JUNE 2015 BAD FAITH CASES: BAD FAITH CLAIM DISMISSED WITHOUT PREJUDICE FOR FAILING TO PLEAD PLAUSIBLE ACTION (Philadelphia Federal)
In Pasqualino v. State Farm Mutual Automobile Insurance Company, the insured brought claims for breach of contract and bad faith against its insurer. The insurer had issued a policy in which the insured was provided with uninsured motorist coverage. The insured was involved in a motor vehicle collision with an uninsured motorist, and the accident’s sole cause was the negligence of the uninsured motorist. The insured suffered severe injuries and requested her policy limits. The insurer refused to offer the insured more than $12,000 in coverage, and the insurer consequently filed suit.
The insured alleged that the insurer’s handling of her claim constituted bad faith because the insurer “failed objectively and fairly to evaluate [the insured’s] claim; failed to adopt or implement reasonable standards in evaluating [the insured’s] claim; acted unreasonably and unfairly in response to [the insured’s] claim; did not attempt in good faith to effectuate a fair, prompt, and equitable settlement of [the insured’s] claim in which [the insurer’s] liability under the policy had become [sic]; subordinated the interest of its insured to its own financial interests; failed reasonably and adequately to evaluate or review the medical documentation in [the insurer’s] possession; failed reasonably and adequately to evaluate or review the medical documentation in [the insurer’s] possession [sic]; violated the fiduciary duty owed to [the insured]; failed to make an honest, intelligent, and objective settlement offer; caused [the insured] to expend money on the presentation of her claim; and caused the [insured] to bear the stress and anxiety associated with litigation.”
The insurer moved to dismiss the bad faith claim, and the Court granted the motion because the insured’s allegations did not “provide any factual allegations from which the Court could make a plausible inference that [the insurer] knew or recklessly disregarded its lack of a reasonable basis for denying benefits.” The Court noted that the insured merely suggested that a bad faith claim was possible, but not that it was plausible, as required under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). The Court reasoned that the insured’s allegations were conclusory and failed to provide a basis for an award of bad faith damages, and granted the insurer’s motion to dismiss the bad faith claim without prejudice.