BAD FAITH CLAIM DISMISSED FOR FAILURE TO PLEAD SUFFICIENT FACTS (THE FIVE Ws) TO ESTABLISH KNOWLEDGE OR RECKLESS DISREGARD (Philadelphia Federal)
This is the latest of many 2020 bad faith cases dismissed for failing to allege more than conclusory allegations. It is the second opinion this month finding a bad faith plaintiff failed to plead the necessary scientir element, even if unreasonableness in denying a benefit was alleged sufficiently.
In this UIM breach of contract and bad faith case, the insured alleged “that (1) she provided notice of the loss and her intent to pursue underinsured motorist benefits from [the insurer], (2) she demanded payment and submitted medical records to substantiate that demand, (3) [the insurer] failed to investigate thoroughly and fairly, (4) [the insurer] failed to communicate with [the insured], (5) [the insurer] has refused to pay the demand, and (6) as a result, [the insured] has and continues to suffer loss and damages.”
The insurer moved to dismiss the bad faith claim.
“A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. To provide a defendant with fair notice, a plaintiff must provide ‘more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Third Circuit instructs the reviewing court to conduct a two-part analysis. First, any legal conclusions are separated from the well-pleaded factual allegations and disregarded. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Second, the court determines whether the facts alleged establish a plausible claim for relief.”
The present complaint “fails to include specific facts regarding [the insurer’s] actions, including those which would support a bad faith claim. District courts in this circuit ‘have routinely dismissed bad faith claims reciting only ‘bare-bones’ conclusory allegations unsupported by facts sufficient to raise the claims to a level of plausibility.’”
The insured failed to plead the “Five Ws”, i.e., “the who, what, where, when, why,” “and how [the insurer’s] conduct plausibly constitutes bad faith.” Even where cursory claims might be sufficient to plausibly plead an unreasonable benefit denial, there still have to be sufficient allegations for a court to “plausibly infer that the insurer knew or recklessly disregarded a lack of a reasonable basis to deny benefits.” This split between adequately alleging unreasonableness and knowledge was present in, e.g., Pasqualino.
More recently, just one day before Judge Pratter’s opinion issued in this case, Judge Quiñones Alejandro issued her opinion in White v. Travelers, summarized earlier this week. Just as in Judge Pratter’s opinion and Pasqualino, Judge Quiñones Alejandro found the insured failed to get beyond conclusory allegations in asserting the insurer acted knowingly or recklessly in denying a benefit.
Finally, Judge Pratter cited to the Third Circuit’s Smith opinion, summarized here, reminding parties and the courts that “the mere ‘failure to immediately accede to a demand for the policy limit cannot, without more, amount to bad faith.’”
Judge Pratter did give the insured leave to amend, rather than dismissing the bad faith claim with prejudice.
Date of Decision: December 8, 2020
Satterfield v. GEICO, U.S. District Court Eastern District of Pennsylvania No. CV 20-1400, 2020 WL 7229763 (E.D. Pa. Dec. 8, 2020) (Pratter, J.)