PLEADING MORE DETAILS FROM COMMUNICATIONS WITH THE INSURER IN AMENDED COMPLAINT STILL FAILS TO SET OUT PLAUSIBLE BAD FAITH CLAIM (Middle District)
This opinion addresses the insurer’s motion to dismiss an amended complaint for failing to set out a plausible bad faith claim. The court dismissed the original complaint for failing to do so, but without prejudice to file an amended complaint. Applying the same reasoning in the first case, Judge Caputo dismissed the amended complaint with prejudice. A summary of the first opinion can be found here.
The insured charity operated a restaurant. It reported a theft, seeking coverage under a commercial liability policy. The coverage issue involved whether the thief was an officer or employee. The insured’s public adjuster and the insurer’s claim handler communicated on this issue over a three-month period, including specific communications about the treasurer’s bonding status. The insurer took the position the claim was not covered.
Judge Caputo had dismissed the previous complaint for pleading only conclusory allegations, and for only including factual allegations insufficient to support a plausible bad faith claim.
The amended complaint includes the same 12 conclusory allegations found in the original complaint. The only difference between the original and amended complaints “is that the later filed pleading details the substance of conversations between Plaintiff’s public adjuster and Defendants’ adjuster during a three week period in April 2017.” However, those additional allegations remained insufficient to set out a plausible bad faith claim. The court stated:
“What those allegations reveal, inter alia, is that Defendants considered the information provided by Plaintiff, requested additional information be provided to determine if there existed a basis to extend coverage, and explained their reasoning for initially determining why no coverage existed for the loss. … Ultimately, Defendants concluded that the loss was not covered. … While Defendants may ultimately be incorrect and the denial of coverage may constitute a breach of the parties’ insurance agreement, this alone does not state a plausible bad faith cause of action. Indeed, none of the allegations in the Amended Complaint support a plausible basis to find that Defendants engaged in bad faith with respect to Plaintiff’s theft claim.”
Judge Caputo dismissed the amended complaint with prejudice, since the insured already had an opportunity to cure the pleading defects.