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Jones v. Allstate Insurance Co.

United States District Court, E.D. Pennsylvania

June 19, 2017

KENNETH B. JONES, SR., Plaintiff,


          GERALD J. PAPPERT, J.

         Plaintiff Kenneth Jones sued Allstate, alleging breach of contract and bad faith in handling his claim for underinsured motorist (“UIM”) benefits. Allstate filed a motion to dismiss Jones's bad faith claim. For the reasons below, the Court grants the motion and grants Jones leave to file an amended complaint.


         On December 17, 2015, Jones sustained serious injuries in a car accident caused by the negligence of an underinsured motorist. (Compl. ¶¶ 4-7.) Jones was insured by Allstate under a policy containing underinsured motorist coverage up to $15, 000 per person. (Id. ¶ 8.) He contends his injuries and losses exceed the $15, 000 policy limit. (Id.) Though Jones “has fully complied with the terms of the policy, ” he and Allstate “have failed to agree on the amount of underinsured motorist benefits that [he] is entitled to recover.” (Compl. ¶¶ 11-12.)

         Jones claims Allstate acted in bad faith by failing to (1) act with reasonable promptness in evaluating and responding to his claim and reasonable fairness in paying the claim, (2) negotiate his claim, (3) properly investigate and evaluate his claim and (4) request a defense medical examination of him. (Id. ¶ 17.) Though Jones's Complaint lacks facts regarding Allstate's investigation, responses or offer(s) of payment, he claims that Allstate lacked a reasonable basis for its conduct in handling his claim since there “is no dispute in this case that the accident was the fault of the underinsured driver and that [he] was entitled to underinsured motorist coverage under [his] policy.” (Id. ¶¶ 16, 18.)


         To survive a motion to dismiss under Rule 12(b)(6), a complaint must provide “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). “Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (citation omitted). While a complaint need not include detailed facts, it must provide “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).

         Twombly and Iqbal require the Court to take three steps to determine whether the second amended complaint will survive Defendants' motion to dismiss. See Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d Cir. 2016). First, it must “take note of the elements the plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Next, it must identify the allegations that are no more than legal conclusions and thus “not entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 679). Finally, where the complaint includes well-pleaded factual allegations, the Court “should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. (quoting Iqbal, 556 U.S. at 679).

         This “presumption of truth attaches only to those allegations for which there is sufficient factual matter to render them plausible on their face.” Schuchardt v. President of the United States, 839 F.3d 336, 347 (3d Cir. 2016) (internal quotation and citation omitted). “Conclusory assertions of fact and legal conclusions are not entitled to the same presumption.” Id. This plausibility determination is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. (quoting Connelly, 809 F.3d at 786-87).


         The Pennsylvania General Assembly promulgated 42 Pa. Cons. Stat. § 8371 to create a cause of action in Pennsylvania insurance law for “bad faith.” The statute provides in relevant part:

In 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 take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of the interest plus 3%; (2) Award punitive damages against the insurer; (3) Assess court costs and attorney fees against the insurer.

42 Pa. Cons. Stat. § 8371.

         While the statute does not explicitly define “bad faith, ” Pennsylvania federal and state courts have defined “bad faith” in this context as “[a] frivolous or unfounded refusal to pay proceeds of a policy.” Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 225 (3d Cir. 2000) (citing Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994)); Atiyeh v. Nat'l Fire Ins. Co., 742 F.Supp.2d 591, 598 (E.D. Pa. 2010). To recover on a bad faith claim, a claimant is required to show by clear and convincing evidence that: (1) the defendant insurer did not have a reasonable basis for denying the ...

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