PITTSBURGH, Feb. 5 – Chief District Magistrate Judge Maureen Kelly has dismissed breach of contract and bad faith claims against State Farm by an insured contractor, finding that the underlying allegations of damage caused by the contractor fell outside of policy period.
Reginella Construction was insured under a contractor’s liability policy with State Farm between July 2004 and May 2006. In 2013, a homeowner filed suit against Reginella complaining of problems with the floor, caused by poor materials and workmanship. The homeowner subsequently won the underlying case against Reginella. State Farm denied defense and indemnity to Reginella in February 2014, claiming that the occurrence per the suit against Reginella fell outside of the policy period(s).
After Reginella sued State Farm in Allegheny County, Pa. in 2015, State Farm removed the case to federal court and filed a motion to dismiss pursuant to F.R.C.P. 12(b)(6).
“Although the cause of the damages to the Eck home was arguably within the coverage period, ‘the cause of injury . . . has no special relevance to determining the date an insurance policy is triggered, unless specifically required by the language of the applicable policy of insurance.’ Where, as here, there is no policy language requiring the cause of injury to be identified, Pennsylvania courts apply the ‘first manifestation rule’ to occurrence policies; that is, the court looks to when injury is ‘reasonably apparent,’ i.e., when it is first manifested.”
Judge Kelly granted State Farm’s motion to dismiss, based on the first manifestation rule and the allegations of the underlying complaint against Reginella, the damage caused by Reginella’s conduct fell outside of the applicable policy period.
Because the Court found that State Farm’s coverage position was supported by a “plain reading” of the policy provisions, it dismissed bad faith claims against State Farm as well.