The opinion of the court was delivered by: JOHN PADOVA, District Judge
Plaintiffs, Daniel and Linda Orrison, have brought this action
for breach of a homeowner's insurance contract, bad faith,
negligence, and negligent misrepresentation against Farmers New
Century Insurance Company ("Farmers"). Defendant has moved to
dismiss Counts II-IV of the Complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6) ("Rule 12(b)(6)") for failure to
state a claim upon which relief may be granted. For the reasons
that follow, the Motion is granted in part and denied in part.
The Complaint alleges that Farmers issued a homeowners'
insurance policy, Policy No. 92096-43-88, covering Plaintiffs'
premises at 3961 Mechanicsville Road, Bensalem, Pennsylvania (the
"Policy"). (Compl. ¶ 3.) On June 24, 2002, while the Policy was
in full force and effect, Plaintiffs suffered a physical loss to
the insured premises resulting in damage to several areas of the
premises, including the infiltration of water into the interior
of the home. (Compl. ¶ 5.) Plaintiffs promptly gave Farmers
notification of their loss. (Compl. ¶ 6). Farmers determined that Plaintiffs had suffered a covered loss and paid certain benefits
to Plaintiffs, including benefits for the replacement of their
roof. (Compl. ¶ 7.) Farmers, in accordance with the Policy,
retained Mark Irwin to replace Plaintiffs' roof. (Compl. ¶ 7.)
Plaintiffs' roof was replaced by Irwin either through his own
company or through a subcontractor. (Compl. ¶ 7.)
Not long thereafter, Plaintiffs discovered mold growth on the
underside of their new roof, in the attic, and in other areas of
their home. (Compl. ¶ 8.) They promptly notified Defendant, who
investigated and refused to provide coverage for the mold growth.
(Compl. ¶ 8.) The mold growth was due in whole or in part to
Farmers' roofer's improper installation of the roof, which
affected the ventilation within the home and provided an
environment which encouraged mold growth. (Compl. ¶ 9.) The mold
growth was also caused by the infiltration of water into
Plaintiffs' home on June 24, 2002. (Compl. ¶ 10.) As a result of
the mold growth, Plaintiffs have suffered damage to their home,
personal property, and health. (Compl. ¶ 11.)
The Complaint asserts causes of action for breach of contract
(Count I) and bad faith in violation of 42 Penn. Cons. Stat. Ann.
§ 8371 (Count II). The Complaint also alleges negligence and
negligent misrepresentation claims (Counts III and IV).
"The test for reviewing a 12(b)(6) motion is whether under any
reasonable reading of the pleadings, plaintiff may be entitled to relief." Simon v. Cebrick, 53 F.3d 17, 19 (3d Cir. 1995). The
court must accept as true all well pleaded allegations in the
complaint and view them in the light most favorable to the
Plaintiff. Angelastro v. Prudential-Bache Securities, Inc.,
764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be
granted when a Plaintiff cannot prove any set of facts,
consistent with the complaint, which would entitle him or her to
relief. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
Farmers has moved to dismiss Count II of the Complaint on the
grounds that the Complaint fails to adequately state a claim for
bad faith under Pennsylvania law. Additionally, Farmers has moved
to dismiss Counts III and IV of the Complaint on the grounds
that, in Pennsylvania, breach of contract is the exclusive remedy
for failure to pay the proceeds of an insurance policy, and state
law does not provide a cause of action based on negligence or
tort theories for the failure to pay the proceeds of an insurance
Count II of the Complaint alleges a claim against Farmers for
insurance bad faith based on Farmers' treatment of Plaintiffs
pertaining to their covered loss and Farmers' refusal of coverage
for the mold damage to the property. The Pennsylvania insurance
bad faith statute provides as follows:
In an action arising under an insurance policy, if the court finds that the insurer has acted
in bad faith toward the insured, the court may take
all of the following actions:
(1) Award interest on the amount of the claim from
the date the claim was made by the insured in an
amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the
42 Pa. Cons. Stat. Ann. § 8371. "To establish a claim for bad
faith denial of insurance coverage under Pennsylvania law, a
Plaintiff must prove by clear and convincing evidence that: the
insurer (1) lacked a reasonable basis for denying coverage, and
(2) knew or recklessly disregarded its lack of a reasonable
basis." Justofin v. Metropolitan Life Ins. Co., No.CIV.A.
01-6266, 2002 WL 1773007, (E.D. Pa. July 29, 2002) at *7 (citing
Adamski v. Allstate Ins. Co., 738 A.2d 1033
, 1036 (
Pa. Super. 1999), appeal denied, Goodman v. Durham, 759 A.2d 387
Farmers argues that Count II should be dismissed pursuant to
Rule 12(b)(6) because the Complaint does not allege that Farmers
acted without a reasonable basis, or with the knowledge that it
lacked a reasonable basis, in investigating and denying
Plaintiffs' claim. However, the Complaint does plead that the
Defendant engaged in bad faith conduct toward Plaintiffs. The
Complaint sets forth the basic facts of the Plaintiffs'
interaction with Farmers, including the issuance of the insurance
policy, the coverage of the initial loss, and Farmers' refusal to
provide coverage for the mold growth. The Complaint specifically avers that Farmers did not have a reasonable basis for denying
Plaintiffs' benefits and that Farmers knowingly or recklessly
disregarded its lack of reasonable basis when it denied
Plaintiffs' claim. (Compl. ¶ 18(f).) Under Rule 8 of the Federal
Rules of Civil Procedure, "[t]he complaint will be deemed to have
alleged sufficient facts if it adequately put the defendants on
notice of the essential elements of the plaintiffs' cause of
action." Langford ...