Linko v. Nationwide Property and Casualty Insurance Company
Filing
9
MEMORANDUM (Order to follow as separate docket entry) re 5 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM for Count II of the Complaint filed by Nationwide Property and Casualty Insurance Company Signed by Honorable James M. Munley on 4/18/16. (sm)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JUSTIN LINKO,
Plaintiff
:
No. 3:15cv2066
:
:
(Judge Munley)
v.
:
:
NATIONWIDE PROPERTY &
:
CASUALTY INSURANCE,
:
Defendant
:
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
MEMORANDUM
The crux of the breach of contract and bad faith dispute in this case
is whether plaintiff’s truck had coverage at the time of an accident under an
automobile insurance policy issued by defendant. Presently, defendant
urges the court to dismiss plaintiff’s statutory bad faith claim. (Doc. 5).
Because we find that plaintiff has pled sufficient facts to proceed with his
bad faith claim, we will deny defendant’s motion.
Background
Plaintiff Justin Linko leased a 2015 Toyota Tundra on February 28,
2015. (Doc. 6, Compl. ¶ 5). Plaintiff Linko claims he contacted a local
agency doing business on behalf of Defendant Nationwide Property and
Casualty Insurance (hereinafter “Nationwide”) to obtain automobile liability
insurance coverage, including collision, comprehensive, and other
coverage for the Tundra. (Id.) Lease documentation reflects insurance
coverage, listing Nationwide as the provider and policy number
5837E918945. (Id., Ex. A). Defendant made monthly automatic
withdrawals from plaintiff’s bank account, which plaintiff argues proves
Nationwide insured his truck. (Id. ¶ 6, Ex. B).
On June 4, 2015, plaintiff’s truck sustained damage in an automobile
accident. (Id. ¶ 7). When plaintiff filed a claim with defendant for the
accident, defendant notified plaintiff that they had no record of him
purchasing insurance coverage for the 2015 Tundra. (Id. ¶ 8). After an
internal inquiry, Defendant Nationwide confirmed on July 5, 2015, that they
would not honor plaintiff’s claim because he had no insurance on the
Tundra. (Id. ¶¶ 9, 11).
Plaintiff Linko filed a two-count complaint in the Court of Common
Pleas of Lackawanna County, Pennsylvania, on September 30, 2015.
(Doc. 6). Count I alleges a claim for breach of contract, and Count II
alleges a claim under Pennsylvania’s Bad Faith Statute, 42 Pa. Cons. Stat.
Ann. § 8371 (Id.)
Nationwide removed the action to this court on October 26, 2015.
(Doc. 1, Notice of Removal). On November 2, 2015, the defendant filed a
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6),
2
bringing the case to its present posture. (Doc. 5). The parties have briefed
the issues and the matter is ripe for our disposition.
Jurisdiction
Plaintiff Justin Linko is a citizen of Pennsylvania. (Doc. 1, ¶ 7).
Defendant Nationwide is a corporation organized under the laws of, and
having its principal place of business in, Ohio. (Id.)
Because there is complete diversity of citizenship between the
parties and the amount in controversy exceeds $75,000.00, the court has
removal jurisdiction over the case. See 28 U.S.C. § 1332 (“district courts
shall have original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest and
costs, and is between . . . citizens of different States[.]”); 28 U.S.C. § 1441
(A defendant can generally remove a state court civil action to federal court
if the federal court would have had original jurisdiction to address the
matter pursuant to the diversity jurisdiction statute).
As a federal court sitting in diversity, we must apply state law.
Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie
R.R. v. Tompkins, 304 U.S. 64, 78 (1938)). In this case, the relevant state
is Pennsylvania. If the state supreme court has not yet addressed an issue
3
before us, we must predict how that court would rule if presented with that
issue. Nationwide v. Mutual Ins. Co., 230 F.3d 634, 637 (3d Cir. 2000). In
so doing, we must examine the opinions of the lower state courts, and we
cannot disregard them unless we are convinced by other persuasive data
that the highest court would rule otherwise. Id.
Legal Standard
Defendant filed its motion to dismiss the amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). The court tests the
sufficiency of the complaint’s allegations when considering a Rule 12(b)(6)
motion. All well-pleaded allegations of the complaint must be viewed as
true and in the light most favorable to the non-movant to determine
whether, “‘under any reasonable reading of the pleadings, the plaintiff may
be entitled to relief.’” Colburn v. Upper Darby Twp., 838 F.2d 663, 665-66
(3d Cir. 1988) (quoting Estate of Bailey by Oare v. Cnty. of York, 768 F.2d
503, 506 (3d Cir. 1985)). The plaintiff must describe “‘enough facts to raise
a reasonable expectation that discovery will reveal evidence of’ [each]
necessary element” of the claims alleged in the complaint. Phillips v. Cnty.
of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007)). Moreover, the plaintiff must allege
4
facts that “justify moving the case beyond the pleadings to the next stage
of litigation.” Id. at 234-35. In evaluating the sufficiency of a complaint the
court may also consider “matters of public record, orders, exhibits attached
to the complaint and items appearing in the record of the case.” Oshiver v.
Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994)
(citations omitted). The court does not have to accept legal conclusions or
unwarranted factual inferences. See Curay-Cramer v. Ursuline Acad. of
Wilmington, Del., Inc., 450 F.3d 130, 133 (3d Cir. 2006) (citing Morse v.
Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)).
Discussion
Nationwide’s motion seeks dismissal of Count II of the complaint,
Plaintiff Linko’s claim for bad faith under 42 Pa. Cons. Stat. Ann. § 8371.
Nationwide argues that plaintiff has not pled sufficient facts to support a
bad faith claim.
Section 8371 authorizes recovery for an insurance company’s bad
faith towards an insured. It provides for several remedies upon a finding of
bad faith: (1) an award of “interest on the amount of the claim” at a rate
equal to “the prime rate of interest plus 3%”; (2) an award of “punitive
damages against the insurer”; and/or (3) an assessment of “court costs
5
and attorney fees against the insurer.” Pennsylvania courts have adopted
the following definition of “bad faith” on the part of an insurer:
any frivolous or unfounded refusal to pay proceeds of a policy;
it is not necessary that such refusal be fraudulent. For
purposes of an action against an insurer for failure to pay a
claim, such conduct imports a dishonest purpose and means a
breach of a known duty (i.e., good faith and fair dealing),
through some motive of self-interest or ill will; mere negligence
or bad judgment is not bad faith.
Perkins v. State Farm Ins. Co., 589 F. Supp. 2d 559, 562 (M.D. Pa. 2008)
(citing Terletsky v. Prudential Property & Casualty Ins. Co., 649 A. 2d 680,
688 (Pa. Super. Ct. 1994) (quoting Black’s Law Dictionary 139 (6th ed.
1990)) (citations omitted); see also Nw. Mut. Life Ins. Co. v. Babayan, 430
F. 3d 121, 137 (3d Cir. 2005) (predicting the Pennsylvania Supreme Court
would define “bad faith” according to the definition set forth in Terletsky)).
The United States Court of Appeals for the Third Circuit has adopted
the legal standard established by the Pennsylvania Superior Court for
testing the sufficiency of bad faith claims under section 8371, “both
elements of which must be supported with clear and convincing evidence:
(1) that the insurer lacked a reasonable basis for denying benefits; and (2)
that the insurer knew or recklessly disregarded its lack of reasonable
basis.” Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 233 (3d
Cir. 1997) (citing Terletsky, 649 A.2d at 688).
6
Nationwide argues that Plaintiff Linko has only made conclusory
allegations of bad faith. Plaintiff argues that the facts alleged do satisfy
both prongs of the Klinger analysis.
The Pennsylvania rules of statutory construction state
that, in general, the “provisions of a statute should be liberally
construed to effect their objects and purposes and to promote
justice.” 1 Pa. Cons. Stat. Ann. § 1928(c) (Supp. 1992). The
purpose of section 8371 is to provide persons with a remedy
against the bad faith conduct of insurers. Remedial statutes
like section 8371 should be broadly construed. The narrow
construction of section 8371 proposed by defendant runs
counter to [the] rule of liberal statutory construction and would
defeat, rather than effectuate the purpose of the statute, and
would hinder, rather than promote, justice.
Krisa v. Equitable Life Assur. Soc., 109 F. Supp. 2d 316, 320 (M.D. Pa.
2000) (quoting Rottmund v. Cont’l Assur. Co., 813 F. Supp. 1104, 1110
(E.D. Pa. 1992)). Plaintiff Linko points out that he alleged that the
defendant regularly withdrew payments from his bank account (Compl. ¶ 6,
Ex. B), but denied benefits and denied plaintiff’s Tundra was covered at all
(Id. ¶¶ 8-11).
We will deny the Nationwide’s motion because plaintiff has alleged
that Nationwide unreasonably denied payment of benefits. As such, it
would be premature to dismiss the claim. While paragraphs of Plaintiff
Linko’s complaint could be read as legal conclusions, we read them in
conjunction with his more specific allegations in his breach of contract
7
claim. (See Compl. ¶ 27 (incorporating paragraphs one through twenty-six
into bad faith claim)). There, bolstering his claim of unreasonable denial of
benefits, he alleged that Nationwide “failed to objectively and fairly evaluate
Plaintiff’s claim” and “failed to promptly offer payment of the reasonable
and fair value of the claim to plaintiff.” (Id. ¶¶ 23-24). Accordingly, we find
that plaintiff has sufficiently alleged facts indicating unreasonable denial of
the payment of benefits in order to survive a motion to dismiss.
Nationwide’s motion will be denied.
CONCLUSION
For the reasons stated above, Nationwide’s motion to dismiss will be
denied. An appropriate order follows.
DATE:4/18/2016
s/ James M. Munley
JUDGE JAMES M. MUNLEY
United States District Court
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?