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Plaintiffs’ home sustained damage in August of 2011 during Hurricane Irene. Plaintiffs’ homeowners’ insurance policy covered damage to plaintiffs’ dwelling, including structures attached to the dwelling. The policy included coverage for wind and hail damage. Following the storm, plaintiffs visited their property and observed water infiltration on the main level, in the living room, dining room, kitchen and loft kitchen; leakage around the skylight; badly bent chimney cap; and flashing on the roof.

A public adjuster assessed the storm-related value of the loss at approximately $55,401. The carrier hired a private adjuster to investigate the loss. The private investigator valued the storm-related loss at approximately $3,392. The carrier refused to pay the amount assessed by the public adjuster because it asserted some of the damages were actually the result of wear and tear, not the storm.

Based on this coverage denial, plaintiffs filed suit against the carrier alleging statutory bad faith. Plaintiffs alleged those claims were evidenced by “[the carrier’s] refusal to accept coverage on the claim when it knew or should have known that the claim was covered under the applicable policy; [the carrier’s] refusal to fully pay the claim; the carrier denying the claim; [the carrier] failing to promptly provide a reasonable explanation for the basis of the denial; [the carrier’s] pattern and practice of engaging in conduct benefitting the carrier to the detriment of plaintiffs; [the carrier] placing its interests over those of the insured; other misconduct which might be discovered during litigation.”

The carrier then filed a motion to dismiss both counts, alleging plaintiffs’ complaint only made conclusory allegations, which do not suffice to establish a plausible claim of bad faith.

The court found plaintiffs’ allegations of statutory bad faith were not sufficient to demonstrate a “plausible claim for relief” as necessary to defeat a motion to dismiss under Fed. R. Civ. P. 12(b)(6). Plaintiffs’ factual allegations fell short of raising “a right to relief above the speculative level on the assumption that all allegations in the complaint are true.” Although the court felt the carrier’s adjuster’s low-value assessment might implicate bad faith, the support cited by plaintiffs was not sufficient to show bad faith was the case.

Date of Decision: June 7, 2013

Calandrello v. Sentinel Ins. Co., Civil Action No. 3:13-CV-134, 2013 U.S. Dist. LEXIS 79967 (M.D. Pa. June 7, 2013) (Conaboy, J.).