NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

________________ No. 15

- 3549

________________ JULIE CHARBONNEAU ,

Appellant

v. CHARTIS PROPERTY CASUALTY CO.

________________ On Appeal from the United States Distric t Court for the Eastern District of Pennsylvania (D. C. Civil Action No. 2

- 1 3

- cv - 0 43 2 3 ) District Judge: Honorable William H. Yohn, Jr.

________________ Submitted under Third Circuit LAR 34.1(a)

on June 22 , 2016
Before:  FISHER , GREENAWAY, JR. and RO TH , Circuit Judges

(Opinion filed: February 23, 2017 )

________________ OPINION * *

________________

* The Honorable D. Michael Fisher assumed senior status on February 1, 2017.
* * This disposition is not an opinion of the full C ourt and pursuant to I.O.P. 5.7 does not constitute binding precede nt.2

RO TH , Circuit Judge Julie Charbonneau, the owner of a n historic home in Villanova, Pennsylvania , known as “Bloomfield,” brought claims in the Eastern District of Pennsylvania against Chartis Property Casualty Company, Bloomfield’s insurer, for breaching the terms of its
insurance contract and intentionally interfering with Charbonneau’s contractual relationship with Bloomfield’s f ormer owner, J erald Batoff. The District Court granted summary judgment for Chartis on all claims except for Charbonneau’s claim of
intentional interference with contractual relation , wh ich proceeded to trial. Following a

seven - day bench trial, the Distr ict Court entered judgment on the intentional interference claim for Chartis. Charbonneau appeals these rulings. We will affirm.
I. 1 In late 2011, Charbonneau and Batoff entered into a lease agreement for Bloomfield, with an option to purchase the prop erty that could be exercised by Charbonneau at any time. The lease

- option agreement provides that in the event of any casualty to Bloomfield for which the cost of repairs exceeds one million dollars, Charbonneau may exercise the option and receive at clos ing a credit in the amount of any insurance proceeds paid to Batoff, as well as an assignment of Batoff’s rights to receive any unpaid insurance proceeds. At the time this agreement was signed, and while Charbonneau was a tenant at Bloomfield, Batoff held an insurance policy for Bloomfield with Chartis. Charbonneau and Dean Topolinski, Charbonneau’s domestic partner, each

1 We write primarily for the parties, who are familiar with the facts of this case. Therefore, we will set forth only those facts necessary to our analysis.3

held insurance policies with Chartis on their personal property , but were not parties to the Bloomfield policy

. In April 2012, a fire started in the basement of Bloomfield. By the time the fire was extinguished, Bloomfield had suffered significant damage. Chartis was notified of the fire, and Batoff, Charbonneau, and Topolinski retained the public adjusting firm Clarke & Cohen to faci litate their insurance claims

. There after , communications between Chartis and the policyholders occurred exclusively through Clarke & Cohen as the policyholders’ authorized representatives

. Clarke & Cohen adjusters Damon Faunce and Richard Cohen provided representation to Batoff, Charbonneau, and Topolinski on their various claims

. C hartis c laims adjuster James O’Keefe was assigned to handle Batoff’s claim on Bloomfield as well as Charbonneau and Topolinski’s personal property claims.
In the months that followed, Batoff, through Cohen , negotiated with Chartis , through O’Keefe, to obtain a settlement for Batoff’s claim under the Bloomfield policy. During these negotiations, O’Keefe asked Cohen about Charbonneau’s rights to insurance proceeds under the le ase - option agreement. Cohen advised O’Keefe that Batoff was working with his own legal counsel at the time to resolve this matter. In a later email exchange between Cohen and O’Keefe, Cohen attached a letter from Batoff’s counsel advising that Charbonnea u was a stranger to the Bloomfield insurance policy and payments made to Charbonneau would fail to discharge any obligation to Batoff. In mid

September 2012 , O’Keefe and Cohen resolved Batoff’s claim for a lump

- sum payment of $18.5 million. On October 1, 2012, Batoff released Chartis of all obligations under the policy.4

While Cohen and O’Keefe negotiated the terms of a settlement on Batoff’s claim,
Batoff took action on his own. In late July 2012, Batoff delivered a letter to Charbonneau advising her th at he did not intend to honor the option

- to

- purchase provision because Charbonneau had breached the lease and no longer held a valid option. On August 7, 2012, Charbonneau responded through her counsel and attempted to exercise the option. On August 15, Batoff filed a complaint in the Delaware County Court of Common Pleas , later removed by Charbonneau to the U.S. District Court for the Eastern District of Pennsylvania, seeking a declaratory judgment that Charbonneau had no exercisable option to purchase B loomfield and no claim to insurance proceeds payable under the Bloomfield policy. In mid

- October, during the pendency of this action, counsel for Charbonneau discovered that the claim on Bloomfield had been negotiated to a settlement
and informed Chartis of the pending litigation. On October 22, 2012, the District Court granted Charbonneau’s motion for a temporary restraining order and froze $17.4 million of the insurance proceeds. Batoff and Charbonneau settled in May 2013 , and Charbonneau received $11 million of the insurance proceeds as well as title to Bloomfield. On July 25, 2013, Charbonneau filed this action against Charti s, alleging breach of contract, breach of the implied duty of good faith and fair dealing, bad faith in violation
of 42 Pa. Con s. Stat. § 8371, and intentional interference with contractual relations , in addition to a request for declaratory relief

. Chartis moved for summary judgment on all of these claims, and summary judgment was granted on all claims except for the intentional interference claim. On September 21, 2015, following a bench trial, the5

District Court found in favor of Chartis on the intentional interference claim. This appeal followed

. II. 2 Charbonneau’s contract claims against Chartis arise from the insurance po licy on
Bloomfield

— a policy that was purchased and held by Batoff. Charbonneau’s alleged rights under the Bloomfield policy are based on the term in Charbonneau’s lease

- option agreement that assigns to Charbonneau all of Batoff’s rights to any unpaid insu rance proceeds. Specifically, the term provides as follows: If the cost to repair any damage is more than $1,000,000, Tenant may elect to exercise its Option, and shall be entitled to receive at closing a credit in the amount of any insurance proceeds pai d to Landlord, and an assignment of all Landlord’s rights to receive any unpaid proceeds. The District Court held that a plain reading of this language would entitle Charbonneau to receive an assignment of Batoff’s rights to unpaid insurance proceeds at c losing. Closing on Bloomfield occurred in the course of the settlement between Charbonneau and Batoff,

2 The District Court had jurisdiction over this action pursuant to 28 U.S.C. § 1332 because di versity of citizenship exists between the parties and the amount in dispute exceeds $75,000 exclusive of interest and costs. We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a district court’s decision to grant summary judgment is plenary , applying the same summery judgment standard as the District Court

. State Auto Prop. & Cas. Ins. Co. v. Pro Design, P.C. , 566 F.3d 86, 89 (3d Cir. 2009). In considering appeals from a bench trial, we exercise plenary review over a district court’s concl usions of law, and we review a district court’s findings of fact for clear error. Travelers Cas. & Sur. Co. v. Ins

. Co. of North America , 609 F.3d 143, 156 (3d Cir. 2010).6

in May 2013; 3 however, as of October 1, 2012, pursuant to the settlement agreement between Batoff and Chartis, Batoff had released Chartis from any furt her obligations under the Bloomfield policy. It follows that if Batoff had no rights to any additional insurance proceeds at closing , Charbonneau could not have been assigned any right s to additional proceeds. 4 Charbonneau’s response is that the word “ assignment” is ambiguous as it appears
in the lease

- option agreement because it could refer either to the transfer of rights or to a memorialization of such a transfer. In Charbonneau’s view, the agreement’s

“ assignment ” of Batoff’s rights to unpaid insur ance proceeds at closing takes on the second definition, and the transfer of these rights occurred at the time she at tempted to exercise her option. However, under Pennsylvania law, “assignment” is a term of art that
has been consistently accorded the fir st of these two meanings. 5 “[L]egal terms of art . . .
should be i nterpreted in accord with their specialized or accepted usage unless such an interpretation would produce irrational results or the contract documents are internally inconsistent.” 6 Charbo nneau resists the weight of authority with two arguments: that the aforementioned definition of “assignment” is one of multiple definitions, and that

3 The District Court reached this conclusion by defining closing as “the final tran saction between the buyer and seller, whereby the conveyancing documents are concluded and the money and property transferred.” Charbonneau v. Chartis Prop. Cas. Co. , No. 13

- 4323, 2015 WL 3999592, at *8 (E.D. Pa. July 1, 2015) (quoting Black’s Law Diction ary (10th ed. 2014)). 4 See Crawford Cent. Sch. Dist. v. Com monwealth , 888 A.2d 616, 619

- 20 (Pa. 2005). 5 See Emp’rs Ins. of Wa u sau v. Commonwealth , Dep’t of Transp

. , 865 A.2d 825, 830 (Pa. 2005); Horbal v. Moxham Nat ’l Bank , 697 A.2d 577, 583 (Pa. 1997) ; Love v. Clayton , 134 A. 422, 425 (Pa. 1926). 6 Mellon Bank

, N.A. v. Aetna Bus. Credit, Inc. , 619 F.2d 1001, 1013 (3d Cir. 1980).7

interpreting “assignment” in accordance with this definition would, in fact, produce
irrational results , namely, that Batoff would be able to delay closing and “sign away” Charbonneau’s rights to the policy. But the lease

- option agreement provides that once Batoff receives notice that Charbonneau has exercised her option, he “shall notify [her] as
to the dat e of closing; which shall not be earlier than 30 days or later than 60 days after [his] receipt” of such notice. Had Batoff breached this term, Charbonneau would have been free to “go into a court of equity seeking to enforce the contract and to compel
sp ecific performance

. ” 7 On the first point, Charbonneau cites no case applying her proposed definition of “assignment .” We therefore agree with the District Court that the term “assignment” refers to a transfer of rights , and at the time of closing, Batoff had no rights to assign to Charbonneau . Consequently, Charbonneau has no basis for recovery against Chartis on her contract claims. We next turn to Charbonneau’ s intentional interference claim, the crux of which is that Chartis, by secretly settling B atoff’s claim under the Bloomfield Policy, induced Batoff to breach the lease

- option agreement. Under Pennsylvania law, a plaintiff claiming intentional interference with contract must prove four elements: “(1) the
existence of a contractual . . . relati on between the complainant and a third party; (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation . . . ; (3) the absence of privilege or justification on the part of the defendant; and

7 Payne v. Clark , 187 A.2d 769, 770

- 71 (Pa. 1963).8

(4) the occasionin g of actual legal damage as a result of the defendant’s conduct.” 8 The District Court held that Charbonneau failed to prove the second and third elements of her claim. We agree. Courts in Pennsylvania look first to the Restatement (Second) of Torts § 76 6 in assessing whether a defendant’s conduct is the sort that is intended to harm an existing
contractual relation. 9 Under this section, a defendant is liable for intentional interference with contract only when the defendant induces or otherwise causes a third party not to perform the contract. 10 Assuming that Batoff breached the lease

- option agreement, the question is whether Chartis “induced” this breach. Comment h of Restatement § 766 offers the following elaboration on inducement: The word “inducing” refers to the situations in which A causes B to choose one course of conduct rather than another. Whether A causes the choice by persuasion or by intimidation, B is free to choose the other course if he is willing to suffer the consequences. Inducement operates on the mind of the person induced. 11 The chronology of events makes clear that Batoff had no intent to comply with the terms of the lease

- option agreement long before Chartis and Batoff reached a settlement. In July 2012, Batoff expressed as much in a letter sent to Charbonneau, while Chartis and Batoff did not reach an agreement until October. Thus, we cannot say that Batoff was “induced” by Chartis in any way when he possessed an independent, fully formed desire to breach his agreement with Cha rbonneau.

8 Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa

. , 7 A.3d 278, 288

- 89 (Pa. Super. Ct. 2010). 9 Adler, Barish, Daniels, Levin & Creskoff v. Epstein , 393 A.2d 1175, 11 8 3 (Pa. 1978). 10 Restatement (Second) of Torts § 766. 11 Id. cmt. h.9

Even if Chartis engaged in conduct that induced Batoff to breach the lease

- option agreement, any such conduct was justified . In determining whether privilege or justification exists, § 767 of the Restatement provides the following factors for

c onsideration: “1) the nature of the actor’s conduct; 2) the actor’s motive; 3) the interests of the other with which the actor’s conduct interferes; 4) the interests sought to be advanced by the actor; 5) the proximity or remoteness of the actor’s conduct to interference; and 6) the relationship between the parties.” 12 “ Although this evaluation of interests is not always susceptible of ‘precise definition,’ it i s clear that the central inquiry is whether the defendant’s conduct is ‘sanctioned by the rules of the game which society has adopted.’” 13 Among the “rules of the game” by which Chartis must abide as an insurer is to not engage in “unfair claim settlement or compromise practices,” which
includes failing to “attempt[] in good faith to effectuate promp t, fair and equitable settlements of claims in which the company’s liability under the policy has become reasonably clear.” 14 Chartis owed Batoff, the only insured under the Bloomfield policy, a duty to quickly resolve his claims under the policy, and Char tis acted to do so. While Charbonneau complains that this obligation did not prevent Chartis from seeking her consent to the settlement, an insurer has “no equitable right to intermeddle between the [seller] and the [buyer]. Under such circumstances, [ in surer s] must be content to respond

12 Strickland v. Univ. of Scranton , 700 A.2d 979, 985 (Pa. Super. Ct. 1997). 13 Phillips v. Selig , 959 A.2d 420, 430 (Pa. Super. Ct. 2008) (quoting Glenn v. Point Park Coll. , 272 A.2d 895, 899 (Pa. 1971)). 14 40 Pa. Cons. Stat. §§ 1171.4

- 5.10

to the party with whom they made the contract of insurance.” 15 Moreover, Chartis had received a letter from Batoff’s attorney averring that Charbonneau had no right to any proceeds under the policy. Therefore , we cannot say that Chartis violated the “rules of the game” by negotiating solely with Batoff and failing to involve Charbonneau. Accordingly, we will affirm the District Court’s ruling with respect to the intentional interference claim.

III. For the reasons stat ed above, we will affirm the judgment of the District Court.

15 State Mut. Fire Ins. Co. v. Updegraff , 21 Pa. 513, 521 (1853).