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Terry L. Sypeck v. State Farm Mutual Automobile Insurance Company

June 15, 2012

TERRY L. SYPECK, PLAINTIFF,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: (judge Caputo)

MEMORANDUM

Presently before the Court is Defendant State Farm Mutual Automobile Insurance Company's Motion to Dismiss. Because Plaintiff Terry Sypeck properly states a claim for breach of contract but fails to state a claim for statutory bad faith, the motion will be granted in part and denied in part. Further, as amendment would be futile, the bad faith claim will be dismissed with prejudice. Finally, the case will be remanded to Pennsylvania state court because the amount-in-controversy requirement for subject matter jurisdiction is no longer satisfied.

I. Background

The facts as alleged in the complaint are as follows: On October 29, 2007, Plaintiff Terry Sypeck was driving on State Route 93 in Luzerne County, Pennsylvania. Driving in the opposite direction on State Route 93 was Anthony Merker. Mr. Merker negligently and carelessly made a left turn directly in front of Ms. Sypeck's vehicle, and their two cars collided.

Ms. Sypeck suffered severe and permanent physical injuries from the collision, including a concussion and several contusions. These injuries have required medical care and treatment, resulting in medical expenses in excess of $24,000 and possible future expenses. Ms. Sypeck also suffered a wage loss in excess of $20,000. Finally, Ms. Sypeck suffers emotional damages, such as anxiety, embarrassment, and a reduced ability to enjoy life.

At the time of the collision, Mr. Merker was insured by Allstate Property and Casualty Insurance Company. Mr. Merker had bodily injury liability up to $100,000, an amount that was inadequate to compensate Ms. Sypeck for her injuries. In July of 2010, Ms. Sypeck agreed to settle with Allstate for $100,000.

Ms. Sypeck was insured by State Farm, and her coverage included underinsured motorist benefits. She chose this coverage even though she had to pay increased premiums. She fully complied with the terms and conditions of the policy.

Ms. Sypeck pursued an underinsured motorist claim, and provided State Farm with her complete medical file and a record of her economic losses. State Farm offered Ms. Sypeck $5,000 to settle the claim, which was not a reasonable amount based on Ms. Sypeck's damages. State Farm did not objectively and fairly evaluate Ms. Sypeck's claim, nor did it investigate the claim, although it was contractually obligated to do so. It also asserted a defense based on the statute of limitations, which it knew or reasonably should have known was baseless.

Ms. Sypeck filed a complaint in the Court of Common Pleas of Luzerne County, Pennsylvania on January 25, 2012. State Farm removed the action to the Middle District of Pennsylvania on February 17, 2012.

Ms. Sypeck amended her complaint on March 22, 2012. The amended complaint contains two counts: (1) breach of contract; and (2) bad faith under 42 Pa. Cons. Stat. § 8371. Ms. Sypeck seeks compensatory damages.

State Farm filed the instant motion to dismiss on April 5, 2012. The motion has been fully briefed and is ripe for disposition.

II. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations "'to raise a reasonable expectation that discovery will reveal evidence of'" each necessary element, Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). The pleading standard of Federal Rule of Civil Procedure 8 does not require "detailed factual allegations," but "[a] pleading that offers 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1959 (2009) (quoting Twombly, 550 U.S. at 555). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009).

Thus, when determining the sufficiency of a complaint, a court must undertake a three-part inquiry. See Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). The inquiry involves: "(1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged." Id. A defendant bears the burden of ...


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