State Farm Fire & Casualty Co. has dropped its fire coverage lawsuit against Fannie Mae, which was filed in a Pennsylvania federal court. State Farm was seeking to recover payments made to a homeowner after squatters started a fire in a nearby property owned by Fannie Mae. The lawsuit, filed in January, alleged that Fannie Mae neglected the property to the point where it became a “haven” for squatters, leading to the fire that caused damage to the homeowner’s property.
State Farm paid out over $75,000 for the homeowner’s claim and sought to recover these funds through the lawsuit. However, Fannie Mae filed a motion to dismiss the case, arguing that it had been trying to eject the squatters from its foreclosure property since November 2019. Due to an eviction moratorium issued in response to the COVID-19 pandemic, the eviction process was extended, and Fannie Mae did not have control of the property at the time of the fire. As a result, Fannie Mae claimed that it didn’t hold any legal responsibility to State Farm.
Fannie Mae argued that, although it had initiated lawful ejectment proceedings prior to the moratorium, the squatters continued to remain unlawfully at the property until November 2021, when the alleged fire occurred. Therefore, the government-sponsored mortgage entity claimed it did not have a duty of care recognized by Pennsylvania law at the time of the incident with State Farm, and as a matter of law, the claims against it should be dismissed.
The settlement terms between State Farm and Fannie Mae have not been disclosed, and both parties declined to comment on the matter, according to a report by Law360.
This development comes after State Farm filed a patent lawsuit against Amazon in November 2022. As the legal complexities that arise with multiple parties involved in property continue, it is crucial for property owners and insurers to understand their legal responsibilities and take proactive measures to prevent and mitigate potential risks.