IF YOU HAVE A BAD FAITH CASE IN FEDERAL COURT, READ THIS COURT’S OPENING PARAGRAPH ON BAD FAITH CLAIMS AND PLEADING (Philadelphia Federal)

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We let the Court’s opening paragraph speak for itself in describing the law and result of failure to plead plausible bad faith claims:

“Pennsylvanians suing their automobile insurer for failing to pay their insurance claim may allege breach of the insurance policy and bad faith under a Pennsylvania statute. They are not the same claim. Alleging bad faith requires facts showing how the insurer acted unreasonably both in denying the policy benefits and later ignoring its unreasonable denial. When, as today, the insured pleads facts from over two years ago which detail the insurer’s responsive steps but then fail to allege a single fact thereafter to describe why the claim is not paid other than concluding the claim is not paid, we are left without a basis to understand if the insurer acted in bad faith. Failure to pay a claim may be a breach of contract but is not bad faith without pleading specific facts as to the insurer’s responses to the claim. The insured also cannot allege a breach of an implied covenant of good faith in the insurance policy when suing for breach of the same undisputed policy. Nor can the insured obtain attorney’s fees for the remaining breach of contract claim. In the accompanying Order, we grant the insurer’s motion to dismiss without prejudice to allow the insured to possibly plead facts supporting a bad faith claim under Fed.R.Civ.P. 11.”

Date of Decision: November 17, 2017

Sherman v. State Farm Ins. Co., CIVIL ACTION NO. 17-4822, 2017 U.S. Dist. LEXIS 190363 (E.D. Pa. Nov. 17, 2017) (Kearney, J.)

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