MEMORANDUM RE: DEFENDANTS' MOTION TO DISMISS THE AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(6)
MICHAEL BAYLSON, District Judge.
Plaintiffs Bradley and Caroline Williamson bring this action against its insurance carrier, Defendant Chubb Indemnity Insurance Company ("Chubb"), for bad faith in violation of 42 Pa. Stat. § 8371. Chubb moves to dismiss Plaintiffs' Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, Chubb's Motion is denied.
Plaintiffs maintain a homeowner's insurance policy with Chubb over their residence in Fort Washington, PA. DE 25 ¶ 8. On September 30, 2009, Plaintiffs' home was damaged. DE 25 ¶ 10. Plaintiffs' notified Chubb of their claim, and Chubb acknowledged that the damage was covered under the policy. DE 25 ¶¶ 12, 14. Chubb retained an independent contractor, Eastern Diversified Services ("EDS"), to assess the amount of Plaintiffs' loss. DE 25 ¶ 13. EDS estimated Plaintiffs' loss to be $193, 270.43. DE 25 ¶ 15. Chubb paid Plaintiffs based on EDS's damage estimate. DE 25 ¶ 16.
Estimates for homeowner's insurance claims are prepared on a "unit cost" basis. DE 25 ¶ 20. Unit-cost estimates break down repairs to individual components and assign a unit cost to each component of a repair. DE 25 ¶ 21. Estimates for benefits due under a homeowner's insurance policy are customarily prepared using estimating software programs. DE 25 ¶ 17. These programs contain databases of unit costs from which the program calculates the total estimate of a particular job. DE 25 ¶ 22. The unit costs assigned to various repair components vary depending on the software program used to prepare the estimate. DE 25 ¶ 23. Accordingly, different software programs evaluating the same repair will produce different estimates. DE 25 ¶ 25.
Chubb's standard practice is to conduct damage estimates itself using an estimating program called Symbility. DE 25 ¶¶ 18, 27, 28. EDS uses an estimating program called Xactimate-and used this program to conduct Plaintiffs' estimate. DE 25 ¶¶ 19, 30, and Ex. A at 1. The unit costs in the Xactimate database used by EDS are lower than the unit costs in the Symbility database used by Chubb. DE 25 ¶ 25. Accordingly, Chubb paid Plaintiffs' claim based on an estimate using lower unit costs than if Chubb had prepared the estimate itself. DE 25 ¶ 26.
Plaintiffs engaged the services of a public adjuster. On April 13, 2011, and on May 31, 2011, Plaintiffs, through their public adjuster, sent letters to Chubb requesting that it rewrite the EDS estimate using the Symbility program. DE 25 ¶ 32. The letters stated that Chubb had an obligation to calculate Plaintiffs' loss in the same manner and fashion as it would all other claims, DE 25 Ex. A at 1, and that Chubb had failed to do so because the unit costs in the Xactimate database are consistently less than those in the Symbility database, DE 25 Ex. B at 1. Chubb refused to recalculate the estimate. DE 25 ¶ 33.
III. Procedural History
Plaintiffs initiated this action in the Pennsylvania Court of Common Pleas of Philadelphia County on June 1, 2011, bringing claims for breach of contract and bad faith. On October 17, 2011, the case was removed to this Court. DE 1. On October 24, 2011, Chubb filed a Motion to Dismiss or, in the Alternative, for Summary Judgment. DE 3. Chubb's Motion sought to dismiss the complaint so that the parties could engage in an independent appraisal process for disputes relating to the amount of loss, pursuant to a provision in the insurance policy. In its Order dated March 8, 2012, the Court dismissed the breach of contract claim without prejudice, ordered the parties to engage in the appraisal process required by the insurance policy, deferred consideration of the bad faith claim until the appraisal process produced an award, and denied Chubb's alternative Motion for Summary Judgment. DE 12.
The appraisal award was rendered on December 18, 2012, which valued Plaintiffs' claim at $203, 450.11, or $6, 094.73 more than EDS's original valuation. DE 19 at 2. Chubb moved the Court to confirm the award and reinitiated its Motion for Summary Judgment. DE 16. In its Order dated June 17, 2013, the Court confirmed the appraisal award but deferred ruling on Chubb's Motion for Summary Judgment. DE 20.
On August 20, 2013, Plaintiffs filed an Amended Complaint, asserting a single claim for bad faith. DE 25. Chubb filed a Motion to Dismiss the Amended Complaint on September 9, 2013. DE 26. Plaintiffs filed a response in opposition and Chubb replied. DE 28, 29.
IV. Contentions of the Parties
A. Plaintiff's Claim in the ...