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The underinsured motorist bad faith claim in the original complaint was dismissed without prejudice, for pleading only conclusory allegations or facts that did not plausibly set out a bad faith claim.  The insured amended the complaint, and the carrier moved to dismiss again.  This time, the court dismissed with prejudice for failing to allege facts showing the insurer did not have a reasonable basis to deny the claim.

Failure to Plead Injuries or Amount of Offer, Inadequate to State a Claim

Eastern District Judge Leeson finds that the insured offered only conclusory allegations, e.g., the insurer’s “offer of settlement was inconsistent with the injuries and damages she sustained, and in light of those same injuries and damages, is an unreasonable and inappropriate offer of settlement.” Plaintiff does list her injuries but “does not describe any type of medical treatments undergone or costs incurred, nor does it detail how much, if any, time she missed from work, nor does it state the amount of [the insurer’s] offer.  Judge Leeson contrasts with cases where the insurer only offered $7,500 to an insured who’d been out of work four years and underwent multiple surgeries.  In the present case, the insured settled for $300,000 with the tortfeasor’s insurer, even though the tortfeasor apparently had $500,000 in coverage.

Length of Time Alone not Bad Faith

There were also only conclusory allegations of delay.  “At most, [the insurer] waited approximately ten months after receiving [the insured’s] claim for underinsured motorist benefits to make an offer of settlement. This length of time, in itself, is insufficient to show bad faith.”  Judge Leeson cites his 2021 Williams opinion, summarized here, “holding that even if the entirety of the delay was attributable to the insurer, ‘a period of nine or ten months, without more, is insufficient to establish bad faith’” and Judge Kelly’s 2011 Thomer opinion, summarized here, “determining on summary judgment that a forty-two month delay was not bad faith….”

“Dismissal is with prejudice because [the insured], who is represented by counsel, was previously advised of the deficiencies in her pleadings by the prior Motion to Dismiss and thereafter filed an Amended Complaint.”

[Note:  This opinion, like a number of post-Rancosky opinions, erroneously states: “To state a bad faith claim for an insurer’s failure to pay a claim, ‘the plaintiff must allege an underlying element of self-interest or ill will.’” The case was dismissed because the insured could not meet the elements of an unreasonable basis to deny the claim accompanied by reckless disregard.  Still the court stated: “The Amended Complaint is completely devoid of facts showing that Nationwide recklessly disregarded a reasonable basis or acted in ill-will.”

In Rancosky, summarized here, Pennsylvania’s Supreme Court was clear that self-interest and ill-will are not elements required to establish a bad faith claim; though they may provide evidence supporting the second element (that an insurer knew or recklessly disregarded its lack of reasonable basis to deny a claim).  This position is reiterated in, e.g., Magistrate Judge Dodge’s November 2020 Falcon decision, summarized here, Judge Bartle’s April 2020 Balu decision, and Judge Baylson’s June 2019 Kelly decision, where he notes “Terletsky bases its test in part on Black Law Dictionary’s definition of bad faith, which includes ‘self-interest or ill-will’ on the insurer’s part. However, both Klinger and Rancosky declined to require a showing of such ‘dishonest purpose’ and only adopted the two-prong test actually applied by the Terletsky court.”

Rancosky was decided in 2017.  This 2022 McConnell opinion cites a 2021 opinion, O’Brien v. Liberty Mutual, summarized here, to support the self-interest/ill-will as a required element position.  Just last month, the same error was repeated by a different judge, as summarized here. Earlier in 2021, another Judge appears to have likewise taken the position that a dishonest purpose is an element of statutory bad faith, in an opinion summarized here.]

Date of Decision:  March 31, 2022

MCCONNELL v. NATIONWIDE MUTUAL INSURANCE COMPANY, U.S. District Court Eastern District of Pennsylvania No. 5:21-CV-04523, 2022 WL 970671 (E.D. Pa. Mar. 31, 2022) (Leeson, J.)