2006 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-16-2006

The Regents v. Republic Franklin

Precedential or Non-Precedential: Precedential

Docket No. 04-3653

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Recommended Citation

"The Regents v. Republic Franklin" (2006). 2006 Decisions. Paper 522.

http://digitalcommons.law.villanova.edu/thirdcircuit_2006/522
 Honorable Dickinson R. Debevoise, Senior District *

Court Judge for the District of New Jersey, sitting by

designation.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 04-3653

 

THE REGENTS OF THE MERCERSBURG COLLEGE,

Appellant

v.

REPUBLIC FRANKLIN INSURANCE COMPANY

 

Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Civil Action No. 00-cv-00558)

District Judge: Honorable James F. McClure, Jr.

 

Argued January 9, 2006

Before: BARRYand AMBRO, Circuit Judges

and DEBEVOISE, District Judge *
2

(Opinion filed August 16, 2006)

Michael R. Libor, Esquire (Argued)

Christina E. Roberts, Esquire

Derek Eddy, Esquire

Morgan, Lewis & Bockius

1701 Market Street

Philadelphia, PA 19103

Counsel for Appellant

Steven J. Polansky, Esquire (Argued)

Marshall, Dennehey, Warner, Coleman & Goggin

200 Lake Drive Easte

Woodland Falls Corporate Park, Suite 300

Cherry Hill, NJ 08002

Counsel for Appellee

 

OPINION OF THE COURT

 

AMBRO, Circuit Judge 

This is an insurance coverage dispute arising out of a

lightning strike and fire that damaged Keil Hall on the campus

of Mercersburg Academy. We affirm in part and reverse in part
Mercersburg contends that, while the dormitory rooms 1

on the fourth floor were unoccupied at the time of the fire due

to declining enrollment, the Academy had plans to expand

enrollment and once again use the fourth floor to house full-time

and summer-program students.

3

the judgment of the District Court.

I. Factual and Procedural Background

Mercersburg, the insured, is a private secondary and

college preparatory boarding school located in Mercersburg,

Pennsylvania. Keil Hall is a building located on the

Mercersburg campus that was constructed over a century ago.

It has four levels above ground and a basement containing

mechanical equipment. The first floor of the building contains

public spaces, including an auditorium and classrooms, while

the second and third floors contain dormitory housing and

common meeting areas. The fourth floor was designed and

constructed for dormitory use as well, and had been used for

that purpose in the past. At the time of the fire, however, that

floor was used as attic and storage space, and was cordoned off

from students.1

The chimney of Keil Hall was struck by lightning on

June 13, 1998, igniting a fire that caused extensive damage to

the roof and fourth floor of the building, as well as smoke and
4

 water damage to the first, second, and third floors.

Following the fire, Mercersburg submitted a timely claim to its

property insurance carrier, Republic Franklin Insurance

Company, for (1) the costs to repair the actual fire damage, (2)

additional costs to repair the building that were made necessary

to bring the building in compliance with applicable laws and

various building codes, and (3) lost business income.

Republic Franklin’s primary policy only provides

coverage for those repairs necessary to return the property to its

pre-fire condition. Accordingly, Mercersburg purchased a

separate “Ordinance and Law Endorsement” to its policy. That

Endorsement provides in relevant part:

1. Coverage A – Coverage For Loss to the

Undamaged Portion of the Building. If a

Covered Cause of Loss occurs to covered

Building property[,] . . . we will pay for loss to

the undamaged portion of the building caused by

enforcement of any ordinance or law that: (a)

requires demolition of parts of the same property

not damaged by a Covered Cause of Loss; (b)

regulates the construction or repair of buildings,

or establishes zoning or land use requirements at

the described premises; and (c) is in force at the

time of loss. 

. . . 
5

3. Coverage C – Increased Cost of Construction

Coverage. If a Covered Cause of Loss occurs to

covered Building property[,] . . . we will pay for

the increased cost to repair, rebuild or construct

the property caused by enforcement of building,

zoning or land use ordinance or law. If the

property is repaired or rebuilt, it must be intended

for similar occupancy as the current property,

unless otherwise required by zoning or land use

ordinance or law.

The insurer’s failure to reimburse the Academy for all of

its costs incurred as a result of the fire prompted it to file a

complaint in United States DistrictCourt for the Middle District

of Pennsylvania alleging breach of contract and bad faith.

Specifically, Mercersburg contended that the Ordinance and

Law Endorsement required Republic Franklin to pay for repair

and renovation costs required by the Americans with

Disabilities Act (ADA), 42 U.S.C. §§ 12101-12213, the

Pennsylvania Handicapped Act and Universal Accessibility

Standards promulgated thereunder, 71 Pa. Cons. Stat. § 1455 et

seq. (2000) & 34 Pa. Code § 60.1 et seq., as well as other

Pennsylvania statutes and national building codes (including the

International Mechanical Code, the Building Officials and Code

Administrators International, Inc. Code, the National Electric

Code, the International Plumbing Code and the standards of the

American Society of Heating, Refrigerating and

Air-Conditioning Engineers). 
Mercersburg completed all renovations and repairs to 2

Keil Hall in December 2000. As of this appeal, Republic

Franklin has paid out $359,696.87 to the Academy. The total

cost of the repairs and renovations was $2,449,073.85.

There is no dispute that the parties have diverse 3

citizenship and the amount in controversy exceeds the

jurisdictional requirement. Thus, the District Court had subject

matter jurisdiction pursuant to 28 U.S.C. § 1332. Because

Mercersburg appeals the final judgment of the District Court, we

have jurisdiction under 28 U.S.C. § 1291.

6

After extensive factual and expert discovery, the parties

settled, resolving all disputes except those related to the

Ordinance and Law Endorsement claim. Republic Franklin’s 2

motion for summary judgment on those claims was granted by

the District Court. It held that (1) the ADA did not apply

because the dormitory space in Keil Hall was not a “public

accommodation” within the meaning of that statute, (2) the

PHA also did not apply because the costs of the fire damage did

not reach the threshold cost to trigger coverage under the Act,

and (3) nationally recognized standards of design and

construction and Pennsylvania laws that require private schools

to meet certain basic safety standards were inapplicable because

the Borough of Mercersburg had not officially adopted any

building code. This appeal followed.3

III. Standard of Review
7

Summary judgment is appropriate if there are no genuine

issues of material fact presented and the moving party is entitled

to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex

Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). As far as the

former, we resolve all factual doubts and draw all reasonable

inferences in favor of the nonmoving party. Hugh v. Butler

County Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005). “We

exercise plenary review over summary judgment and we apply

the same standard that the lower court should have applied.”

Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir.

2000).

The primary legal issue here is the interpretation of the

scope of coverage of the Ordinance and Law Endorsement.

“The interpretation of the scope of coverage of an insurance

contract is a question of law properly decided by the court, a

question over which [this court] exercise[s] plenary review.”

Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir.

1999); McMillan v. State Mut. Life Assurance Co. of Am., 922

F.2d 1073, 1074 (3d Cir. 1990). 

Where, as here, federal jurisdiction is based on diversity

of citizenship, we apply the choice of law rules of the state in

which the District Court sat. St. Paul Fire & Marine Ins. Co. v.

Lewis, 935 F.2d 1428, 1431 n.3 (3d Cir. 1991) (citing Klaxon

Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). As

noted, this action was filed in the Middle District of

Pennsylvania. Under Pennsylvania choice of law rules, an
We note that another line of Pennsylvania cases holds 4

that choice of law in an insurance contract is to be determined

by looking to the law of the state with the most significant

relationship with the contract. See, e.g., Wilson v. Transp. Ins.

Co., 889 A.2d 563, 571 (Pa. Super. 2005). The choice between

these tests is not determinative here, as Pennsylvania also had

the most significant relationship with the contract. 

8

insurance contract is governed by the law of the state in which

the contract was made. Crawford v. Manhattan Life Ins. Co.,

221 A.2d 877, 880 (Pa. Super. 1966); see also McMillan, 922

F.2d at 1074. “An insurance contract is ‘made’ in the state in 4

which the last act legally necessary to bring the contract into

force takes place.” Crawford, 221 A.2d at 880. The parties

agree that the insurance contract was ‘made’ in Pennsylvania

and, consequently, Pennsylvania substantive law applies. 

We now consider in turn each of the District Court’s

grounds for granting summary judgment in favor of Republic

Franklin.

III. Merits

A. ADA Claim

Mercersburg asserts that numerous accessibility upgrades

made to Keil Hall were required to comply with the dictates of
Title I of the ADA prohibits discrimination in 5

employment and provides that rights and remedies available

under Title VII of the Civil Rights Act of 1964 are available as

well under Title I of the ADA. Id. § 12117. Title II prohibits

discrimination by a “public entity.” Id. § 12132. Finally, Title

III—the one that applies here—prohibits discrimination in

“public accommodations.” Id. § 12182. 

The ADA’s goals are familiar: (1) to provide a clear and 6

comprehensive national mandate for the elimination of

discrimination against individuals with disabilities; (2) to

provide clear, strong, consistent, enforceable standards

addressing discrimination against individuals with disabilities;

(3) to ensure that the federal Government plays a central role in

enforcing the standards established on behalf of individuals

with disabilities; and (4) to invoke the sweep of congressional

9

Title III of the ADA and, thus, the costs of those upgrades are

5

covered under the Ordinance or Law Endorsement. The District

Courtruled that the ADA protections afforded disabled persons

do not apply to the dormitory space on the second, third and

fourth floors of Keil Hall because dormitory housing is not

considered “transient lodging” that is covered under the ADA.

Citing 28 C.F.R. Part 36 Appendix A, Mercersburg responds

that the ADA’s regulations specifically include dormitories as

“transient lodging,” and hence the Endorsement covers the costs

of accessibility modifications required by the ADA. 

Under Title III of the ADA, it is unlawful for a public 6
authority, including the power to enforce the Fourteenth

Amendment and to regulate commerce, to address the major

areas of discrimination faced day-to-day by people with

disabilities. 42 U.S.C. § 12101(b).

Specifically, 7

(A) an inn, hotel, motel, or other place of lodging,

except for an establishment located within a

building that contains not more than five rooms

for rent or hire and that is actually occupied by the

proprietor of such establishment as the residence

of such proprietor; (B) a restaurant, bar, or other

establishment serving food or drink; (C) a motion

picture house, theater, concert hall, stadium, or

other place of exhibition or entertainment; (D) an

auditorium, convention center, lecture hall, or

other place of public gathering; (E) a bakery,

grocery store, clothing store, hardware store,

shopping center, or other sales or rental

establishment; (F) a laundromat, dry-cleaner,

bank, barber shop, beauty shop, travel service,

shoe repair service, funeral parlor, gas station,

office of an accountant or lawyer, pharmacy,

insurance office, professional office of a health

10

accommodation to discriminate against an individual on the

basis of disability in the full and equal enjoyment of the goods,

services, facilities, privileges, advantages, or accommodations.

Id. § 12182(a). “Public accommodation” is defined in terms of

12 categories, which the legislative history indicates “should be 7
care provider, hospital, or other service

establishment; (G) a terminal, depot, or other

station used for specified public transportation;

(H) a museum, library, gallery, or other place of

display or collection; (I) a park, zoo, amusement

park, or other place of recreation; (J) a nursery,

elementary, secondary, undergraduate, or

postgraduate private school, or other place of

education; (K) a day care center, senior citizen

center, homeless shelter, food bank, adoption

agency, or other social service center

establishment; and (L) a gymnasium, health spa,

bowling alley, golf course, or other place of

exercise or recreation. 

42 U.S.C. § 12181(7).

11

construed liberally” to afford people with disabilities “equal

access” to the wide variety of establishments available to the

nondisabled. S. Rep. No. 101-116, p. 59 (1989); H.R. Rep. No.

101-485, pt. 2, p. 100 (1990), U.S. Code Cong. & Admin. News

1990, pt. 2, at pp. 303, 382-383. The ADA obligates a “public

accommodation” only with respect to a “facility” that is “used

as, or designed or constructed for use as,” either a place of

public accommodation or a commercial facility. 28 C.F.R. §

36.102(b)(3)(i)-(ii). When a public accommodation or a part of

it is altered, the Act requires that alterations be made so that

“the altered portions of the facility are readily accessible to and

usable by individuals with disabilities, including individuals
12

who use wheelchairs.” 42 U.S.C. § 12183(a). If an alteration

could affect usability of or access to an area of

the facility containing a primary function, the

entity shall also make the alterations in such a

manner that, to the maximum extent feasible, the

path of travel to the altered area and the

bathrooms, telephones, and drinking fountains

serving the altered area, are readily accessible to

and usable by individuals with disabilities where

such alterations . . . are not disproportionate to the

overall alterations in terms of cost and scope . . . .

Id. § 12183(a)(2). 

Given this legal landscape, our analysis of the ADA

claim proceeds as a three-part inquiry: whether (1) Mercersburg

Academy is a “public accommodation,” (2) the repairs and

renovations made to Keil Hall are “alterations,” and (3) Keil

Hall is a “facility” that is “used as, or designed for use as,”

either “a place of public accommodation” or “a commercial

facility.”

The District Court held that Mercersburg satisfied the

“public accommodation” requirement and that its repairs and

renovations to Keil Hall were “alterations” within the meaning

of the ADA. Each of these determinations is correct.

Mercersburg is a “secondary school,” which by definition
13

makes it a “place of education,” and, accordingly, a “public

accommodation” under 42 U.S.C. § 12181(7)(J). Moreover,

existing regulations establish that the repairs made to Keil Hall

were “alterations” because they included “remodeling,

renovation, [or] reconstruction . . . .” 28 C.F.R. § 36.402(b)(1)

(“Alterations include, but are not limited to, remodeling,

renovation, rehabilitation, reconstruction, historic restoration,

changes or rearrangement in structural parts or elements, and

changes or rearrangement in the plan configuration of walls and

full-height partitions.”). Thus, the first two steps of our threestep inquiry are easily satisfied.

The third step is markedly more difficult. The District

Court first held that the four floors of Keil Hall “should each be

evaluated separately as to whether they are covered under the

ADA, rather than evaluating Keil Hall as whole,” to determine

whether the floors are “used as, or designed or constructed for

use as,” a place of public accommodation. Employing that

principle, the Court held that the first floor of Keil Hall was

used as a “public accommodation” under the ADA because it

contained classrooms, see 42 U.S.C. § 12181(7)(J) (a place of

education), and an auditorium, see id. § 12181(7)(D) (a place of

public gathering), but that the second through fourth floors were

not “public accommodations” because dormitories do not fall

within any of the twelve categories enumerated in 42 U.S.C. §

12181(7). According to the Court, dormitories are more akin to

residential units such as apartments and condominiums—which

are not covered by the ADA—than transient lodging like inns,
Neither the District Court nor Republic Franklin was 8

able to point to any authority holding that dormitories are more

like residential facilities than “transient lodging” for ADA

purposes. Indeed, both the Court and the insurer rely almost

exclusively on a 13-year-old District Court opinion that is not

on point: Independent Housing Services of San Francisco v.

Fillmore Center Associates, 840 F. Supp. 1328 (N.D. Cal.

1993). 

In Independent Housing Services, the Court addressed

whether a residential facility was a public accommodation. It

was undisputed that the facility had commercial entities

occupying the ground floor, which fell within the purview of

the ADA accessibility standards. But were the residential

apartments occupying the upper floors subject to the ADA

accessability standards? The Court examined the legislative

history of the ADA, and concluded it was not intended to apply

to residential facilities.

42 U.S.C. § 12182 concerns discrimination in

14

hotels, and motels—which are covered under § 12181(7)(A).

Mercersburg argues that the District Court erred because

(1) private-school dormitories are “transient lodging” as defined

by the ADA regulations and (2) dormitories are part of boarding

schools, and, as such, are places of education. We agree.

Although the statutory definition of “public accommodation”

does not expressly mention private school dormitories, those

facilitiessatisfy that definition under conventional principles of

interpretation.8
public accommodations. Section 12181(7)(A)

includes “an inn, hotel, motel, or other place of

lodging” within the definition of public

accommodations. However, the legislative

history of the ADA clarifies that the “other place

of lodging” does not include residential facilities.

H.R. Rep. No. 101-485(II), 101st Cong., 2d Sess.

383 (1990). 

Id. at 1344 n.14. It then concluded that “apartments and

condominiums do not constitute public accommodations within

the meaning of the [ADA].” Id. at 1344. 

Independent Housing Services does little to advance

Republic Franklin’s argument that private school dormitories

are not “transient lodging” under the ADA. We agree that

residential facilities such as apartments and condominiums are

not transient lodging and, therefore, not subject to ADA

compliance. But we believe dormitory housing, which is by its

very nature temporary, is different. 

15

The ADA’s implementing regulations belie Republic

Franklin’s contention—and the District Court’s ruling—that the

ADA does not apply to dormitories. See Bragdon v. Abbott,

524 U.S. 624, 646 (1998) (citing Chevron U.S.A., Inc. v.

Natural Res. Defense Counsel, Inc., 467 U.S. 837, 844 (1984),

and explaining that the implementing regulations and views of

the United States Department of Justice (DOJ) as to the ADA

are entitled to deference). The ADA Accessibility Guidelines

(ADAAG) provide that design, construction, or alteration of

facilities in conformance with the ADA “shall comply with the
16

applicable provisions of Appendix A to this part (ADAAG).”

28 C.F.R. § 35.151. Chapter 9 of Appendix A to the ADAAG

provides guidelines for “Accessible Transient Lodging,” which

specifically includes “Hotels, Motels, Inns, Boarding Houses,

Dormitories, Resorts and Other Similar Places of Transient

Lodging.” 28 C.F.R. Part 36 App. A, Ch. 9.1 (emphases

added). Moreover, Chapter 3 of the ADAAG expressly states

that transient lodging includes “[a] building, facility, or portion

thereof, excluding inpatient medical care facilities and

residential facilities, that contains sleeping accommodations.

Transient lodging may include, but is not limited to, resorts,

group homes, hotels, motels, and dormitories.” 28 C.F.R. Part

36 App. A, Ch. 3.5 (emphasis added). In a nutshell, the ADA

regulations expressly define dormitories as transient lodging

and provide that any construction or alterations to dormitories

occurring after January 26, 1992, must comply with the ADA

and its guidelines. 28 C.F.R. § 36.402(b). 

Beyond the plain language of the ADA implementing

regulations, there is an additional reason to rule that it applies

to private-school dormitories: student housing—an integral part

of boarding school experience—is one of the facilities,

privileges, advantages, and accommodations of a place of

education covered by Title III of the ADA. As a private

secondary school, Mercersburg itself is a “public

accommodation” that is required to comply with the ADA. 42

U.S.C § 12181(7)(J). A school may not discriminate on the

basis of a student’s disability nor deny a reasonable
In Bragdon v. Abbott, the Supreme Court drew guidance 9

from several of the DOJ’s technical assistance letters. 524 U.S.

17

accommodation to a disabled student. On-campus housing

facilities such as dormitories are certainly part of the “goods,

services, facilities, privileges, advantages, and

accommodations” offered by schools to its students. 42 U.S.C

§ 12182(a). Thus, Mercersburg could not lawfully deny a

disabled student a reasonable accommodation that would permit

him or her to live in its dormitories. Indeed, the DOJ has

consistently taken the position that all aspects of a school’s

student activities and of the educational experience (including,

for example, research activities and fraternity housing) are

covered by Title III of the ADA. See DOJ, “Americans with

Disabilities Act Technical Assistance Letters,” Doc. # 488, at

http://www.usdoj.gov/crt/foia/talindex.htm (May 2, 1994)

(stating that fraternity houses, owned and operated by a

university, “like all other aspects of a university experience, are

part of the place of education, and are covered by title III”); see

also DOJ, “Americans with Disabilities Act Technical

Assi s t ance Lett e r s , ” Doc. # 1 2 8 , a t

http://www.usdoj.gov/crt/foia/talindex.htm (July 8, 1992)

(stating that research activities conducted by a university, even

if primarily for pharmaceutical research rather than education,

are covered by Title III as part of the university’s obligation to

ensure “compliance with [T]itle III in all of the activities of the

place of public accommodation that it owns or operates[, a]

provision . . . intended to be read broadly”). For the same 9
624, 646 (1998).

The DOJ filed an amicus brief in an ADA case pending 10

in the United States District Court for the Northern District of

Georgia, Barker v. Emory University, No. 02-CV-2450-CC.

DOJ, “United States’ Sur-Reply Brief as Amicus Curiae in

Opposition to Emory University’s Motion to Dismiss,” at

http://www.ada.gov/briefs/barkerbr.pdf. The plaintiffs, a

student at the Emory University School of Law and a disability

rights advocacy group, sued Emory claiming that a number of

facilities on its campus are inaccessible, including a new student

apartment complex owned and operated by the University.

Emory asked the Court to dismiss the case, arguing that the

apartment complex and other dormitories on campus are not

covered by Title III of the ADA because they are “strictly

residential.” The Government disagreed, unequivocally

advancing the position that campus housing is covered by Title

III of the ADA. According to the DOJ,

Emory [wa]s obligated to ensure that all admitted

students have ‘full and equal enjoyment of the

goods, services, facilities, privileges, advantages,

18

reasons, the DOJ has taken the position that student housing is

covered by Title III of the ADA. See id., “United States’ Brief

as Amicus Curiae in Opposition to Emory University’s Motion

to Dismiss,” at http://www.ada.gov/briefs/barkopbr.pdf (stating

that “student housing owned and operated by a private

university is covered by [T]itle III of the ADA as a facility,

privilege, advantage, and/or accommodation of a place of

education”). In this context, we hold that the ADA applies

10
or accommodations’ that it provides . . . These

include its residential housing program. 

Id. at 2.

The DOJ emphasized that “the categories of places of

public accommodation [should be read] broadly” and “student

housing is covered by the ADA under the broad category of a

place of education.” Id. at 5, 6.

. . . Emory argues that dormitories are only

covered by Title III if they offer short-term stays,

because dormitories are listed in the heading of

section 9.1 of the Department’s ADA accessibility

standards: “Hotels, Motels, Inns, Boarding

Houses, Dormitories, Resorts and Other Similar

Places of Transient Lodging.” 28 C.F.R. Pt. 36

App. A § 9. Emory’s argument fails, however,

because Emory has neglected to distinguish the

issue of whether an entity is covered by title III

from the subsequent inquiry about what standards

apply to a particular covered entity. . . . The

Department’s position that dormitories are

covered as places of education is not inconsistent

with the fact that the standards mention

dormitories as a type of transient lodging: to the

contrary, the reference to dormitories in the

standards is a clear indication that coverage of

such facilities was anticipated by the drafters of

the regulation. 

Id. at 6-7 (emphasis added). Moreover, “[t]he length of a

student’s stay in college housing is irrelevant because student

19
housing is covered by the ADA under the broad category of a

place of education.” 

Although it ruled that the first floor of Keil Hall was 11

subject to the demands of the ADA, the District Court went on

to conclude that Republic Franklin was not liable for the

renovation costs on that floor, stating:

Because Mercersburg was required to ensure that

the first floor complied with ADA prior to the

fire, the Ordinance or Law [E]ndorsement was not

triggered. Accordingly, Republic is not liable for

the expenses related to the repairs made to the

first floor as required by the ADA.

Mercersburg argues that the Endorsement does not

contain any “trigger” requirement. According to the Academy,

the Endorsement provides coverage for loss to undamaged

portions of the building caused by enforcement of any law or

ordinance regulating the construction or repair of buildings that

is in force at the time of the loss. Thus, in Mercersburg’s view

the ADA—a law in force at the time of the loss—required it to

provide “maximum accessability” to the disabled when making

its alterations to Keil Hall. 

We disagree. Coverage A of the Endorsement will pay

for “loss to the undamaged portion of the building caused by

enforcement of any ordinance or law that . . . is in force at the

time of loss.” (Emphasis added.) Although “loss” is not

specifically defined in the policy, it provides the “trigger” that

20

to private-school dormitories and, therefore, to allfour floors of

Keil Hall.11
Republic Franklin claims. When voluntary repairs are

undertaken to undamaged portions of the building, there may be

costs imposed by enforcement of a law or ordinance, but those

costs are not a “loss.” Only when some actual Covered Cause

of Loss has caused damage to the building, the repair of which

must legally be accompanied by changes to the undamaged

portion of the building, can the law or ordinance be said to have

caused a “loss.” Similarly, Coverage C of the Endorsement

refers to “the increased cost to repair, rebuild, or construct the

property” (emphasis added) only when a Covered Cause of Loss

has occurred “to covered Building property.” This phrasing,

which directly links the rebuilt property to the damaged

property, does not mention voluntary reconstruction of

undamaged portions and should not be taken to refer to them.

See ADA Preamble to Regulation on Nondiscrimination 12

on the Basis of Disability by Public Accommodations and in

Commercial Facilities (“Title III Preamble”), Pt. 36, App. B, at

645 (“In striking a balance between guaranteeing access to

individuals with disabilities and recognizing the legitimate cost

concerns of businesses and other private entities, the ADA

establishes different standards for existing facilities and new

21

In light of our disagreement with the District Court as to

the applicability of the ADA to dormitories, one question

remains: whether any post-fire renovations made to the

undamaged portions of Keil Hall were demanded by the ADA.

There are two standards of compliance under the ADA: the

new construction standard and the alteration standard. New

construction is the highest standard, and it applies to public 12
construction.”).

The ADA’s barrier removal provision requires the 13

removal of structural barriers in existing facilities when it is

“readily achievable.” 42 U.S.C. § 12182(b)(2)(A)(iv). This is

22

accommodations designed or constructed after January 26,

1992, and to the portion of a facility altered after that date. See

42 U.S.C. § 12183(a); H.R. Rep. No. 101-485(III) at 60,

reprinted at 1990 U.S.C.C.A.N. 445, 483 (explaining that

“[b]ecause it costs far less to incorporate accessible design into

the planning and construction of new buildings and of

alterations [as compared to retrofitting existing structures], a

higher standard of ‘readily accessible to and usable by’ persons

with disabilities has been adopted in the ADA for new

construction and alterations”); and 28 C.F.R. Part 36, App. B,

Section 36.402 (stating that, with respect to altered portions,

“[t]his part does not require alterations; it simply provides that

when alterations are undertaken, they must be made in a

manner that provides access”) (emphasis added); see also

Brother v. CPT Investments, Inc., 317 F. Supp. 2d 1358, 1370

(S.D. Fla. 2004) (stating that the ADA does not require

alterations). The new construction standards are contained in

28 C.F.R. Part 36, and, as discussed above, the ADAAG are set

forth in Appendix A of Part 36. 

Existing facilities also must comply with the ADA, but

that obligation is governed by the barrier removal provision.13
so when it is “easily accomplished and able to be carried out

without much difficulty or expense.” Id. § 12181(9).

Compliance with the ADA’s barrier removal provision may

require, for example, the installation of a concrete ramp, a

widened exterior door, or the modification of an existing public

restroom. 28 C.F.R. § 36.304(b). Where those public

accommodations can demonstrate that barrier removal is not

“readily achievable,” they must try other methods that are. 28

C.F.R. § 36.305(a).

In relevant part, 42 U.S.C. § 12183(a) provides: 14

[D]iscrimination for purposes of section 12182(a)

of this title includes . . . 

(2) with respect to a facility or part thereof that is

altered by, on behalf of, or for the use of an

establishment in a manner that affects or could

affect the usability of the facility or part thereof,

a failure to make alterations in such a manner

that, to the maximum extent feasible, the altered

portions of the facility are readily accessible to

and usable by individuals with disabilities,

including individuals who use wheelchairs.

Where the entity is undertaking an alteration that

affects or could affect usability of or access to an

23

Of course, if existing facilities are altered, they must conform to

the alteration standard, which requires that alterations, as well

as the path of travel to “primary function” areas, be made

readily accessible to disabled individuals. 42 U.S.C. §

12183(a)(2). “Areas containing primary functions refer to 14
area of the facility containing a primary function,

the entity shall also make the alterations in such a

manner that, to the maximum extent feasible, the

path of travel to the altered area and the

bathrooms, telephones, and drinking fountains

serving the altered area, are readily accessible to

and usable by individuals with disabilities where

such alterations to the path of travel or the

bathrooms, telephones, and drinking fountains

serving the altered area are not disproportionate to

the overall alterations in terms of cost and scope

(as determined under criteria established by the

Attorney General).

24

those portions of a place of public accommodation where

significant goods, services, facilities, privileges, advantages or

accommodations are provided.” H. Rep. No. 485, 101st Cong.,

2d Sess., pt. 2, at 112 (1990), reprinted in 1990 U.S.C.C.A.N.

445, 486. As a practical example, “the path of travel to . . .

bathrooms, telephones, and drinking fountains [must be] . . .

readily accessible to and usable by individuals with disabilities.”

Id. at 394. As our Court has observed,

while Congress chose not to mandate full

accessibility to existing facilities, it required that

subsequent changes to a facility be undertaken in

a non-discriminatory manner. The use of such

changes must be made available to all. The
25

emphasis on equal treatment is furthered, as well,

by an expansive, remedial construction of the

term “usability.” Usability should be broadly

defined to include renovations which affect the

use of a facility, and not simply changes which

relate directly to access.

Kinney v. Yerusalim, 9 F.3d 1067, 1973 (3d Cir. 1993). It is

clear, then, that to the extent the ADA—a law in force at the

time of the fire—regulated the alterations to Keil Hall (a public

accommodation) after the fire and required the Academy to

make paths and travel accessible to the primary-function areas

on each floor of Keil Hall, the plain language of the Ordinance

and Law Endorsement covers Mercersburg’s costs of complying

with the ADA. 

With this backdrop, we part with the District Court in

two respects. First, because dormitories are “transient lodging”

and Mercersburg is a “place of education,” we conclude that the

dormitory floors of Keil Hall are public accommodations within

the meaning of the ADA. Second, because the Endorsement

requires the insurer to cover alterations to the undamaged

portions of Keil Hall caused by enforcement of the ADA,

Republic Franklin may be liable for certain expenses not

directly caused by the fire. Of course, any alterations,

renovations and/or improvements made to any floor of Keil Hall

that were not mandated by the ADA (i.e., discretionary

alterations) do not fall within the scope of coverage of the
26

Endorsement, and, as a result, do not obligate the insurer.

Given that the ADA applies to all four floors of Keil Hall, it is

for the DistrictCourt to determine on remand specifically which

renovations (if any) undertaken by Mercersburg in its repair of

Keil Hall were mandated by the ADA—an issue the Court did

not reach in its memorandum opinion. Therefore, we reverse

the District Court’s grant of summary judgment in favor of

Republic Franklin on Mercersburg’s ADA claim and remand

the case for proceedings not inconsistent with this analysis. 

B. PHA Claim

Mercersburg also contendsthat, much like the ADA, the

Universal Accessibility Standards promulgated under the

Pennsylvania Handicapped Act (PHA), 71 Pa. Cons. Stat. §

1455.1 et seq. (2000); 34 Pa. Code § 60.1 et seq., required the

accessability upgrades, including the installation of an elevator,

to Keil Hall. The District Court held that the PHA did not

require modifications to Keil Hall because the repairs required

by the fire total less than 30% of the building’s value. 

The PHA requires that certain structural improvements

be made to maximize accessibility and usability by persons with

physical handicaps. 71 Pa. Cons. Stat. § 1455.1. Unlike the

ADA, the PHA generally applies to “buildings used by the

public” rather than to certain enumerated “public

accommodations.” Id. § 1455.1b. Moreover, the PHA

expressly applies to “schools” and “dormitories.” Id.
27

Under it, when an existing private building is remodeled,

the remodeling must be done to ensure that the remodeled area

is “accessible to and usable by persons with physical handicaps”

to a degree based on the proportional cost of the remodeling to

the overall worth of the building. Id. § 1455.1c(b)(1). If the

construction cost of the remodeling is less than 30% of the

value of the building, only the remodeled area or areas shall be

made accessible to and usable by persons with physical

handicaps. An accessible route to the remodeled area or areas

is not required. Id. § 1455.1c(b)(1)(i). If “the construction cost

of the remodeling is greater or equal to 30 percent but less than

50 percent of the worth of the building, the remodeled area or

areas shall be made accessible to and usable by persons with

physical handicaps, and an accessible route to the remodeled

area or areas shall be provided.” Id. § 1455.1c(b)(1)(ii). If the

construction cost is 50 percent or more of the value of the

building, the entire building must be made accessible to and

usable by handicapped persons. Id. § 1455.1c(b)(1)(iii). For

purposes of the latter two subsections, construction made over

a three-year period may be calculated as the construction cost.

Id. § 1455.1c(b)(1)(iv). 

The same analytical framework applicable to the ADA

claim, discussed above, necessarily applies to Mercersburg’s

PHA claim. Simply stated, the lightning strike only damaged

certain portions of Keil Hall; when those portions were

remodeled, Mercersburg was required to comply with the PHA;

Republic Franklin, in turn, was obligated to pay for that
28

remodeling (which it has done); it was only obligated to pay for

further remodeling to undamaged portions of Keil Hall if that

remodeling was required by an ordinance or law. 

The question, then, is whether the PHA required any

further remodeling. As explained above, the answer to that

inquiry depends on a factual determination and the cost of

remodeling compared to the worth of Keil Hall. Specifically,

if the repairs required by the fire total less than 30% of Keil

Hall’s total value, the PHA requires no further modifications

and it follows that Republic Franklin is not obligated to cover

the cost of any further modifications. The converse is also true:

if the repairs required by the fire total exceed 30% of Keil

Hall’stotal value, then the PHA demands further modifications

and it follows that Republic Franklin must cover all or some of

the portion of the cost of those modifications under the

Ordinance and Law Endorsement. 

Both sides agree that the total value of Keil Hall is

$1,900,000. Moreover, during oral argument, counsel for

Mercersburg agreed that the aggregate cost of repair to Keil

Hall caused by the fire totals substantially less than 30% of the

total value of the building. As a result, the PHA required no

further modifications to Keil Hall. Accordingly, we affirm the

District Court’s grant of summary judgment in favor of

Republic Franklin on the PHA claim.
29

C. Building Codes

Finally, Mercersburg contends that the Ordinance and

Law Endorsement provides coverage for renovations it made to

undamaged portions of Keil Hall pursuant to, inter alia, the

International Mechanical Code, Building Officials and Code

Administrators International, Inc. Code, the National Electric

Code, the International Plumbing Code, and the standards of the

American Society of Heating, Refrigeration and AirConditioning Engineers. It is undisputed that the Borough of

Mercersburg, in which the Academy is located, has adopted

none of the foregoing codes nor any other building codes.

Relying on that fact, the District Court held that the terms “law”

and “ordinance” in the Endorsement should be afforded their

ordinary meaning. As such, it refused to construe those terms

to include building codes or standards adopted by private

organizations but not adopted by a governmental body having

authority to do so here.

The basic principles of law governing insurance policy

interpretation are well-settled in Pennsylvania. E. Associated

Coal Corp. v. Aetna Cas. & Surety Co., 632 F.2d 1068, 1075

(3d Cir. 1980). The goal of interpreting an insurance policy,

like the goal of interpreting any other contract, is to determine

the intent of the parties. It begins where it must—the language

of the policy. Madison Constr. Co., 735 A.2d at 106 (“The

polestar of our inquiry . . . is the language of the insurance

policy.”).
30

The task of interpreting [an insurance] contract is

generally performed by a court rather than by a

jury. The goal of that task is, of course, to

ascertain the intent of the parties as manifested by

the language of the written instrument. 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. Where, however, the language of the

contract is clear and unambiguous, a court is

required to give effect to that language.

Gene & Harvey Builders v. Pa. Mfrs. Ass’n, 517 A.2d 910, 913

(Pa. 1986) (quoting Standard Venetian BlindCo. v. Am. Empire

Ins. Co., 469 A.2d 563, 566 (Pa. 1983)) (additional citations

omitted). 

Contractual language is ambiguous “if it is reasonably

susceptible of different constructions and capable of being

understood in more than one sense.” Hutchison v. Sunbeam

Coal Co., 519 A.2d 385, 390 (Pa. Super. Ct. 1986); see also

Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d

100, 106 (Pa. 1999). Courts should not, however, distort the

meaning of the language or strain to find an ambiguity. Steuart

v. McChesney, 444 A.2d 659, 663 (Pa. Super. Ct. 1982). 

Mercersburg asks us to rule that the plain and ordinary

meaning of “law” and “ordinance” in the Endorsement is
31

broader than the interpretation given by the District Court. We

need not reach this issue. This is because, even if the District

Court did read those terms too narrowly, that determination does

not resolve the larger controversy before us: whether the “loss to

undamaged portion[s]” of Keil Hall was “caused by enforcement

of any” of the codes. This inquiry must be answered no. Unlike

the ADA and PHA, Mercersburg fails to point out any provisions

of the building codes that mandated or required it to do any

upgrades, renovations, etc., to the undamaged portions of Keil

Hall. Certainly, Mercersburg’s discretionary decision to renovate

undamaged portions of Keil Hall triggered the application of the

building codes as to that renovation, but critically important is

that the building codes themselves did not trigger those

renovations. This distinguishes Mercersburg’s building codes

claims from its ADA and PHA claims. As a result, we affirm the

District Court’s determination (albeit on different grounds than

the District Court) that the Ordinance and Law Endorsement does

not provide coverage for renovations it made to undamaged

portions of Keil Hall in hypothetical compliance with codes not

mandating those renovations.

VI. Conclusion

We reverse the District Court’s summary judgment ruling

dismissing Mercersburg’s ADA claim and remand that claim for

proceedings not inconsistent with this opinion, but affirm its

summary judgment rulings dismissing Mercersburg’s PHA and

building codes claims.