The carrier denied an uninsured motor vehicle claim based upon the household exclusion. Over four years later, the insured brought suit in light of the Supreme Court’s Gallagher v. GEICO decision, arguably voiding the exclusion at issue. The insured raised claims for breach of contract, breach of the implied covenant of good faith and fair dealing, statutory bad faith, and violation of the Unfair Trade Practices and Consumer Protection Law (UTPCPL).
The carrier moved to dismiss the complaint, which was dismissed with prejudice, chiefly on statute of limitations grounds.
Contract and Bad Faith claims time-barred
Eastern District Court Judge Gallagher first found that the event triggering the statute of limitations was the original claim denial, and not a later refusal to pay after a renewed demand. There is a four-year statute of limitations on the contract claims, including a breach of the covenant of good faith and fair dealing. Thus, those claims were time-barred on the face of the complaint.
Statutory bad faith claims are subject to a two-year statute of limitations. A fortiori, plaintiff’s statutory bad faith claim was also time-barred.
Bad faith claim inadequately pleaded
Judge Gallagher then found the bad faith claim inadequately pleaded, even if there were no time-bar. The insured failed to allege any specific facts “indicating the lack of a reasonable basis for denying the UIM coverage.” He merely enumerated a series of conclusory allegations, which did not set out a plausible bad faith claim. These included general allegations that the insurer:
- “engaged in unreasonable, bad faith claims handling practices with respect to Plaintiff’s claim,”;
- “engaged in unreasonable, bad faith investigative practices with respect to Plaintiff’s income loss claim,”; and
- “acted with ill will, malicious intent, and self-motive in handling Plaintiff’s claim.”
No duty to inform insured of change in the law
The insured alleged the carrier violated the UTPCPL because it breached a duty to notify the insured that Pennsylvania’s Supreme Court had changed the law concerning the household exclusion in its Gallagher decision. The court found “no support in Pennsylvania law for such an extraordinary duty.” Moreover, “Courts that have addressed the issue of whether a company has a duty to inform its customers of a change in the law have uniformly held that no such duty exists.”
As any amendment would be futile the complaint was dismissed with prejudice.
Date of Decision: January 7, 2022
Devine v. GEICO General Insurance Co., No. 5:21-CV-02679-JMG, 2022 WL 79630 (E.D. Pa. Jan. 7, 2022) (Gallagher, J.)