                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


8-16-2006

The Regents v. Republic Franklin
Precedential or Non-Precedential: Precedential

Docket No. 04-3653




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                                            PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT


                       No. 04-3653


 THE REGENTS OF THE MERCERSBURG COLLEGE,
                            Appellant

                             v.

   REPUBLIC FRANKLIN INSURANCE COMPANY



       Appeal from the United States District Court
          for the Middle District of Pennsylvania
            (D.C. Civil Action No. 00-cv-00558)
      District Judge: Honorable James F. McClure, Jr.


                   Argued January 9, 2006

          Before: BARRYand AMBRO, Circuit Judges
               and DEBEVOISE,* District Judge


      *
         Honorable Dickinson R. Debevoise, Senior District
Court Judge for the District of New Jersey, sitting by
designation.
              (Opinion filed August 16, 2006)

Michael R. Libor, Esquire (Argued)
Christina E. Roberts, Esquire
Derek Eddy, Esquire
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103

      Counsel for Appellant

Steven J. Polansky, Esquire (Argued)
Marshall, Dennehey, Warner, Coleman & Goggin
200 Lake Drive Easte
Woodland Falls Corporate Park, Suite 300
Cherry Hill, NJ 08002

      Counsel for Appellee




                OPINION OF THE COURT


AMBRO, Circuit Judge

       This is an insurance coverage dispute arising out of a
lightning strike and fire that damaged Keil Hall on the campus
of Mercersburg Academy. We affirm in part and reverse in part


                              2
the judgment of the District Court.

           I. Factual and Procedural Background

       Mercersburg, the insured, is a private secondary and
college preparatory boarding school located in Mercersburg,
Pennsylvania. Keil Hall is a building located on the
Mercersburg campus that was constructed over a century ago.
It has four levels above ground and a basement containing
mechanical equipment. The first floor of the building contains
public spaces, including an auditorium and classrooms, while
the second and third floors contain dormitory housing and
common meeting areas. The fourth floor was designed and
constructed for dormitory use as well, and had been used for
that purpose in the past. At the time of the fire, however, that
floor was used as attic and storage space, and was cordoned off
from students.1

       The chimney of Keil Hall was struck by lightning on
June 13, 1998, igniting a fire that caused extensive damage to
the roof and fourth floor of the building, as well as smoke and



       1
        Mercersburg contends that, while the dormitory rooms
on the fourth floor were unoccupied at the time of the fire due
to declining enrollment, the Academy had plans to expand
enrollment and once again use the fourth floor to house full-time
and summer-program students.

                               3
      water damage to the first, second, and third floors.
Following the fire, Mercersburg submitted a timely claim to its
property insurance carrier, Republic Franklin Insurance
Company, for (1) the costs to repair the actual fire damage, (2)
additional costs to repair the building that were made necessary
to bring the building in compliance with applicable laws and
various building codes, and (3) lost business income.

       Republic Franklin’s primary policy only provides
coverage for those repairs necessary to return the property to its
pre-fire condition. Accordingly, Mercersburg purchased a
separate “Ordinance and Law Endorsement” to its policy. That
Endorsement provides in relevant part:

       1. Coverage A – Coverage For Loss to the
       Undamaged Portion of the Building. If a
       Covered Cause of Loss occurs to covered
       Building property[,] . . . we will pay for loss to
       the undamaged portion of the building caused by
       enforcement of any ordinance or law that: (a)
       requires demolition of parts of the same property
       not damaged by a Covered Cause of Loss; (b)
       regulates the construction or repair of buildings,
       or establishes zoning or land use requirements at
       the described premises; and (c) is in force at the
       time of loss.

       ...

                                4
       3. Coverage C – Increased Cost of Construction
       Coverage. If a Covered Cause of Loss occurs to
       covered Building property[,] . . . we will pay for
       the increased cost to repair, rebuild or construct
       the property caused by enforcement of building,
       zoning or land use ordinance or law. If the
       property is repaired or rebuilt, it must be intended
       for similar occupancy as the current property,
       unless otherwise required by zoning or land use
       ordinance or law.

       The insurer’s failure to reimburse the Academy for all of
its costs incurred as a result of the fire prompted it to file a
complaint in United States District Court for the Middle District
of Pennsylvania alleging breach of contract and bad faith.
Specifically, Mercersburg contended that the Ordinance and
Law Endorsement required Republic Franklin to pay for repair
and renovation costs required by the Americans with
Disabilities Act (ADA), 42 U.S.C. §§ 12101-12213, the
Pennsylvania Handicapped Act and Universal Accessibility
Standards promulgated thereunder, 71 Pa. Cons. Stat. § 1455 et
seq. (2000) & 34 Pa. Code § 60.1 et seq., as well as other
Pennsylvania statutes and national building codes (including the
International Mechanical Code, the Building Officials and Code
Administrators International, Inc. Code, the National Electric
Code, the International Plumbing Code and the standards of the
American Society of Heating, Refrigerating and
Air-Conditioning Engineers).

                                5
        After extensive factual and expert discovery, the parties
settled, resolving all disputes except those related to the
Ordinance and Law Endorsement claim.2 Republic Franklin’s
motion for summary judgment on those claims was granted by
the District Court. It held that (1) the ADA did not apply
because the dormitory space in Keil Hall was not a “public
accommodation” within the meaning of that statute, (2) the
PHA also did not apply because the costs of the fire damage did
not reach the threshold cost to trigger coverage under the Act,
and (3) nationally recognized standards of design and
construction and Pennsylvania laws that require private schools
to meet certain basic safety standards were inapplicable because
the Borough of Mercersburg had not officially adopted any
building code. This appeal followed.3

                  III. Standard of Review


       2
        Mercersburg completed all renovations and repairs to
Keil Hall in December 2000. As of this appeal, Republic
Franklin has paid out $359,696.87 to the Academy. The total
cost of the repairs and renovations was $2,449,073.85.
       3
        There is no dispute that the parties have diverse
citizenship and the amount in controversy exceeds the
jurisdictional requirement. Thus, the District Court had subject
matter jurisdiction pursuant to 28 U.S.C. § 1332. Because
Mercersburg appeals the final judgment of the District Court, we
have jurisdiction under 28 U.S.C. § 1291.


                               6
       Summary judgment is appropriate if there are no genuine
issues of material fact presented and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). As far as the
former, we resolve all factual doubts and draw all reasonable
inferences in favor of the nonmoving party. Hugh v. Butler
County Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005). “We
exercise plenary review over summary judgment and we apply
the same standard that the lower court should have applied.”
Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir.
2000).

       The primary legal issue here is the interpretation of the
scope of coverage of the Ordinance and Law Endorsement.
“The interpretation of the scope of coverage of an insurance
contract is a question of law properly decided by the court, a
question over which [this court] exercise[s] plenary review.”
Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir.
1999); McMillan v. State Mut. Life Assurance Co. of Am., 922
F.2d 1073, 1074 (3d Cir. 1990).

        Where, as here, federal jurisdiction is based on diversity
of citizenship, we apply the choice of law rules of the state in
which the District Court sat. St. Paul Fire & Marine Ins. Co. v.
Lewis, 935 F.2d 1428, 1431 n.3 (3d Cir. 1991) (citing Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). As
noted, this action was filed in the Middle District of
Pennsylvania. Under Pennsylvania choice of law rules, an

                                7
insurance contract is governed by the law of the state in which
the contract was made. Crawford v. Manhattan Life Ins. Co.,
221 A.2d 877, 880 (Pa. Super. 1966); see also McMillan, 922
F.2d at 1074.4 “An insurance contract is ‘made’ in the state in
which the last act legally necessary to bring the contract into
force takes place.” Crawford, 221 A.2d at 880. The parties
agree that the insurance contract was ‘made’ in Pennsylvania
and, consequently, Pennsylvania substantive law applies.

       We now consider in turn each of the District Court’s
grounds for granting summary judgment in favor of Republic
Franklin.

                          III. Merits

A. ADA Claim

      Mercersburg asserts that numerous accessibility upgrades
made to Keil Hall were required to comply with the dictates of



       4
        We note that another line of Pennsylvania cases holds
that choice of law in an insurance contract is to be determined
by looking to the law of the state with the most significant
relationship with the contract. See, e.g., Wilson v. Transp. Ins.
Co., 889 A.2d 563, 571 (Pa. Super. 2005). The choice between
these tests is not determinative here, as Pennsylvania also had
the most significant relationship with the contract.

                               8
Title III of the ADA5 and, thus, the costs of those upgrades are
covered under the Ordinance or Law Endorsement. The District
Court ruled that the ADA protections afforded disabled persons
do not apply to the dormitory space on the second, third and
fourth floors of Keil Hall because dormitory housing is not
considered “transient lodging” that is covered under the ADA.
Citing 28 C.F.R. Part 36 Appendix A, Mercersburg responds
that the ADA’s regulations specifically include dormitories as
“transient lodging,” and hence the Endorsement covers the costs
of accessibility modifications required by the ADA.

       Under Title III of the ADA,6 it is unlawful for a public


       5
       Title I of the ADA prohibits discrimination in
employment and provides that rights and remedies available
under Title VII of the Civil Rights Act of 1964 are available as
well under Title I of the ADA. Id. § 12117. Title II prohibits
discrimination by a “public entity.” Id. § 12132. Finally, Title
III—the one that applies here—prohibits discrimination in
“public accommodations.” Id. § 12182.
       6
        The ADA’s goals are familiar: (1) to provide a clear and
comprehensive national mandate for the elimination of
discrimination against individuals with disabilities; (2) to
provide clear, strong, consistent, enforceable standards
addressing discrimination against individuals with disabilities;
(3) to ensure that the federal Government plays a central role in
enforcing the standards established on behalf of individuals
with disabilities; and (4) to invoke the sweep of congressional

                               9
accommodation to discriminate against an individual on the
basis of disability in the full and equal enjoyment of the goods,
services, facilities, privileges, advantages, or accommodations.
Id. § 12182(a). “Public accommodation” is defined in terms of
12 categories,7 which the legislative history indicates “should be


authority, including the power to enforce the Fourteenth
Amendment and to regulate commerce, to address the major
areas of discrimination faced day-to-day by people with
disabilities. 42 U.S.C. § 12101(b).
       7
           Specifically,
                 (A) an inn, hotel, motel, or other place of lodging,
                 except for an establishment located within a
                 building that contains not more than five rooms
                 for rent or hire and that is actually occupied by the
                 proprietor of such establishment as the residence
                 of such proprietor; (B) a restaurant, bar, or other
                 establishment serving food or drink; (C) a motion
                 picture house, theater, concert hall, stadium, or
                 other place of exhibition or entertainment; (D) an
                 auditorium, convention center, lecture hall, or
                 other place of public gathering; (E) a bakery,
                 grocery store, clothing store, hardware store,
                 shopping center, or other sales or rental
                 establishment; (F) a laundromat, dry-cleaner,
                 bank, barber shop, beauty shop, travel service,
                 shoe repair service, funeral parlor, gas station,
                 office of an accountant or lawyer, pharmacy,
                 insurance office, professional office of a health

                                   10
construed liberally” to afford people with disabilities “equal
access” to the wide variety of establishments available to the
nondisabled. S. Rep. No. 101-116, p. 59 (1989); H.R. Rep. No.
101-485, pt. 2, p. 100 (1990), U.S. Code Cong. & Admin. News
1990, pt. 2, at pp. 303, 382-383. The ADA obligates a “public
accommodation” only with respect to a “facility” that is “used
as, or designed or constructed for use as,” either a place of
public accommodation or a commercial facility. 28 C.F.R. §
36.102(b)(3)(i)-(ii). When a public accommodation or a part of
it is altered, the Act requires that alterations be made so that
“the altered portions of the facility are readily accessible to and
usable by individuals with disabilities, including individuals


             care provider, hospital, or other service
             establishment; (G) a terminal, depot, or other
             station used for specified public transportation;
             (H) a museum, library, gallery, or other place of
             display or collection; (I) a park, zoo, amusement
             park, or other place of recreation; (J) a nursery,
             elementary, secondary, undergraduate, or
             postgraduate private school, or other place of
             education; (K) a day care center, senior citizen
             center, homeless shelter, food bank, adoption
             agency, or other social service center
             establishment; and (L) a gymnasium, health spa,
             bowling alley, golf course, or other place of
             exercise or recreation.
42 U.S.C. § 12181(7).


                                11
who use wheelchairs.” 42 U.S.C. § 12183(a). If an alteration

      could affect usability of or access to an area of
      the facility containing a primary function, the
      entity shall also make the alterations in such a
      manner that, to the maximum extent feasible, the
      path of travel to the altered area and the
      bathrooms, telephones, and drinking fountains
      serving the altered area, are readily accessible to
      and usable by individuals with disabilities where
      such alterations . . . are not disproportionate to the
      overall alterations in terms of cost and scope . . . .

Id. § 12183(a)(2).

        Given this legal landscape, our analysis of the ADA
claim proceeds as a three-part inquiry: whether (1) Mercersburg
Academy is a “public accommodation,” (2) the repairs and
renovations made to Keil Hall are “alterations,” and (3) Keil
Hall is a “facility” that is “used as, or designed for use as,”
either “a place of public accommodation” or “a commercial
facility.”

       The District Court held that Mercersburg satisfied the
“public accommodation” requirement and that its repairs and
renovations to Keil Hall were “alterations” within the meaning
of the ADA. Each of these determinations is correct.
Mercersburg is a “secondary school,” which by definition

                               12
makes it a “place of education,” and, accordingly, a “public
accommodation” under 42 U.S.C. § 12181(7)(J). Moreover,
existing regulations establish that the repairs made to Keil Hall
were “alterations” because they included “remodeling,
renovation, [or] reconstruction . . . .” 28 C.F.R. § 36.402(b)(1)
(“Alterations include, but are not limited to, remodeling,
renovation, rehabilitation, reconstruction, historic restoration,
changes or rearrangement in structural parts or elements, and
changes or rearrangement in the plan configuration of walls and
full-height partitions.”). Thus, the first two steps of our three-
step inquiry are easily satisfied.

       The third step is markedly more difficult. The District
Court first held that the four floors of Keil Hall “should each be
evaluated separately as to whether they are covered under the
ADA, rather than evaluating Keil Hall as whole,” to determine
whether the floors are “used as, or designed or constructed for
use as,” a place of public accommodation. Employing that
principle, the Court held that the first floor of Keil Hall was
used as a “public accommodation” under the ADA because it
contained classrooms, see 42 U.S.C. § 12181(7)(J) (a place of
education), and an auditorium, see id. § 12181(7)(D) (a place of
public gathering), but that the second through fourth floors were
not “public accommodations” because dormitories do not fall
within any of the twelve categories enumerated in 42 U.S.C. §
12181(7). According to the Court, dormitories are more akin to
residential units such as apartments and condominiums—which
are not covered by the ADA—than transient lodging like inns,

                               13
hotels, and motels—which are covered under § 12181(7)(A).

        Mercersburg argues that the District Court erred because
(1) private-school dormitories are “transient lodging” as defined
by the ADA regulations and (2) dormitories are part of boarding
schools, and, as such, are places of education. We agree.
Although the statutory definition of “public accommodation”
does not expressly mention private school dormitories, those
facilities satisfy that definition under conventional principles of
interpretation.8


       8
         Neither the District Court nor Republic Franklin was
able to point to any authority holding that dormitories are more
like residential facilities than “transient lodging” for ADA
purposes. Indeed, both the Court and the insurer rely almost
exclusively on a 13-year-old District Court opinion that is not
on point: Independent Housing Services of San Francisco v.
Fillmore Center Associates, 840 F. Supp. 1328 (N.D. Cal.
1993).
        In Independent Housing Services, the Court addressed
whether a residential facility was a public accommodation. It
was undisputed that the facility had commercial entities
occupying the ground floor, which fell within the purview of
the ADA accessibility standards. But were the residential
apartments occupying the upper floors subject to the ADA
accessability standards? The Court examined the legislative
history of the ADA, and concluded it was not intended to apply
to residential facilities.
        42 U.S.C. § 12182 concerns discrimination in

                                14
        The ADA’s implementing regulations belie Republic
Franklin’s contention—and the District Court’s ruling—that the
ADA does not apply to dormitories. See Bragdon v. Abbott,
524 U.S. 624, 646 (1998) (citing Chevron U.S.A., Inc. v.
Natural Res. Defense Counsel, Inc., 467 U.S. 837, 844 (1984),
and explaining that the implementing regulations and views of
the United States Department of Justice (DOJ) as to the ADA
are entitled to deference). The ADA Accessibility Guidelines
(ADAAG) provide that design, construction, or alteration of
facilities in conformance with the ADA “shall comply with the


       public accommodations. Section 12181(7)(A)
       includes “an inn, hotel, motel, or other place of
       lodging” within the definition of public
       accommodations.         However, the legislative
       history of the ADA clarifies that the “other place
       of lodging” does not include residential facilities.
       H.R. Rep. No. 101-485(II), 101st Cong., 2d Sess.
       383 (1990).
Id. at 1344 n.14. It then concluded that “apartments and
condominiums do not constitute public accommodations within
the meaning of the [ADA].” Id. at 1344.
       Independent Housing Services does little to advance
Republic Franklin’s argument that private school dormitories
are not “transient lodging” under the ADA. We agree that
residential facilities such as apartments and condominiums are
not transient lodging and, therefore, not subject to ADA
compliance. But we believe dormitory housing, which is by its
very nature temporary, is different.

                             15
applicable provisions of Appendix A to this part (ADAAG).”
28 C.F.R. § 35.151. Chapter 9 of Appendix A to the ADAAG
provides guidelines for “Accessible Transient Lodging,” which
specifically includes “Hotels, Motels, Inns, Boarding Houses,
Dormitories, Resorts and Other Similar Places of Transient
Lodging.” 28 C.F.R. Part 36 App. A, Ch. 9.1 (emphases
added). Moreover, Chapter 3 of the ADAAG expressly states
that transient lodging includes “[a] building, facility, or portion
thereof, excluding inpatient medical care facilities and
residential facilities, that contains sleeping accommodations.
Transient lodging may include, but is not limited to, resorts,
group homes, hotels, motels, and dormitories.” 28 C.F.R. Part
36 App. A, Ch. 3.5 (emphasis added). In a nutshell, the ADA
regulations expressly define dormitories as transient lodging
and provide that any construction or alterations to dormitories
occurring after January 26, 1992, must comply with the ADA
and its guidelines. 28 C.F.R. § 36.402(b).

       Beyond the plain language of the ADA implementing
regulations, there is an additional reason to rule that it applies
to private-school dormitories: student housing—an integral part
of boarding school experience—is one of the facilities,
privileges, advantages, and accommodations of a place of
education covered by Title III of the ADA. As a private
secondary school, Mercersburg itself is a “public
accommodation” that is required to comply with the ADA. 42
U.S.C § 12181(7)(J). A school may not discriminate on the
basis of a student’s disability nor deny a reasonable

                                16
accommodation to a disabled student. On-campus housing
facilities such as dormitories are certainly part of the “goods,
services, facilities, privileges, advantages, and
accommodations” offered by schools to its students. 42 U.S.C
§ 12182(a). Thus, Mercersburg could not lawfully deny a
disabled student a reasonable accommodation that would permit
him or her to live in its dormitories. Indeed, the DOJ has
consistently taken the position that all aspects of a school’s
student activities and of the educational experience (including,
for example, research activities and fraternity housing) are
covered by Title III of the ADA. See DOJ, “Americans with
Disabilities Act Technical Assistance Letters,” Doc. # 488, at
http://www.usdoj.gov/crt/foia/talindex.htm (May 2, 1994)
(stating that fraternity houses, owned and operated by a
university, “like all other aspects of a university experience, are
part of the place of education, and are covered by title III”); see
also DOJ, “Americans with Disabilities Act Technical
Assistance Letters,” Doc. # 128, at
http://www.usdoj.gov/crt/foia/talindex.htm (July 8, 1992)
(stating that research activities conducted by a university, even
if primarily for pharmaceutical research rather than education,
are covered by Title III as part of the university’s obligation to
ensure “compliance with [T]itle III in all of the activities of the
place of public accommodation that it owns or operates[, a]
provision . . . intended to be read broadly”).9 For the same

       9
       In Bragdon v. Abbott, the Supreme Court drew guidance
from several of the DOJ’s technical assistance letters. 524 U.S.

                                17
reasons, the DOJ has taken the position that student housing is
covered by Title III of the ADA. See id., “United States’ Brief
as Amicus Curiae in Opposition to Emory University’s Motion
to Dismiss,” at http://www.ada.gov/briefs/barkopbr.pdf (stating
that “student housing owned and operated by a private
university is covered by [T]itle III of the ADA as a facility,
privilege, advantage, and/or accommodation of a place of
education”).10 In this context, we hold that the ADA applies


624, 646 (1998).
       10
        The DOJ filed an amicus brief in an ADA case pending
in the United States District Court for the Northern District of
Georgia, Barker v. Emory University, No. 02-CV-2450-CC.
DOJ, “United States’ Sur-Reply Brief as Amicus Curiae in
Opposition to Emory University’s Motion to Dismiss,” at
http://www.ada.gov/briefs/barkerbr.pdf.          The plaintiffs, a
student at the Emory University School of Law and a disability
rights advocacy group, sued Emory claiming that a number of
facilities on its campus are inaccessible, including a new student
apartment complex owned and operated by the University.
Emory asked the Court to dismiss the case, arguing that the
apartment complex and other dormitories on campus are not
covered by Title III of the ADA because they are “strictly
residential.”      The Government disagreed, unequivocally
advancing the position that campus housing is covered by Title
III of the ADA. According to the DOJ,
        Emory [wa]s obligated to ensure that all admitted
        students have ‘full and equal enjoyment of the
        goods, services, facilities, privileges, advantages,

                               18
        or accommodations’ that it provides . . . These
        include its residential housing program.
Id. at 2.
        The DOJ emphasized that “the categories of places of
public accommodation [should be read] broadly” and “student
housing is covered by the ADA under the broad category of a
place of education.” Id. at 5, 6.
        . . . Emory argues that dormitories are only
        covered by Title III if they offer short-term stays,
        because dormitories are listed in the heading of
        section 9.1 of the Department’s ADA accessibility
        standards: “Hotels, Motels, Inns, Boarding
        Houses, Dormitories, Resorts and Other Similar
        Places of Transient Lodging.” 28 C.F.R. Pt. 36
        App. A § 9. Emory’s argument fails, however,
        because Emory has neglected to distinguish the
        issue of whether an entity is covered by title III
        from the subsequent inquiry about what standards
        apply to a particular covered entity. . . . The
        Department’s position that dormitories are
        covered as places of education is not inconsistent
        with the fact that the standards mention
        dormitories as a type of transient lodging: to the
        contrary, the reference to dormitories in the
        standards is a clear indication that coverage of
        such facilities was anticipated by the drafters of
        the regulation.
Id. at 6-7 (emphasis added). Moreover, “[t]he length of a
student’s stay in college housing is irrelevant because student

                              19
to private-school dormitories and, therefore, to all four floors of
Keil Hall.11


housing is covered by the ADA under the broad category of a
place of education.”
       11
          Although it ruled that the first floor of Keil Hall was
subject to the demands of the ADA, the District Court went on
to conclude that Republic Franklin was not liable for the
renovation costs on that floor, stating:
        Because Mercersburg was required to ensure that
        the first floor complied with ADA prior to the
        fire, the Ordinance or Law [E]ndorsement was not
        triggered. Accordingly, Republic is not liable for
        the expenses related to the repairs made to the
        first floor as required by the ADA.
        Mercersburg argues that the Endorsement does not
contain any “trigger” requirement. According to the Academy,
the Endorsement provides coverage for loss to undamaged
portions of the building caused by enforcement of any law or
ordinance regulating the construction or repair of buildings that
is in force at the time of the loss. Thus, in Mercersburg’s view
the ADA—a law in force at the time of the loss—required it to
provide “maximum accessability” to the disabled when making
its alterations to Keil Hall.
        We disagree. Coverage A of the Endorsement will pay
for “loss to the undamaged portion of the building caused by
enforcement of any ordinance or law that . . . is in force at the
time of loss.” (Emphasis added.) Although “loss” is not
specifically defined in the policy, it provides the “trigger” that

                                20
       In light of our disagreement with the District Court as to
the applicability of the ADA to dormitories, one question
remains: whether any post-fire renovations made to the
undamaged portions of Keil Hall were demanded by the ADA.
There are two standards of compliance under the ADA: the
new construction standard and the alteration standard. New
construction is the highest standard,12 and it applies to public


Republic Franklin claims.         When voluntary repairs are
undertaken to undamaged portions of the building, there may be
costs imposed by enforcement of a law or ordinance, but those
costs are not a “loss.” Only when some actual Covered Cause
of Loss has caused damage to the building, the repair of which
must legally be accompanied by changes to the undamaged
portion of the building, can the law or ordinance be said to have
caused a “loss.” Similarly, Coverage C of the Endorsement
refers to “the increased cost to repair, rebuild, or construct the
property” (emphasis added) only when a Covered Cause of Loss
has occurred “to covered Building property.” This phrasing,
which directly links the rebuilt property to the damaged
property, does not mention voluntary reconstruction of
undamaged portions and should not be taken to refer to them.
       12
         See ADA Preamble to Regulation on Nondiscrimination
on the Basis of Disability by Public Accommodations and in
Commercial Facilities (“Title III Preamble”), Pt. 36, App. B, at
645 (“In striking a balance between guaranteeing access to
individuals with disabilities and recognizing the legitimate cost
concerns of businesses and other private entities, the ADA
establishes different standards for existing facilities and new

                               21
accommodations designed or constructed after January 26,
1992, and to the portion of a facility altered after that date. See
42 U.S.C. § 12183(a); H.R. Rep. No. 101-485(III) at 60,
reprinted at 1990 U.S.C.C.A.N. 445, 483 (explaining that
“[b]ecause it costs far less to incorporate accessible design into
the planning and construction of new buildings and of
alterations [as compared to retrofitting existing structures], a
higher standard of ‘readily accessible to and usable by’ persons
with disabilities has been adopted in the ADA for new
construction and alterations”); and 28 C.F.R. Part 36, App. B,
Section 36.402 (stating that, with respect to altered portions,
“[t]his part does not require alterations; it simply provides that
when alterations are undertaken, they must be made in a
manner that provides access”) (emphasis added); see also
Brother v. CPT Investments, Inc., 317 F. Supp. 2d 1358, 1370
(S.D. Fla. 2004) (stating that the ADA does not require
alterations). The new construction standards are contained in
28 C.F.R. Part 36, and, as discussed above, the ADAAG are set
forth in Appendix A of Part 36.

       Existing facilities also must comply with the ADA, but
that obligation is governed by the barrier removal provision.13


construction.”).
       13
         The ADA’s barrier removal provision requires the
removal of structural barriers in existing facilities when it is
“readily achievable.” 42 U.S.C. § 12182(b)(2)(A)(iv). This is

                                22
Of course, if existing facilities are altered, they must conform to
the alteration standard, which requires that alterations, as well
as the path of travel to “primary function” areas, be made
readily accessible to disabled individuals. 42 U.S.C. §
12183(a)(2).14 “Areas containing primary functions refer to


so when it is “easily accomplished and able to be carried out
without much difficulty or expense.” Id. § 12181(9).
Compliance with the ADA’s barrier removal provision may
require, for example, the installation of a concrete ramp, a
widened exterior door, or the modification of an existing public
restroom. 28 C.F.R. § 36.304(b). Where those public
accommodations can demonstrate that barrier removal is not
“readily achievable,” they must try other methods that are. 28
C.F.R. § 36.305(a).
       14
          In relevant part, 42 U.S.C. § 12183(a) provides:
                [D]iscrimination for purposes of section 12182(a)
of this title includes . . .
                (2) with respect to a facility or part thereof that is
                altered by, on behalf of, or for the use of an
                establishment in a manner that affects or could
                affect the usability of the facility or part thereof,
                a failure to make alterations in such a manner
                that, to the maximum extent feasible, the altered
                portions of the facility are readily accessible to
                and usable by individuals with disabilities,
                including individuals who use wheelchairs.
                Where the entity is undertaking an alteration that
                affects or could affect usability of or access to an

                                 23
those portions of a place of public accommodation where
significant goods, services, facilities, privileges, advantages or
accommodations are provided.” H. Rep. No. 485, 101st Cong.,
2d Sess., pt. 2, at 112 (1990), reprinted in 1990 U.S.C.C.A.N.
445, 486. As a practical example, “the path of travel to . . .
bathrooms, telephones, and drinking fountains [must be] . . .
readily accessible to and usable by individuals with disabilities.”
Id. at 394. As our Court has observed,

       while Congress chose not to mandate full
       accessibility to existing facilities, it required that
       subsequent changes to a facility be undertaken in
       a non-discriminatory manner. The use of such
       changes must be made available to all. The


              area of the facility containing a primary function,
              the entity shall also make the alterations in such a
              manner that, to the maximum extent feasible, the
              path of travel to the altered area and the
              bathrooms, telephones, and drinking fountains
              serving the altered area, are readily accessible to
              and usable by individuals with disabilities where
              such alterations to the path of travel or the
              bathrooms, telephones, and drinking fountains
              serving the altered area are not disproportionate to
              the overall alterations in terms of cost and scope
              (as determined under criteria established by the
              Attorney General).


                                24
       emphasis on equal treatment is furthered, as well,
       by an expansive, remedial construction of the
       term “usability.” Usability should be broadly
       defined to include renovations which affect the
       use of a facility, and not simply changes which
       relate directly to access.

Kinney v. Yerusalim, 9 F.3d 1067, 1973 (3d Cir. 1993). It is
clear, then, that to the extent the ADA—a law in force at the
time of the fire—regulated the alterations to Keil Hall (a public
accommodation) after the fire and required the Academy to
make paths and travel accessible to the primary-function areas
on each floor of Keil Hall, the plain language of the Ordinance
and Law Endorsement covers Mercersburg’s costs of complying
with the ADA.

        With this backdrop, we part with the District Court in
two respects. First, because dormitories are “transient lodging”
and Mercersburg is a “place of education,” we conclude that the
dormitory floors of Keil Hall are public accommodations within
the meaning of the ADA. Second, because the Endorsement
requires the insurer to cover alterations to the undamaged
portions of Keil Hall caused by enforcement of the ADA,
Republic Franklin may be liable for certain expenses not
directly caused by the fire. Of course, any alterations,
renovations and/or improvements made to any floor of Keil Hall
that were not mandated by the ADA (i.e., discretionary
alterations) do not fall within the scope of coverage of the

                               25
Endorsement, and, as a result, do not obligate the insurer.
Given that the ADA applies to all four floors of Keil Hall, it is
for the District Court to determine on remand specifically which
renovations (if any) undertaken by Mercersburg in its repair of
Keil Hall were mandated by the ADA—an issue the Court did
not reach in its memorandum opinion. Therefore, we reverse
the District Court’s grant of summary judgment in favor of
Republic Franklin on Mercersburg’s ADA claim and remand
the case for proceedings not inconsistent with this analysis.

B. PHA Claim

       Mercersburg also contends that, much like the ADA, the
Universal Accessibility Standards promulgated under the
Pennsylvania Handicapped Act (PHA), 71 Pa. Cons. Stat. §
1455.1 et seq. (2000); 34 Pa. Code § 60.1 et seq., required the
accessability upgrades, including the installation of an elevator,
to Keil Hall. The District Court held that the PHA did not
require modifications to Keil Hall because the repairs required
by the fire total less than 30% of the building’s value.

      The PHA requires that certain structural improvements
be made to maximize accessibility and usability by persons with
physical handicaps. 71 Pa. Cons. Stat. § 1455.1. Unlike the
ADA, the PHA generally applies to “buildings used by the
public” rather than to certain enumerated “public
accommodations.” Id. § 1455.1b. Moreover, the PHA
expressly applies to “schools” and “dormitories.” Id.

                               26
        Under it, when an existing private building is remodeled,
the remodeling must be done to ensure that the remodeled area
is “accessible to and usable by persons with physical handicaps”
to a degree based on the proportional cost of the remodeling to
the overall worth of the building. Id. § 1455.1c(b)(1). If the
construction cost of the remodeling is less than 30% of the
value of the building, only the remodeled area or areas shall be
made accessible to and usable by persons with physical
handicaps. An accessible route to the remodeled area or areas
is not required. Id. § 1455.1c(b)(1)(i). If “the construction cost
of the remodeling is greater or equal to 30 percent but less than
50 percent of the worth of the building, the remodeled area or
areas shall be made accessible to and usable by persons with
physical handicaps, and an accessible route to the remodeled
area or areas shall be provided.” Id. § 1455.1c(b)(1)(ii). If the
construction cost is 50 percent or more of the value of the
building, the entire building must be made accessible to and
usable by handicapped persons. Id. § 1455.1c(b)(1)(iii). For
purposes of the latter two subsections, construction made over
a three-year period may be calculated as the construction cost.
Id. § 1455.1c(b)(1)(iv).

       The same analytical framework applicable to the ADA
claim, discussed above, necessarily applies to Mercersburg’s
PHA claim. Simply stated, the lightning strike only damaged
certain portions of Keil Hall; when those portions were
remodeled, Mercersburg was required to comply with the PHA;
Republic Franklin, in turn, was obligated to pay for that

                               27
remodeling (which it has done); it was only obligated to pay for
further remodeling to undamaged portions of Keil Hall if that
remodeling was required by an ordinance or law.

        The question, then, is whether the PHA required any
further remodeling. As explained above, the answer to that
inquiry depends on a factual determination and the cost of
remodeling compared to the worth of Keil Hall. Specifically,
if the repairs required by the fire total less than 30% of Keil
Hall’s total value, the PHA requires no further modifications
and it follows that Republic Franklin is not obligated to cover
the cost of any further modifications. The converse is also true:
if the repairs required by the fire total exceed 30% of Keil
Hall’s total value, then the PHA demands further modifications
and it follows that Republic Franklin must cover all or some of
the portion of the cost of those modifications under the
Ordinance and Law Endorsement.

       Both sides agree that the total value of Keil Hall is
$1,900,000. Moreover, during oral argument, counsel for
Mercersburg agreed that the aggregate cost of repair to Keil
Hall caused by the fire totals substantially less than 30% of the
total value of the building. As a result, the PHA required no
further modifications to Keil Hall. Accordingly, we affirm the
District Court’s grant of summary judgment in favor of
Republic Franklin on the PHA claim.




                               28
C. Building Codes

       Finally, Mercersburg contends that the Ordinance and
Law Endorsement provides coverage for renovations it made to
undamaged portions of Keil Hall pursuant to, inter alia, the
International Mechanical Code, Building Officials and Code
Administrators International, Inc. Code, the National Electric
Code, the International Plumbing Code, and the standards of the
American Society of Heating, Refrigeration and Air-
Conditioning Engineers. It is undisputed that the Borough of
Mercersburg, in which the Academy is located, has adopted
none of the foregoing codes nor any other building codes.
Relying on that fact, the District Court held that the terms “law”
and “ordinance” in the Endorsement should be afforded their
ordinary meaning. As such, it refused to construe those terms
to include building codes or standards adopted by private
organizations but not adopted by a governmental body having
authority to do so here.

        The basic principles of law governing insurance policy
interpretation are well-settled in Pennsylvania. E. Associated
Coal Corp. v. Aetna Cas. & Surety Co., 632 F.2d 1068, 1075
(3d Cir. 1980). The goal of interpreting an insurance policy,
like the goal of interpreting any other contract, is to determine
the intent of the parties. It begins where it must—the language
of the policy. Madison Constr. Co., 735 A.2d at 106 (“The
polestar of our inquiry . . . is the language of the insurance
policy.”).

                               29
      The task of interpreting [an insurance] contract is
      generally performed by a court rather than by a
      jury. The goal of that task is, of course, to
      ascertain the intent of the parties as manifested by
      the language of the written instrument. Where a
      provision of a policy is ambiguous, the policy
      provision is to be construed in favor of the
      insured and against the insurer, the drafter of the
      agreement. Where, however, the language of the
      contract is clear and unambiguous, a court is
      required to give effect to that language.

Gene & Harvey Builders v. Pa. Mfrs. Ass’n, 517 A.2d 910, 913
(Pa. 1986) (quoting Standard Venetian Blind Co. v. Am. Empire
Ins. Co., 469 A.2d 563, 566 (Pa. 1983)) (additional citations
omitted).

      Contractual language is ambiguous “if it is reasonably
susceptible of different constructions and capable of being
understood in more than one sense.” Hutchison v. Sunbeam
Coal Co., 519 A.2d 385, 390 (Pa. Super. Ct. 1986); see also
Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d
100, 106 (Pa. 1999). Courts should not, however, distort the
meaning of the language or strain to find an ambiguity. Steuart
v. McChesney, 444 A.2d 659, 663 (Pa. Super. Ct. 1982).

      Mercersburg asks us to rule that the plain and ordinary
meaning of “law” and “ordinance” in the Endorsement is

                              30
broader than the interpretation given by the District Court. We
need not reach this issue. This is because, even if the District
Court did read those terms too narrowly, that determination does
not resolve the larger controversy before us: whether the “loss to
undamaged portion[s]” of Keil Hall was “caused by enforcement
of any” of the codes. This inquiry must be answered no. Unlike
the ADA and PHA, Mercersburg fails to point out any provisions
of the building codes that mandated or required it to do any
upgrades, renovations, etc., to the undamaged portions of Keil
Hall. Certainly, Mercersburg’s discretionary decision to renovate
undamaged portions of Keil Hall triggered the application of the
building codes as to that renovation, but critically important is
that the building codes themselves did not trigger those
renovations. This distinguishes Mercersburg’s building codes
claims from its ADA and PHA claims. As a result, we affirm the
District Court’s determination (albeit on different grounds than
the District Court) that the Ordinance and Law Endorsement does
not provide coverage for renovations it made to undamaged
portions of Keil Hall in hypothetical compliance with codes not
mandating those renovations.

       VI.    Conclusion

       We reverse the District Court’s summary judgment ruling
dismissing Mercersburg’s ADA claim and remand that claim for
proceedings not inconsistent with this opinion, but affirm its
summary judgment rulings dismissing Mercersburg’s PHA and
building codes claims.

                               31
