The opinion of the court was delivered by: Ditter, J.
This case comes before me on the motion to dismiss of the defendant, Allstate Life Insurance Company, pursuant to Fed. R. Civ. P. 12(b)(6). The plaintiffs, Paul M. Prusky, Paul M. Prusky Roth IRA, Paul M. Prusky IRA, and Steven Prusky (collectively, "the plaintiffs") filed a six-count complaint based on Allstate's restriction of transfers related to the parties'contract for Flexible Premium Deferred Variable Annuities. Count I seeks injunctive relief, specific performance, and a declaration that plaintiffs are entitled to make daily transfers with no monetary limitations. Count II is entitled "Equitable Estoppel" and seeks to estop Allstate from preventing unrestricted transfers based on the plaintiffs' reliance on Allstate's representations related to daily transfers. Count III seeks recovery under Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. ("UTPCPL"). Count IV is entitled "Insurance Company Bad Faith" and alleges Allstate "acted in bad faith toward their insured" pursuant to 42 Pa. Cons. Stat. § 8371. In Counts V and VI plaintiffs allege that Allstate's representations regarding "unrestricted daily transfers" were false and constitute fraud and negligent misrepresentation.
For the reasons that follow, I will deny Allstate's motion as to all but Counts II and IV of the complaint.
The plaintiffs purchased seven Variable Annuity Account II Certificates ("Annuity Contracts") from Northbrook Life Insurance Company, a predecessor of Allstate, on April 27 and 28, 1999.*fn2 The plaintiffs invested money in the Annuity Contracts by the separate Northbrook Variable Annuity Account II ("Variable Account"). The Annuity Contracts permit the value invested to be apportioned in various subaccounts at the direction of the plaintiffs. It is uncontested that at the time of purchase, and for a significant period thereafter, the plaintiffs were allowed to transfer assets between and among the subaccounts as frequently as once daily to take advantage of market fluctuations. The plaintiffs allege that the frequent ability to transfer funds was "essential" to plaintiffs' purpose in obtaining the contracts.
Prior to the purchase of the annuity contracts, the plaintiffs asked certain Allstate representatives about the ability to make frequent transfers among subaccounts. The plaintiffs proposed binding terms by way of a Special Instructions Attachment relating to unrestricted transfers, the right to change owners, and the right to utilize an agent for transfers, as well as the ability to place transfers with a single set of instructions and permission to effect transfers by telephone or facsimile. Allstate responded by stating it could not sign off on any changes to the contract, but expressly noted that the plaintiffs' requests regarding transfers "were clearly indicated in the contract" and the requested methods for effecting the transfers were "common administrative practices." The plaintiffs also contacted "Renee," an Allstate employee, and Dave Marcucci, an Allstate supervisor. Renee confirmed that the procedures listed in the attachment were all standard and that "frequent transfers were not an issue." Similarly, Mr. Marcucci told the plaintiffs "that frequent transfers... would not be a problem."
Two of the seven Annuity Contracts were issued with an Amendatory Endorsement for Transfer Limitations, while the other five were not. However, Allstate notified the plaintiffs by letter dated September 16, 1999, that the Amendatory Endorsement was sent in error and should be discarded.
When the Annuity Contracts were signed, a 1998 prospectus was in effect which did not provide any language placing limitations on the transfer rights of owners. Beginning in May 1999 and continuing through May 2003, the yearly prospectuses provided, in part, "[f]or Contracts issued after May 2, 1999, we reserve the right to limit transfers among the Variable Sub-Accounts if we determine, in our sole discretion, that transfers by one or more Contract owners would be to the disadvantage of other Contract owners." In 2004, however, the prospectus stated that Allstate could impose transfer limitations on contracts from any year.
In a November 6, 2002 letter, William B. Borst, III, then Senior Vice President of Northbrook, notified the plaintiffs that their telephone transfer privileges would be restricted, but no restrictions were imposed at that time. In a December 10, 2002 letter, Allstate notified the plaintiffs that one subaccount was closed to new premiums or transfers and that it was restricting new premium allocations and transfers into three other subaccounts to a maximum of $50,000 per day. Allstate began to impose the restrictions outlined in this letter on that same day by denying the plaintiffs' transfer requests.
The plaintiffs filed this action in the Court of Common Pleas of Montgomery County, Pennsylvania*fn3 and Allstate timely removed the matter to this Court on November 6, 2009, based on diversity of citizenship between the parties. The plaintiffs contend that Allstate is not permitted to impose transfer limitations under the Annuity Contracts. They argue that they were induced to purchase the Annuity Contracts by representations of Allstate employees that transfers would be unrestricted. They assert that Allstate understood that they would not have purchased the annuities without unlimited daily transfers among subaccounts and the ability to make transfers by telephone or fax. Furthermore, they point to Allstate's September 16, 1999 letter, the pre-2004 prospectuses, and the nearly four years of unrestricted transfers as evidence that Allstate did not have the right to impose transfer limitations. They allege that they reasonably relied upon these representations and the course of performance by making premium payments and adding funds to the contracts' balance.
Allstate has moved to dismiss all counts of the complaint, asserting the Amendatory Endorsement to the Master Policy for Transfer Limitations properly amended the Master Policy and permits Allstate to impose transfer restrictions.
Under Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief can be granted. I must accept as true the factual allegations contained in the complaint and all reasonable inferences drawn therefrom and view the facts in the light most favorable to the plaintiff. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face ...