United States District Court, E.D. Pennsylvania
July 12, 2004.
FRANK LASALANDRA, et al.
PENNSYLVANIA GENERAL INSURANCE CO., INC.
The opinion of the court was delivered by: THOMAS O'NEILL, Senior District Judge
Plaintiffs Frank LaSalandra and Chiara LaSalandra filed a
complaint against defendant Pennsylvania General Insurance
Company, Inc. alleging breach of contract and bad faith.
Plaintiffs, residents of the state of New Jersey, purchased a
homeowner's insurance policy from defendant, a Massachusetts
corporation. While the insurance policy was in force, plaintiffs'
allege their home was damaged as a result of ice, snow and wind.
Plaintiffs assert that they provided prompt notice to defendant
regarding their property loss, made their home available for
inspection and otherwise complied with the terms and conditions
required by defendant's policy. Plaintiffs further allege that
defendant contends any damages to their house were not a result
of ice and snow and were not covered by the insurance policy.
They assert that defendant failed to conduct a complete
investigation of their claim and misapplied provisions of the
homeowner's policy in denying coverage the policy purported to
provide. Now before me is defendant's motion to dismiss Count II
of plaintiffs' complaint, alleging that plaintiffs' bad faith
claim is not viable under New Jersey law. A Rule 12(b)(6) motion to dismiss examines the sufficiency of
the complaint. Conley v. Gibson, 355 U.S. 41, 45 (1957). In
determining the sufficiency of the complaint I must accept all of
plaintiffs' well-pleaded factual allegations as true and draw all
reasonable inferences therefrom. Graves v. Lowery,
117 F.3d 723, 726 (3d Cir. 1997).
The Federal Rules of Civil Procedure do not require a
claimant to set out in detail the facts upon which he
bases his claim. To the contrary, all the Rules
require is "a short and plain statement of the claim"
that will give the defendant fair notice of what the
plaintiff's claim is and the grounds upon which it
Id., quoting Conley, 355 U.S. at 47. I should not inquire
as to whether plaintiffs will ultimately prevail, but only
whether they are entitled to offer evidence to support their
claims. See Oatway v. Am. Int'l Group, Inc., 325 F.3d 184
187 (3d Cir. 2003). "Thus, [I will] not grant a motion to dismiss
`unless it appears beyond a doubt that [plaintiffs] can prove no
set of facts in support of [their] claim which would entitle
[them] to relief.'" Graves, 117 F.3d at 726, quoting,
Conley, 355 U.S. at 45-46.
Accepting all the plaintiffs well-pleaded factual allegations
as true and drawing all reasonable inferences therefrom, I find
they have pled sufficient facts to withstand a motion to dismiss
Count II of their complaint alleging bad faith in violation of
the statutory, regulatory and case law of New Jersey. New Jersey
does not have a bad faith statute, but New Jersey Courts imply a
duty of good faith and fair dealing in all contracts. See, e.g.
Paul Revere Life Ins. Co. v. Patniak, No. 02-3243, 2004 U.S.
Dist. LEXIS 7668, at *6 (D.N.J. April 1, 2004). Further, "[t]he
New Jersey Supreme Court has recognized a cause of action for an
insurance company's `bad faith' failure to pay an insured's
claim." Tarsio v. Provident Ins. Co., 108 F. Supp.2d 397, 400
(D.N.J. 2000). To establish bad faith, "a plaintiff must show the
absence of a reasonable basis for denying benefits of the policy." Pickett v. Lloyd's,
621 A.2d 445, 453 (1993) (citation omitted). The plaintiff "must then
prove that the defendant knew or recklessly disregarded the lack
of a reasonable basis for denying the claim." Tarsio v.
Provident Ins. Co., 108 F. Supp.2d 397, 400-01 (D.N.J. 2000),
citing Pickett 621 A.2d at 453. In other words, "an insurance
company does not act in `bad faith' if the plaintiff's insurance
claim was `fairly debatable.'" Tarsio, 108 F. Supp.2d at 401.
N.J. Stat. Ann. § 17:29 B-4(9) identifies unfair claim
settlement practices by insurers including:
(a) Misrepresenting pertinent facts or insurance
policy provisions relating to coverages at issue;
. . .
(d) Refusing to pay claims without conducting a
reasonable investigation based upon all available
(e) Failing to affirm or deny coverage of claims
within a reasonable time after proof of loss
statements have been completed;
(f) Not attempting in good faith to effectuate
prompt, fair and equitable settlements of claims in
which liability has become reasonably clear;
(g) Compelling insureds to institute litigation to
recover amounts due under an insurance policy by
offering substantially less than the amounts
ultimately recovered in actions brought by such
insureds; . . .
(n) Failing to promptly provide a reasonable
explanation of the basis in the insurance policy in
relation to the facts or applicable law for denial of
a claim or for the offer of a compromise settlement;
The statute sets forth a standard of conduct for the settlement
of claims by insurers and an insurer's non-compliance with this
standard is evidence of bad faith. Miglicio v. HCM Claim Mgmt.
Corp., 672 A.2d 266
, 271 (N.J. Super. 1995).
Plaintiffs' allegations in Count II of the complaint include
claims that defendant undertook many of the practices deemed
unfair in § 17:29 B-4(9). Plaintiffs allege, in part, that
defendants acted in bad faith by "falsely representing that the
policy of insurance issued by Defendant did not provide for a complete and unqualified
appraisal of Plaintiffs' loss;" "failing to complete a prompt and
thorough investigation of plaintiffs' claim . . .;" "conducting
an unfair and unreasonable investigation of plaintiffs' claim;
. . ." and "unnecessarily and unreasonably compelling Plaintiffs
to institute this lawsuit to obtain policy benefits. . . ."
(Pls.' Am. Compl. ¶ 14). Under Federal Rule of Civil Procedure
8(a)(2)'s notice pleading requirement, a plaintiff must simply
plead sufficient facts to "give the defendant fair notice of what
the plaintiff's claim is and the grounds upon which it rests."
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002), citing
Conley v. Gibson, 355 U.S. 41, 47 (1957). Plaintiffs'
allegations in Count II of the complaint are sufficient to give
defendant fair notice of the grounds for their bad faith claim as
they allege the absence of a reasonable basis for denying
In support of its argument that plaintiffs' claim was "fairly
debatable," defendant cites to a letter from Edward Ramos of New
Jersey Skylands Insurance Companies which notes that plaintiffs'
property was inspected by Dave Sorace of Contemporary Adjustment
Company and David Yelner, an engineering consultant. Defendant
asserts that dismissal of the bad faith claim is proper because
"[w]hen the results of two separate investigations support denial
of a claim, logic and equity dictate that the claim must be
rendered `fairly debatable' at the very least." (D's Mem. of Law
in Suppt. of Mot. to Dis. at 3). Defendant cites to no cases
where a court has dismissed a claim because investigations by two
individuals were sufficient to render an insurance claim fairly
debatable. Under the liberal pleading requirements of Rule 8(a),
where plaintiffs have alleged defendant's investigation of their
claim was "unfair and unreasonable" it does not appear "clear
that no relief could be granted under any set of facts that could
be proved consistent with the [plaintiff's] allegations."
Swierkiewicz, 534 U.S. at 514, citing Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984). Plaintiffs should be
entitled to offer evidence to support their claim that
defendant's denial of insurance coverage was made in bad faith
because there was no fairly debatable reason for its limitation
of coverage for plaintiffs' claims of damage due to wind, snow
and ice. ORDER
AND NOW, this day of July 2004, after considering defendant's
motion to dismiss Count II of plaintiff's complaint and
plaintiff's response thereto, and for the reasons set forth in
the accompanying memorandum, it is hereby ORDERED that
defendant's motion is DENIED.
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