“LEGAL THEORIES ALONE ARE NOT ENOUGH TO SUSTAIN LITIGATION. A PLAINTIFF MUST ALSO PLEAD FACTUAL ALLEGATIONS TO SUPPORT HIS LEGAL THEORIES.”
Legal theories alone are not enough to sustain litigation. A plaintiff must also plead factual allegations to support his legal theories.
The Honorable Joshua D. Wolson, May 6, 2021
In this breach of contract and bad faith case, Eastern District Judge Wolson dismissed all claims.
As to the alleged breach of contract, the insured made conclusory allegations about failures to pay sums due. He did not plead any facts as to what sums were due that the insurer failed to pay, or what provisions in the insurance contract were breached. Further, he admitted that certain sums asserted as allegedly due were paid.
Finally, even when payment is delayed, there is still payment. The delay does not create a breach of the insurance agreement when payment is eventually made. Thus, delay is really an issue of bad faith, not breach of contract.
Moving on to the bad fad faith claim, the insured argued that the delayed payment, “in and of itself” established bad faith. Judge Wolson disagreed, observing that “a delay in payment is not a per se violation of 42 Pa. C.S.A. § 8371. Although an unreasonable delay can be considered a bad faith insurance practice under the statute, ‘a long period of delay between demand and settlement does not, on its own, necessarily constitute bad faith.’”
Rather, a plaintiff alleging delay based bad faith “must plead facts sufficient to demonstrate that (1) the defendant had no reasonable basis for the actions it undertook, which resulted in the delay, and (2) that the defendant knew or recklessly disregarded the fact that it had no reasonable basis to deny payment. … If the delay is attributable to a need for further investigation or even to simple negligence, there is no bad faith.”
Judge Wolson found nothing in the complaint suggesting the insurer knew or recklessly disregarded the lack of a reasonable basis to delay payment. “On the contrary, according to the Complaint, after [the insured] filed suit, ‘the matter was looked at with greater scrutiny,’ and [the insurer] sent him an additional check … eight to nine months after denying him additional benefits.”
Judge Wolson observed that, taken as true, the Complaint asserts facts that might show negligence. However, the plaintiff did not “attribute this delay to [the insurer’s] knowledge or recklessness that it had no basis for the delay.” The court could not “infer recklessness based only on a nine-month delay of an additional payment.”
Interestingly, while Judge Wolson would not grant leave to file a new amended complaint, he did grant plaintiff an opportunity to correct deficiencies in the existing complaint.