OCTOBER 2018 BAD FAITH CASES: PLEADING 20 SPECIFIC ACTIONS TAKEN IN BAD FAITH SUFFICIENT TO SURVIVE MOTION TO DISMISS (Middle District)

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This is a UIM bad faith case involving serious injuries to three family members. The insureds claimed their damages far exceeded the tortfeasors’ coverage, and their own carrier refused to pay benefits due. The insureds brought a bad faith claim alleging their insurer “refused to conduct a good faith reasonable investigation in order to effectuate a prompt, fair, and equitable settlement….”

The carrier moved to dismiss, arguing that the insureds merely pled a dispute over valuation, and failed to allege specific facts stating anything beyond that. The court disagreed.

Judge Munley found that, beyond merely refusing to pay, the insured had averred “with detail and specificity that [the insurer] also refused to conduct a good faith reasonable investigation in order to effectuate a prompt, fair, and equitable settlement of the plaintiffs’ claims. Specifically, paragraph 24 of the complaint sets forth twenty actions taken by the defendant that are specific to bad faith. Based on the facts pled, it is plausible that [the insurer] acted in bad faith when it failed to conduct an investigation before denying the plaintiffs’ insurance claims.”

The court further stated that, having pled failure to conduct a reasonable investigation, “it appears from the face of the complaint that [the insurer] denied the plaintiffs benefits with reckless disregard regardless of whether or not such a decision had a reasonable basis. The plaintiff has pled enough facts to raise a reasonable expectation that discovery will reveal evidence of bad faith on the part of the defendant.”

The 20 specific allegations in the Complaint include:

(i) Failing to acknowledge and act properly upon written and oral communications with respect to claims arising under an insurance policy;

(ii) Refusing to conduct a reasonable investigation based upon all the information available;

(iii) Not attempting in good faith to effectuate a prompt, fair and equitable settlement of Plaintiffs’ claims;

(iv) Compelling Plaintiff to file a Breach of Contract Claim and Bad Faith Claim to recover amounts due under the policy;

(v) Refusing to provide any reasonable counter offer to Plaintiffs’ July 6, 2016 written settlement demands;

(vi) Failing to objectively and fairly evaluate Plaintiffs’ claims;

(vii) Failing to objectively and fairly re-evaluate Plaintiffs’ claims when new information became available;

(viii) Engaging in dilatory and abusive claims handling;

(ix) Failing to adopt or implement reasonable standards in evaluating Plaintiffs’ claims;

(x) Acting unreasonably and unfairly in Response to Plaintiffs’ claims;

(xi) Not attempting in good faith to effectuate a prompt, fair and equitable settlement of Plaintiffs’ claims where Defendants’ … liability under the policy had become reasonably clear;

(xii) Subordinating the interests of its insured to its own financial monetary interest;

(xiii) Failing to promptly offer reasonable payment to Plaintiffs;

(xiv) Failing to reasonably and adequately investigate Plaintiffs’ claims;

(xv) Failing to reasonably and adequately evaluate and review the medical documentation in Defendants … possession related to this claim;

(xvi) Violating the fiduciary duty owed to Plaintiffs;

(xvii) Acting unreasonably and unfairly by withholding Underinsured Motorist Benefits justly due and owing to Plaintiffs;

(xviii) Failing to make an honest, intelligent and objection settlement offers [sic];

(xix) Causing Plaintiffs to expend money on the presentation of their claims; and

(xx) Causing Plaintiffs to bear the stress and anxiety association with litigation.

It is interesting to compare this decision to another decision from the same court where 29 averments of bad faith were found conclusory and inadequate to state a claim under Twombly/Iqbal.

Date of Decision: October 11, 2018

King v. Travelers Cos., U. S. District Court Middle District of Pennsylvania No. 3:18cv1549, 2018 U.S. Dist. LEXIS 174732 (M.D. Pa. Oct. 11, 2018) (Munley, J.)

The King Complaint can be found here

 

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