United States District Court, W.D. Pennsylvania
MEMORANDUM & ORDER
Bissoon United States District Judge
matter is before the Court upon a Motion to Dismiss filed by
Defendant State Farm Fire and Casualty Co. (“State
Farm”) (Doc. 12). For the reasons that follow, State
Farm's Motion will be granted.
March 22, 2011, Plaintiff Randy Gowton's
(“Gowton”) home sustained extensive fire damage.
Am. Compl. (ECF No. 11) ¶ 6. At the time, Gowton's
property was insured by State Farm pursuant to
Homeowner's Insurance Policy Number 38-PT-9631-0
(“Policy”). Id. ¶ 4. The Policy
provided for fire damage coverage in the amount of $190,
733.00. Id. ¶ 7. Pursuant to the policy, State
Farm was obligated to provide “actual cash value
benefits” based on the estimated cost to repair or
replace the property, less the cost of calculable
depreciation and estimated contractor overhead and profit.
Id. ¶ 11; State Farm Policy (ECF No. 11-1).
promptly notified State Farm of the damage and submitted a
claim for the replacement cost of the destroyed structure.
Id. ¶¶ 9, 13. Based on an estimate that he
obtained from a company known as Custom Construction &
Remodeling, Gowton requested a replacement cost benefit of
$293, 911.80. Id. ¶ 13; Contract Proposal (ECF
No. 11-3). State Farm, after performing its own inspection,
provided only $112, 694.50. Id. ¶ 11. State
Farm arrived at this amount by calculating an estimated
replacement cost of $187, 874.50 and subtracting a
depreciation cost of $75, 180.15. Id.; see
State Farm Estimate (ECF No. 11-2).
Farm, to date, has only paid $112, 694.35 for the damage to
the residence. Id. ¶14. Gowton contends that
State Farm's assessment is inaccurate, understated and
“bears no reasonable relationship to Plaintiff's
true replacement cost.” Id. ¶¶
13-14. Gowton is seeking to recover the difference between
the Policy's limits and the amount actually paid by State
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). When faced with a motion to dismiss, a 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).
Amended Complaint asserts a single claim of bad
faith. To establish a bad faith claim in
Pennsylvania, “a plaintiff must show by clear and
convincing evidence that the insurer (1) did not have a
reasonable basis for denying benefits under the policy and
(2) knew or recklessly disregarded its lack of a reasonable
basis in denying the claim.” Post v. St. Paul
Travelers Ins., 691 F.3d 500, 522-23 (3d Cir. 2012)
(internal quotations omitted). For purposes of an action
against an insurer for failing to pay a claim, “such
conduct imports a dishonest purpose and means a breach of a
known duty (i.e., good faith and fair dealing)
through some motive of self-interest or ill will; mere
negligence or bad judgment is not bad faith.”
Id. at 523 (quotations omitted).
original Complaint, Gowton broadly alleged that “[t]he
conduct of the Defendants in refusing to pay the additional
amounts due on the Plaintiff's claim under the Policy,
constitute bad faith by the Defendants toward the
Plaintiff.” Compl. (ECF No. 1-2) ¶ 40. He
suggested that State Farm had relied on unsupportable loss
calculations, but did not explain how or why those
calculations were inadequate. Id. ¶¶ 15,
19. Because “[c]onclusory or bare-bones allegations [of
bad faith] will not survive a Motion to Dismiss, ” this
Court dismissed Gowton's bad faith claim for lack of
specificity. See Memorandum and Order (ECF No. 10)
at 5 (quoting Liberty Ins. Co. v. PGT Trucking,
Inc., 2011 WL 2552531, at *4 (W.D. Pa. Jun. 27, 2011)
(internal quotations omitted)). The Court instructed Gowton
to cure his pleading deficiencies by filing an amended
complaint containing sufficient factual detail to support his
claim. Id. at 5-6.
Amended Complaint, Gowton clarifies that his bad faith claim
is based entirely on the difference between the repair
estimate that he independently obtained and State Farm's
much lower repair estimate. Am. Compl. ¶¶ 12-13.
Gowton explains that State Farm's estimate “bears
no reasonable relationship to [his] actual loss”
because it “is more than $100, 000.00 lower than the
true replacement cost price quotation obtained by Plaintiff
pursuant to the open market.” Id. ¶ 13.
He also avers that State Farm used a depreciation percentage
that it “pick[ed] . . . out of the air” in
determining how much depreciation to factor into his ultimate
payment benefit. Id. ¶ 14. No other facts
bearing on the accuracy of State Farm's estimate are
similar scenario was recently addressed in Seto v. State
Farm Ins. Co., 855 F.Supp.2d 424, 430 (W.D. Pa. 2012).
In Seto, as in the instant case, the plaintiffs
asserted that State Farm had failed to adequately reimburse
them for damage to their home arising from a series of fires.
Id. at 426-27. After being informed of the damage,
State Farm conducted a prompt inspection, sent a damage
estimate, and tendered payment in the amount of $116, 321.67.
Id. at 427. Plaintiffs engaged a private contractor
and obtained a second damage estimate that was at least $50,
000 higher than that supplied by State Farm. Id.
Relying on their own estimate, plaintiffs alleged that State
Farm had acted in bad faith by “low-balling” its
valuations of numerous components of the destroyed home.
Id. at 428.
court began its analysis by acknowledging the
well-established principle that “Pennsylvania law does
not treat as bad faith an insurer's low but reasonable
estimate of an insured's losses.” Id. at
430 (citing Brown v. Progressive Ins. Co., 860 A.2d
493, 501 (Pa. Super. 2004)). Rather, the insured must
demonstrate that the insurer's estimate bore no
reasonable relationship to the actual damage loss, either
because the insurer “breached its duty of good faith
through some motive of self-interest or ill-will” or
because the insurer failed to “conduct a review or
investigation sufficiently thorough to yield a ...