DECEMBER 2018 BAD FAITH CASES: THREE MIDDLE DISTRICT OPINIONS FIND CONCLUSORY ALLEGATIONS CANNOT MAKE OUT A BAD FAITH CASE (Middle District)

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Three recent Middle District opinions, decided between December 10-12, 2018, found the insureds’ bad faith pleadings constituted conclusory allegations that had to be dismissed under federal pleading standards. The plaintiffs, however, were all allowed to file amended complaints. Two of the opinions are by Judge Caputo, and one by Judge Rambo. All are UIM cases.

In Clarke v. Liberty Mutual Insurance Company, Judge Caputo found the following allegations bare bones and conclusory, absent alleging any further factual support for such conclusions:

  1. Denying coverage under the underinsured motorist provisions of the policy when Defendants knew or disregarded the fact that Defendant lacked a reasonable basis for denying such a claim;

  2. Failing to promptly provide the full UIM benefit for which Plaintiffs had paid and contracted when Plaintiff had provided Defendants evidence that demonstrated clearly that her injuries were caused by an underinsured motorist and her damages exceeded the value of the UIM coverage on the policy;

  3. Failing to make an offer when the Defendants knew that Plaintiff had suffered severe injuries caused by an underinsured driver and Plaintiff had made a valid claim for UIM benefits;

  4. Arbitrarily refusing to provide coverage available under the policy;

  5. Failing to conduct an adequate and objective investigation into the extent of Plaintiff’s injuries and failing to make an offer to settle the case; [and]

  6. Failing to conduct a reasonable evaluation of the value of the case.

Judge Caputo referenced his earlier Meyers decision in finding these types of allegations inadequate, and also cited the propositions that: (1) an insured’s subjective belief about a claim’s value that differs from the insurer’s valuation is not enough to state a claim without actual facts objectively supporting that belief; (2) the failure to make a settlement offer after receiving documents is not bad faith without “additional factual support such as the complexity of the claim and the time passed between the date Plaintiffs supplied the necessary information and the date the complaint was filed”; and (3) the failure to accede to a policy limits demands alone is not bad faith.

Two days later, Judge Caputo decided Moran v. United Services Automobile Association. He found the following allegations, without any supporting factual allegations, to be inadequate conclusory pleadings under the Federal Rules:

  1. failed to promptly and reasonably respond to Plaintiff’s counsel’s demands for prompt payment of Plaintiff’s underinsured [sic] benefits;

  2. unreasonably and vexatiously delayed consent to settle for claim under claim [sic] against the tortfeasor;

  3. failed to properly investigate Plaintiff’s claim;

  4. failed to name an arbitrator as requested by Plaintiff’s counsel and required under the terms of the policy;

  5. failed to exercise the utmost good faith and discharge of its statutory and contractual duties to the Plaintiff;

  6. failed to attempt in good faith to effectuate a prompt, fair and equitable settlement of Plaintiff’s underinsured [sic] benefits claim;

  7. failed to adopt and implement reasonable standards for the prompt investigation and payment of underinsured [sic] benefits claim arising out of Plaintiff’s automobile insurance contract; [and]

  8. failed to act promptly and [sic] timely fashion responding to Plaintiff’s counsel.

Finally, in Winslow v. Progressive Specialty Insurance Company, relying on similar case law as the above two cases, Judge Rambo found the following allegations conclusory, and dismissed the bad faith claim with leave to amend:

  1. Failed to promptly and reasonably respond to Plaintiff’s demands for prompt payment of Plaintiff’s insurance claims after Defendant had been provided with loss documentation that clearly established that immediate payment of such insurance benefits was justifiable and warranted;

  2. Unreasonably and vexatiously delayed payment of insurance benefits to the Plaintiff when it was clear that immediate payment of the insurance policy benefits was justified and warranted;

  3. Failed to make a reasonable settlement offer or payment to the Plaintiff, thereby compelling Plaintiff to institute the instant action and incur additional costs to recover those benefits rightly due to him;

  4. Failed and/or refused to pay the full amount of Plaintiff’s insurance policy benefits and damages without a reasonable foundation to do so;

  5. Forced Plaintiff to unnecessarily incur significant debt by failing to promptly pay insurance policy benefits that were rightly to him;

  6. Failed to adopt and implement reasonable standards for the prompt investigation and payment of insurance policy benefits arising out of Plaintiff’s insurance contract;

  7. Failed to pay Plaintiff’s insurance policy benefits and claims within a reasonable time after supporting loss documentation had been provided to defendant;

  8. Failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of Plaintiff’s insurance policy benefits and claims even though there was no issue as to Defendant’s liability for the insurance policy benefits;

  9. Failed to exercise the utmost good faith and discharge of its statutory and contractual duties to Plaintiff; and

  10. Engaged in unfair claims settlement and insurance practices in violation of common law and Defendant’s statutory obligations.

Judge Rambo also looked to her recent decision in Rickell when measuring the adequacy of these allegations.

Date of Decision: December 10, 2018

Clarke v. Liberty Mut. Ins. Co., U.S. District Court Middle District of Pennsylvania NO. 3:18-CV-1925, 2018 U.S. Dist. LEXIS 207646 (M.D. Pa. Dec. 10, 2018) (Caputo, J.)

Date of Decision: December 12, 2018

Moran v. United Servs. Auto. Association USAA, U.S. District Court Middle District of Pennsylvania NO. 3:18-CV-2085, 2018 U.S. Dist. LEXIS 209315 (M.D. Pa. Dec. 12, 2018) (Caputo, J.)

Date of Decision: December 12, 2018

Winslow v. Progressive Specialty Ins. Co., U.S. District Court Middle District of Pennsylvania CIVIL ACTION NO. 3:18-CV-1094, 2018 U.S. Dist. LEXIS 209057 (M.D. Pa. Dec. 12, 2018) (Rambo, J.)

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