United States District Court, Eastern District of Pennsylvania
CHRISTA ST. CLAIR, Plaintiff,
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
This is an insurance dispute. Christa St. Clair has sued State Farm Fire and Casualty Company for allegedly acknowledging only a small portion of covered fire damage to her property and then refusing to participate in an appraisal process mandated by her policy. State Farm has moved to dismiss St. Clair’s demand for attorney fees in Counts I and IV (breach of contract and petition to compel appraisal), as well as her demand for punitive damages in Count IV. It has also moved to dismiss Count II (breach of implied covenant of good faith and fair dealing) and Count III (bad faith pursuant to 42 Pa. Cons. Stat. Ann. § 8371). For the following reasons, I will deny State Farm’s request to dismiss Count III but otherwise grant its motion.
I. Factual and Procedural Background
St. Clair owns residential property in Bucks County, Pennsylvania, that is insured by a State Farm policy. Compl. ¶¶ 9–11. This policy covers direct physical loss to the dwelling and her personal property caused by fire. Id. ¶¶ 13–14. It also includes an appraisal clause that applies if the parties disagree on the amount of a loss. Id. ¶ 16. To invoke the clause, either party must make a written demand for an appraisal, in which case each party first chooses a disinterested appraiser. Id. These appraisers then set the amount of the loss; if they disagree, they submit their differences to an impartial umpire for resolution. Id.
On March 27, 2014, St. Clair’s dwelling and personal property were severely damaged by a fire. Id. ¶¶ 17–18. St. Clair then submitted a timely claim to State Farm, which sent an adjuster to evaluate the loss. Id. ¶¶ 21–23. The adjuster, however, acknowledged only a small portion of the covered loss to St. Clair’s property. Id. ¶ 24.
St. Clair contested this assessment with State Farm. Id. ¶ 29. After State Farm still declined to pay the full amount required by the policy, St. Clair invoked the policy’s appraisal clause. Id. ¶ 31. But State Farm has refused to participate in the appraisal process, wrongfully claiming that the parties must agree to the scope of damage before engaging in it. Id. ¶¶ 32–33.
Based on these allegations, St. Clair brings four claims against State Farm. She claims breach of contract (Count I); breach of implied covenant of good faith and fair dealing (Count II); and a violation of Pennsylvania’s bad faith statute, 42 Pa. Cons. Stat. Ann. § 8371 (Count III). She also seeks an order compelling State Farm to submit this claim to appraisal as required by her policy (Count IV). State Farm filed a motion to dismiss, and St. Clair then responded.
II. Standard of Review
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a complaint. In analyzing a motion to dismiss, the court must “accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210–11 (3d Cir. 2009). That means that “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citing Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). The court must “then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Fowler, 578 F.3d at 211 (quoting Iqbal, 556 U.S. at 679). This requirement of “facial plausibility” is satisfied “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 (citation omitted).
A. St. Clair’s Demand for Attorney Fees in Count I (Breach of Contract) and Count IV (Petition to Compel Appraisal)
State Farm argues that St. Clair cannot demand attorney fees in Counts I (breach of contract) and IV (petition to compel appraisal) standing alone. I agree. Although she can collect attorney fees for hours expended on Counts I and IV if she prevails on Count III (bad faith via 42 Pa. Cons. Stat. Ann. § 8371), she cannot collect attorney fees for Counts I and IV standing alone.
“The general rule in this Commonwealth is that there is no recovery of attorney’s fees from an adverse party in the absence of an express statutory authorization, clear agreement between the parties, or the application of a clear exception.” Bayne v. Smith, 965 A.2d 265, 267 (Pa.Super. Ct. 2009). State Farm argues that there is no such statutory basis for Counts I and IV.
St. Clair responds that 42 Pa. Cons. Stat. Ann. § 8371, Pennsylvania’s bad faith statute, expressly authorizes her to recover attorney fees for hours expended on Counts I and IV. Under this statute, “[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may . . . [a]ssess . . . attorney fees against the insurer.” § 8371(3). St. Clair contends that she has pleaded a ...