SEPTEMBER 2018 BAD FAITH CASES: COURT FINDS BAD FAITH ALLEGATIONS SUFFICIENT TO SURVIVE MOTION TO DISMISS (Middle District)

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The homeowner insured was using an excavator to do work on his property, and damaged utility lines owned by a third party. Reviewing the complaint on this motion to dismiss, the court found the third party power line owner was making a claim for damages against the insured, and the insurer refused to cover that claim. The court described this as denying benefits under the policy.

The insured brought various claims, including a bad faith claim, which the insurer moved to dismiss for lack of pleading facts supporting a plausible case.

The court denied the motion, finding the allegations adequate. The plaintiff alleged that the insurer refused “to provide insurance coverage to Plaintiff is without reasonable basis in fact and/or law. . . In refusing to pay insurance benefits to Plaintiff, Defendant knowingly or recklessly disregarded its lack of reasonable basis for such refusal.”

The court stated of the pleading: “Although the factual detail here may not be great, we find that it is sufficient when the complaint is viewed as a whole to support the bad faith cause of action. This conclusion is especially apt because we are dealing with a motion to dismiss stage before any discovery has been done. This issue may be more fully addressed at the summary judgment stage if the defendant finds that insufficient evidence supports the claim at that point.”

It is interesting to compare this decision to another recent Middle District decision applying Twombly/Iqbal to a bad faith complaint, as recently posted to this Blog. In that case, the court required a more specific pleading after finding 29 averments of bad faith “conclusory”.

Date of Decision: September 21, 2018

Stewart v. Travelers Insurance Co., U. S. District Court Middle District of Pennsylvania No. 3:18cv170, 2018 U.S. Dist. LEXIS 161125 (M.D. Pa. Sept. 20, 2018) (Munley, J.)

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