Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ORRISON v. FARMERS NEW CENTURY INSURANCE COMPANY

June 8, 2004.

DANIEL ORRISON, ET AL.
v.
FARMERS NEW CENTURY INSURANCE COMPANY.



The opinion of the court was delivered by: JOHN PADOVA, District Judge

MEMORANDUM

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.

I. BACKGROUND

  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).

  II. LEGAL STANDARD

  "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).

  III. DISCUSSION

  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 policy.

  A. Bad Faith

  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 insurer.
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 (Pa. 2000)).

  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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.