Atwood v. State Farm Fire & Casualty Co.

Filing 45

MEMORANDUM re Mtn to amend 35 and to Appoint Counsel 36 filed by Rodger T. Atwood, II.(Order to follow as separate docket entry) Signed by Honorable Sylvia H. Rambo on 10/01/14. (ma)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
RODGER T. ATWOOD, II,
Plaintiff
v.
STATE FARM FIRE AND
CASUALTY CO.,
Defendant

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Civil No. 1:13-CV-1000

Sylvia H. Rambo

MEMORANDUM
This civil action involves a breach of contract claim in connection to a
homeowner’s insurance policy, arising from a fire that occurred at Plaintiff’s
residence on or about March 31, 2012. Presently before the court are two motions:
Plaintiff’s motion to amend his complaint (Doc. 35) and Plaintiff’s renewed motion
for appointment of counsel (Doc. 36). For the reasons that follow, the motion to
amend the complaint will be granted and the motion for appointment of counsel will
be denied.
I.

Background
As both parties are intimately familiar with the facts of this case, the

court will include only the background information relevant to decide the current
motions.
A.

Facts1

On or about May 2, 2011, Plaintiff, Rodger T. Atwood II (“Plaintiff”),
purchased a homeowner’s insurance policy from Defendant, State Farm Fire and
The factual allegations set forth in this memorandum are drawn from Plaintiff’s original
complaint (Doc. 1, Ex.2) and the proposed amended complaint (Doc. 35-1).
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Casualty Company (“State Farm” or “Defendant”), covering Plaintiff’s residence and
personal property located at 740 Pine Hill Road, Duncannon, Pennsylvania, within
the Middle District of Pennsylvania. (Doc. 1, Ex. 2 (“Compl.”), ¶ 6.) On February
7, 2012, federal authorities, headed by the Drug Enforcement Agency in Harrisburg,
Pennsylvania, entered Plaintiff’s home by knocking down the front door, rendering
the property unsecured. (Id. at ¶ 10.) For a period of time thereafter, Plaintiff left
the area in an attempt to avoid arrest by federal authorities. (Id. at ¶ 13.) While
Plaintiff was “on the lam,” he was informed by his brothers that there had been thefts
from the house and garage on a nearly daily basis. (Id. at ¶ 14.) Further, a fire
occurred at the residence on or about March 31, 2012.2 (Id. at ¶ 15.) By letter dated
April 3, 2012, Plaintiff gave written notice of the fire and thefts to Defendant along
with an inventory of the personal property stolen or destroyed by the fire. (Id. at ¶
18.) After receipt of Plaintiff’s written notice, Defendant undertook an investigation
of Plaintiff’s claim. (Id. at ¶ 19.) To that end, Plaintiff spoke with Greg Lunde, an
authorized agent of Defendant, and Ted Marzani, a claim representative and Special
Investigations Unit investigator. (Id. at ¶ 20.)
On May 10, 2012, Plaintiff, his wife, and his parents were arrested in
Florissant, Colorado. (Id. at ¶ 21.) Criminal proceedings were filed against
Defendant in the Middle District of Pennsylvania, which included a forfeiture
proceeding against Plaintiff’s residence. (Id. at ¶ 34.)
Plaintiff has submitted claims to State Farm for his losses in the amount
of $278,000.00 for his dwelling, “plus an additional amount of $55,600.00 under

Plaintiff avers that there is some dispute as to the actual date of the fire, as between March
3, 29, or 31, 2012. (Id. at ¶ 15.)
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Option ID;” $219,134.00 for personal property; and approximately $48,000.00 for
loss of use. (Id. at ¶ 47.) Defendant has provided a detailed listing of his personal
property to Defendant. (Id.)
Nearly thirty months have passed since the date of the loss. To date,
Defendant has not denied Plaintiff’s claim, but has made only partial payment. (Doc.
35-1, ¶ 36.) On September 4, 2013, Defendant issued a check to the mortgage lien
holder, Edward Jones, in the amount of $180,970.82, representing the remaining
mortgage balance on the property plus interest. (Id.) In addition, Defendant has paid
Plaintiff $128,824.05 for loss of personal property. (Doc. 43, ¶ 5.) Defendant has
not made any payment toward Plaintiff’s loss of use claim. (Id.)
B.

Procedural History

Plaintiff initiated this action by filing a complaint in the Court of
Common Pleas of Cumberland County on March 4, 2013 for breach of contract and
bad faith (Doc. 1, Ex. 2), which was removed to federal court by Defendant on April
17, 2013 (Doc. 1). On April 24, 2013, Defendant filed a motion to dismiss
Plaintiff’s complaint (Doc. 2), followed by a brief in support on May 3, 2013 (Doc.
5). On May 8, 2013, Plaintiff filed a response in opposition. (Doc. 8.) On May 15,
2013, Plaintiff filed an additional response to Defendant’s motion to dismiss,
wherein he requested leave to file an amended complaint. (Doc. 10.) The court
granted Plaintiff’s request and directed him to file an amended complaint by May 29,
2013. (Doc. 11.) Plaintiff failed to file an amended complaint by May 29, 2013,
and, on June 3, 2013, the court issued a rule to show cause why an amended
complaint had not been filed. (Doc. 12.) On June 10, 2013, Plaintiff filed a letter to
the Clerk or Court (Doc. 13) claiming that his May 15, 2013 response (Doc. 10)
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effectively amended his complaint. The court disagreed, noting that, if Plaintiff
wished to alter his complaint, he was required to file an amended complaint, separate
and apart from any complaint or document previously filed, and granted him an
additional ten days to file an amended complaint. (Doc. 14.) On June 17, 2013,
Plaintiff filed an amended complaint (Doc. 15), which the court accepted for filing
(Doc. 16). In response, Defendant filed an amended motion to dismiss (Doc. 17) and
brief in support (Doc. 19). On July 29, 2013, Plaintiff filed a brief in opposition.
(Doc. 20.) By memorandum and order, the court granted Defendant’s motion to
dismiss and dismissed without prejudice Plaintiff’s bad faith claim at Count II,
primarily because the insurance coverage was not yet denied, noting that Defendant
had a reasonable basis to delay its final coverage decision in light of the pending
criminal charges. (Doc. 21.) The court invited Plaintiff to amend his complaint
upon the issuance of a final coverage decision from Defendant regarding Plaintiff’s
claim. (Id.) The court also denied Plaintiff’s demand for attorney’s fees, noting that
Plaintiff was proceeding pro se, but added that if an attorney entered his or her
appearance, the court would consider a motion by Plaintiff to amend his complaint to
add a request for attorney’s fees. (Id.)
On September 10, 2013, Defendant filed an answer to Plaintiff’s
amended complaint (Doc. 22), to which Plaintiff filed a response on September 19,
2013 (Doc. 23). A case management order was entered on March 14, 2014. (Doc.
29.) On June 27, 2014, Plaintiff filed a motion to extend the time to file any motion
to amend (Docs. 30 & 31), and Defendant filed a response on July 7, 2014 (Doc. 32).
The court granted Plaintiff’s motion, thereby extending the joinder and amendments
deadline until July 31, 2014. (Doc. 33.) On July 30, 2014, Plaintiff filed the instant
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motion for leave to amend the complaint and renewed his motion to appoint counsel.
(Docs. 35 & 36.) Defendant filed a response to Plaintiff’s renewed motion for
appointment of counsel on August 8, 2014. (Doc. 37.) Plaintiff replied on August
21, 2014. (Doc. 38.) On August 25, 2014, Defendant filed a response to Plaintiff’s
motion to amend the complaint (Doc. 40), and Plaintiff replied on September 11,
2014 (Doc. 43). Thus, both motions have been fully briefed and are ripe for
consideration.
II.

Motion to Amend the Complaint
A.

Legal Standard

Under Rule 15, “leave to amend shall be freely given, in the absence of
circumstances such as undue delay, bad faith or dilatory motive, undue prejudice to
the opposing party, or futility of amendment.” Jablonski v. Pan Am. World Airways,
Inc., 863 F.2d 289, 292 (3d Cir. 1988) (citing Forman v. Davis, 371 U.S. 178
(1962)). Delay is undue where a plaintiff attempts to re-plead facts which could
have earlier been pleaded. Cureton v. National Collegiate Athletics Ass’n, 252 F.3d
267, 273 (3d Cir. 2001). “A finding of dilatory motive is justified where the plaintiff
acts ‘in an effort to prolong litigation.’” Breyer v. Meissner, 23 F. Supp. 2d 540, 542
(E.D. Pa. 1998). Such efforts are apparent when the motion attempts to plead
additional information that was previously available, and the plaintiff fails to provide
an explanation as to why the information was not included in the original complaint.
See Scattergood v. Pearlman, 945 F.2d 618, 627 (3d Cir. 1991)). Amendment of the
complaint is futile if the amendment will not cure the deficiency in the original

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complaint or if the amended complaint cannot withstand a renewed motion to
dismiss. Jablonski, 863 F.2d at 292.
B.

Discussion3

At issue regarding the matter sub judice is whether Plaintiff should be
permitted to amend his complaint to reassert his bad faith claim, which was
previously dismissed by the court without prejudice for failure to state a claim.
(Doc. 21, pp. 7-10 of 11.) In its August 27, 2013 memorandum, the court explained
that it was granting Defendant’s motion to dismiss primarily because the insurance
coverage had not yet been denied, and noted that Defendant had a reasonable basis to
delay its final coverage decision in light of the pending criminal charges. (Id.) The
court invited Plaintiff to amend his complaint upon the issuance of a final coverage
decision from Defendant regarding Plaintiff’s claim. (Id. at 10 of 11.) In his
proposed amended complaint, Plaintiff avers that, after nearly two-and-a-half years,
Defendant’s failure to pay only slightly more than half of his personal property claim
and none of his loss of use claim effectively amounts to a denial of the insurance
claim. In response, Defendant argues that the amended complaint would be futile
because it has not denied Plaintiff’s claim. To the contrary, it has paid Plaintiff’s
claim for the damage to the structure of his home and for personal property.
Defendant further argues that it could not release the insurance proceeds sooner due
to the criminal charges against Plaintiff and the post-indictment restraining
order/levy issued by the court in the criminal case.

Defendant first argues that the court should deem Plaintiff’s motion to amend withdrawn
for failure to file a brief in support within fourteen days, pursuant to Local Rule 7.5. However, a
supporting brief is essentially incorporated within the motion itself. (See Doc. 35.) Given Plaintiff’s
pro se status, the court will accept the motion as filed.
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Under Pennsylvania law, an insured may receive damages and other
relief if the insurer acted in bad faith. 42 Pa. C.S.A. § 8371. To establish a claim for
bad faith, “the plaintiff must show that the defendant did not have a reasonable basis
for denying benefits under the policy and that [the] defendant knew or recklessly
disregarded its lack of reasonable basis in denying the claim.” Terletsky v.
Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994) (citations
omitted); see also Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F. 3d 218, 225 (3d
Cir. 2005) (adopting the definition of bad faith as set forth in Terletsky). However,
the statute is not limited to an insurer’s bad faith in denying a claim. Rather, “[a]
plaintiff may also successfully make a claim for [ ] bad faith in an insurer’s
investigative practices, such as a lack of good faith investigation into facts, and
failure to communicate with the claimant.” Sypeck v. State Farm Mut. Auto. Ins. Co.,
Civ. No. 3:12-cv-324, 2012 WL 2239730, *3 (M.D. Pa. June 15, 2012) (internal
quotations and citations omitted). In addition, even where a claim is eventually paid,
“[d]elay is a relevant factor in determining whether bad faith has occurred.”
Kosierowski v. Allstate Ins. Co., 51 F. Supp. 2d 583, 588 (E.D. Pa. 1999) (citing
Klinger v. State Farm Mut. Auto Ins. Co., 115 F.3d 230, 234 (3d Cir. 1997)).
To constitute bad faith, however, mere negligence or bad judgment is not enough.
Terletsky, 649 A.2d at 688. Instead, the plaintiff must show that the insurer breached
its duty of good faith “through some motive of self-interest or ill-will.” Id. Bad faith
must be established by clear and convincing evidence. Sypeck, 2012 WL 2239730 at
*3.
Here, in support of his bad faith claim, Plaintiff asserts, in part, as
follows:
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Twenty-eight (28) months have passed since the date of the
loss. 18 months passed from the date of the loss to the date
the Government withdrew its motion for a restraining
order. It is not unreasonable to think that 18 months is
more than ample time for the insurer to do all its number
crunching to arrive at payout figures for the residence
premises, the personal property, and the loss of use. Before
the Government withdrew its motion, the insurer knew that
it was going to pay the claim, either to the Government if it
prevailed in its motion, or the insured. Now, an additional
10 months have passed and the insurer continues to
stonewall. Plaintiff believes (and the record confirms) that
Defendant has intentionally delayed the resolution of
Plaintiff’s claim.
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It appears as if Defendant is taking advantage of both the
fact that Plaintiff is incarcerated and that Plaintiff is
indigent.
(Doc. 35-1, ¶¶ 53, 59.)
Based upon the allegations set forth in the proposed amended
complaint, the court finds that it is appropriate at this juncture to permit Plaintiff to
amend his complaint to reassert his bad faith claim against Defendant. Plaintiff
alleges that, while Defendant has paid the lien holder for the property damage, it has
only paid approximately 57 percent of Defendant’s personal property claim and has,
thus far, declined to pay his loss of use claim. Although the court invited Plaintiff to
amend his complaint if his claim was denied, the court agrees that Defendant’s
failure to pay the balance of the personal property claim and the loss of use claim
may effectively amount to a denial of coverage, especially considering the passage of
time. Further, the court finds that Defendant’s arguments regarding the futility of the
proposed amended complaint are better suited for a motion for summary judgment as
they involve facts and events that are extraneous to the complaint.

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In summary, the court finds that the amendment should be permitted.
The addition of the bad faith claim as well as the additional factual allegations
outlined in the proposed amended complaint are amendments that do not appear to
be futile. In light of the foregoing and upon consideration that leave to amend is
generally “freely given,” Plaintiff’s motion for leave to file an amended complaint
will be granted.
III.

Motion for Appointment of Counsel
A.

Legal Standard

It is well settled that “indigent civil litigants possess neither a
constitutional nor a statutory right to appointed counsel.” Gordon v. Gonzalez, 232
F. App’x 153, 156 (3d Cir. 2007) (quoting Montgomery v. Pinchak, 294 F.3d 492,
498 (3d Cir. 2002)). However, it is within the court’s discretion “to request an
attorney to represent any person unable to afford counsel.” 28 U.S.C. § 1915(e)(1).
The court’s decision whether to appoint counsel is to be given wide latitude and will
only be overturned if its ruling is clearly an abuse of discretion. Tabron v. Grace, 6
F.3d 147, 155 (3d Cir. 1993).
In Tabron, the Third Circuit developed a list of criteria to aid the district
courts in weighing the appointment of counsel. As a threshold matter, the district
court must assess whether the claimant’s case has some arguable merit in fact and
law. Tabron, 6 F.3d at 155. Upon a favorable finding, the court must then consider
certain additional factors that bear on the necessity for the appointment of counsel.
Id. These include: (1) the plaintiff’s ability to present his own case; (2) the difficulty
of the particular legal issues; (3) the degree to which factual investigation will be
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necessary and the ability of the plaintiff to pursue investigation; (4) the plaintiff’s
capacity to retain counsel on his own behalf; (5) the extent to which a case is likely
to turn on credibility determinations; and (6) whether the case will require testimony
from expert witnesses. Id. at 155-56. This list is neither exhaustive nor is any one
factor determinative. Parham v. Johnson, 126 F.3d 454, 458 (3d Cir. 1997).
B.

Discussion

Assuming, solely for the purpose of deciding these motions, that
Plaintiff’s claims have merit in fact and law, several of the Tabron factors militate
against appointment of counsel. While Plaintiff is a pro se litigant, he has
demonstrated an aptitude for litigation. Indeed, throughout the extensive legal
proceedings thus far, Plaintiff has presented comprehensible legal arguments with
appropriate citations to governing authority. The numerous pro se filings in this case
alone evince Plaintiff’s familiarity with the legal system. He not only files
appropriate motions with well crafted arguments, but is also responsive to the
arguments presented by Defendant. Further, the legal issues in this case are
relatively uncomplicated, and any investigation does not appear to be beyond
Plaintiff’s ability. Indeed, although Plaintiff has encountered some difficulties in
obtaining certain documents while incarcerated, he has demonstrated an ability to
overcome those obstacles. In addition, there is some indication that Plaintiff can
afford to retain his own counsel.3 Finally, this case does not appear to be one that
will turn on credibility or require expert witness testimony. In short, Plaintiff

The fact that Plaintiff has received $128,824.05 from Defendant leads the court to
question his claim of indigency.
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demonstrates a certain level of sophistication, he knows his case well, and has had
full access to the facts, material or otherwise, relating to his case. Therefore,
Plaintiff’s renewed motion for appointment of counsel will be denied.
IV.

Conclusion
For the reasons stated above, the court will grant Plaintiff’s motion for

leave to amend his complaint and deny Plaintiff’s motion for appointment of
counsel.
An appropriate order will be issued and docketed separately.
s/Sylvia H. Rambo
United States District Judge
Dated: October 1, 2014.

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