Allstate alleged that the PHA property was vacant and abandoned and that vagrants squatted there; that this “open and dangerous condition” was notorious and the subject of numerous complaints to the city; that the PHA allowed the property to deteriorate; and that the property was “dangerous, unsecure, and unstable.”

Moreover, according to Allstate, the building had been declared an “unsafe structure” and had been ordered demolished, but the PHA did nothing.

Asserting a negligence claim, Allstate alleged that had the PHA property been safe and secure or properly demolished, the fire would not have occurred.

The PHA argued that, as a Commonwealth agency, it was entitled to immunity under the Pennsylvania Sovereign Immunity Act (“PSIA”), 42 Pa.C.S. § 8521.

Allstate acknowledged that the PHA was a Commonwealth agency, but contended that the real estate exception, 42 Pa.C.S. § 8522(b)(4), applied, exposing the PHA to liability for the damage to the Torres property.

The PHA moved to dismiss the complaint.

The District Court's Decision

The district court granted the PHA's motion.

In its decision, the district court explained that under the real estate exception to the PSIA, a Commonwealth agency may be liable for injury caused by “a dangerous condition of Commonwealth agency real estate” that caused injury. A plaintiff seeking to invoke the exception must establish that (1) the plaintiff could, absent immunity, recover damages from the agency that caused the injury, and (2) the injury was caused by the agency's negligence, rendering the property unsafe for its intended use and creating a dangerous condition or defect in the real estate that caused the injury.

The district court ruled that, as to the first requirement, Allstate had stated a cause of action against the PHA for negligence in allowing its property to fall into a state of disrepair, rendering it unsafe and dangerous.

The district court ruled, however, that Allstate had not satisfied the second requirement. The district court reasoned that the fire “did not derive, originate, or have as its source the PHA-owned real estate itself.” Instead, the district court noted, Allstate alleged that “the independent actions of a squatter caused the fire and the subsequent harm.”

The PHA's failure to act – including its failure to secure the property – did not cause the fire, the district court found. “Nor did any substance, object, or defect in the property construction, maintenance, repair, or design,” the district court added. Rather, the district court ruled, as asserted in Allstate's complaint, the fire had been caused by a trespasser and Allstate did “not link the origin of the fire to any act or failure to act on PHA's part.”

The acts of a third party, rather than an agency, that caused harm did not subject the agency to liability, according to the district court. Concluding that the real estate exception applied only where it was alleged that “the artificial condition or defect of the land itself cause[d] the injury, not merely when it facilitate[d] the injury by the acts of others,” the district court ruled that the PHA was immune from liability to Allstate.

The case is Allstate Vehicle and Property Ins. Co. v. Philadelphia Housing Authority, No. 19-1354 (E.D. Pa. July 11, 2019). Attorneys involved include: For ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, A/S/O FELIX AND EVELYN TORRES, Plaintiff: JOSEPH L. MCGLYNN, LEAD ATTORNEY, de Luca Levine, LLC, BLUE BELL, PA. For PHILADELPHIA HOUSING AUTHORITY, Defendant: DAVID P. BATEMAN, BATEMAN, CALIENDO LLC, HORSHAM, PA.