The court considered a carrier’s motion to dismiss an insured’s complaint. The complaint alleged bad faith, violations of the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), breach of contract, breach of fiduciary duty of good faith and fair dealing, and negligence.
Addressing each count individually, the court noted that the insured party alleged facts sufficient to state plausible bad faith, UTPCPL, and breach of contract claims. As such, the court denied the carrier’s motion to dismiss the first three counts, permitting them to proceed to discovery. However, the court dismissed the insured’s claim for punitive damages under its breach of contract claim.
With respect to the UTPCPL claim, the court held that the insured must prove that it “justifiably relied on the [carrier’s] wrongful conduct or representation and that [it] suffered harm as a result of that reliance.” Recognizing that this was merely a motion to dismiss, the court ruled that the UTPCPL count should be tested more thoroughly after discovery is conducted.
With respect to Count IV, the breach of implied covenant of good faith and fair dealing allegation, the court dismissed the insured’s claim. It reasoned that such a claim is “tantamount to a breach of contract” allegation, making Count IV redundant in conjunction with the insured’s additional bad faith and breach of contract claims. As such, the court dismissed Count IV of the complaint.
Turning to Count V, the negligence allegation, the court held that the “gist of the action” doctrine operates to bar tort claims rooted in a contractual suit. The court reasoned that, because Count V merely alleges that the carrier failed to “to exercise reasonable case in the handling of claims made under the Policy,” it is clear that the claims are “purely contractual,” arising only under the parties’ insurance policy.
Therefore, the court denied the insurer’s motion to dismiss with respect to Counts I-III, permitting the claims to proceed to discovery. However, the court granted the motion to dismiss with respect to Count IV, Count V, and the claim for punitive damages under Count III.
Date of Decision: January 17, 2012
Krugh v. State Farm Ins. Co., No. 2:11-cv-1484, 2012 U.S. Dist. LEXIS 4999 (W.D. Pa. Jan. 17, 2012) (Fischer, J.)