1. Presented By: C. Scott Rybny "SOCIAL LIABILITY" – THE NEW CAUSE OF ACTION OCTOBER 23, 2015

2. The Current “Pennsylvania Problem”

3. BRUNO V. ERIE INS. CO., 104 PA LEXIS 3319 (PA. DEC. 15, 2014)

4. Bruno discovers mold behind paneling while renovating basement. Mold caused by leaking water pipe. Bruno submits insurance claim to Erie. $5,000 mold limitation in policy, which Erie eventually pays.

5. BRUNO V. ERIE INS. CO., 104 PA LEXIS 3319 (PA. DEC. 15, 2014) Erie retains engineer, who inspects property with adjuster. Adjuster and expert tell Brunos: "The mold was harmless and [the Brunos] should continuing tearing out the existing paneling and that health problems associated with mold were a media frenzy and overblown."

6. BRUNO V. ERIE INS. CO., 104 PA LEXIS 3319 (PA. DEC. 15, 2014) Wife/Policyholder dies of esophageal cancer linked to mold exposure. Remaining family members also get sick.

7. BRUNO V. ERIE INS. CO., 104 PA LEXIS 3319 (PA. DEC. 15, 2014) Policyholders pled negligent and false assurances by Erie’s contractor and engineer regarding toxicity of black mold. PA Supreme Court allows policyholder negligence claim against carrier and engineer to proceed.

8. BRUNO V. ERIE INS. CO., 104 PA LEXIS 3319 (PA. DEC. 15, 2014) Court stated that these negligence allegations “facially concern Erie’s alleged breach of a general social duty, not a breach of any duty created by the insurance policy itself.”

9. THE BRUNO EFFECT Potential impact on insurers Underwriting: loss control surveys, risk management Claims: 1 st and 3d party claims

10. THE BRUNO EFFECT How is liability created The action must result in either: An increase in the risk of harm, in an undertaking to perform a duty owed by another to a 3 rd person; or In reliance by the insured or the employee of the insured upon the undertaking

11. SELMEK V. STATE FARM FIRE & CAS. CO., 2014 U.S. DIST. LEXIS 162294 (W.D.PA. 2014) – PRE BRUNO Wind Damage Claim Involving Residential Roof Policyholder Asks Claims Adjuster Whether He Should Temporarily Tarp the Roof Adjuster Responds “Yes” Policyholder Falls Through the Roof and is Rendered Paraplegic

12. SELMEK V. STATE FARM FIRE & CAS. CO., 2014 U.S. DIST. LEXIS 162294 (W.D. PA. 2014) Policyholder suit for negligence and Bad Faith Court allowed the Bad Faith action to proceed beyond a Motion to Dismiss Allegations of an unreasonable denial of temporary repair benefits

13. TAKEAWAYS