MAY 2016 BAD FAITH CASES: COURT FINDS FACTUAL ALLEGATIONS IN COMPLAINT CONCERNING NATURE OF BREACH OF CONTRACT MUST BE READ ALONG WITH OTHERWISE CONCLUSORY LEGAL ALLEGATIONS OF BAD FAITH IN RULING ON MOTION TO DISMISS (Middle District)
In Linko v. Nationwide Property & Casualty Insurance, the insured alleged he made monthly insurance payments towards insurance on a particular truck, and that he had insurance on the truck with the insurer. The insurer denied this, stating it had no record of his purchasing insurance. The insurer refused coverage when the truck was involved in an accident, and the insured brought breach of contract and bad faith claims. The insurer moved to dismiss the bad faith claim for merely pleading conclusory allegations of law.
The court denied the insurer’s motion to dismiss plaintiff’s bad faith claim. The court found that the insured pleaded an unreasonable denial of benefits, and that dismissal would be premature.
While some paragraphs in the complaint could be viewed as legal conclusions, the court read those paragraphs “in conjunction with [the] more specific allegations in his breach of contract claim.” These factual allegations bolstered the claim of unreasonable denial of benefits, and were read to support a bad faith cause of action for failure to objectively and fairly evaluate the insured’s claim, and failure to “promptly offer payment of the reasonable and fair value of the claim to plaintiff.”