MARCH 2014 BAD FAITH CASES: MIDDLE DISTRICT DISMISSES COMPLAINT FOR FAILURE TO PLEAD SPECIFIC ACTIONS CONSTITUTING BAD FAITH (Middle District)

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In Wanat v. State Farm, plaintiff was hit by an underinsured motorist, and settled with the driver’s insurer for $48,000, just under the $50,000 policy limit.  Plaintiff then filed an underinsured claim under her own policy which provided $25,000 in underinsured coverage and $25,000 in liability, non-stacked.  The insurer denied the claim, claiming plaintiff had been fairly compensated by the other driver’s policy, and instructed plaintiff she would not receive any payments on the claim.

Plaintiff filed suit alleging breach of contract, bad faith denial of her claim, and a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.

The insurer removed the suit to federal court and filed a motion to dismiss the entire complaint.  Plaintiff voluntarily dismissed the breach of contract and unfair practices claims, leaving only the bad faith claim on the motion to dismiss.

Plaintiff did not alleged any evidence as to why the insurer’s decision to decline payment of the uninsured benefits constituted a bad faith decision.  The court found plaintiff’s complaint relied entirely on allegations paraphrasing the elements of a bad faith claim.  Plaintiff merely alleged the insurer lacked a reasonable basis for denying the claim, acted knowingly and recklessly, and failed to properly investigate, evaluate and compensate the claim were not backed by any specific facts of such actions.

Case law dictates that such “conclusory” or “bare-bones” allegations that an insurance company acted in bad faith are insufficient to withstand a motion to dismiss.  However, plaintiff alleged the exhibits, which she attached to the complaint filed in state court, were not sent to the district court upon removal, and that such documents would enable the complaint to stand.  Therefore, the motion to dismiss was granted, but without prejudice as to allow the plaintiff to file an amended complaint setting forth the elements of the bad faith claim with greater clarity.

Date of Decision: Report and Recommendation of October 11, 2013, adopted on January 21, 2014

Wanat v. State Farm Mut. Auto. Ins. Co., Civil No. 4:13-CV-1366, 2013 U.S. Dist. LEXIS 183948 (M.D. Pa. Oct. 11, 2013) (Carlson, M.J.).

Wanat v. State Farm Mut. Auto. Ins. Co., Civil No. 4:13-CV-1366, 2014 U.S. Dist. LEXIS 7016 (M.D. Pa. Jan. 21, 2014) (Brann, J.).

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