JUNE 2013 BAD FAITH CASES: PLAINTIFF FAILS TO MEET TWOMBLY/IQBAL REQUIREMENTS BY PLEADING ONLY LEGAL CONCLUSIONS (Philadelphia Federal)
Plaintiff was injured in a rear-end accident. The driver responsible for the crash had only the statutorily required $15,000 policy limit, the entirety of which was tendered, but insufficient to cover plaintiff’s injuries. Plaintiffs (the injured woman and her husband) filed a claim with their insurer (the “carrier”) for underinsured motorist benefits. The underinsured motorist policy had a limit of $300,000, and the carrier made an offer of $18,578. Following this offer, plaintiffs brought suit alleging bad faith.
Pursuant to the opinion, to successfully bring a claim for bad faith, a plaintiff must demonstrate (1) the carrier lacked a reasonable basis for denying benefits, and (2) the insurer knew or recklessly disregarded its lack of a reasonable basis. Plaintiffs alleged the carrier’s offer was “unreasonable under any circumstances,” the carrier “failed to make a good faith offer,” and that the carrier “arbitrarily and capriciously failed to act in good faith in settlement of the claim.”
The court, however, found that these were legal conclusions, not facts, and thus had to be disregarded. Therefore, under the remaining facts pled in the complaint, the plaintiffs were insured by the carrier under an underinsured motorist policy, plaintiffs were injured as a result of a collision with an underinsured motorist, they complied with the terms of their policy in making an underinsured claim, and the insurer made an offer to cover plaintiffs’ losses which the plaintiffs did not consider acceptable.
The court founds these facts insufficient to state a claim for relief under Pennsylvania’s bad faith statute, and the bad faith count of the complaint was dismissed; however, the dismissal was without prejudice, implying the possibility that the claim would be re-pleaded if the plaintiffs could set out sufficient facts to meet the Twombly/Iqbal pleading standards.