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Stephens v. State Farm Fire and Casualty Co.

United States District Court, Middle District of Pennsylvania

September 12, 2014


Conner Chief Judge


Martin C. Carlson United States Magistrate Judge

I. Statement of Facts and of The Case

This case involves a dispute relating a homeowners’ insurance policy, and began its life as a pro se action filed in state court. The initial pro se complaint alleged that the plaintiffs, Gerald Stephens and Bonnie Wilson, purchased a homeowners insurance policy for their property located at 1184 Julianne Drive, Hummelstown, Pennsylvania from State Farm, and had fully paid the premiums under this insurance policy at the time of the losses which they alleged took place in 2012. (Doc. 1-1, ¶1.) According to Stephens and Wilson, “[c]laims were made for theft vandalism and water damages, which have been given 3 different claim numbers by State Farm even though they are related to concurrent loss events.” (Id.)

Stephens and Wilson stated that they submitted claims to State Farm relating to these losses in October 2012. According to the plaintiffs in January 2013 a State Farm adjuster then “visited the property to view damages to the property and evaluate the claimed losses.” (Id., ¶¶3-4.) On or about February 2013, the plaintiffs allege that they hired a public adjuster to settle their claims with State Farm, and in February 2013State Farm “paid part of the money to the plaintiffs toward partial settlement of the claimed losses but many claimed losses have not been paid for.” (Id., ¶¶5-6.)

The initial pro se complaint further contended that Stephens and Wilson repeatedly demanded payment of the additional amounts they believe are due, but that State Farm neglected and refused to pay replacement costs of losses and only paid greatly depreciated values; did not pay for stolen utilities or lost rental income; and acted in bad faith and did not deal fairly with the plaintiffs. (Id., ¶¶7-10.) After setting forth these factual recitals, the initial pro se complaint advanced three legal claims: Count I alleged a cause of action for Breach of Contract relating to this insurance policy; Count II asserted a claim for Unjust Enrichment; and Count III sought injunctive relief for Cancellation of Insurance on False Premises. (Id.) With respect to Count II, the Unjust Enrichment claim, the complaint contained a single averment, alleging that if State Farm “is permitted to retain the payments for insurance supplied by Plaintiff, without making payment, [State Farm] will be unjustly enriched in the amount of the insurance premiums paid and the losses experienced.” (Id.)

State Farm timely removed this action from state court, and then filed the instant motion to dismiss on February 6, 2014, (Doc. 4), accompanied by a supporting memorandum of law filed on February 20, 2014. (Doc. 7.) In this motion, State Farm sought to dismiss Count II of the complaint, the unjust enrichment claim, and also requested dismissal of the prayer for injunctive relief.

We recommended that the district court dismiss Count II of the complaint, the unjust enrichment count, (Doc. 10), and on May 5, 2014, the district court entered an order dismissing this count, without prejudice, and remanding the case for further proceedings. (Doc. 13.) The defendant then answered the complaint. (Doc. 14.) A case management conference was held; (Doc. 17), and a case management schedule was set for this litigation. (Doc. 18.) That schedule allowed parties to move to amend their pleadings on or before July 14, 2014. (Id.)

On July 10, 2014, four days prior to the deadline set by the court for amendment of pleadings, the plaintiffs moved to amend their complaint. (Doc. 19.) Along with this motion, the plaintiffs tendered a proposed amended complaint. (Id.) As we read it, that proposed amended complaint sets forth three claims and causes of action. First, the complaint re-states and re-alleges the plaintiffs’ breach of insurance contract claim, alleging that State Farm has failed to properly pay all benefits that are due and owing to the plaintiffs on this homeowner insurance policy. In their prayer for relief on this breach of contract count the plaintiffs seeks compensatory damages, along with punitive damages and attorney’s fees. Count II of the proposed amended complaint then brings a statutory bad faith claim relating to the adjustment of the plaintiffs’ covered losses under this insurance policy. This claim is brought pursuant to 42 Pa.C.S. §8371, but is advanced in a summary fashion with the plaintiffs simply incorporating by reference their breach of contract allegations and then stating: “Defendant has engaged in bad faith conduct toward Plaintiff and has treated Plaintiff unreasonably and unfairly with respect to adjustment of Plaintiff’s covered loss . . . .” (Id., ¶16.)

Finally, the proposed amended complaint sets forth a claim under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 Pa.C.S. §201-9.2 (hereafter “UTPCPL”). This UTPCPL claim is factually distinct from the claims relating to State Farm’s alleged failure to pay under its policy with the plaintiffs and relates to the cancellation of this homeowner insurance policy. According to the well-pleaded facts in the complaint, Plaintiff Stephens, a quadriplegic, notified State Farm, through its agent, that he would have to leave his residence for a period of time for medical treatment and intended to rent the home while his received care for his disabling condition. (Id., ¶¶17-30.) Stephens alleges that he was assured by State Farm’s agent that his insurance would remain unaffected by his departure while he sought medical care. (Id.) Despite these affirmative assurances, at the time he submitted claims on the policy, Stephen alleges that State Farm then deceptively and wrongfully relied upon his departure from the residence to cancel his insurance, in violation of UTPCPL. (Id.) State Farm has opposed to this motion to amend, arguing that the plaintiffs’ proposed amended complaint is both untimely and futile since the new claims raised by the plaintiffs fail as a matter of law. (Doc. 20.) This motion is now ripe for resolution.

For the reasons set forth below, it is recommended that the motion for leave to amend be granted, in part, and denied, in part.


A. Rule 15 Standard of Review

Rule 15 of the Federal Rules of Civil Procedure governs amendments and supplementation of pleadings. Fed.R.Civ.P. 15. Rule 15(a) authorizes a party to amend his pleading once as a matter of course within 21 days after serving it, or if the pleading is one to which a responsive pleading is required, 21 days after service of the responsive pleading, or 21 days after service of a dispositive motion under Rule 12, whichever is earlier. Fed.R.Civ.P. 15(a)(1)(A) and (B). “In all other cases, a party may amend its pleading only with the opposing party’s written consent, or the court’s leave, ” which courts are to freely give “when justice so requires.” Fed.R.Civ.P. 15(a)(2).

Consistent with the plain language of this rule, leave to amend rests in the discretion of the court. That discretion, however, is governed by certain basic principles, principles that are embodied in Rule 15. In this regard, while Rule 15 provides that leave to amend should be freely given when justice so requires, the district court still retains broad discretion to deny a motion to amend, Bjorgung v. Whitetail Resort, LP, 550 F.3d 263 (3d Cir. 2008); Cureton v. National Collegiate Athletic Ass’n., 252 F.3d 267 (3d Cir. 2001).

Furthermore, “‘[a]mong the grounds that could justify a denial of leave to amend are undue delay, bad faith, dilatory motive, prejudice, and futility.’ In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir.1997) (‘Burlington’); Lorenz v. CSX Corp., 1 F.3d 1406, 1413-14 (3d Cir.1993). ‘Futility’ means that the complaint, as amended, would fail to state a claim upon which relief could be granted. Burlington, 114 F.3d at 1434.” Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). Moreover, a party seeking to supplement pleadings must act in a diligent fashion. Thus, for example, “[a] District Court has discretion to deny a plaintiff leave to amend where the plaintiff was put on notice as to the deficiencies in his complaint, ...

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