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Courts in this Circuit regularly dismiss bad faith claims when the complaint is devoid of specific factual allegations of bad faith conduct and is merely comprised of bare-bones, conclusory allegations.

This property damage coverage and bad faith complaint included one of these regularly dismissed bad faith claims.

Judge Marston cited numerous Eastern District cases where the court found bad faith claims inadequately pleaded, including Shallow (2020, Judge Pappert), Clapps (2020, Judge Darnell Jones), Shetayh (2020, Judge Leeson), MBMJ Properties (2019, Judge Slomsky), Myers (2017, Judge Surrick), Toner (2017, Judge Slomsky), Soldrich (2015, Judge Leeson), and the 2012 Third Circuit decision in Smith. The pleading flaws in these cases all fundamentally involve a failure to explain or describe with any details what the insurer actually did, e.g., in purportedly failing to investigate, causing unreasonable delays, failing to negotiate or offer a reasonable settlement, etc.

The complaint in the present case alleged the following conduct constituted bad faith:

  1. by sending correspondence falsely representing that Plaintiffs’ loss caused by a peril insured against under the Policy was not entitled to benefits due and owing under the Policy;

  2. in failing to complete a prompt and thorough investigation of Plaintiffs’ claim before representing that such claim is not covered under the Policy;

  3. in failing to pay Plaintiffs’ covered loss in a prompt and timely manner;

  4. in failing to objectively and fairly evaluate Plaintiffs’ claim;

  5. in conducting an unfair and unreasonable investigation [*3]  of Plaintiffs’ claim;

  6. in asserting Policy defenses without a reasonable basis in fact;

  7. in flatly misrepresenting pertinent facts or policy provisions relating to coverages at issue and placing unduly restrictive interpretations on the Policy and/or claim forms;

  8. in failing to keep Plaintiff or their representatives fairly and adequately advised as to the status of the claim;

  9. in unreasonably valuing the loss and failing to fairly negotiate the amount of the loss with Plaintiff or their representatives;

  10. in failing to promptly provide a reasonable factual explanation of the basis for the denial of Plaintiff’s claim;

  11. in unreasonably withholding policy benefits;

  12. in acting unreasonably and unfairly in response to Plaintiffs’ claim;

  13. in unnecessarily and unreasonably compelling Plaintiff to institute this lawsuit to obtain policy benefits for a covered loss, that Defendant should have paid promptly and without the necessity of litigation.

Judge Marston found these allegations were virtually identical to the allegations in MBMJ, where Judge Slomsky found the bad faith claims entirely conclusory. For example, MBMJ highlighted that while pleading a failure to promptly and thoroughly investigate, there were no allegations of any underlying facts supporting those general averments of bad faith. “For instance, the plaintiffs did not plead ‘the timing of the alleged investigation in relation to when Plaintiffs submitted their claim’ or ‘the length of the investigation from start to finish.’”

Judge Marston added, “[l]ikewise, in Clapps v. State Farm Insurance Cos., the plaintiff pled identical bad faith allegations as those the [the insureds] raise here. … The [Clapps] court concluded that ‘Plaintiff’s bad faith allegations [were] nothing more than conclusory statements devoid of any factual detail.’”

In the 1009 Clinton Properties case, relied on by the insureds, the court had found similar allegations to those plead here sufficient under the circumstances of that case to withstand a motion to dismiss. Judge Marston, however, agreed with the observation in Shetayh and Clapps that 1009 Clinton properties was an outlier.

After observing that the insureds in this case failed to plead any facts concerning dates, length of time to denial, or details of other interactions, communications negotiations and alleged misrepresentations, Judge Marston concludes: “As we repeatedly noted above, the … bad faith allegations are identical to those in numerous other cases. The [insureds] cannot “simply parrot” the same allegations pled in 1009 Clinton Properties, Clapps, Shetayh, and MBMJ Properties and expect this Court to find that they alleged enough factual content to render their bad faith claim plausible. Indeed, doing so would turn federal pleading standards on their head.” (Court’s emphasis)

That being said, Judge Marston did grant leave to amend the bad faith claim, quoting Shetayh to the effect that the amendment must be “consistent with this Memorandum and ‘must specifically include facts to address who, what, where, when, and how the alleged bad faith conduct occurred.’”

Date of Decision: May 8, 2020

Cappuccio v. State Farm Fire & Casualty Insurance Co., U.S. District Court Eastern District of Pennsylvania CIVIL ACTION NO. 19-3025-KSM, 2020 U.S. Dist. LEXIS 81751 (E.D. Pa. May 8, 2020) (Marston, J.)