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First, Eastern District Judge Padova denied the plaintiff’s motion to remand this UIM breach of contract, bad faith, and Unfair Trade Practices and Consumer Protection Law (UTPCPL) case.  There was a $50,000 policy limit, and separate counts for statutory bad faith and under the UTPCPL.  Plaintiffs pleaded damages in excess of $50,000 in each separate count.  On its face, this was enough to create jurisdiction, even though the plaintiffs attempted to argue they were not seeking more than $75,000 in total.  It was the allegations in the complaint at the time of filing that controlled the court’s review, and plaintiffs had alleged their UTPCPL and statutory bad faith claims each were in excess of $50,000.

[Note:  The court goes on to dismiss the bad faith and UTPCPL claims, but only after allowing those claims to go toward reaching the $75,000 jurisdictional minimum.  By contrast, two weeks earlier, Middle District Judge Mannion ruled that an insurer could not include any amount from a statutory bad faith claim in opposing remand where the bad faith claim only asserted conclusion allegations that were inadequate to state a claim.  That case is summarized here.]

Second, the bad faith count only asserted conclusory allegations without factual support for the bad faith claims.  Judge Padova noted in particular that the complaint merely mapped language from the Unfair Insurance Practices Act (UIPA).  He states:

There are no factual allegations as to when Plaintiffs submitted a claim for benefits under the Policy; what information they submitted to support their request for the UIM Policy limits; the amount that [the insurer] offered to settle Plaintiffs’ claims, if any; or the reasons the [insurer] offered for failing to settle or to offer the Policy limits. In the absence of any factual allegations that support Plaintiffs’ assertion that [the insurer’s] conduct was motivated by bad faith, we conclude that their general allegations are insufficient to state a bad faith claim upon which relief can be granted.

Finally, Judge Padova dismissed the UTPCPL claim.  He states:

Importantly, however, “[t]he UTPCPL applies to consumer transactions, which are statutorily defined[, and] the handling of an insurance claim does not meet the statutory definition.” Wenk v. State Farm Fire & Cas. Co., 228 A.3d 540, 551 (Pa. Super. Ct. 2020) (citation omitted). Indeed, as the Pennsylvania Superior Court has stated, “[t]he UTPCPL applies to the sale of an insurance policy, it does not apply to the handling of insurance claims.” Wenk, 228 A.3d at 550 (citation omitted); Kelly v. Progressive Advanced Ins. Co., 159 F. Supp. 3d 562, 564-65 (E.D. Pa. 2016) (stating that “[t]he UTPCPL … applies to conduct surrounding [an] insurer’s pre-[contract] formation conduct” and not “to the handling of insurance claims” (citing Gibson v. Progressive Specialty Ins. Co., Civ. A. No. 15-1038, 2015 WL 2337294, at *4 (E.D. Pa. May 13, 2015))). Instead, the bad faith statute, 42 Pa. Cons. Stat. § 8371, “provides the exclusive statutory remedy applicable to claims handling.” Wenk, 228 A.3d at 550 (quotation omitted). Here, the allegations in the Complaint relate only to [the insurer’s] handling of Plaintiffs’ insurance claims, not to the sale of the Policy. Accordingly, we conclude that Plaintiffs’ UTPCPL claim does not state a claim upon which relief can be granted.

Interestingly, because the bad faith and UTPCPL claims were dismissed, the case was only worth $50,000 at most, and the court send the case to mandatory arbitration.

Date of Decision:  April 14, 2022

Cooper v. Liberty Mutual General Insurance Company, U.S. District Court Eastern District of Pennsylvania No. 22-618, 2022 WL 1121040 (E.D. Pa. Apr. 14, 2022) (Padova, J.)