in

interest” and that a court may dismiss an action for failure to

prosecute in the name of the real party in interest after affording

the real party in interest a reasonable time to ratify, join or be

substituted in the action. Fed. R. Civ. P. 17(a)(1), (3). That

protection against dismissal “is designed to avoid forfeiture and

injustice when an understandable mistake has been made in

selecting the party in whose name the action should be brought.”

6A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane,
 3

Harper’s testimony at his deposition on June 12, 2006 was

as follows:

Q: Now, did [Appellant’s two attorneys] ever act as

your lawyer?

A: No. First time I met them.

Q: So you never met either one of them before

today?

A: No.

Q: Is that correct?

A: Never.

Q: And they have represented to me that neither

one of them has ever talked to you about either

the coverage case or the underlying case – well,

strike that – about the question of your coverage

with State Farm or any issue about that. Is that

right?

A: What do you mean?

Q: That you never talked to them about State Farm

25

Federal Practice & Procedure, § 1555 (2d ed. 2008). Thus, it

“should be applied only to cases in which substitution of the real

party in interest is necessary to avoid injustice.” Id.

Here, Appellant named the “real party in interest” in

commencing suit, by filing it in Harper’s name. Fatally,

however, she had no authorization to do so.3

 Thus, in actuality,
or your policy. Let me ask it this way. Do you

recall any conversation you ever had with either

one of them?

A: On the phone.

Q: Okay. What do you recall about that

conversation, and who was it with?

A: Well, just who my insurance was.

Q: Okay.

A: My insurance carrier.

Q: They wanted to find out the name of your

insurance carrier?

A: That was it.

Q: And that was the extent of the conversation?

A: That was it. That was the only thing.

App. at A271-A272. 

26

it was she who commenced the suit, not Harper, and she was not

yet a real party in interest, because Harper had not yet assigned

his rights to her. See FDIC v. Deglau, 207 F.3d 153, 159 n.2

(3d Cir. 2000) (“Federal Rule of Civil Procedure 17 requires that

an action involve only the real parties in interest, as determined

by transfers prior to the initiation of suit.”) Under such

circumstance, we agree with the District Court that the April
27

2005 filing of the writ of summons did not toll the statute of

limitations and, instead, the statute continued to run until Harper

assigned his right to Appellant in June of 2005. By that time,

however, the statute had expired.

Notably, the United States Court of Appeals for the Ninth

Circuit addressed a situation similar to ours in United States ex

rel. Wulff v. CMA, Inc., 890 F.2d 1070 (9th Cir. 1989). In that

case, plaintiffs asserted a Miller Act claim against CMA, Inc.,

a federal contractor, and its surety. Plaintiffs, however, were

merely judgment creditors of CMA’s subcontractor, which was

the real party in interest on the Miller Act claim. At the time

that plaintiffs commenced the suit, on September 17, 1986, the

subcontractor had not assigned its Miller Act claim against

CMA to plaintiffs. Six days later, on September 23, 1986, the

one-year statute of limitations on the Miller Act claim expired.

On June 2, 1987, plaintiffs obtained the subcontractor’s written
28

assignment of its claims against CMA, and plaintiffs

immediately amended their complaint to allege this assignment.

The Ninth Circuit considered both whether the amended

complaint related back to plaintiffs’ initial complaint under Rule

15, so as to make it timely under the statute of limitations, and

whether the amended complaint could be construed as a specific

ratification by the subcontractor of plaintiff’s right to maintain

the Miller Act claim under Rule 17. In finding that the

amended complaint did not relate back, it stated as follows:

 . . . [T]he requirement that a person

suing under the Miller Act must

have furnished labor or material to

the federal construction project is a

condition precedent to the existence

of the cause of action. This

element was lacking when

[plaintiffs] filed their original

complaint. Therefore, they did not

have a Miller Act claim on which

they could sue at that time. When

they later obtained the assignment

from [the subcontractor] the statute
29

of limitations had run. Thus, . . . the

supplemental pleading in which the

[plaintiffs] alleged that they had

obtained the assignment from [the

subcontractor] will not relate back

to create a Miller Act claim which

the [plaintiffs] did not have when

they filed their original complaint.

890 F.2d at 1074. With respect to Rule 17, the Court noted that

the Advisory Notes to Rule 17 indicate that the purpose of Rule

17(a)(3) is to “prevent forfeiture of an action when

determination of the right party to sue is difficult or when an

understandable mistake has been made.” Id. (citing Advisory

Committee Notes on the 1966 Amendments to Fed. R. Civ. P.

17, and 6 C. Wright and A. Miller, Federal Practice and

Procedure § 1555 (1971)). Stating that there was no difficulty

and no mistake in determining who was the proper party to bring

suit, and that plaintiffs had admitted that they filed suit when

they did in order to toll the statute of limitations, the Court
30

reasoned as follows:

Rule 17(a) does not apply to a

situation where a party with no

cause of action files a lawsuit to toll

the statute of limitations and later

obtains a cause of action through

assignment. Rule 17(a) is the

codification of the salutary

principle that an action should not

be forfeited because of an honest

mistake; it is not a provision to be

distorted by parties to circumvent

the limitations period. [The

subcontractor’s] assignment to the

[plaintiffs] of its claim against

CMA cannot ratify the [plaintiffs’]

commencement of suit on a claim

which theretofore did not exist. 

Id. at 1075.

Applying this same rationale to the instant case, we

conclude that Harper’s assignment of his claims against State

Farm to Appellant after the statute of limitations had run was

legally ineffective to save the claims from the statute of
 4

State Farm has argued that Appellant’s action against it

was void ab initio because Appellant commenced the State

Court Action in Harper’s name without the authority to do so. 

Given our disposition of this appeal, we need not rule on that

argument. We nevertheless observe that we were very

surprised to learn that Appellant’s counsel filed the State

Court Action in Harper’s name without Harper’s consent and

misrepresented in that filing that they were Harper’s counsel. 

We strongly caution attorneys against engaging in similar

conduct in the future. 

 5

We also reject Appellant’s arguments that (1) the April

2003 letter was not a clear and unambiguous denial of

coverage, and (2) that there was no proof that the denial letter

was actually mailed and received. Specifically, we find that

the plain language of the letter was a clear and unambiguous

denial, App. at A190 (“Since you held the residence premises

for rental and did not occupy any part of it when this accident

occurred, we must deny coverage for this claim.”), and the

record is clear that the letter was sent and Harper does not

deny receiving it. See App. at A41, A71-A72. While we do

not know the exact date on which Harper received the letter,

the few days of uncertainty are inconsequential given that

Harper did not assign his claims to Appellant until more than

two months after the statute of limitations had expired,

31

limitations bar.4 Thus, we affirm the District Court’s dismissal

of the negligence and statutory bad faith claims on statute of

limitations grounds.5

 
making the precise date on which the statute began to run

immaterial to our analysis. 

32

V.

Appellant also argues that the District Court erred in

failing to separately analyze her claims that State Farm breached

the insurance contract and its fiduciary duties by conducting an

inadequate claims investigation, concluding “very early” that the

Rental Exclusion applied, without conducting a “complete and

objective investigation” that would have uncovered relevant

facts and “ignor[ing] the answers that it did receive.” According

to Appellant, these claims are not contingent on the underlying

success of her claims that State Farm breached the insurance

contract by failing to provide coverage as they hinge entirely on

State Farm’s alleged investigatory misconduct. 

Even if we were to accept Appellant’s premise that her

claims based on State Farm’s alleged investigatory misconduct
33

can survive our determination that State Farm had no duty to

defend or indemnify Harper against Appellant’s claims, we

conclude that the undisputed record evidence establishes that

State Farm breached no duties to Appellant in connection with

its investigation. According to Appellant, State Farm should

have asked a whole host of questions to more accurately

determine Harper’s residency, should have obtained Harper’s

statement under oath, and should have obtained an outside legal

opinion regarding the applicability of the Occasional Basis

Exception. However, as explained above, State Farm properly

denied coverage based on its correct conclusion that the

Occasional Basis Exception did not apply, and Appellant cites

to no facts that State Farm would have obtained in a more

thorough investigation that would have established otherwise.

Accordingly, the District Court did not err in granting judgment

in State Farms’s favor, even insofar as Appellant asserted claims
34

based on State Farm’s allegedly inadequate investigation. 

 

VI.

Finally, Appellant argues that the trial court erred in

granting summary judgment in State Farm’s favor on

Appellant’s UTPCPL claim. As the District Court explained,

the UTPCPL is designed to protect the public from fraud and

deceptive business practices. Pirozzi v. Penske

Olds-Cadillac-GMC, Inc., 605 A.2d 373, 375 (Pa. Super. Ct.

1992). The statute provides a private right of action for “[a]ny

person who purchases . . . goods or services primarily for

personal, family or household purposes and thereby suffers any

ascertainable loss of money or property” on account of the

seller’s unfair or deceptive acts or practices. 73 P.S. §

201-9.2(a). We have previously explained that “[i]n

Pennsylvania, only malfeasance, the improper performance of
35

a contractual obligation, raises a cause of action under the

[UTPCPL], and an insurer’s mere refusal to pay a claim which

constitutes nonfeasance, the failure to perform a contractual

duty, is not actionable.” Horowitz v. Fed. Kemper Life Assur.

Co., 57 F.3d 300, 307 (3d Cir. 1995) (citing Gordon v.

Pennsylvania Blue Shield, 548 A.2d 600, 604 (Pa. Super. Ct.

1988)). Here, as the District Court stated, “the undisputed

evidence establishes that [State Farm] committed neither

malfeasance nor did it improperly perform a contractual

obligation.” App. at A24. The District Court was entirely

correct in that regard; there is no basis in the record or the law

for a conclusion that State Farm engaged in malfeasance. We

therefore affirm the District Court’s decision in that regard as

well. 

IV.

We have considered all other arguments made by the
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parties on appeal, and conclude that no further discussion is

necessary. For the foregoing reasons, we will affirm the District

Court’s order granting summary judgment in favor of State

Farm and denying summary judgment to Appellant.