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Kline v. Progressive Corp.

United States District Court, M.D. Pennsylvania

December 17, 2019

PATRICK A. KLINE and SHARON L. KLINE, Plaintiffs,
v.
PROGRESSIVE CORP., Defendant.

          MEMORANDUM

          Jennifer P. Wilson, United States District Court Judge.

         This is a breach of contract and bad faith action brought by two car insurance policyholders against their insurance company. Plaintiffs, Patrick A. Kline and Sharon L. Kline (“the Klines” or “Plaintiffs”), bring claims for breach of contract, bad faith, and unfair claim settlement practices. Defendant, Progressive Specialty Insurance Company (“Progressive”), [1] has filed a motion to dismiss portions of the Plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the court will grant Progressive's motion to dismiss.

         Factual Background and Procedural History

         This case was first filed in the Franklin County Court of Common Pleas on March 20, 2019. (Doc. 1-2 at 6.) According to the complaint, Progressive issued the Klines an auto insurance policy on December 1, 2017, which provided that Progressive would indemnify the Klines from certain losses. (Id. ¶¶ 8-9.) The policy was in effect on January 1, 2018, when Patrick Kline was involved in a collision caused by Victor C. Mowen (“Mowen”). (Id. ¶¶ 10-13.) After the collision, the Klines settled a claim with Mowen for the maximum amount that Mowen's insurance company would pay under Mowen's auto insurance policy. (Id. ¶ 15.) The Klines subsequently filed a claim with Progressive for underinsured motorist coverage, but Progressive refused to pay the Klines' claim. (Id. ¶¶ 17- 19.)

         The Klines raise claims in their complaint for breach of contract, bad faith, and unfair claim settlement practices. The Klines allege that Progressive's conduct constitutes bad faith because Progressive “delayed paying Plaintiffs their policy proceeds for unknown reasons, ” because Progressive forced the Klines to pursue litigation to resolve their claim, because Progressive “engaged in deceptive acts” with regard to the Klines' policy, because Progressive “made false statements” to the Klines “for the purposes of creating an apparent reason” to deny the Klines' claim, and because Progressive “made oppressive demands” of the Klines to delay payment of the Klines' claim. (Id. ¶ 31.)

         Progressive removed the case to this court on April 19, 2019, and then filed the instant motion to dismiss. (Docs. 1, 3.) The Klines filed a brief in opposition to the motion on October 31, 2019, and Progressive filed a reply brief on November 3, 2019. (Docs. 9-10.)

         Jurisdiction

         This court has jurisdiction under 28 U.S.C. § 1332, which allows a district court to exercise subject matter jurisdiction where the parties are citizens of different states and the amount in controversy exceeds $75, 000.

         Standard of Review

         In order “[t]o 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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “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. (quoting Twombly, 550 U.S. at 556). “Conclusory allegations of liability are insufficient” to survive a motion to dismiss. Garrett v. Wexford Health, 938 F.3d 69, 92 (3d Cir. 2019) (quoting Iqbal, 556 U.S. at 678-79). To determine whether a complaint survives a motion to dismiss, a court identifies “the elements a plaintiff must plead to state a claim for relief, ” disregards the allegations “that are no more than conclusions and thus not entitled to the assumption of truth, ” and determines whether the remaining factual allegations “plausibly give rise to an entitlement to relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).

         Discussion

         In its motion to dismiss, Progressive argues that the Klines' bad faith claim should be dismissed because the Klines fail to plead sufficient facts to state a bad faith claim upon which relief can be granted; that the Klines' claim for unfair claim settlement practices should be dismissed because neither Pennsylvania's Unfair Insurance Practices Act (“UIPA”) nor Pennsylvania's regulations governing unfair claim settlement practices allow for a private cause of action; and that the Klines' breach of contract claim should be dismissed to the extent that it seeks attorneys' fees because such fees are not available in a breach of contract action under Pennsylvania law. These arguments are addressed seriatim.

         A. The Complaint Fails to State a Bad Faith Claim Upon Which Relief Can Be Granted.

         Progressive first argues that the Klines' bad faith claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) because the complaint does not allege sufficient facts to state a bad faith claim upon which relief can be granted. Bad faith claims under Pennsylvania law are governed by 42 Pa.C.S. § 8371. To state a claim for bad faith against an insurer under Pennsylvania law, a plaintiff must allege “(1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis.” Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 365 (Pa. 2017) (citing Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994)). “In other words, ‘bad faith is a frivolous or unfounded refusal to pay, lack of investigation into the facts, or a failure to communicate with the insured.'” NVR, Inc. v. Motorists Mut. Ins. Co., 371 F.Supp.3d 233, 255 (W.D. Pa. 2019) (quoting The Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999)). A complaint does not state a bad faith claim upon which relief can be granted where the bad faith claim is based only on “bare-bones conclusory allegations” ...


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