MAY 2015 BAD FAITH CASES: COURT FINDS NO “GOOD FAITH AND FAIR DEALING” CAUSE OF ACTION SEPARATE FROM BREACH OF CONTRACT AND BAD FAITH ACTION (Middle District)

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In Monck v. Progressive Corp., Plaintiff was involved in an automobile accident and received $16,000 from a policy held by the driver of the other vehicle. The insured claimed this amount was insufficient, and asserted that she was an insured under a policy issued to her aunt and uncle because she met the definition of relative, as she was living with her aunt and uncle at the time of the accident. The insurer denied Plaintiff’s claim because it believed she did not reside at the policy address.

Consequently, Plaintiff filed suit against the insurer. The insurer sought to dismiss five counts of Plaintiff’s eight-count complaint: (1) good faith and fair dealing; (2) breach of fiduciary duty; (3) unfair trade practices and consumer protection law (“UTPCPL”); (4) negligence; and (5) vicarious liability. The Court addressed each in turn and granted the insurer’s motion to dismiss.

The insurer argued that the good faith and fair dealing claim should be dismissed because it was redundant to Plaintiff’s claims of breach of contract and bad faith. The Court reasoned that “an independent claim for breach of the covenant of good faith and fair dealing is properly dismissed where the plaintiff brings a claim for first party insurance benefits and the complaint includes claims for breach of contract and bad faith.”

Here, the Court observed that Plaintiff asserted a claim for breach of contract, “within which she alleges that the conduct complained of constitutes a breach of the policy’s implied covenant of good faith and fair dealing and Count Three for “Good Faith and Fair Dealing” relies upon the same conduct.” The Court found  Plaintiff’s claim for good faith and fair dealing subsumed into her breach of contract claim.

Next, the insurer alleged that Plaintiff’s UTPCPL claim should be dismissed because “Plaintiff failed to allege facts to support justifiable reliance on Defendants’ alleged misconduct; a UTPCPL claim is barred by the economic loss doctrine; and there are no facts to support a claim for misfeasance.”

The Court was not convinced by Plaintiff’s argument that she was not required to show justifiable reliance but allowed her an opportunity to amend her Complaint as to this claim. The Court dismissed the UTPCPL claim, and therefore did not extensively discuss the economic loss doctrine or misfeasance arguments set forth by the insurer.

The insurer next argued that Plaintiff’s claims for breach of fiduciary duty and negligence were barred by the gist of the action doctrine, and the Court agreed because the claims were dependent on the insurance contract.

Finally, the insurer alleged that Plaintiff’s claim for vicarious liability should be dismissed because “Defendants’ agents and employees cannot be liable to Plaintiff.” Because Plaintiff did not present facts that would give rise to an independent claim for negligence, the Court dismissed the vicarious liability claim.

Date of Decision: April 13, 2015

Monck v. Progressive Corp., CIVIL ACTION NO. 3:15-CV-250, 2015 U.S. Dist. LEXIS 47801 (M.D. Pa. April 13, 2015) (Conaboy, J.)

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