Court Opinion

ID: 222111
Source: CourtListenerOpinion
Date Created: 2011-07-28 20:04:51+00
Date Added: 2024-06-11T17:28:53.119153
License: Public Domain

NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                ____________

                                     No. 10-2811
                                    ____________

                                  JOSEPH COZZA,
                             on behalf of Filomena Cozza,

                                            Appellant

                                           v.

                 STATE FARM FIRE AND CASUALTY COMPANY
                               ____________

                    On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                                (D.C. No. 2-09-cv-02380)
                     District Judge: Honorable Legrome D. Davis
                                     ____________

                   Submitted Pursuant to Third Circuit LAR 34.1(a)
                                   July 15, 2011

             Before: SLOVITER, FUENTES and FISHER, Circuit Judges.

                                (Filed: July 28, 2011 )
                                    ____________

                             OPINION OF THE COURT
                                  ____________

FISHER, Circuit Judge.

      Joseph Cozza, on behalf of Filomena Cozza, (collectively “Cozza”) appeals an

order of the District Court granting summary judgment in favor of Appellee, State Farm
Fire and Casualty Insurance Company (“State Farm”) on claims arising from the denial

of an insurance claim. For the reasons set forth below, we will affirm.

                                             I.

       We write principally for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we set forth only those facts necessary to our

analysis.

       This case arises out of State Farm’s denial of a claim for coverage made by Cozza.

State Farm issued Filomena Cozza an “all risk” homeowners’ insurance policy, which

covered her residence in Philadelphia but contained a subsurface water damage

exclusion. On April 16, 2008, Joseph Cozza filed an insurance claim with State Farm

after discovering significant damage to a foundational wall in his mother’s basement,

ultimately requiring the home to be “shored up” and the basement wall replaced. State

Farm conducted an investigation and found that the wall had collapsed due to pressure

from supersaturated soil pressing against it from outside the house. Water had been

leaking into the surrounding soil from breaks in a drain pipe running parallel to the

foundation wall, four-feet underground. The drain pipe carried rainwater collected from

Cozza’s roof-gutters, fed from three downspouts, to the main city sewer.

       State Farm denied Cozza’s insurance claim based on a subsurface water damage

exclusion in her policy:

       We do not insure under any coverage for any loss which would not have
       occurred in the absence of one or more of the following excluded events.

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      We do not insure for such loss regardless of: (a) the cause of the excluded
      event; or (b) other causes of the loss; or (c) whether other causes acted
      concurrently or in any sequence with the excluded event to produce the
      loss; or (d) whether the event occurs suddenly or gradually, involves
      isolated or widespread damage, arises from natural or external forces, or
      occurs as a result of any combination of these:
      ....
              c. Water Damage, meaning:
              ....
              (2) water or sewage from outside the residence premises
              plumbing system that enters through sewers or drains or water
              which enters into and overflows from within a sump pump,
              sump pump well or any other system designed to remove
              subsurface water which is drained from the foundation area;
              or
              (3) water below the surface of the ground, including water
              which exerts pressure on, or seeps or leaks through a
              building, sidewalk, driveway, foundation, swimming pool, or
              other structure.

      Cozza filed a complaint in the Philadelphia Court of Common Pleas, alleging

breach of contract and bad faith on the part of State Farm. State Farm removed the action

to the District Court for the Eastern District of Pennsylvania on May 26, 2009 based on

diversity jurisdiction, and moved for summary judgment on both claims. The District

Court granted summary judgment in favor of State Farm, and Cozza timely appealed.

                                           II.

      The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have

jurisdiction under 28 U.S.C. § 1291. We review grants of summary judgment de novo,

assessing the record “using the same summary judgment standard that guides the district

courts.” Gardner v. State Farm Fire and Cas. Co., 544 F.3d 553, 557 (3d Cir. 2008).

                                            3
Summary judgment is appropriate where there is no genuine dispute of material fact and

the moving party is entitled to judgment as a matter of law. G-I Holdings, Inc. v.

Reliance Ins. Co., 586 F.3d 247, 253 (3d Cir. 2009).

         Cozza advances two arguments in support of his claim that the District Court erred

in denying his mother coverage: (1) State Farm’s denial of her claim for coverage was

improper because the subsurface water exclusion provision on which her claim was

denied did not apply; and (2) because State Farm’s denial of her claim breached a known

duty, State Farm acted in bad faith.

                               A. Subsurface Water Exclusion

         Cozza argues that the District Court erred in determining that the subsurface water

exclusion in the insurance policy precluded coverage of her claim. Both parties agree

that we apply Pennsylvania law in this case. In claims for breach of contract to

indemnify under an “all risks” policy, Pennsylvania places the initial burden on the

insured to show that a loss within the policy’s scope has occurred. Wexler Knitting Mills

v. Atl. Mut. Ins. Co., 555 A.2d 903, 905 (Pa. Super. Ct. 1989). The burden then shifts to

the insurer to defend “by showing that the loss falls within a specific policy exclusion.”

Id.; see also Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa.

1999).

         Cozza argues that the exclusion does not apply because the water came from a

burst pipe, and that under Pennsylvania law, water that escapes from a plumbing system

                                              4
is not covered by the subsurface water exclusion. Kozlowski v. Penn Mut. Ins. Co., 441

A.2d 388, 391 (Pa. Super. Ct. 1992). Instead, the exclusion covers water that comes from

outside the insured’s plumbing system. Id.

       While Cozza is correct in her legal position that the exclusion does not cover water

that escapes from a plumbing system, Cozza fails to provide a basis for her premise that

the drain line from which the water escaped was part of her house’s “plumbing system.”

“Plumbing system” is not defined in the policy. “Words of common usage in an

insurance policy are to be construed in their natural, plain, and ordinary sense.” Madison

Constr. Co., 735 A.2d at 108. The Concise Oxford English Dictionary defines

“plumbing” to include “the system of pipes, tanks, and fittings required for the water

supply, heating, and sanitation in a building.” Concise Oxford English Dictionary 11th

ed. Here, the ruptured pipe did not provide water, heat, or sanitation to Cozza’s house.

Instead, it was designed to keep rainwater outside the house. Thus, the pipe in question

was not a part of her house’s plumbing system. Accordingly, the water damage was

caused by water covered by the subsurface water exclusion. The District Court did not

err in dismissing her coverage claim.

                                        B. Bad Faith

       Cozza argues that the District Court erred when it dismissed her claim that State

Farm acted in bad faith when it denied her claim. Where the sole basis for a bad-faith

claim is the denial of coverage, there can be no bad-faith claim if the insurer was correct

                                             5
as a matter of law in denying coverage. Frog, Switch & Mfg. Co., Inc. v. Travelers Ins.

Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999). Here, as State Farm did not err in denying

Cozza’s claim, the District Court did not err in dismissing her bad faith claim.

                                            III.

       For the reasons stated above, we will affirm the order of the District Court.

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