United States District Court, W.D. Pennsylvania
GOLON, INC. FORMERLY KNOWN AS, GOLON MASONRY RESTORATION, INC., Plaintiff,
SELECTIVE INSURANCE COMPANY OF THE SOUTHEAST and SELECTIVE INSURANCE COMPANY OF AMERICA, Defendants.
MEMORANDUM ORDER RE: DEFENDANTS' RULE 12(B)(6)
PARTIAL MOTION TO DISMISS PLAINTIFF'S COMPLAINT (DOC. NO.
J. Schwab United States District Judge.
1, 2012, an employee of Plaintiff Golon, Inc., f/k/a Golon
Masonry Restoration, Inc. (“Golon” or
“Plaintiff”), was involved in a motor vehicle
accident while driving a vehicle owned by Golon that resulted
in injuries to Thomas Straw, his wife, Jennifer, and their
son, Rowan, and in the death of the Straw's six-year-old
son, Elijah. Doc. No. 1-1. Thereafter, the Straw
family filed suit seeking compensation for personal injuries
against Golon and its employee in the Court of Common Pleas
of Allegheny County, Docket No. GD-3-3294 (the
“Underlying Action”). Id.
gave notice of the Underlying Action to its insurer,
Defendant Selective Insurance Company of the Southeast
(“Selective Southeast”). Doc. No. 1-1.
Selective Southeast then assumed the defense of the
Underlying Action on behalf of Golon. Id. Selective
Southeast informed Plaintiff that the potential award in the
Underlying Action could exceed the $11 Million policy limits
of coverage. Id.
Underlying Action resulted in a $32 Million verdict in favor
of the Straw family against Golon. Id. Prior to
trial, Golon alleges that Selective Southeast and Defendant
Selective Insurance Company of America (“Selective
America”) employed a “bad-faith, high-risk,
brinksmanship negotiation strategy, ” over the
objections of Golon, that resulted in a failure to settle the
Underlying Action, within the policy limits during a
mediation, or for $8.5 Million on the eve of trial, despite
the recommendation of the trial judge.
alleges three claims against Defendants Selective Southeast
and Selective America: first, that the Defendants breached
the terms of the policy and the “duty to act reasonably
and in good faith when considering whether to pay a third
party in settlement of the third party's claim[, ]”
(“Count I”); second, that Defendants breached
their duty as fiduciaries of “undivided loyalty and
fidelity, not to engage in self-dealing, not to prefer
[their] interest[s] over Golan's, and to act reasonably,
in good faith, and with due care when making settlement
decisions[, ] (“Count II”); and third, that
Defendants acted in bad faith by failing to settle the
Underlying Action within the policy limits, rejecting the
Straw family's final settlement demand (which was within
the policy limits), and otherwise lacking a reasonable basis
for refusing to settle the Underlying Action within the
policy limits, (“Count III”). Doc. No.
have moved to partially dismiss Golan's Complaint.
Doc. No. 9. Defendants moved to dismiss Count II,
the breach of fiduciary duty claim, as barred by the
“gist of the action” doctrine. Id.
Additionally, Selective America moved to dismiss all claims
against it because it is not the entity that issued the
insurance policy to Golan and is therefore not a party to the
Rule of Civil Procedure 12(b)(6), provides for dismissal for
“failure to state a claim upon which relief can be
granted.” Detailed factual pleading is not required -
Rule 8(a)(2) calls for a “short and plain statement of
the claim showing that the pleader is entitled to
relief” - but a Complaint must set forth sufficient
factual allegations that, taken as true, set forth a
plausible claim for relief. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
plausibility standard does not require a showing of
probability that a claim has merit, Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 556 (2007), but it does
require that a pleading show “more than a sheer
possibility that a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678. Determining the plausibility of an
alleged claim is “a context-specific task that requires
the reviewing court to draw on its judicial experience and
common sense.” Id. at 679. The Court must
consider the specific nature of the claims presented and
determine whether the facts pled to substantiate the claims
are sufficient to show a “plausible claim for
relief.” Covington v. Int'l Ass'n of
Approved Basketball Officials, 710 F.3d 114, 118 (3d
Cir. 2013); see also Santiago v. Warminster
Twp., 629 F.3d 121, 130 (3d Cir. 2010).
addition to the averments in a complaint, the Court may
consider “an undisputedly authentic document that a
defendant attaches as an exhibit to a motion to dismiss if
the plaintiff's claims are based on the document.”
Pension Benefit Guar. Corp. v. White Consolidated
Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). Further, the
Court may also consider a document “integral to or
explicitly relied upon in the complaint” without
converting the motion to dismiss into one for summary
judgment. U.S. Express Lines v. Higgins, 281 F.3d
383, 388 (3d Cir. 2002). Accordingly, the Court has
considered the insurance policy between Golon and Selective
Southeast appended to Defendants' brief.
federal court exercising diversity jurisdiction is bound by
the Erie doctrine to follow state law as announced
by the highest state court. Wayne Moving & Storage of
New Jersey, Inc. v. School Dist. of Philadelphia, 625
F.3d 148, 154 (3d Cir. 2010). If the state's highest
court has not addressed the precise question presented, the
federal court must predict how the state's highest court
would resolve the issue. Id.
urges this Court to find that, “under Pennsylvania law,
a policyholder may sue an insurance company for breach of its
fiduciary duty to settle within policy limits, and at the
same time sue for breach of contract, without violating the
gist of the action doctrine.” Doc. No. 20, p.
4. Golon follows this argument further in a footnote, stating
“[i]t is questionable whether the gist of the action
doctrine can ever bar tort claims against insurance
companies if the words “mutual consensus” in
Bohler-Uddeholm were read according to their
ordinary meaning, because the terms of insurance policies are
rarely the result of bargaining. Doc. No. 20, FN 1
(emphasis in original).
Bohler-Uddeholm, the United States Court of Appeals
for the Third Circuit considered whether it was proper for a
district court to allow the plaintiff to proceed to trial on
breach of contract and breach of fiduciary duty claims in a
“complicated commercial case” that
“emerge[d] from the disintegration of a joint
venture” and also included misappropriation of trade