The opinion of the court was delivered by: Yohn, J.
Defendant State Farm Mutual Insurance Co. ("State Farm")*fn1 has filed a motion to dismiss Counts I-IV of plaintiff Jameson Godfry's Complaint for failure to state a cause of action upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) and a motion to transfer this action to the District of Delaware pursuant to 28 U.S.C. § 1404(a). The central issue raised by defendant's motions is whether Pennsylvania or Delaware law applies to this case. For the reasons that follow, I hold that Pennsylvania law applies and that transferring venue is inappropriate. Therefore, I will deny both of defendant's motions.
I. Factual and Procedural Background
This dispute arises from Godfry's claim for uninsured motorist benefits following an automobile collision. On August 15, 2004, Godfry was a passenger in a vehicle driven by Randall Neil when the vehicle was involved in a collision in Delaware. (Def.'s Mot. Dis. ¶ 4; Pl.'s Answer Def.'s Mot. Dis. ¶ 4.) The vehicle was owned by Karen Neil, a Delaware resident. (Def.'s Mot Dis. ¶ 4; Pl.'s Answer Def.'s Mot. Dis. ¶ 4.) State Farm provided automobile insurance coverage for Karen Neil's vehicle (the "insurance policy"). (Def.'s Mot. Dis. ¶ 5; Pl.'s Answer Def.'s Mot. Dis. ¶ 5.) The other vehicle involved in the collision was uninsured. (Compl. ¶ 8; Def.'s Mot. Dis. ¶ 6.) Godfry suffered several injuries, which required extended rehabilitation. (Compl. ¶¶ 10, 14.)
After the collision, Godfry made an insurance claim for uninsured motorist benefits under the policy. Godfry's claim was handled by State Farm claim representatives operating in Delaware.*fn2 In August 2005 and again in August 2006, Godfry sent a demand to State Farm, offering to settle his claim for $65,000. (Compl. ¶ 19.) State Farm requested that Godfry visit Dr. Richard Morris for a medical examination.*fn3 This examination occurred in Wilmington, Delaware on January 23, 2006. (Id. ¶ 17; Def.'s Mot. Dis. Ex. C, Letter from State Farm to Godfry's Attorney dated Dec. 23, 2005.) Dr. Morris determined that Godfry had returned to his pre-collision activity levels. (See Def.'s Mot. Dis. Ex. C., Letter from State Farm to Godfry's Attorney dated March 8, 2006). On March 8, 2006, in reliance on Dr. Morris's examination, State Farm discontinued reimbursement for Godfry's medical expenses. (Id.)
On May 8, 2006, Godfry rejected State Farm's offer of $7,500 to settle his claim. On July 11, 2007, Godfry commenced a civil action against State Farm in the Philadelphia County Court of Common Pleas to enforce his rights under the insurance policy (the "state court action"). State Farm retained Joseph Ross, a Pennsylvania attorney, to defend the state court action. (Def.'s Mot. Dis. ¶ 9; Pl.'s Answer Def.'s Mot. Dis. ¶ 6.) Godfry asserts that after hiring Ross, correspondence and settlement discussions may have originated in Delaware, but were implemented by Ross in Pennsylvania. (Pl.'s Answer Def's Mot. Dis. ¶ 9.)
Prior to trial, Godfry and State Farm attended two court-ordered settlement conferences in Pennsylvania. (Pl.'s Mem. Law Resp. Def.'s Mot. Dis. at 2.) Gary Brownstein, Esquire, presided over the first settlement conference and recommended a settlement value of $35,000. (Compl. ¶ 26.) The Honorable William J. Manfredi presided over the second settlement conference and, like Mr. Brownstein, Judge Manfredi concluded that the state court action should settle for $35,000. (Id. ¶ 31.) Despite these neutral evaluations, State Farm never increased its offer to settle. (Id. ¶ 34.) The state court action, therefore, proceeded to trial on August 26, 2008. Godfry asserts that during the trial Dr. Morris committed perjury when discussing the cause and extent of Godfry's injuries. (Id. ¶ 33.) Godfry further asserts that State Farm knew or should have known that Dr. Morris committed perjury because Dr. Morris's deception was "apparent" from his previous deposition testimony. (Id.) Nonetheless, the jury returned a $50,000 verdict in favor of Godfry.
On September 8, 2008, Godfry commenced the instant diversity action in the Philadelphia County Court of Common Pleas, arguing that State Farm's failure to fairly and reasonably settle the state court action and knowing use of perjured testimony at trial, inter alia, constituted bad faith. Godfry's Complaint asserts five counts: (1) violation of Pennsylvania's Unfair Insurance Practices Act, 40 Pa. Cons. Stat. § 1171 et seq.; (2) bad faith pursuant to 42 Pa. Cons. Stat. § 8371; (3) violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1 et seq.; (4) common law bad faith under Pennsylvania law; and (5) common law bad faith under Delaware law. State Farm removed the action to federal court on October 8, 2008 pursuant to 28 U.S.C. § 1441(a) and § 1332. On October 24, 2008, State Farm filed a motion to dismiss Counts I-IV of plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and a motion to transfer venue to the District of Delaware pursuant to 28 U.S.C. § 1404(a). In its motion, State Farm argues that Pennsylvania law does not provide a cause of action for Counts I and III and that Delaware law applies to this case, thereby necessitating the dismissal of Counts II and IV, as these counts are premised on Pennsylvania law. Godfry responded to State Farm's motion on November 4, 2008. In his response, Godfry concedes the dismissal of Counts I and III, but argues for the application of Pennsylvania law to the balance of his Complaint. State Farm filed its reply on November 14, 2008.
As plaintiff concedes the dismissal of Counts I and III of his Complaint, the court will dismiss these counts with prejudice. Therefore, two issues remain: (1) whether Pennsylvania's choice of law principles require the court to apply Pennsylvania or Delaware law to Godfry's bad faith claims and (2) whether, for the convenience of the parties and witnesses and in the interest of justice, I should exercise my discretion under 28 U.S.C. § 1404(a) and transfer this case to the District of Delaware.
The first issue concerns whether Pennsylvania or Delaware substantive law applies to this case.*fn5 State Farm argues that Delaware law applies because the automobile collision occurred in Delaware, the named insured is a Delaware domiciliary, the insurance policy was negotiated and executed in Delaware, and plaintiff's insurance claims were administered by Delaware claim representatives. Godfry contends that Pennsylvania law applies because he is a domiciliary of Pennsylvania, the underlying state court action occurred in Pennsylvania and was defended by a Pennsylvania attorney, and most of the acts relevant to his bad faith claims occurred in Pennsylvania. Because this is a diversity action, I apply the choice of law rules of the forum state to determine the applicable body of substantive law. See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Accordingly, Pennsylvania choice of law rules apply.
The Pennsylvania Supreme Court has adopted a "flexible rule" for choice of law questions, "which permits analysis of the policies and interests underlying the particular issue before the court." Griffith v. United Airlines, Inc., 203 A.2d 796, 805 (Pa. 1964); see also, e.g., Budtel Assocs., LP v. Cont'l Cas. Co., 915 A.2d 640, 643-44 (Pa. Super. Ct. 2006). This approach "gives to the place having the most interest in the problem paramount control over the legal issues arising out of a particular factual context and thereby allows the forum to apply the policy of the jurisdiction most intimately concerned with the outcome of the particular litigation." Griffith, 203 A.2d at 806 (internal quotation marks and alterations omitted). The Griffith "interest/contacts" approach applies to insurance contract disputes. Hammersmith v. TIG Ins. Co., 480 F.3d 220, 227-28 (3d Cir. 2007).
The first step of the interest/contacts analysis requires a determination of whether an "actual or real" conflict exists between the substantive laws of the involved jurisdictions. Id. at 230. If an actual conflict exists, I will "examine the governmental policies underlying each law, and classify the conflict as 'true,' 'false,' or an unprovided-for situation.*fn6 " Id. Only if I find a true conflict must I "determine which state has the 'greater interest in the application of its law.'" Id. at 231 (quoting Cipolla v. Shaposka, 267 A.2d 854, 856 (Pa. 1970)). If I must determine which state harbors the greater interest, I will consider "both the [Conflict of Laws] Restatement II (contacts establishing significant relationships) and 'interests analysis' (qualitative appraisal of the relevant state policies with respect to the controversy)." Id. This analysis is not a "'mere counting of contacts'"; rather, I must weigh the relevant contacts "on a qualitative scale." Id. (quoting Cipolla, 267 A.2d at 856).
A. Identifying a Conflict
Under the Hammersmith approach, I must first determine whether an "actual" conflict exists between Pennsylvania and Delaware bad faith insurance claims. Id. at 230. The parties both contend that a conflict exists between the two bodies of law. After review, I agree.
Under Pennsylvania law, an insured alleging bad faith on the part of an insurer can file either (or both) a bad faith claim pursuant to 42 Pa. Cons. Stat. § 8371*fn7 or a breach of contract claim for breach of the implied duty of good faith.*fn8 The Pennsylvania legislature did not define "bad faith" as it is used in § 8371, and the Pennsylvania Supreme Court has yet to supply a definition. Northwestern Mut. Life Ins. Co. v. Babayan, 430 F.3d 121, 137 (3d Cir. 2005). Nonetheless, both the Third Circuit (whose decisions are of course binding on me) and Pennsylvania Superior Court have predicted the Pennsylvania Supreme Court would require insureds to prove (1) "the insurer did not have a reasonable basis for denying benefits under the applicable insurance policy" and (2) "the insurer knew or recklessly disregarded its lack of reasonable basis in denying the claim." Greene v. United Servs. Auto. Ass'n, 936 A.2d 1178, 1189 (Pa. Super. Ct. 2007) (quoting Employers Mut. Cas. Co. v. Loos, 476 F. Supp. 2d 478, 490- 91 (W.D. Pa. 2007) (citing Tertletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994))). If an insured establishes these elements, § 8371(1)-(3) permits recovery of interest, court costs, attorney fees and punitive damages. If an insured establishes a breach of the implied duty of good faith (i.e., a breach of the insurance contract), an insured can recover typical contract remedies, including compensatory damages. See Birth Central v. St. Paul Cos., Inc., 787 A.2d 376, 387 (Pa. 2001) (holding that § 8371 "does not prohibit courts from awarding compensatory damages that are otherwise available" in the common law bad faith action). Recovery on the contract claim, however, does not include punitive damages. See Baker v. Pa. Nat'l Mut. Cas. Ins. Co., 536 A.2d 1357, 1361-62 (Pa. Super. Ct. 1987).*fn9
Unlike Pennsylvania, Delaware has no statutory cause of action to remedy an insurer's bad faith. Instead, "[w]here an insurer fails to investigate or process a claim or delays payment in bad faith, it is in breach of the implied obligations of good faith and fair dealing underlying all contractual obligations." Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254, 264 (Del. 1995). If an insured establishes a breach of these implied obligations (i.e., establishes a "Tackett" claim), Delaware permits general contract remedies. In addition, punitive damages "may be available in the context of a [Tackett claim] if the denial of coverage is wilful or malicious . . . and when the bad faith actions of an insurer are taken with a reckless indifference or malice toward the plight of the [insured]." E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 446 (Del. 1996) (alterations omitted). Potential recovery for an insurer's bad faith, however, generally does not include attorney fees. See Casson v. Nationwide Ins. Co., 455 A.2d 361, 370 (Del. Super. Ct. 1982) ("In an action at law, a court may not order the payment of attorney's fees as part of costs to be paid by the losing party unless the payment of such fees is authorized by some provision of statute or contract." (emphasis added)). Delaware applies the American rule for the recovery of attorney fees, which requires parties to shoulder costs and fees attendant to a lawsuit unless a statute or contract provision creates an exception. Id. Because no Delaware statute permits the recovery of attorney fees in bad faith actions, absent a contractual provision permitting such recovery, attorney fees are not recoverable. Id. (holding that "there is no statutory basis for an award of attorney's fees" in an automobile insurance case involving breach of implied duty of good faith and fair dealing).*fn10
In short, the remedies available to a successful plaintiff suing an insurer for bad faith under Delaware law differ from those under Pennsylvania law. While a plaintiff can recover punitive damages and compensatory damages under both Pennsylvania and Delaware law, under Delaware law a plaintiff cannot recover attorney fees. Because Delaware and Pennsylvania law differ materially with respect to an insured's potential recovery, an actual conflict exists. Cf. Aircraft Guar. Corp. v. Strato-Lift, Inc., 951 F. Supp. 73, 77 (E.D. Pa. 1997) (finding true conflict because "Texas's statutory entitlement to attorney's fees in contract actions stands in direct ...