NO BAD FAITH WHERE INSURED FAILS TO PLEAD BREACH OF CONTRACT; INSURED CAN’T DICTATE MANNER OF INVESTIGATION (Western District)
The insured suffered a fire loss and asserted the carrier’s actual cash value estimate was unreasonably low. It brought breach of contract and bad faith claims. The insurer moved to dismiss.
Breach of contract claim dismissed, without prejudice, for failing to allege damages
The court dismissed the breach of contract claim, without prejudice, because the insured failed to plead damages adequately. The policy required, “as a condition of reporting a loss that ‘the insured … give immediate written notice to this company of any loss … showing in detail actual cash value and amount of loss claimed.’ … [The] Amended Complaint does not detail an actual cash value and amount of loss claimed. Therefore, without sufficient pleading as to the damages element, [the insured] has not adequately pleaded a breach of contract claim.”
No bad faith in denying payment, or in the manner of investigation that is justified under express policy language
On the bad faith claim, the insured claimed the same unreasonably low valuation, and a bad faith investigation via “propounding unnecessary, burdensome, and overbroad document requests related to mutual funds, life insurance policies, five years of tax returns, and bankruptcy documents, which allegedly served no legitimate purpose in Defendants’ investigation of this commercial insurance claim.” In making these claims, however, the insured did “not account for the requirements under the Policy and [the pleadings merely] contain conclusory allegations.”
As to the document requests, the bad faith allegations were conclusory, “given that the allegations do not specify how the documents requested would not support the requirements of proof under the … Policy.” The policy provided a specific and wide range of categories subject to investigation as a prerequisite to paying a loss. In rejecting the insurer’s offer, the insured “placed the … valuation at issue and invited further investigation under the Policy, which could include some of the documentation requested by the Defendant. Defendants are placed in a position where they have a duty to conduct a thorough investigation; however, they are hamstrung by their insured’s unilateral determinations of what Defendant’s should be allowed to investigate.”
Analogizing this to inevitable discovery requests and objections should the claim be allowed to proceed, the court found the insured would not meet its burden in objecting to the same requests posed in discovery. Thus, the allegations these document requests constitute bad faith were conclusory and inadequate.
Finally, the “claims that the Defendants’ determination of actual cash value was unreasonable are similarly conclusory, and [the insured] has provided neither a specific claim for damage nor an alternative valuation method. Thus, [the insured] has not adequately pleaded a statutory bad faith claim.”