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Tanya Eley and v. State Farm Insurance Company

January 31, 2011

TANYA ELEY AND
ALBERT ELEY, H/W
v.
STATE FARM INSURANCE COMPANY



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM

January , 2010

Presently before the Court is Defendant's Motion to Dismiss Count II of Plaintiffs' Complaint, brought pursuant to Federal Rule of Civil Procedure 12(b)(6). In their suit, filed in federal court on diversity jurisdiction,*fn1 Plaintiffs Tanya and Albert Eley have alleged two counts, first, breach of contract and, second, bad faith conduct arising out of underinsured motorist ("UIM") coverage under an automobile insurance policy issued by Defendant State Farm Insurance Company ("State Farm"). For the reasons set forth below, the Defendant's Motion to Dismiss is granted, with prejudice.

I. Introduction

A. Factual and Procedural History

Based upon the allegations in Plaintiffs' Complaint, which this Court must accept as true for purposes of Defendant's Motion to Dismiss, the pertinent facts are as follows. At all times material to the claim, Ms. Eley was insured by Defendant under an insurance policy containing UIM coverage of $100,000, with stacking on two vehicles for a total of $200,000 in coverage. Compl. at ¶ 4, ECF No. 1; Pls.' Resp., Ex. A at 2, ECF No. 5.*fn2 On June 4, 2009, Ms. Eley sustained injuries in a motor vehicle collision with a underinsured driver, whose liability policy was limited at $15,000. Compl. at ¶¶ 6-10. As a result of Ms. Eley's injuries and her husband's alleged loss of consortium, Plaintiffs filed a claim with Defendant on August 20, 2010, seeking coverage beyond the policy limits offered by the underinsured driver's insurer. Pls.' Resp., Ex.B. Plaintiffs sent a letter to Defendant demanding a settlement amount of $195,000 on August 23, 2010. Pls.' Resp., Ex. C. Defendant has, thus far, declined to offer Plaintiffs a settlement or refer the claim to arbitration. Compl. at ¶ 13-14.

As a result of Defendant's refusal to settle the claim, Plaintiffs filed the instant suit on October 21, 2010. Count I of Plaintiffs' Complaint alleges that Plaintiffs' State Farm policy was in effect and carried UIM coverage at the time of the accident, that Plaintiffs complied with policy requirements and are entitled to coverage, and that Defendant denied their claim. Pls.' Compl. at ¶¶ 5-13. In Count II, Plaintiffs allege that Defendant acted in bad faith contrary to its statutory duty under 42 Pa. C.S.A. § 8371 by "(a) fail[ing] to negotiate plaintiffs' [UIM] claim in good faith[;] (b) fail[ing] to properly investigate and evaluate plaintiff[s'] insurance claim[; and] (c) such other acts to be shown through discovery." Compl. at ¶ 18.

On November 11, 2010, Defendant filed this Motion to Dismiss Count II of Plaintiffs' Complaint (ECF No. 4). Plaintiffs responded on December 2, 2010 (ECF No. 5). Defendant filed a reply on December 21, 2010 (ECF No.11).

Defendant contends in this Motion to Dismiss that Plaintiffs have not alleged sufficient or specific facts to allow this Court to draw the inference that Defendant has acted in bad faith in denying Plaintiffs' UIM claim. Def.'s Br. at 7. Defendant asserts that all of Plaintiffs' allegations related to Defendant's liability under Count II are conclusory and without the factual support required to meet the notice pleading standard set forth in Federal Rule of Civil Procedure 8. Id. at 8. Defendant further contends that this Court should dismiss Paragraph 18(c) of Plaintiffs' Complaint because a plaintiff may not rely on "such other acts to be shown through discovery" as sufficient to determine whether a cause of action exists.

B. Parties Contentions

In response, Plaintiffs contend that Defendant have not met the burden of "proving beyond doubt that [Plaintiffs] can prove no set of facts in support of [their] claim that would entitle [them] to relief." Pls.' Resp. at 2. Plaintiffs contend they have alleged that (1) the motor vehicle collision was caused by the negligence of an underinsured motorist; (2) Ms. Eley's policy contained UIM coverage; (3) Plaintiffs fully complied with the terms of the policy; and (4) despite Plaintiffs' efforts, Defendant failed to make an offer to settle the claim. Id. Thus, Plaintiffs assert that they have alleged sufficient facts to state a claim for bad faith because Defendant had no reasonable basis to deny benefits and "knew or recklessly disregarded its lack of reasonable basis." Id.

II. Legal Standards

A. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. ยง 1332 because the parties are citizens of different states and the amount in controversy exceeds the sum or ...


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