Dileo et al v. State Auto Property and Casualty Insurance Company et al

Filing 16

MEMORANDUM and ORDER denying 4 dfts' partial Motion to Dismiss ; pltfs ordered to file an amended complaint w/i 10 days of this order; the amended complaint shall clearly and separately identify the cause of action raised.Signed by Honorable James M. Munley on 1/26/09 (sm, )

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA JOSEPH DILEO, and JOANNE DILEO, his wife, Plaintiffs : No. 3:08cv1218 : : (Judge Munley) : : v. : : STATE AUTO PROPERTY AND : CASUALTY INSURANCE : COMPANY, and : STATE AUTO INSURANCE : COMPANIES, : Defendants : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
M E M O R AN D U M B e fo re the court is defendants' partial motion to dismiss the plaintiffs' complaint (Doc. 4). Having been fully briefed, the matter is ripe for disposition. B a c k g ro u n d 1 T h is case arises from a break-in of property owned by Plaintiffs Joseph and J o a n n e Dileo. (See Complaint (hereinafter "Complt.")). During the break-in, which o c c u rre d on April 27, 2006, plaintiffs sustained damage to their residence, as well as th e theft of construction equipment and material. (Id. at ¶ 4). At the time of the in c id e n t, defendants provided plaintiffs with insurance coverage for the property. (Id. a t ¶ 3). Plaintiff Joseph Dileo reported the break-in and theft to the W e s t W y o m in g , P e n n s ylv a n ia Police Department on or about April 30, 2006; he also notified
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The court derives these facts from the plaintiffs' complaint.

d e fe n d a n ts promptly of his loss. (Id. at ¶¶ 5-6). Plaintiffs allege that their loss of c o n s tru c tio n equipment and materials amounted to $18,705.34. On April 4, 2008, a lm o s t two years after plaintiffs' loss, defendants for the first time informed plaintiffs th a t they would deny coverage for the break-in and theft. (Id. at ¶ 8). Plaintiffs a s s e rt that their policy covered the incident in question. (Id. at ¶ 9). Plaintiffs filed the instant complaint in the Court of Common Pleas of Luzerne C o u n ty , Pennsylvania on June 20, 2008. The complaint appears to raise several c a u s e s of action under Pennsylvania law, though plaintiffs assert that they seek to ra ise only a bad faith claim. Plaintiffs contend that, despite knowing of the incident, d e fe n d a n ts did not complete their investigation of the break-in and theft within thirty d a y s and failed to inform plaintiffs of the reasons for the delay within forty-five days, a s required by Pennsylvania law. (Id. at ¶ 10). They also allege that defendants k n e w that they were entitled to coverage, but misrepresented to the plaintiffs that the y lacked such coverage in violation of state law. (Id. at ¶ 11). Defendants' failure to timely pay the claim created an unreasonable and unnecessary delay in c o m p le tin g construction on plaintiffs' home, and plaintiffs contend that this failure a m o u n ts to bad faith under Pennsylvania law. (Id. at ¶ 12). Moreover, plaintiff c o n te n d s , defendants imposed conditions on recovery that were not present in the in s u ra n c e contract in violation of the Pennsylvania Unfair Insurance Practices Act. (Id. at ¶¶ 13, 17). Such actions also amounted to bad faith under state law, as did d e fe n d a n ts ' defamatory allegations that plaintiffs engaged in fraud in an attempt to

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o b ta in an insurance claim. (Id. at ¶¶ 14-16). Plaintiffs seek an award greater than $ 5 0 ,0 0 0 .0 0 , in addition to interest, punitive damages and attorney's fees. On June 26, 2008, defendants removed the case to this court. (Doc. 1). Defendants thereafter filed a motion to dismiss portions of the complaint (Doc. 4). The parties then briefed the motion, bringing the case to its present posture. J u r i s d ic t i o n P la in tiffs are citizens of Pennsylvania. Defendants are Iowa companies with th e ir principal place of business in Ohio. The amount in controversy exceeds $ 7 5 ,0 0 0 . The court therefore has jurisdiction pursuant to 28 U.S.C. § 1332. ("The d is tric t courts shall have original jurisdiction of all civil actions where the matter in c o n tro v e rs y exceeds the sum or value of $75,000, exclusive of interest and costs, a n d is between (1) citizens of different States."). Legal Standard W h e n a 12(b)(6) motion is filed, the sufficiency of a complaint's allegations are te s te d . The issue is whether the facts alleged in the complaint, if true, support a c la im upon which relief can be granted. In deciding a 12(b)(6) motion, the court m u s t accept as true all factual allegations in the complaint and give the pleader the b e n e fit of all reasonable inferences that can fairly be drawn therefrom, and view th e m in the light most favorable to the plaintiff. Morse v. Lower Merion Sch. Dist., 1 3 2 F.3d 902, 906 (3d Cir. 1997). Discussion 3

D e fe n d a n ts argue that plaintiffs' claims pursuant to the Pennsylvania Unfair In s u ra n c e Practices Act (UIPA) and Unfair Claims Settlement Practices Regulations (U C S P R ) are invalid under State law. Defendants argue that courts in Pennsylvania h a v e concluded that violations of these two statutes are irrelevant to plaintiffs' u n d e rlyin g bad faith insurance claim, brought pursuant to the Pennsylvania bad faith in s u ra n c e statute, 42 Pa. C. S. A. § 8371, and should be dismissed. Plaintiff re s p o n d s that they make no claims pursuant to these acts, and that references to the U IP A and UCSPR merely serve as evidence for the bad faith claim. N o dispute exists here, then, that forms the subject of a motion to dismiss. The d is a g re e m e n t is over whether violations of UIPA and UCSPR can be used as e vid e n c e to support a bad-faith insurance claim under 42 Pa. C.S. A. § 8371. Defendants do not dispute that plaintiffs have stated a claim under that statute and p la in tiffs agree that they could not state a claim under either the UIPA or the U C S P R . Since the question for a 12(b)(6) motion to dismiss is whether the plaintiff h a s stated a claim upon which relief can be granted and both sides agree that p la in tiff can state a claim on the only cause of action contained in the complaint, the c o u rt finds that the motion to dismiss should be denied. At the same time, the court re c o g n iz e s that, as drafted, the complaint does not set out clearly as it could the c a u s e of action and the allegations which support that claim. To avoid confusion a n d promote the efficient termination of the litigation, the court will order the plaintiffs to file an amended complaint that clearly states under a separate heading (i.e.,

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"C o u n t I") the cause of action they seek to bring. An appropriate order follows.

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA JOSEPH DILEO, and JOANNE DILEO, his wife, Plaintiffs : No. 3:08cv1218 : : (Judge Munley) : : v. : : STATE AUTO PROPERTY AND : CASUALTY INSURANCE : COMPANY, and : STATE AUTO INSURANCE : COMPANIES, : Defendants : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
ORDER AN D NOW, to wit, this 26th day of January 2009, the defendants' partial m o tio n to dismiss (Doc. 4) is hereby DENIED. The plaintiffs are hereby ORDERED to file an amended complaint within ten (10) days of the date of this order. The a m e n d e d complaint shall clearly and separately identify the cause(s) of action r a is e d .

B Y THE COURT: s / James M. Munley JUDGE JAMES M. MUNLEY U N IT E D STATES DISTRICT COURT

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