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Kelly E. Tubman v. Usaa Casualty Insurance Co

April 29, 2013

KELLY E. TUBMAN, PLAINTIFF,
v.
USAA CASUALTY INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Anita B. Brody, J.

MEMORANDUM

Plaintiff Kelly E. Tubman brings suit against Defendant USAA Casualty Insurance Company ("USAA") for breach of contract (Count I), violation of statutory bad faith (Count II), breach of fiduciary duty (Count III), breach of common law bad faith (Count IV), and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (Count V). USAA moves to dismiss Counts III through V, and to strike any references to "fiduciary duty" in Tubman's amended complaint. I exercise diversity jurisdiction over Tubman's claims pursuant to 28 U.S.C. § 1332. Pennsylvania law applies. For the reasons stated below, I will grant USAA's motion for Counts III through V, and deny USAA's motion to strike.

I.BACKGROUND*fn1

On February 1, 2008, Kelly Tubman was a passenger in a car when the driver crashed into a tree. She was ejected from the car and sustained serious injuries. Tubman filed a claim with the driver's insurance and received the $15,000 limit for liability coverage under the driver's policy. As a resident of her father's home, she was also eligible to receive underinsured motorist ("UIM") coverage under her father's insurance policy with USAA. The policy included $300,000 in stacked UIM coverage for four vehicles. USAA consented to Tubman's settlement against the driver and agreed that Tubman could institute a timely action for recovery of UIM benefits within four years of the settlement. Tubman filed a claim within this time period, but she rejected USAA's offer, claiming that the amount was insufficient to compensate her for her injuries. She brings suit for breach of contract, claiming that she is entitled to recover $1,200,000. She also brings extra-contractual bad faith claims for statutory bad faith, breach of fiduciary duty, common law bad faith, and violation of the Unfair Trade Practices and Consumer Protection Law. For these claims she seeks consequential damages, punitive damages, interest, fees, costs and treble damages.

II.LEGAL STANDARDS

A motion to dismiss should be granted under Rule 12(b)(6) if the moving party "under any reasonable reading of the complaint . . . may be entitled to relief." Kerchner v. Obama, 612 F.3d 204, 207 (3d Cir. 2010) (internal quotation marks omitted). The complaint must allege facts sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Rather, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Id. (internal quotation marks omitted). "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." Id.

In deciding a motion to dismiss under Rule 12(b)(6), a court must "accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff." Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). This "assumption of truth" is "inapplicable to legal conclusions." Iqbal, 129 S. Ct. at 1949-50.

Under Rule 12(f) a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "[S]triking a pleading is a 'drastic remedy' to be used sparingly because of the difficulty of deciding a case without a factual record." BJ Energy, LLC v. PJM Interconnection, LLC, Nos. 08-3649, 09-2864, 2010 WL 1491900, at *1 (E.D. Pa. Apr. 13, 2010) (quoting N. Penn. Transfer, Inc. v. Victaulic Co. of Am., 859 F. Supp. 154, 158-59 (E.D. Pa.1994)). Therefore, while Rule 12(f) grants the court the power to grant a motion to strike, such motions "are not favored and usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues." N. Penn. Transfer, 859 F. Supp. at 158 (internal quotation marks omitted).

III.DISCUSSION

USAA seeks to dismiss three of Tubman's four extra-contractual bad faith claims: breach of fiduciary duty (Count III), breach of common law bad faith (Count IV), and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (Count V). Each is addressed below.

A.Breach of Fiduciary Duty

USAA argues that Tubman's breach of fiduciary duty claim should be dismissed because this duty does not exist in the underinsured motorist ("UIM") context. "The mere fact that an insurer and an insured enter into an insurance contract does not automatically create a fiduciary relationship." Conn. Indem. Co. v. Markman, No. 93-799, 1993 WL 304056, at *5 (E.D. Pa. Aug. 6, 1993) (citing 2A Couch on Insurance 2d, § 23.11 (1984); 1A Long, The Law of Liability Insurance, § 5A.07). The Third Circuit has held that under Pennsylvania Law, a fiduciary duty arises when an insurer asserts a right under the policy to handle claims against the insured. Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 227-28 (3d Cir. 2000); See also Gedeon v. State Farm Mut. Auto. Ins. Co., 410 188 A.3d 320, 322 (Pa. 1963). This scenario applies to third party insurance claims. Birth Ctr. v. St. Paul Cos., Inc., 727 A.2d 1144, 1155 (Pa. Super. Ct. 1999) (stating that "the insurer assumes a fiduciary responsibility towards the insured and becomes obligated to act in good faith and with due care in representing the interests of its insured when handling, inter alia, all third party claims brought against the insured." (emphasis in original)).

UIM claims do not fit this mold. The Pennsylvania Superior Court considers UIM claims to be a hybrid of first and third party claims. Zappile v. Amex Ass. Co., 928 A.2d 251, 256 (Pa. Super. 2007); Condio v. Erie Ins. Exch., 899 A.2d 1136, 1145 (Pa. Super. Ct. 2006). Like first party claims, in UIM claims the insured often makes a direct claim against her own insurer under her policy for optional coverage she elected to purchase. Condio, 899 A.2d at 1144. Like third party claims, UIM claims are inherently at arm's length and adversarial because the insured seeks to maximize her recovery, while the insurer seeks to minimize recovery. Id. Due to their hybrid nature, federal district courts have held that an insurer does not assume a fiduciary duty toward an insured for UIM claims. Fitzpatrick v. State Farm Ins. Cos., No. 09-1498, 2010 WL 2103954, at *4-*5 (W.D. Pa. May 25, 2010); Allstate Prop. & Cas. Ins. Co. v. Vargas, No. 2:06- cv-3368-LDD, 2006 U.S. Dist. LEXIS 95608, at *10 (E.D. Pa. Dec. 28, 2006) (finding that claims for breach of fiduciary duty in non-third party claims are generally subsumed by breach of contract and statutory bad faith claims).*fn2 Tubman cites to two cases for the proposition that she can bring a breach of ...


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