Maryland judge sides with insurer in dispute involving 22 damaged condo roofs
The insurance carrier argued that some of the damage submitted in the claim was pre-existing and not caused by a storm.
A federal judge in Maryland denied a council of condominium owners’ motion to dismiss an insurance company’s instant action for declaratory judgment concerning their duties and obligations to indemnify a claim for damages to the roofs of numerous condominiums.
The Council of Unit Owners of Partridge Courts Condominium Inc. filed a motion to dismiss an action filed by Philadelphia Indemnity Insurance Co., seeking declaratory judgment pursuant to 28 U.S.C. Section 2201(a) as to questions concerning their rights, duties and obligations under a property coverage policy issued by Philadelphia Indemnity.
Partridge had submitted a claim to Philadelphia Indemnity, alleging a storm damaged the roofs of 22 condominium buildings that required replacement, claiming the replacement costs of the roofs totaled more than $1.1 million. Meanwhile, Philadelphia Indemnity estimated that the storm-related damages and repairs came in around $38,000.
In a Nov. 29, 2023, opinion, Judge Julie R. Rubin of the U.S. District Court for the District of Maryland denied Partridge’s motion to dismiss, concluding there was a definite and concrete dispute between the parties and that the appraisal process was already completed.
Philadelphia Indemnity claimed the policy coverage didn’t extend to the damage/condition of the roofs not caused by the storm, and went on to file a complaint seeking declaratory judgment and relief via an order declaring it doesn’t have a duty to pay for the replacement of the 22 roofs. It maintained that the damage to the roofs was pre-existing and caused by wear and tear, deterioration, faulty materials, faulty prior repairs, and/or lack of and faulty maintenance.
However, Partridge claimed Philadelphia Indemnity’s action ”was premature until the appraisal process was complete,” maintaining that the disputed facts about the appropriate roof repair method from the Nov. 15, 2020, storm should be “subsumed in the decision of the appraisers setting the amount of loss attributed to the storm occurrence,” the opinion said.
Rubin found Partridge’s position that the dispute related only to the appropriate method to repair the storm damage to be unavailing.
The court looked to its 1987 ruling in Wausau Ins. Co. v. Herbert Halperin Distribution Corp., where it denied the defendant’s motion to stay or dismiss the plaintiff’s action for declaratory judgment regarding questions arising under the policy.
“Like Wausau, PIIC ‘is contesting the issue of legal ‘causation’ on the basis that the policy exclusions apply so as to limit the scope of coverage.’ As the Wausau court explained: ‘[t]his issue is one of contract interpretation which is within the competence of the [c]ourt,’” Rubin noted.
While Philadelphia Indemnity sought a declaratory judgment regarding the parties’ rights, entitlements and obligations pursuant to the policy, Partridge noted that, “[t]he appraisal panel has not been charged with including in their award any damage to the structures attributed to other potentially excluded causes of loss.”
Rubin concluded there was “a definite and concrete dispute between the parties that ‘relates to legal rights and obligations arising from the contracts of insurance,’” citing the U.S. Supreme Court’s 1937 opinion in Aetna Life Insurance Co. v. Haworth.
Further, Philadelphia Indemnity maintains and Partridge doesn’t dispute that the appraisal process has since been completed, according to the court.
Counsel for Philadelphia Indemnity, Margaret Fonshell Ward of Downs Ward Bender Herzog & Kintigh in Hunt Valley, did not immediately respond to a request for comment.
Partridge’s attorney, Catherine A Potthast in Lutherville, declined to comment.
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