563 F. App'x 209
3d Cir.2014Background
- Creagh owned a four‑story Philadelphia building; an apartment tenant died and undiscovered decomposition released bodily fluids that severely damaged the unit.
- Creagh spent about $180,000 on remediation/restoration and submitted a claim under Lloyd’s commercial/general liability policy.
- Lloyd’s sought a declaratory judgment denying coverage; Creagh counterclaimed for compensatory damages, bad faith, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).
- District Court granted summary judgment for Lloyd’s, holding two policy exclusions (microorganism and seepage) barred coverage; it also denied Creagh’s motions for reconsideration and to reopen the record.
- Creagh appealed the summary judgment and the denial of his postjudgment motions; the Third Circuit affirmed.
Issues
| Issue | Creagh's Argument | Lloyd’s Argument | Held |
|---|---|---|---|
| Whether the microorganism exclusion bars coverage for damage caused by decomposition fluids | Bacteria were in the decedent’s body, not in escaped fluids; Creagh did not seek bacterial removal and challenges Lloyd’s proof | Expert evidence established bacteria were present in the bodily fluids that contaminated the property; exclusion covers claims arising directly or indirectly from microorganisms | Exclusion applies; uncontested expert statement and causal link between bacteria and damage support exclusion |
| Whether the seepage/pollution/contamination exclusion bars coverage for escaped bodily fluids | "Seepage" should be read narrowly (ejusdem generis) and not encompass this loss | Exclusion unambiguously covers seepage and contamination that endangers health; bodily fluids posed a health/safety risk | Exclusion applies; fluids constituted contamination/endangerment and are within the endorsement’s scope |
| Whether District Court abused discretion by denying motion to reopen the record with new evidence challenging expert opinion | New evidence undermines Lloyd’s expert and was allegedly relevant | New evidence was previously available; courts normally do not reopen record for evidence that could have been presented | No abuse of discretion; motion properly denied because evidence was not shown to be unavailable earlier |
| Validity of Creagh’s bad faith and UTPCPL counterclaims | Denial of coverage was unreasonable; misrepresentations about bacteria and odor | Coverage denial was supported by policy exclusions and expert evidence | Counterclaims fail because coverage denial had a reasonable basis and misrepresentation claim lacks merit |
Key Cases Cited
- Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450 (3d Cir. 2003) (standard of review for summary judgment)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (federal courts apply state substantive law in diversity cases)
- Gibson v. Mayor & Council of City of Wilmington, 355 F.3d 215 (3d Cir. 2004) (standard for reviewing denial of motion to reopen record)
- Max’s Seafood Cafe ex rel. Lou‑Ann, Inc. v. Quinteros, 176 F.3d 669 (3d Cir. 1999) (doctrine limiting relief to introduce previously available evidence postjudgment)
- United States v. 6.45 Acres of Land, 409 F.3d 139 (3d Cir. 2005) (bench‑trial‑like factual findings reviewed for clear error)