COURT WILL NOT SIMPLY INFER BAD FAITH CONDUCT, WITHOUT FACTUAL DETAIL THAT CAN UNDERPIN A PLAUSIBLE BAD FAITH CLAIM (Philadelphia Federal)
This is another example of a failure to meet federal plausibility pleading standards when asserting statutory bad faith. The opinion was issued by Judge Michael Baylson. We have summarized nearly 40 of Judge Baylson’s bad faith opinions over the years.
Judge Baylson sets out the basic propositions guiding the outcome of this motion to dismiss the bad faith count.
“Alleging an insurer failed to pay plaintiff for claims covered by an insurance policy, even if the loss-causing incident is uncontested and plaintiff allegedly fulfilled all prior conditions, does not itself state a plausible claim for unreasonableness.” Judge Baylson cites his 2011 Eley opinion, among other cases, in support.
“[M]ere averment that an insurer had no reasonable basis for refusing to reimburse a plaintiff is a conclusory legal statement, not a factual allegation.”
“'[T]he mere fact that [the insurer] denied [the insured’s] request for coverage,’ without factual specifics as to ‘who, what, where, when, and how’ such denial was unreasonable, does not plausibly show reckless indifference.” He cites Judge O’Neill’s 2012 Blasetti decision in support.
“A failure to immediately accede to a demand [under an insurance policy] cannot, without more, amount to bad faith.” Judge Baylson cites to Judge Buckwatler’s Pasqualino decision in support of this proposition.
The case involved a property damage claim for breach of contract and bad faith. Applying the foregoing principles to the complaint’s averments, Judge Baylson reaches the following conclusions:
First, the complaint alleges the insurer possessed no evidence that the losses did not occur and were not substantiated. However, there are no supporting facts alleged as to the unreasonableness of the insurer’s position. The only allegations are the property damage was covered under the policy, and that the insured complied with the policy by sending some written documentation of the damages and demanding coverage.
Judge Baylson refused to infer unreasonableness from simply pleading a failure to reimburse the alleged damages, “without [the complaint] clarifying what expenses were submitted, when they were rejected, and whether or how [the insurer] responded.”
Second, the complaint wholly failed to address the knowing or reckless disregard element needed to prove statutory bad faith. Simply arguing a carrier’s general knowledge, i.e., the conclusory notion that the carrier must have known its position was unreasonable, with no supporting facts, is inadequate to meet the second prong of the Terletsky/Rancosky bad faith test.
The complaint was dismissed without prejudice, however, with leave to amend.