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Golden v. Brethen Mutual Insurance Co.

United States District Court, M.D. Pennsylvania

October 24, 2019

ARLENE GOLDEN and KATIE GOLDEN SMITH, as parent and natural guardian of C.S., a minor, Plaintiffs,
v.
BRETHREN MUTUAL INSURANCE COMPANY, Defendant.

          MEMORANDUM

          JOSEPH F. SAPORITO, JR. United States Magistrate Judge.

         This is an action by a policyholder, Arlene Golden, and her minor grandson, C.S., against Golden’s automobile insurer for breach of contract and for the statutory tort of bad faith.

         On December 21, 2016, the plaintiffs were involved in an automobile accident in which Golden’s vehicle was struck by another, driven by non-party Melissa Stevenson. Stevenson, who was driving under the influence of alcohol at the time, crossed the double-yellow line and struck Golden’s vehicle head-on, causing serious injuries to both Golden and C.S., who was a front-seat passenger in her vehicle. Based on the complaint, Golden was entirely without fault in the accident.

         At the time of the accident, Golden was covered by a personal automobile insurance policy issued by the defendant, Brethren Mutual Insurance Company (“Brethren”), Policy No. PAP0040082. The policy included underinsured motorist coverage (“UIM”) with a $600,000 limit of liability.[1]

         On December 21, 2018-exactly two years after they were injured in the underlying automobile accident-the plaintiffs filed their two-count complaint in this action, asserting diversity jurisdiction.[2] In their first count, the plaintiffs asserted a common law claim for breach of contract, alleging that, despite Golden’s compliance with all terms, conditions, and duties imposed upon her by the insurance policy, Brethren had failed to make any payments under the UIM provision of the policy. In their second count, the plaintiffs asserted a statutory claim of bad faith under 42 Pa. Cons. Stat. Ann. § 8371, based on Brethren’s alleged failure to reasonably investigate and pay their UIM coverage claims. In lieu of an answer, Brethren has filed a Rule 12(b)(6) motion to dismiss the action. (Doc. 8.) The motion is fully briefed and ripe for disposition. (Doc. 9; Doc. 20.)

         I. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff’s claims lack facial plausibility.” Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555–56 (2007)). In deciding the motion, the Court may consider the facts alleged on the face of the complaint, as well as “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.”[3] Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Although the Court must accept the fact allegations in the complaint as true, it is not compelled to accept “unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.” Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)). Nor is it required to credit factual allegations contradicted by indisputably authentic documents on which the complaint relies or matters of public record of which we may take judicial notice. In re Washington Mut. Inc., 741 Fed. App’x 88, 91 n.3 (3d Cir. Sept. 25, 2018); Sourovelis v. City of Philadelphia, 246 F.Supp.3d 1058, 1075 (E.D. Pa. 2017); Banks v. Cty. of Allegheny, 568 F.Supp.2d 579, 588–89 (W.D. Pa. 2008).

         II. Discussion

         A. Breach of Contract Claim

         In Count I, the plaintiffs assert a breach of contract claim against Brethren based on its failure to pay UIM benefits.

         “A party asserting a breach of contract claim under Pennsylvania law must demonstrate (1) the existence of a contract; (2) a breach of duty imposed by the contract; and (3) resultant damages.” Smith v. Allstate Ins. Co., 904 F.Supp.2d 515, 521 (W.D. Pa. 2012). “In Pennsylvania, a duty of good faith and fair dealing is implicit in an insurance contract.” Simmons v. Nationwide Mut. Fire Ins. Co., 788 F.Supp.2d 404, 408 (W.D. Pa. 2011); Smith, 904 F.Supp.2d at 521 (quoting Simmons); see also Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91 (3d Cir. 2000) (“[Under Pennsylvania law,] every contract has an implied term that the parties will perform their duties in good faith.”).

         At this stage, the parties do not dispute the existence of a contract or resultant damages. Brethren has moved to dismiss Count I of the complaint for failure to state a claim on the ground that the plaintiffs have failed to allege a breach of duty imposed by the contract. Brethren notes that the plaintiffs have failed to allege that Brethren expressly denied the plaintiff’s UIM claim. Brethren argues that the mere allegation that Brethren has not paid UIM benefits is insufficient to allege a breach of the policy.[4]

         We disagree. The plaintiffs were seriously injured in an automobile accident on December 21, 2016. The complaint alleges that Golden complied with the terms of the insurance policy at issue, which included a requirement that she provide Brethren with reasonable notice of the accident and that she cooperate in its investigation of her claim. We find that we may reasonably infer from the facts alleged in the complaint that the injuries suffered by the plaintiffs were severe enough that Stevenson lacked adequate automobile insurance coverage to fully compensate the plaintiffs for their injuries. The complaint alleges that, as of its filing on December 21, 2018-two years after the plaintiffs were injured in the automobile collision at issue-Brethren had failed to make any payments whatsoever to them under the policy’s UIM coverage provision.

         A “fixed, permanent refusal to pay the proceeds of a policy” is not required “for a finding of breach of the insurer’s duty of good faith; it is enough if the payment is delayed for an inordinate and unreasonable period of time . . . .” Bodnar v. Nationwide Mut. Ins. Co., No. 3:12-CV-1337, 2013 WL 2147807, at *15 (M.D. Pa. May 16, 2013). Thus, accepting the facts alleged in the complaint as true and viewing them in the light ...


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