MAY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH COMPLAINT AS CONCLUSORY, ABSENT FACTUAL ALLEGATIONS INDICATING A LACK OF REASONABLE BASIS FOR CLAIM DENIAL (Philadelphia Federal)
In Miracle Temple Christian Academy v. Church Mutual Insurance Co., the court heard a carrier’s motion to dismiss the complaint of a religious institution that brought suit for breach of contract, bad faith, and common law fraud. The case stems from wind and water damage sustained by the insured party in early 2010. When the insured’s general commercial liability carrier alerted the insured that the full amount of its losses were not fully covered by the policy, the insured brought suit.
Examining the insured’s complaint, the court reasoned that allegations such as “Defendant has refused to provide coverage pursuant to said claim of damages” are conclusory legal statements that fail to support a claim of bad faith. The court dismissed the insured’s complaint because it failed to provide sufficient factual allegations supporting the carrier’s alleged lack of reasonable basis for denying the full amount of the insured’s claim.
The court also dismissed the insured’s common law fraud claim, citing the party’s bare legal conclusions as insufficient to support a viable claim.