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O'Brien v. Geico Employees Insurance Co.

United States District Court, E.D. Pennsylvania

July 3, 2019



          GERALD J. PAPPERT, J.

         Mary Ellen O'Brien sued GEICO Employees Insurance Company in the Court of Common Pleas for Philadelphia County on April 3, 2019, alleging breach of contract and bad faith in violation of Pennsylvania law. GEICO removed the case to this Court on May 3, 2019 and moves to dismiss O'Brien's Complaint as barred by the statute of limitations and for failure to state a claim. The Court grants the Motion for the reasons below.


         O'Brien suffered serious injuries in a motorcycle crash on May 31, 2014 in Phoenixville, Pennsylvania. (Compl. ¶¶ 5-8.) At that time, O'Brien had a motor vehicle insurance policy with GEICO that provided insurance coverage for Underinsured Motorists in the amount of $100, 000 and $300, 000 in the aggregate. (Id. at ¶ 3.)

         O'Brien filed a claim pursuant to the policy. GEICO denied her claim based on the “household vehicle exclusion” on September 19, 2014. (Id. at ¶ 13.) Specifically, GEICO cited language in the insurance policy that stated “[t]his coverage does not apply to bodily injury while occupying or from being struck by a vehicle owned or leased by you or a relative that is not insured for Underinsured Motorist Coverage under this policy.” (Denial Letter at 1, Compl. Ex. B.) GEICO explained that the motorcycle O'Brien was driving at the time of the crash was not insured under the Underinsured Motorist Coverage policy. (Id.) O'Brien did not file a lawsuit after GEICO denied the claim.

         On January 23, 2019, the Supreme Court of Pennsylvania issued its decision in Gallagher v. GEICO Indemnity Company, 201 A. 3d 131, 138-139 (Pa. 2019), holding that a similar household vehicle exception violated the Motor Vehicle Financial Responsibility Law (MVFRL) and that such exceptions are “unenforceable as a matter of law.” Before Gallagher, Pennsylvania courts had held that the household vehicle exclusion did not violate the MVFRL. See, e.g., Gov't Employees Ins. Co. v. Ayers, 955 A.2d 1025, 1030 (2008). On February 12, 2019, O'Brien requested that GEICO tender the limits of the insurance policy relating to her 2014 motorcycle crash. (Compl. ¶ 15.) GEICO denied her request as time barred on March 1, 2019. (Id. at ¶ 16.) O'Brien then filed this lawsuit on April 3, 2019, arguing that she is entitled to damages for breach of contract and bad faith in light of Gallagher.


         To survive dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the facts pled “allow[ ] the court to draw the reasonable inference that [a] defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

         When 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.” See Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d Cir. 2016) (quoting Iqbal, 556 U.S. at 679). However, 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 U.S., 839 F.3d 336, 347 (3d Cir. 2016) (internal quotation and citation omitted). 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).


         GEICO contends that O'Brien's breach of contract claim is barred by the statute of limitations. While affirmative defenses should generally be raised in an answer to a complaint, the Third Circuit “permits a limitations defense to be raised by a motion under Rule 12(b)(6), but only if ‘the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations.'” Robinson v. Johnson, 313 F.3d 128, 135 (3d Cir. 2002) (quoting Hanna v. U.S. Veterans' Admin. Hosp., 514 F.2d 1092, 1094 (3d Cir. 1975)). Stated another way, “[a] complaint is subject to dismissal for failure to state a claim on statute of limitations grounds only when the statute of limitations defense is apparent on the face of the complaint.” Wisniewski v. Fisher, 857 F.3d 152, 157 (3d Cir. 2017) (citing Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)).

         The statute of limitations for a breach of contract claim in Pennsylvania is four years. See 42 Pa. C.S.A. § 5525. “Ordinarily, a statute of limitations begins to run from the moment the potential plaintiff has a ‘complete and present cause of action.'” Disabled in Action of Pa. v. Se. Pa. Transp. Auth., 539 F.3d 199, 209 (3d Cir. 2008). For the purposes of uninsured or underinsured motorist claims, “the running of the statute of limitations is commenced upon an alleged breach, which . . . would be occasioned by the insurer's denial of coverage or refusal to arbitrate.” Erie Ins. Exch. v. Bristol, 643 Pa. 709, 728 (2017); Legos v. Travelers Cas. Co. of Connecticut One of the Travelers Ins. Companies, No. 3:16CV1917, 2018 WL 4928963, at *3 (M.D. Pa. Oct. 11, 2018).

         The statute of limitations defense here is apparent on the face of O'Brien's Complaint. She alleges that GEICO denied her claim on September 19, 2014. The statute of limitations governing her breach of contract claim expired on September 19, 2018 and O'Brien did not file her Complaint until April 3, 2019, more than six months after the statute's expiration. O'Brien, citing the discovery rule, contends that she could not have learned of her cause of action until after the Pennsylvania Supreme Court issued its Gallagher decision on January 23, 2019.

         In Pennsylvania, the discovery rule provides that “where the existence of the injury is not known to the complaining party and such knowledge cannot reasonably be ascertained within the prescribed statutory period, the limitations period does not begin to run until the discovery of the injury is reasonably possible.” Kelly v. Repsol Oil & Gas USA, LLC, 2019 WL 1975914, at *6 (Pa. Super. Ct. May 1, 2019) (citing Schafferv. Larzelere, 410 Pa. 402, 406 (1963)). “The underlying purpose of the discovery rule is to ensure that persons who are reasonably unaware of an injury that is not immediately ascertainable have essentially the same rights as those who ...

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