Kalili v. State Farm Fire & Cas. Co., 2024 Pa. Super. LEXIS 562(PA Superior Ct., December 26, 2024)(Sullivan J.)
OPINION BY SULLIVAN, J.: Paiea Kalili (“Kalili”) appeals from the grant of summary judgment in favor of State Farm Fire and Casualty Company (“State Farm”). We affirm. The trial court described the underlying facts: [Kalili] owns a two[-]story row house . . . in Philadelphia (“the property”). State Farm issued a homeowner’s insurance policy to [Kalili] (“the policy”)[,] which provided coverage for the property. The policy was in effect at all times relevant to this litigation . . .. [In October 2020], water began leaking from a pipe inside a wall of the property, damaging the interior walls. [Kalili] contacted Grade A Plumbing ([“]Grade A[“]) to address the problem. Grade A determined the cause of the leak was a “lead drain line to shower leaking in ceiling of first floor . . . corroded due to normal wear and tear.” Grade A stated that the drain line had to be replaced[,] which required tearing out the wall, the shower, and surrounding pipes to access the damaged pipe. Grade A [] estimated that the costs of these repairs would be $23,500. [Kalili] also retained Alliance Adjustment Group (“Alliance”) to handle his claim and coordinate with State Farm during the adjustment of this loss. Alliance assigned [Kalili’s] case to Brian Singer [(“Singer”)], a licensed public adjuster. Singer inspected the loss, assessed the scope of damage, and produced an estimate for the cost of repairs . . .. The initial cost to make the necessary repairs to the property, including tearing out the walls and plumbing to access the damage pipe, was estimated at $18,007.56. Alliance later provided a revised estimate to account for updated pricing, totaling $29,917.15.
The trial court determined the Tear Out provision did not apply because the burst pipe was caused by normal wear and tear. It rejected Kalili’s contention that “wear and tear” was an ambiguous phrase and “constituted a genuine issue of material fact that preclud[ed] summary judgment.”
A party alleging bad faith must meet a very high standard. See Rancosky, 170 A.3d at 377. Kalili fails to show by clear and convincing evidence that State Farm “did not have a reasonable basis for denying benefits under the policy” and that it “knew or recklessly disregarded its lack of a reasonable basis in denying the claim.” Id. To the extent that we can determine the basis of Kalili’s bad faith argument, he asserts State Farm acknowledged there was a “loss insured” and that it owed benefit under the Tear Out provision but denied benefits under the Ordinance or Law provision because there was no “loss insured.” As explained above, State Farm had a reasonable basis to limit coverage under the Tear Out provision to the “particular part of the building structure necessary to gain access to the specific point of that system . . . from which the water . . . escaped.” The use of the words “particular”, “specific”, and “necessary” underscores the narrow scope of coverage provided and the limited area subject to tear out coverage. There is simply nothing in the Tear Out provision to support Kalili’s suggestion he was entitled to coverage for the replacement of much of his bathroom and the pipes. See id. Thus, State Farm had a reasonable basis for limiting coverage under the Tear Out provision to the area necessary [*19] to access the burst pipe, and for denying coverage for any additional tear out costs. State Farm also had a reasonable basis to deny coverage for the lead pipe replacement under the Ordinance or Law endorsement. Here, the need to replace the lead pipes was not caused by the sole “loss insured” (i.e., the damage to the foyer ceiling and walls). Instead, the need to replace the lead pipes arose solely from the pipe which burst due to wear and tear, which was not a “loss insured.”
Kalili provides no legal support for his argument that the Tear Out provision should be broadly interpreted to require State Farm to pay for the cost to tear out all the pipes in Kalili’s undamaged sections of the bathroom.
Nothing in the plain language of the endorsement applies to Kalili’s obligation to replace the lead pipes in the bathroom since they are now in violation of applicable building codes. For the reasons discussed above, Kalili is not entitled to further coverage under the Tear Out provision or the Ordinance or Law endorsement of the policy. Thus, the trial court did not err in granting summary judgment on the breach of contract claim.