Zimmerman v. State Farm Mutual Automobile Insurance Company

Filing 9

MEMORANDUM AND ORDER denying 3 Motion to Dismiss Signed by Honorable A. Richard Caputo on 10/12/11 (jam, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JEAN ZIMMERMAN,
CIVIL ACTION NO. 3:11-CV-1341

Plaintiff,

(JUDGE CAPUTO)
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
MEMORANDUM
Defendant State Farm Mutual Automobile Insurance Company moves to dismiss
plaintiff Jean Zimmerman’s bad faith refusal to provide insurance coverage claim. The
claim stems from a May 2010 car accident. State Farm argues Zimmerman’s complaint
fails to state a claim for bad faith under 42 Pa. C.S. § 8371. The Court disagrees and will
deny the motion.
BACKGROUND
Zimmerman’s complaint alleges as follows.
In May 2010, Zimmerman was in an accident while driving on Route 309 in Hazleton,
Pennsylvania. Allen Herman, the driver of the other car, made an illegal left turn in front of
Zimmerman, causing the crash. As a result of the accident, Zimmerman suffered “very
serious personal injuries,” including a fractured fibula.

At the time of the accident,

Zimmerman held multiple State Farm auto insurance policies. These policies contained
underinsured motorist coverage. This coverage requires the insurer to pay all sums the
insured is entitled to recover as compensatory damages from the owner of an underinsured
vehicle. Allen Herman’s insurance carrier, Allstate, tendered to Zimmerman the limit of his
policy, $100,000.00. State Farm then opened an underinsured motorist claim. Zimmerman

provided State Farm with the medical records and information needed to evaluate the claim.
In June 2011, State Farm made an initial offer on the claim which was “clearly inadequate.”
Zimmerman then filed suit against State Farm, claiming breach of contract (count II) and
bad faith (count I) in the Court of Common Pleas of Schuylkill County. After removing the
case to federal court, State Farm filed a partial motion to dismiss Zimmerman’s bad faith
claim. The motion has been fully briefed and is ripe for review.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint,
in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal
is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has
not pleaded “enough facts to state a claim to relief that is plausible on its face,” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations “‘to raise
a reasonable expectation that discovery will reveal evidence of’” each necessary element,
Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550
U.S. at 556); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring a
complaint to set forth information from which each element of a claim may be inferred). In
light of Federal Rule of Civil Procedure 8(a)(2), the statement need only “‘give the defendant
fair notice of what the ... claim is and the grounds upon which it rests.’” Erickson v. Pardus,
551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555). “[T]he factual
detail in a complaint [must not be] so undeveloped that it does not provide a defendant
[with] the type of notice of claim which is contemplated by Rule 8.” Phillips, 515 F.3d at 232;
see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir.

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2007).
In deciding a motion to dismiss, the Court should consider the allegations in the
complaint, exhibits attached to the complaint, and matters of public record. See Pension
Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). The
Court may also consider “undisputedly authentic” documents when the plaintiff’s claims are
based on the documents and the defendant has attached copies of the documents to the
motion to dismiss. Id. The Court need not assume the plaintiff can prove facts that were
not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256,
263 & n.13 (3d Cir. 1998), or credit a complaint’s “‘bald assertions’” or “‘legal conclusions,’”
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (quoting In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)). “While legal conclusions
can provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009).
When considering a Rule 12(b)(6) motion, the Court’s role is limited to determining
if a plaintiff is entitled to offer evidence in support of her claims. See Scheuer v. Rhodes,
416 U.S. 232, 236 (1974). The Court does not consider whether a plaintiff will ultimately
prevail. See id. A defendant bears the burden of establishing that a plaintiff’s complaint
fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
DISCUSSION
The motion to dismiss the bad faith claim will be denied because Zimmerman has
stated a claim under 42 Pa. C.S. § 8371.
42 Pa. C.S. § 8371, Pennsylvania’s bad faith statute, states:

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In an action arising under an insurance policy, if the court finds that the insurer
has acted in bad faith toward the insured, the court may take all of the following
actions:
(1) Award interest on the amount of the claim from the date the claim was made
by the insured in an amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
To state a claim for bad faith denial of insurance coverage under Pennsylvania law,
a plaintiff must prove by clear and convincing evidence that his insurer (1) lacked a
reasonable basis for denying coverage, and (2) knew or recklessly disregarded its lack of
a reasonable basis. See Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1036 (1999) appeal
denied, Goodman v. Durham, 563 Pa. 663, 759 A.2d 387 (2000). Bad faith is “any frivolous
or unfounded refusal to pay proceeds of a policy.” Id. at 1188. (citing Terletsky v. Prudential
Prop. & Cas. Ins. Co., 437 Pa.Super. 108, 649 A.2d 680, 688 (1994)). As the Third Circuit
stated twice in J.C. Penney Life Ins. Co. v. Pilosi, “[a] reasonable basis is all that is required
to defeat a claim of bad faith.” 393 F.3d 356, 367 (3d Cir.2004).
Here, Zimmerman has demonstrated she is entitled to discovery on the bad faith
claim. She alleges that, a year after the accident, State Farm made an inadequate offer
that did not adequately consider the severity of her injuries. Zimmerman further alleges that
State Farm failed to properly investigate her claim, failed to reasonably underwrite the
underinsured policy limit, and failed to negotiate in good faith with her.

Although her

allegations are largely conclusory, bad faith is a fact-intensive inquiry, requiring
development of the record. The Court therefore finds dismissal at this stage would be
inappropriate. State Farm is welcome to revisit this issue on summary judgment.
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CONCLUSION
State Farm’s motion to dismiss Zimmerman’s bad faith claim is denied. An
appropriate order follows.

10/12/11
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JEAN ZIMMERMAN,
CIVIL ACTION NO. 3:11-CV-1341

Plaintiff,

(JUDGE CAPUTO)
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
ORDER
NOW, this 12th

day of October, 2011, IT IS HEREBY ORDERED that

State Farm’s motion to dismiss plaintiff Zimmerman’s bad faith claim (Doc. 3) is
DENIED.

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge