This matter involves a dispute over application of an auto insurance policy’s “regular use exclusion” and underinsured motorist coverage. The carrier asserted the exclusion, and the insured argued it was void as being contrary to Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL).
Refusal to remand, and finding law settled on regular use exclusion
The insured brought a declaratory judgment action, and the insurer removed it to federal court. The court applied the Reifer factors and refused to remand.
Of particular interest was the court’s finding that Pennsylvania’s Supreme Court had accepted the regular use exclusion, as interpreted by the United States Court of Appeals for the Third Circuit. Thus, the law was settled and there was no need to remand on that basis. The insured unsuccessfully argued that the case should be remanded because the regular use exclusion issue issue was pending in front to the Superior Court in Rush v. Erie Insurance Exchange.
[In fact, the Rush case was decided on October 22, 2021, and the Superior Court ruled it was not bound by the Supreme Court dicta relied upon above, and found the regular use exclusion was void as it violated Pennsylvania’s Motor Vehicle Financial Responsibility law. A copy of the Rush opinion can be found here. Of course, a United States District Court is bound by the decisions of the Third Circuit on its interpretations of Pennsylvania state law, and not decisions by Pennsylvania’s Superior Court.]
The court then turned to the carrier’s motion to dismiss the insured’s bad faith claim. Middle District Judge Mannion dismissed the complaint without prejudice for failing to plead specific facts sufficient to make out a plausible bad faith claim. The complaint included conclusory and boilerplate allegations. For example, the insured alleged a conspiracy to deny UIM benefits, untimeliness, an unfair settlement offer, and discriminatory treatment when compared to the treatment of other similarly situated claimants. There were no specific facts detailing how this purported misconduct constituted bad faith.
Judge Mannion relied upon Judge Kane’s 2019 Rosenthal decision, summarized here, Judge Rambo’s 2018 Moran opinion addressing timeliness and valuation, summarized here, and her Rickell opinion, summarized here, Eastern District Judge Kearney’s 2017 Sherman decision giving sharp advice on pleading bad faith, summarized here, Judge Caputo’s 2017 Meyers decision addressing timeliness of payment and investigation, summarized here, and Western District Judge Schwab’s 2011 Pfister opinion addressing valuation disputes, summarized here.
Date of Decision: November 5, 2021
Dayton v. The Automobile Insurance Company of Hartford, Connecticut, U.S. District Court Middle District of Pennsylvania No. CV 3:20-1833, 2021 WL 5163221 (M.D. Pa. Nov. 5, 2021) (Mannion, J.)