FEBRUARY 2017 BAD FAITH CASES: CONCLUSORY ALLEGATIONS NOT ENTITLED TO PRESUMPTION OF TRUTH, AND FEW FACTUAL ALLEGATIONS DID NOT REACH LEVEL OF BAD FAITH (Philadelphia Federal)
Plaintiffs failed to plead an adequate bad faith complaint under Twombly/Iqbal, but were given leave to amend.
Among the averments that did not meet muster were allegations that the insurer falsely represented that the loss which was not covered, and that the insurer’s representative knew this representation was false, fraudulent and misleading and made solely for the purpose of depriving plaintiffs of the benefits of the Policy. The representative’s letter was actually was attached to the complaint and explained that “[b]ased on [the] investigation and review of [a forensic analysis and engineering report] . . . the damage to the bridge is the result of wear, tear, deterioration, and erosion, which is not covered under the Policy.”
Other inadequate averments were that the insurer and its agents:
failed to complete a prompt and thorough investigation before denying the claim,
failed to pay in a prompt and timely manner,
failed to objectively and fairly evaluate the claim,
conducted an unfair and unreasonable investigation,
asserted Policy defenses without a reasonable basis in fact,
flatly misrepresented pertinent facts or policy provisions relating to coverages at issue and placed unduly restrictive interpretations on the Policy and/or claim forms,
failed to keep the insureds fairly and adequately advised as to the status of the claim, unreasonably valued the loss and failed to negotiate the amount of the loss,
failed to promptly provide a reasonable factual basis for the denial of the claim,
unreasonably withheld policy benefits,
acted unreasonably and unfairly when responding to the claim,
and unnecessarily and unreasonably compelled a lawsuit.
These allegations did not allege sufficient facts to state a claim of bad faith against defendant. They merely restated the possible conduct that may be considered to be bad faith. They were merely conclusory allegations.
While the allegation “that a representative of defendant forwarded correspondence to plaintiffs is a factual allegation, the allegations that this correspondence ‘falsely represented’ that the loss was not covered and that the representative ‘knew this representation was false, fraudulent and misleading and made solely’ to deprive plaintiffs of the benefits of the Policy are conclusory.
The court found such “conclusory allegations … are not entitled to the presumption of truth in determining whether the Complaint states a claim for bad faith.” At most, the factual allegations actually pleaded in the Complaint and the exhibits “allege … that defendant’s analysis of the damage to the Property and/or the Policy’s coverage was incorrect. Without more, the Complaint does not sufficiently allege a claim of bad faith conduct by defendant.”