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Koerner v. Geico Casualty Co.

United States District Court, M.D. Pennsylvania

June 14, 2017

JUDITH KOERNER, Plaintiff,
v.
GEICO CASUALTY COMPANY, Defendant.

          MEMORANDUM

          RICHARD P. CONABOY United States District Judge.

         Pending before the Court is Defendant's, GEICO Casualty Company, Motion to Dismiss Counts I, II and III (compensatory and consequential damages) of the Second Amended Complaint. (Doc. 12.) With this Motion, Defendant seeks dismissal of Count I for "Breach of Contract-Uninsured Motorist Benefits" and Count II for "Breach of Contract-Common Law Bad Faith" as moot. Defendant seeks dismissal of Count III for Statutory Bad Faith insofar as Plaintiff seeks compensatory and consequential damages because theses damages are not available under Pennsylvania's Bad Faith Statute, 42 Pa. C.S. § 8371. (Id.) The Court concludes the motion is properly granted.

         I. Background

         As set out in the Second Amended Complaint, the case arises from a motor vehicle accident which took place on May 4, 2016. (Doc. 8 ¶ 5.) Plaintiff alleges that she was injured when objects from an unidentified vehicle "were thrust into the roadway" on which Plaintiff was traveling and her car was forced off the road into a guardrail. (Id.) Plaintiff had a policy of automobile insurance with Defendant at the relevant time. (Doc. 8 ¶ 3.} Because Plaintiff sustained injuries and damages as a result of the accident, she sought uninsured motorist benefits under her policy with Defendant. (Doc. 8 ¶ 8.)

         Count I of the Second Amended Complaint is for "Breach of Contract-Uninsured Motorist Benfits." (Doc. 8 at 2.) In Count I Plaintiff avers the following: her attorney, Charles Kannebecker, Esquire, spoke to Paul Brunskole, Defendant's employee, concerning the uninsured motorist claim and Mr. Brunskole told Mr. Kannebecker that Plaintiff had made a statement to GEICO in which she said the accident occurred when she blacked out and lost control of her vehicle and careened into a guardrail (Doc. 8 ¶¶ 11-13); Mr. Brunskole's story was a fabrication intended to bar her from recovery (id. ¶¶ 14-17); Defendant denied Plaintiff's claim and refused to make payment of uninsured motorist benefits (id. ¶ 19); in denying the claim, Defendant breached the policy of insurance and violated the duties of good faith and fair dealing (id. ¶¶ 20-21); Plaintiff was forced to institute suit and incur fees and costs in order to recover uninsured motorist benefits to which she was entitled (id. ¶ 23}; and by failing to tender the unisured motorist coverage in a timely manner, Defendant's violation of the duties of good faith and fair dealing exposed itself to payment of uninsured motorist coverage in excess of the policy limits (id. ¶ 24). Plaintiff asserts that "[t]ender of the uninsured motorist limit of coverage, in an untimely manner, does not insulate the defendant, GEICO, from the obligation to fully satisfy any verdict or judgment entered in connection with the claim for recovery of uninsured motorist benefits. See Birth Center v. St. Paul, 787 A>2d 376 (Pa. 2001}." (Id. ¶ 28.) In the ad damnum clause, Plaintiff seeks "the amount of damages she sustained as a result of the negligence and carelessness of the unidentified and thus uninsured motorist, together with costs, disbursements, and other relief deemed just and proper by the Court." (Doc. 8 at 5.) Count II alleges a "Breach of Contract - Common Law Bad Faith." (Doc. 8 at 5.} In Count II Plaintiff avers that Defendant "acted in bad faith and in violation of the common law obligations of good faith and fair dealing in failing to properly and fairly investigate, evaluate and negotiate the uninsured motorist claim." (Id. ¶ 30.) In subparagraphs (a) to (y), Plaintiff identifies the actions giving rise to the violation. (Id.) She states that she is entitled to recover all direct, indirect, compensatory, and consequential damages by reason of Defendant's common law bad faith and reiterates Defendant's exposure to paying uninsured motorist benefits in excess of the policy limits by reason of the breach of duties of good faith and fair dealing. (Id. ¶¶ 35-38.) Plaintiff again asserts that "[t]ender of the uninsured motorist limit of coverage, in an untimely manner, does not insulate the defendant, GEICO, from the obligation to fully satisfy any verdict or judgment entered in connection with the claim for recovery of uninsured motorist benefits. See Birth Center v. St. Paul, 787 A>2d 376 (Pa. 2001)." (Id. ¶ 41.) In the ad damnum clause, Plaintiff seeks "all common law bad faith damages including compensatory and consequential damages as well as other relief deemed just and proper by the Court." (Doc. 8 at 9.)

         Count III alleges "Statutory Bad Faith." (Doc. 8 at 9.) With this count, Plaintiff seeks relief under Pennsylvania's Bad Faith Statute, 42 Pa. C.S.A. § 8371. (Id. § 46.) She does so on the same bases that she identifies in Count II. (Id. ¶¶ 30(a)-(y), 50(a)-(y).) In the ad damnum clause, Plaintiff seeks "all statutory bad faith damages including interest, fees, costs, punitive damages and any and all other compensatory and consequential damages as well as all other relief which is deemed just and proper by the Court." (Doc. 8 at 14.)

         Plaintiff originally filed a Complaint in the Pike County Court of Common Pleas on May 19, 2016. (See Doc. 1-1 at 4-6.) On or about February 1, 2017, GEICO sent a letter to Plaintiff's counsel tendering the policy limits of the uninsured motorist coverage on her automobile policy and enclosed a check in the amount of $15, 000. (Doc. 12-3 at 4.) On February 22, 2017, Plaintiff filed an Amended Complaint in the Court of Common Pleas of Pike County. (Doc. 1-1 at 53-62.) Defendant filed the Notice of Removal on March 13, 2017, asserting that removal was appropriate based on diversity jurisdiction. (Doc. 1.) Plaintiff filed Plaintiff's Motion for Remand (Doc. 10) on April 5, 2017, which the Court denied by Memorandum and Order (Docs. 20, 21) of May 18, 2017. Having established that diversity jurisdiction is appropriate (see Doc. 20), the Court now addresses Defendant's, GEICO Casualty Company, Motion to Dismiss Counts I, II and III (compensatory and consequential damages) of the Second Amended Complaint (Doc. 12) which is fully briefed and ripe for disposition.

         II. Discussion

         A. Motion to Dismiss Standard

         Pursuant to Federal Rule of Civil Procedure 12(b)(6), the reviewing court may dismiss a complaint for "failure to state a claim upon which relief may be granted." Detailed pleading is not required-"Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to 'give fair notice of what the . . . claim is and the grounds upon which it rests, ' Conley v. Gibson, 355 U.S. 41, 47 . . . (1957)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the Court noted that, although Rule 8 does not require detailed factual allegations, "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (citing Twombly, 550 U.S. at 555). Iqbal also reiterated the Twombly guidance that "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' 550 U.S. at 555 . . . Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.' Id. at 557." 556 U.S. at 678.

To 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." [Twombly, 550 U.S.] at 57 0, 127 S.Ct. 1955. A claim has facial plausibility when the plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id., at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a "probability requirement, " but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id., at 557, 127 S.Ct. 1955 (brackets omitted).

556 U.S. at 678.

         Pursuant to Twombly and Iqbal, the Court of Appeals for the Third Circuit set out three steps required of a court reviewing the sufficiency of a claim in Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016).

First, it must "tak[e] note of the elements [the] plaintiff must plead to state a claim." Iqbal, 556 U.S. at 675, 129 S.Ct. 1937. Second, it should identify allegations that, "because they are no more than conclusions, are not entitled to the assumptions of truth." Id. at 679, 129 S.Ct. 1937. See also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) ("Mere restatements of the elements of a claim are not entitled to the assumption of truth." (citation and editorial remarks omitted)). Finally, "[w]hen there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

809 F.3d at 787. Importantly, a Plaintiff is not required to establish the elements of a prima facie case-"the post-Twombly pleading standard 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s].'" Connelly, 809 F.3d at 789 (quoting Twombly, 550 U.S. at 556); see also Phillips v. City of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).

         Finally, the district court must extend the plaintiff an opportunity to amend before dismissing a complaint unless amendment would be inequitable or futile. Phillips, 515 F.3d at 245; Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002).

         B. Defendant's Motion

         As noted above, Defendant asserts that Counts I and II should be dismissed as moot, and the requests for compensatory and consequential damages in Count III should be dismissed. (See Doc. 12 at 6.) If the motion is granted, Plaintiff's Second Amended Complaint would go forward only as to Plaintiff's claim for statutory bad faith damages in Count III.

         1. Count I, Breach of Contract-Uninsured Motorist Coverage and Count II, Breach of Contract-Common Law Bad Faith

         Defendant first argues that Count I is moot and should be dismissed because it has tendered the full policy limits for Plaintiff s uninsured motorist claim-the averment in Count I that she is entitled to a greater amount of uninsured motorist coverage is incorrect. (Doc. 12-3 at 5-11.) Plaintiff responds that Defendant's wrongful and fraudulent disclaimer of uninsured motorist coverage caused her to file suit and exposed Defendant to an excess verdict. (Doc. 15-1 at 10-11.)

         Defendant then argues that Plaintiffs common law bad faith claim is subsumed into her breach of contract claim which is now moot. (Doc. 12-3 at 14.) Plaintiff begins her opposition to the dismissal of Count II with the assertion that "Pennsylvania has long recognized a cause of action at common law for bad faith. Traditionally, common law bad faith claims arose in the context of an excess verdict in a third party tort action[, ] and the same is true for uninsured and underinsured motorist claims." (Doc. 15-1 at 11-12.) Notably, Plaintiff ...


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