The opinion of the court was delivered by: Baylson, J.
MEMORANDUM RE: MOTION TO DISMISS
Presently before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint. Upon careful review of the parties' briefings and the relevant case law, this Court will deny Defendants' motion.
A. Factual and Procedural History
This is a case requiring interpretation of an insurance policy. Plaintiff Sb1 is a Philadelphia-based federal credit union. Pl.'s Compl. at ¶ 2, ECF No. 1-4. Defendants CUNA Mutual Group and CUMIS Insurance Society, Inc. (collectively "CUNA" or "Defendants") are Wisconsin corporations that have serviced bonds protecting Plaintiff against anticipated losses since 1977, including bonds covering relevant time period. Id. at ¶¶ 10-13.
On January 13, 2010, Plaintiff received a call from a person identifying himself as one of Sb1's "members" (i.e. customers). Id. at ¶¶ 40-42. Based on receipt of accurate responses to security questions, Plaintiff complied with the caller's instructions to change the member's telephone number of record. Id. at ¶¶ 41-42. The following day, a caller again identifying himself as the same member requested that $220,000 be accessed from the member's credit line and transferred to his checking account. Id. at ¶¶ 43-52. Based on (1) a properly completed and signed funds transfer form accompanied by a copy of the member's passport, with both signatures matching those on file, and (2) two telephone calls by Plaintiff to the (new) number of record, Plaintiff transferred the funds into the member's checking account and then debited those funds, plus a service charge, from the member's account. Id. at ¶ 45; Pl.'s Ex. E. The funds are now believed to have been transferred to a bank in Hong Kong. Id. at ¶ 53. Plaintiff determined on January 21, 2010, that the transfer occurred without authorization of the member. Id. at ¶ 52.
Plaintiff sought coverage from Defendants pursuant to five separate provisions of a bond issued by Defendants, specifically those provisions entitled "Funds Transfer," "Electronic Crime," "Electronic Crime-Loan," "Forgery or Alteration," and "Unauthorized Signature." Pl.'s Compl. at ¶ 58; Pl.'s Ex. A, pp. 8, 10, 11, 13; Pl.'s Ex. G. Defendants have refused to cover financial losses sustained by Plaintiff arising out of the wire transfer. Pl.'s Compl. at ¶¶ 44-48,52. As a result, Plaintiff filed a complaint against Defendants in the Pennsylvania Court of Common Pleas on September 17, 2010 (ECF No. 1-4). Plaintiff seeks recovery with three counts: first, for declaratory judgment; second, for breach of contract; and third, for bad faith conduct by Defendants, citing 42 Pa. C.S.A. § 8371. Pl.'s Compl. at ¶¶ 95-118.
On October 12, 2010. Defendants removed the case to the Eastern District of Pennsylvania on the basis of diversity jurisdiction (ECF No. 1). Defendants filed their Motion to Dismiss on October 19, 2010 (ECF No. 4). Plaintiffs responded on November 16, 2010 (ECF No. 9), and Defendants filed a reply on November 23, 2010 (ECF No.10).
Defendants contend that Plaintiff did not meet the requirements for coverage under the Funds Transferprovision because Plaintiff approved and initiated the fraudulent wire transfer without either (1) performing a proper "callback verification" for change of telephone number,*fn1 or (2) "follow[ing] a commercially reasonable security procedure set forth in a written funds transfer agreement, signed by the member . . . that governs the transaction and instruction."
Defs.' Brief in Supp. of Mot. to Dismiss at 4; Pl.'s Ex. A, p. 10. Defendants further contend that Plaintiff cannot seek coverage under multiple provisions and that none of the additional provisions cited by Plaintiff apply to Plaintiff's loss. Defs.' Brief in Supp. of Mot. to Dismiss at 6-8.
In its Response to Defendants' Motion to Dismiss, Plaintiff contends that it sufficiently pled a three "governing agreement[s]" between Plaintiff and the member that (1) govern funds transfers and (2) authorize Plaintiff to "recognize" the member's signature in the payment of funds, expressly incorporating "additional security overlays," through language by which the member agreed to "additional terms and conditions . . . established by [Plaintiff] from time to time," meeting the requirements of the Bond provision. Pl.'s Resp. 5-7; Pl.'s Exs. B, C, & D. Plaintiff further contends the "commercial reasonableness" of its security procedures to be a factual inquiry. Pl.'s Resp. 5.
Plaintiff additionally contends it has stated a claim regarding coverage under each of the four other provisions, notwithstanding the exclusionary provision relied on by Defendants in rejecting its original claim for coverage. ...