The opinion of the court was delivered by: Lisa Pupo Lenihan Chief United States Magistrate Judge
Chief Judge Gary L. Lancaster
Chief Magistrate Judge Lisa Pupo Lenihan
Currently pending before the Court for disposition is Plaintiff's Petition for Leave to Amend the Complaint (ECF No. 27). Pursuant to Judge Lancaster's Memorandum Order dated 9/10/12 (ECF No. 25), Plaintiffs seek leave to amend their Complaint to add allegations of harm with regard to their claim of common law bad faith. In addition, Plaintiffs also seek to add two claims for the tort of outrage (Counts III and IV). Defendants oppose Plaintiffs' motion arguing that Plaintiffs have failed to state plausible claims for common law bad faith and outrage, and therefore, it would be futile to allow Plaintiffs leave to amend their complaint.
Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." In Foman v. Davis, the Supreme Court delineated the grounds that would justify denying leave to amend: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment". Foman v. Davis, 371 U.S. 178, 182 (1962). The grant or denial of leave to amend is within the sound discretion of the district court; however, failure to provide a reason for denying leave to amend is considered an abuse of that discretion. Id.; see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (citing Foman, supra). In determining whether the proposed amendment would be futile, courts apply the same standard as that applied to motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000) (citation omitted).
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A complaint must be dismissed for failure to state a claim if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (rejecting the traditional 12(b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly at 556). The Supreme Court further explained:
The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"
Id. (citing Twombly at 556-57). The court of appeals has expounded on this standard in light of its decision in Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008) (construing Twombly in a civil rights context), and the Supreme Court's recent decision in Iqbal:
After Iqbal, it is clear that conclusory or "bare-bones" allegations will no longer survive a motion to dismiss: "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S.Ct. at 1949. To prevent dismissal, all civil complaints must now set out "sufficient factual matter" to show that the claim is facially plausible. This then "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1948. The Supreme Court's ruling in Iqbal emphasizes that a plaintiff must show that the allegations of his or her complaints are plausible. See Id. at 1949-50; see also Twombly, 505 U.S. at 555, & n. 3.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
Proposed Count I - Common Law Bad Faith
In the Report and Recommendation (ECF No. 15), adopted as the opinion of the District Court (ECF No. 25), the undersigned concluded that a claim for common law bad faith in Pennsylvania is recognized in limited circumstances, i.e., where the insureds have suffered harm as a consequence of the insurer taking on the rule of a fiduciary and knowingly and purposefully misrepresenting the coverage available under the policy. Miller v. Keystone Ins. Co., 636 A.2d 1109, 1112-13 (Pa. 1994) (citing Dercoli v. Nat'l Mut. Cas. Ins. Co., 554 A.2d 906, 911 (P8. 1989)). A determining factor in the supreme court's recognition of a common law bad faith claim in Dercoli was the fact that the insured had been lulled into inaction with regard to a viable claim and, because the statute of limitations had expired, was precluded from bringing a viable claim. Based on this precedent, this Court concluded that Plaintiffs should be allowed the opportunity to re--plead their common law bad faith claim to allege any cognizable harm they sustained as a consequence of Defendants' actions prior to the retention of counsel.
Now, in their proposed second amended complaint, Plaintiffs allege that they have suffered the following harm as a ...