United States District Court, E.D. Pennsylvania
MEMORANDUM RE: MOTION TO DISMISS
case involves a dispute over a failure to negotiate an
extension of Defendant State Farm Fire and Casualty
Company's (“State Farm”) one-year suit
limitation policy. Plaintiff Lawrence Jack filed a complaint
against State Farm, his insurance carrier, which consists of
two claims: (1) breach of contract, and (2) bad faith under
42 Pa.C.S. Section 8371. Before the Court now is State
Farm's Motion to Dismiss Plaintiff's bad faith claim
under Federal Rule of Civil Procedure 12(b)(6). For the
reasons explained below, State Farm's Motion is granted
Factual and Procedural History
Plaintiff's allegations as true, the factual background
is as follows. Plaintiff held a homeowner's insurance
policy (the “Policy”) with State Farm that
included a provision stating that any lawsuit by an insured
must be filed within one year of the date of loss. ECF No. 1,
Notice of Removal, Ex. A (Complaint) ¶ 5. On March 6,
2015, Plaintiff suffered a covered loss under the Policy, and
he made a timely claim for loss to his building and personal
property as well as for living expenses. Id. ¶
4. State Farm paid Plaintiff the limits of liability for the
building claim and an additional sum for his personal
property. Id. ¶¶ 6-7. On July 23, 2015,
State Farm sent a letter to Plaintiff which notified
Plaintiff that he would be able to receive further benefits
for the loss to the building upon Plaintiff's completion
of repairs and replacements of the damaged property.
Id. ¶ 8. It further stated that Plaintiff could
recover withheld depreciation of his personal property upon
Plaintiff's replacement of that property. Id.
¶ 9. On October 5, 2015, State Farm issued another
letter, stating that the building loss benefits described in
the July 23, 2015 letter would be available until March 6,
2017 and the personal property benefits offered would be
available until March 31, 2016. Id. ¶ 10.
of the Policy's one-year suit limitation clause, which
would bar Plaintiff from filing suit against State Farm in
regard to the covered loss after March 6, 2016, Plaintiff
consulted with a public adjuster. Id. ¶ 11. The
adjuster notified State Farm that the necessary repairs might
not be done before March 6, 2016, and asked for a six-month
extension of the provision to ensure that Plaintiff would not
lose his right to sue if the repairs were not completed
before the suit period expired. Id. ¶¶ 11,
13. State Farm refused to extend the one-year suit provision
and, as a result, Plaintiff initiated this action by filing a
praecipe for writ of summons on March 2, 2016. Id.
¶¶ 13-15. On September 13, 2016, State Farm filed a
praecipe for a rule to file a complaint, prompting
Plaintiff's request that State Farm withdraw it and enter
into a tolling agreement stating that Plaintiff would not
waive his right to sue if the repairs were not completed by
March 6, 2016. Id. ¶¶ 17-19. State
Farm's counsel responded that Plaintiff would have to
release any bad faith claim against State Farm in order for
State Farm to consider entering into a tolling agreement.
Id. ¶ 20. However, when Plaintiff's counsel
offered to waive any claims of past bad faith in exchange for
a tolling agreement which would give Plaintiff an additional
year to complete any necessary repairs, State Farm sent a
status letter reiterating the one-year suit limitation
provision and not responding to Plaintiff's offer.
Id. ¶ 22.
after, Plaintiff filed a complaint consisting of two claims:
(1) breach of contract, and (2) bad faith under 42 Pa.C.S.
Section 8371. Id. ¶ 23. The complaint was filed
in Lancaster County Court of Common Pleas and later removed
to this Court. On November 14, 2016, State Farm filed a
Motion to Dismiss the bad faith claim under Rule 12(b)(6),
alleging that Plaintiff had failed to state a claim upon
which relief can be granted (ECF No. 3). Plaintiff responded
on December 1, 2016 (ECF No. 5) and State Farm filed a reply
on December 7, 2016 (ECF No. 7).
considering a motion to dismiss under Rule 12(b)(6),
“we accept all factual allegations as true [and]
construe the complaint in the light most favorable to the
plaintiff. Warren Gen. Hosp. v. Amgen, Inc., 643
F.3d 77, 84 (3d Cir. 2011) (internal quotation marks and
citations omitted). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim for relief that is plausible on
its face.”' Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “Pleadings must include at
least some factual allegations to support the legal claims
asserted.” Fowler v. UPMC Shadyside, 578 F.3d
203, 210 (3d Cir. 2009). “[T]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. (quoting
Iqbal, 556 U.S. at 678).
issue is whether Plaintiff has stated a claim under 42
Pa.C.S. Section 8371, which allows plaintiffs to recover
interest, punitive damages, court costs, and attorneys'
fees for bad faith conduct by insurers in denying benefits or
handling claims. See Terletsky v. Prudential & Cas.
Ins. Co., 649 A.2d 680, 688 (Pa. Super. 1994). The term
“bad faith” concerns “any frivolous or
unfounded refusal to pay proceeds of policy.” Toy
v. Metro. Life Ins. Co., 928 A.2d 186, 199 (Pa. 2007)
(quoting Black's Law Dictionary 139 (6th ed. 1990)).
“[M]ere negligence or bad judgment does not constitute
bad faith; knowledge or reckless disregard of a lack of a
basis for denial of coverage is necessary [and] [e]ven
questionable conduct giving the appearance of bad faith is
not sufficient to establish it so long as the insurer had a
reasonable basis to deny coverage.” Post v. St.
Paul Travelers Ins. Co., 691 F.3d 500, 523 (3d Cir.
2012). To state a claim for bad faith, a plaintiff must
allege sufficient facts to establish that (1) the insurer
lacked a reasonable basis for denying the benefits under the
policy and (2) the insurer knew or recklessly disregarded its
lack of reasonable basis. Id. at 522 (citing
Condio v. Erie Ins. Exch., 899 A.2d 1136, 1143 (Pa.
Super. Ct. 2006)).
Eastern District of Pennsylvania recently decided a motion to
dismiss a bad faith claim, and its decision is instructive
here. In Davis v. Nationwide Mutual Insurance Company,
No. 16-3878, 2017 WL 85388 (E.D. Pa. Jan. 10, 2017), the
plaintiff alleged that Nationwide had breached its contract
with him and acted in bad faith by refusing to pay benefits
due under his automobile insurance policy after he suffered
serious injuries in a car accident. Id. at *1. The
court held that, regardless of whether Nationwide failed to
pay the plaintiff entirely or made an offer of $7, 500 as
Nationwide contended, the plaintiff had alleged enough facts
for his bad faith claim to survive, due to the extent of his
injuries and the amount of coverage he had. Id. at
*3. The court concluded that, “[a]ssuming the truth of
these allegations, an unreasonably low offer, or no offer,
could be bad faith on the part of Nationwide.”
this Court has recently held that a number of complaints were
insufficient to overcome a Rule 12(b)(6) motion. See
Zinno v. Geico, No. 16-792, 2016 WL 5100540 (E.D. Pa.
Sept. 19, 2016); Mills v. Allstate Ins. Co., No.
15-4824, 2015 WL 5707303 (E.D. Pa. Sept. 29, 2015); Allen
v. State Farm Mut. Auto. Ins. Co., No. 14-7367, 2015 WL
1072968 (E.D. Pa. Mar. 12, 2015); Eley v. State Farm Ins.
Co., No. 10-5564, 2011 WL 294031 (E.D. Pa. Jan. 31,
recently, in Zinno, this Court considered a
complaint in which the plaintiff alleged that his insurer had
unreasonably declined to offer him underinsured motorist
coverage benefits. Zinno, 2016 WL 5100540, at *1.
The plaintiff's claims could be distilled to the
“Defendant has failed to evaluate Plaintiff's
claim, Defendant has failed to make a reasonable settlement
offer, Defendant is prioritizing its own interests over
Plaintiff's interests, and Defendant is forcing ...