WILLIAMS et al v. STATE FARM FIRE & CASUALTY INSURANCE COMPANY
OPINION. Signed by Judge Joseph H. Rodriguez on 4/3/2017. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
WILLIAM WILLIAMS and MARY
HONORABLE JOSEPH H. RODRIGUEZ
Civil Action No. 16-9028
STATE FARM FIRE & CASUALTY INS.
CO. UNITED STATES,
This matter is before the Court on Defendant’s motion to dismiss the
Count Two of the Complaint under Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim. The Court has reviewed the submissions and
decides the matter based on the briefs pursuant to Fed. R. Civ. P. 78(b). For
the reasons stated here, Defendant’s motion will be granted.
Motion to Dismiss Standard
Federal Rule of Civil Procedure 12(b)(6) provides that a court may
dismiss a complaint “for failure to state a claim upon which relief can be
granted.” In order to survive a motion to dismiss, a complaint must allege
facts that raise a right to relief above the speculative level. Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Fed.R.Civ.P. 8(a)(2).
While a court must accept as true all allegations in the plaintiff's complaint,
and view them in the light most favorable to the plaintiff, Phillips v. County
of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008), a court is not required to
accept sweeping legal conclusions cast in the form of factual allegations,
unwarranted inferences, or unsupported conclusions. Morse v. Lower
Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The complaint must
state sufficient facts to show that the legal allegations are not simply
possible, but plausible. Phillips, 515 F.3d at 234. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556).
Plaintiffs allege that Defendant issued a policy of insurance covering
their residence located at 2510 Good Intent Road, Woodbury, New Jersey
and that they are entitled to coverage for a loss that took place on/or about
January 12, 2016. In Count One of their Complaint, Plaintiffs allege that
Defendant refused to pay benefits allegedly due and owing to Plaintiffs
under the policy and that Defendant breached the insurance policy. In
Count Two, Plaintiffs allege that Defendant breached the duty of good faith
and fair dealing in processing Plaintiffs’ homeowner’s claim; Count Two
also demands punitive damages.
A claim against an insurer for breach of the implied duty of good faith
and fair dealing or a breach of fiduciary duty in the handling of an insured’s
claim under an insurance contract has been described as a claim for “bad
faith.” See Pickett v. Lloyd’s, 621 A.2d 445, 451 (N.J. 1993) (“Most
jurisdictions have characterized a cause of action for bad-faith failure to pay
an insured’s claim as a tort that arises out of the implied duty of an
insurance company to deal fairly and act in good faith in processing the
claims of its policyholder.”). To establish a bad faith claim for denial of
benefits, a plaintiff must show “(1) the insurer lacked a ‘fairly debatable’
reason for its failure to pay a claim, and (2) the insurer knew or recklessly
disregarded the lack of a reasonable basis for denying the claim.” Ketzner v.
John Hancock Mut. Life Ins. Co., 118 Fed. Appx. 594, 599 (3d Cir. 2004).
While “the lack of a reasonable basis may be inferred and imputed to an
insurance company,” there must be allegations of reckless indifference to
facts or to proofs submitted by the insured. Pickett, 621 A.2d at 453
(quotations and citations omitted).
Plaintiffs reference a “reckless disregard for the rights of the
Plaintiffs” but do so in conclusory fashion, thereby leaving the Court to
infer reckless indifference from the fact that Defendant denied coverage;
however, the Court declines to make such an inference. Plaintiffs do not
provide sufficient factual allegations to suggest an absence of a reasonable
basis on the part of Defendant for denying coverage. The mere allegation
that Defendant’s denial of coverage inferentially establishes bad faith relies
on the very speculation forbidden by Twombly and Iqbal. Accordingly, the
Court dismisses Plaintiffs’ claim for bad faith without prejudice.
Having determined that Plaintiffs’ claim for breach of the duty of
good faith and fair dealing is insufficiently pled and therefore is dismissed,
the Court need not address whether Plaintiffs are entitled to punitive
damages under that claim.
For these reasons, Defendant’s motion to dismiss Count Two of the
Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim will be granted. An appropriate Order will be entered.
Date: April 3, 2017
/s/ Joseph H. Rodriguez
JOSEPH H. RODRIGUEZ
UNITED STATES DISTRICT JUDGE
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