Daily Archive for October 8th, 2021

TWO BAD FAITH OPINIONS BY PHILADELPHIA FEDERAL JUDGE DARNELL JONES: (1) BARE BONES UIM BAD FAITH CLAIM DISMISSED WITH LEAVE TO AMEND (2) NO DUTY TO DEFEND = NO BAD FAITH (Philadelphia Federal)

Eastern District Judge Darnell Jones recently rendered two bad faith decisions just a few days apart.

CASE 1  – Underinsured Motorist Bad Faith Claim Dismissed Without Prejudice

In the first case, Judge Jones dismissed an underinsured motorist bad faith claim, with leave to amend.

The court focused on the recent Western District decision in Faith, summarized here, to emphasize bad faith can “include a lack of investigation, unnecessary or unfounded investigation, failure to communicate with the insured, or failure to promptly acknowledge or act on claims. Bad faith can also include poor claims-handling, the insurer’s failure to act with diligence or respond to the insured, scattershot investigation, and similar conduct.”

That being said, a UIM bad faith plaintiff “’cannot merely say that an insurer acted unfairly, but instead must describe with specificity what was unfair.’”  Judge Jones relies upon Philadelphia Federal Judge Baylson’s recent O’Brien decision, summarized here, which in turn relied upon Western District Judge Colville’s 2020 Pierchalski decision, summarized here, for this proposition.

Rather, “a Complaint alleging bad faith ‘must specifically include facts to address who, what, where, when, and how the alleged bad faith conduct occurred.’” Bare bones bad faith pleadings in Pennsylvania’s District Courts are routinely dismissed. As examples, Judge Jones cites Eastern District Judge Leeson’s 2020 Shetayh v. State Farm opinion, summarized here, the oft-cited 2012 Third Circuit opinion in Smith v. State Farm, summarized here, Eastern District Magistrate Judge Heffley’s decision in Camp v. NJM, summarized here, Eastern District Judge Slomsky’s 2017 decision in Toner v. GEICO, summarized here, and the Western District decision in Rosenberg v. Amica Mutual, summarized here.

The Complaint fell into the inadequate pleading column, as it was “devoid of facts necessary to infer a plausible bad faith claim.” Other than the accident date, the complaint has no “references to dates or time spans, yet claims several of Defendant’s alleged actions to be untimely.” Plaintiffs allege unreasonableness as to the insurer’s alleged lack of thorough claim assessment, “yet provide[s] no indication as to the manner in which these alleged deficiencies were unreasonable.”

The court cites Judge Baylson’s 2015 Allen v. State Farm case, summarized here, for the proposition that simply reciting that the insurer failed to properly investigate and evaluate a claim, and knew or recklessly disregarded its unreasonable conduct, are conclusory in nature, because all this language does is recite the elements of a bad faith claim, without pleading basic facts to support those elements.

Here, there are no facts pleaded from which the court could draw reasonable inferences supporting a plausible bad faith claim.  The “complaint alleges no factual content to suggest Defendant lacked a reasonable basis for denying the UIM coverage, or that Defendant knew or recklessly disregarded the lack of reasonable basis.”

Dismissal was without prejudice, however, because after the court’s “careful assessment of the allegations set forth in [the bad faith count] of Plaintiffs’ Complaint (as well as those incorporated by reference), this Court is unable to conclude that amendment would be futile.”

Date of Decision:  September 27, 2021

Kelly v. Progressive Advanced Insurance Company, U.S. District Court Eastern District of Pennsylvania No. CV 20-5661, 2021 WL 4399657 (E.D. Pa. Sept. 27, 2021) (Jones, II, J.)

CASE 2 – Bad Faith Not Possible Where No Duty to Defend

In the second case, Judge Jones found no duty to defend the insured, as the claims pleaded against the insured clearly fell within a policy exclusion. Once Judge Jones found coverage obligations absent, he stated the following in a footnote, addressing the bad faith claim:

“[B]ad faith claims cannot survive a determination that there was no duty to defend, because the court’s determination that there was no potential coverage means that the insurer had good cause to refuse to defend.” (internal quotations omitted)

Date of Decision:  October 1, 2021

Jeffers Farms, Inc. v. Liberty Insurance Underwriters, Inc., U.S. District Court Eastern District of Pennsylvania No. CV 20-5475, 2021 WL 4502785 (E.D. Pa. Oct. 1, 2021) (Jones, J.)