Myerski v. First Acceptance Insurance Company, Inc. et al

Filing 28

MEMORANDUM (Order to follow as separate docket entry)For the reasons discussed above, Defendants Motion to Dismiss (Doc. 7) is GRANTED and the following counts are dismissed from Plaintiffs Complaint: Count Three, Good Faith and Fair Dealing; Count F our, Bad Faith 42 Pa. C.S. § 8371; Count Five, Negligence; and Count Six, Vicarious Liability. Given the facts alleged and the legal requirements of the claims dismissed, it appears that amendment would be futile. However, in an abundance of c aution,the Court will allow Plaintiff an opportunity to amend his complaint as to these claims. The following claims go forward: Count One, Uninsured Motorist Claim; Count Two, Breach of Contract; and Count Seven, Claim Pursuant to 75 Pa. C.S. § 1716. An Order consistent with these determinations will be filed simultaneously with this Memorandum.Signed by Honorable Richard P. Conaboy on 6/10/16. (cc)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
RICHARD MYERSKI,

:
:
Plaintiff,
:CIVIL ACTION NO. 3:16-CV-488
:
v.
:(JUDGE CONABOY)
:
FIRST ACCEPTANCE INSURANCE
:
COMPANY, INC., and FIRST
:
ACCEPTANCE INSURANCE
:
SERVICES, INC.,
:
:
Defendants.
:
:
___________________________________________________________________
MEMORANDUM
Defendants’ Motion to Dismiss (Doc. 7) is pending before the
Court.

With this motion, Defendants seek dismissal of four of the

seven counts contained in Plaintiff’s Complaint: Count Three for
Good Faith and Fair Dealing; Count Four for Bad Faith pursuant to
42 Pa. C.S. § 8371; Count Five for Negligence; and Count Six for
Vicarious Liability.

(Doc. 7 at 1.)

For the reasons discussed

below, the Court concludes that Defendants’ Motion is properly
granted.
I. Background
This action was removed from the Court of Common Pleas of
Lackawanna County, Pennsylvania, on March 22, 2016.

(Doc. 1.)

The

following factual recitation is derived from the Statement of Facts
in Defendants’ supporting brief.1

1

(Doc. 8 at 2-6.)

This

The Court adopts this Statement of Facts in that Defendants
provide citations to the record where Plaintiff’s Statement of
Facts (Doc. 12 at 6-11) does not.

recitation is supplemented by additional facts of record the Court
deems pertinent.
Per the Complaint, Plaintiff was the
permissive driver of his mother Sara Morris’
car on April 19, 2015, when he was involved
in a crash with an uninsured vehicle. (See
Ex. A. Compl. at ¶¶6, 9-12). Plaintiff
suffered bodily injuries. (See id. at ¶14).
He was obligated to pay for medical expenses
and suffered wage loss and loss of earning
capacity. (See id. at ¶¶15, 17). Plaintiff
does not allege or attach proof of the amount
of medical expenses incurred or wages lost.
(See, generally, id.).
Defendant insured the subject vehicle
and provided $15,000 of UM benefits and
$5,000 of first party medical benefits (also
referred to herein as “Personal Injury
Protection” or “PIP”). (See id. at ¶¶7, 2324). Plaintiff did not reside with Morris.
(See id. at ¶18). On the day of the crash,
Morris informed Defendants it occurred and
her son was injured. (See id. at ¶25). She
told Defendants Plaintiff was not named on
the policy and did not reside with her. (See
id.).
On August 25, 2015, Defendants advised
Morris they were denying coverage for the
damage to her vehicle based on the following
policy language:
PART D:

COVERAGE FOR DAMAGE TO
YOUR AUTO

EXCLUSIONS
1.

Any loss or damage arising
from an accident which occurs
while the auto is being
operated, manipulated,
maintained, services or used
in any other manner by an
unlisted driver who resides in
2

the same household as the
named insured, or is a regular
and frequent operator of any
vehicle insured under this
policy. This exclusion shall
apply whether or not the named
insured is occupying the
vehicle at the same time said
driver is using it in any
manner whatsoever.
(Id. at ¶26). On unpled dates, Morris
received the police report showing a
different address for Plaintiff than Morris’
address and informed Defendants the other
vehicle was uninsured per the police report.
(See id. At ¶¶28-29). However, the police
report notes insurance coverage through CSAA
General. (See Ex. B, Police Rpt., 2). On
this unpled date, Defendants contended
Plaintiff resided with Morris and denied all
claims under the policy. (See id. At ¶29).
Plaintiff and Morris then retained
counsel who wrote to Defendants on November
25, 2015. (See id. ¶¶30-31). Counsel
advised Plaintiff did not reside with Morris
and requested copies of the policy,
declarations page, first party benefits
application, and name and phone number of the
property damage adjuster. (See id. at ¶31).
The referenced letter does not mention a
claim for UM benefits. (See id. at Ex. C
(11/25/15 Fax to Defs).). Defendants
responded by faxing the attorney the August
25, 2015 letter denying property damage
benefits based on the Part D exclusion. (See
id. at ¶32). The letter does not reference
denials of claims for UM or first party
medical benefits. (See id. at Ex. D
(11/25/15 Fax to Pl. Att’y)).
On November 27, 2015, Plaintiff’s
attorney advised Defendants they did not
properly respond to her November 25, 2015
letter by re-sending the August 25, 2015
denial. (See id. at ¶33). Enclosed with the
letter, she sent a copy of the police report
3

and Plaintiff’s driver’s license showing
different address from Morris’ address. (See
id.) The attorney requested documentation in
support of the denial and the policy and
declarations page. (See id.) The November
27, 2015 letter does not mention a claim for
UM benefits. (See id. at Ex. E (11/27/15 Fax
to Defs.)).
On December 2, 2015, Defendants re-sent
the August 25, 2015 property damage denial
letter. (See id. at ¶34). That same day,
Defendants sent a second letter “advising
they have ‘opened a claim for a review of PIP
benefits.’” (Id. at ¶35). The letter states:
We are in receipt of your letter
dated November 27, requesting that
we revisit our denial of Part D:
Coverage For Damage To Your Auto.
You have also requested that we
provide you with all documentation
relied upon to make our coverage
decision along with certified
copies of the policy, declarations
page, waivers, the name of the
property damage adjuster and an
Application for Benefits.
Please be advised that we have
opened a claim for a review of PIP
benefits. We are gathering all of
the items you requested so that we
may provide them to you. In the
mean time we would like to respond
with the items that are presently
at hand. We have requested a
transcription of the recorded
statement that was obtained from
Richard Myerski on August 25. Once
provided with this statement you
will note that Mr. Myerski provided
the address of 1072 Bunnell Farm
Road as his residency. This is the
same address as the one listed on
our policy for Mrs. Morris. Mr.
Myerski further states, in part,
that Mrs. Morris is the co-signer
4

of the vehicle in question and that
he drives the vehicle “all of the
time.” The propert [sic] damage
adjuster is Beverly Bowers. Once a
PIP adjuster is assigned, you will
be provided with the necessary
documents related to the claim for
PIP coverage.
(Id. at Ex. G (12/2/15 Ltr. to Pl. Att’y).
The letter does not mention UM benefits (See
id.). The same day, Defendants called
Plaintiff’s attorney and told her Defendants
are denying all claims based on the household
and regular and frequent use exclusions.
(See id. at ¶36). On December 9, 2015,
Defendants advised Plaintiff’s attorney they
“are ‘investigating’ the PIP and uninsured
claim,” but did not confirm coverage would be
extended. (Id. at ¶37).
Defendants provided a certified copy of
the policy on December 10, 2015, with
correspondence stating, they are “continuing
[their] investigation into liability coverage
and uninsured motorist.” (Id. at ¶38). The
letter Plaintiff relies upon states:
Attached are the documents you
requested, a copy of our
declaration page and transcription
of our statement from your client,
Richard Myerski.
Please note that we are continuing
our investigation into liability
coverage and uninsured motorist.
If you have a copy of a coverage
denial from the other driver’s
carrier, please provide that for
our records. Additionally, we are
also taking a further look into the
negligence for this loss. We will
keep you apprised of any further
developments.
(See id. at Ex. A (12/10/15 Ltr. To Pl.
Att’y)). In his recorded statement taken
5

August 25, 2015, which was enclosed with this
letter but omitted from Plaintiff’s Exhibit
A, Plaintiff stated he lives with his mother
and he drives the subject vehicle “all the
time...six days a week.” (Ex. C, Pl.
Statement, 1-2).
Plaintiff claims Defendants have “failed
to make any PIP benefits or uninsured
coverage available to Plaintiff and [have]
taken the position that there is no coverage
for these claim.” (Id. at ¶35).
(Doc. 8 at 2-6.)
Defendants assert that “[t]he remainder of the Complaint
contains boilerplate allegations, including paragraph 49, which
includes sixty-two such allegations.”

(Doc. 8 at 5.)

Defendants

also note that “Plaintiff has not attached any correspondence or
documentation in which Defendants refused to extend either UM or
first party medical benefits coverage”; “Plaintiff has not
attached or otherwise alleged that a demand package or other proof
of Plaintiff’s injuries and damages incurred was submitted to
Defendants”; “Plaintiff has not attached documentation of or
otherwise alleged the amount of the medical bills incurred, which
Defendants refuse to pay with first party medical benefits
coverage”; “Plaintiff has not attached documentation of or
otherwise alleged the amount of wages lost and anticipated future
lost wages”; and “Plaintiff has not alleged it was improper to
deny coverage based on Plaintiff’s regular and frequent use of the
vehicle.”

(Doc. 8 at 6.)

Plaintiff’s Statement of Facts includes the assertion that
6

Tim Brown, the driver of the other vehicle, was 100% at fault in
this accident.

(Doc. 12 at 6.)

Regarding the “unpled dates”

referenced in Defendants’ Statement of Facts, Plaintiff avers that
Ms. Morris received a copy of the police report after she received
the August 25, 2015, correspondence from Defendants and she then
followed up with a call to Ms. Bowers informing her that the
police report showed a different address for Plaintiff than
Morris’ address and informed Defendants the other vehicle was
uninsured.

(Doc. 12 at 8.)

In the Complaint, Plaintiff avers

that when Ms. Morris informed Ms. Bowers that the other vehicle
was uninsured, Ms. Bower’s stated “It was her problem.”
29 (Doc. 1 at 12).)

(Compl. ¶

Plaintiff also avers that Ms. Bowers denied

the offer from Ms. Morris for further information and/or
documentation.

(Id.)
II. Discussion

A. Motion to Dismiss Standard
In McTernan v. City of York, 577 F.3d 521, 530 (3d Cir.
2009), the Third Circuit Court of Appeals set out the standard
applicable to a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) in light of the United States Supreme Court’s
decisions Bell Atlantic Corp. v. Twombly, 550 U.S. 433 (2007), and
Ashcroft v. Iqbal, 566 U.S. 662, 129 S. Ct. 1937 (2009).
“[T]o survive a motion to dismiss, a
complaint must contain sufficient factual
matter, accepted as true to ‘state a claim
that relief is plausible on its face.’”
7

Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550
U.S. at 570). The Court emphasized that
“only a complaint that states a plausible
claim for relief survives a motion to
dismiss.” Id. at 1950. Moreover, it
continued, “[d]etermining whether a complaint
states a plausible claim for relief will . .
. be a context-specific task that requires
the reviewing court to draw on its judicial
experience and common sense.” Id. (citation
omitted).
McTernan, 577 F.3d at 530.

The Circuit Court discussed the

effects of Twombly and Iqbal in detail and provided a road map for
district courts presented with a motion to dismiss for failure to
state a claim in a case filed just a week before McTernan, Fowler
v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009).
[D]istrict courts should conduct a two-part
analysis. First, the factual and legal
elements of a claim should be separated. The
District Court must accept all of the
complaint’s well-pleaded facts as true, but
may disregard any legal conclusions. [Iqbal,
129 S. Ct. at 1949.] Second, a District
Court must then determine whether the facts
alleged in the complaint are sufficient to
show that the plaintiff has a “plausible
claim for relief.” Id. at 1950. In other
words, a complaint must do more than allege a
plaintiff’s entitlement to relief. A
complaint has to “show” such an entitlement
with its facts. See Philips [v. Co. of
Alleghany], 515 F.3d [224,] 234-35 [(3d
Cir.2008 )]. As the Supreme Court instructed
in Iqbal, “[w]here the well-pleaded facts do
not permit the court to infer more than the
mere possibility of misconduct, the complaint
has alleged--but it has not ‘show[n]’--‘that
the pleader is entitled to relief.’” Iqbal,
129 S. Ct. at 1949. This “plausibility”
determination will be “a context-specific
task that requires the reviewing court to
draw on its judicial experience and common
8

sense.”

Id.

Fowler, 578 F.3d at 210-11.
The Circuit Court’s guidance makes clear that legal
conclusions are not entitled to the same deference as well-pled
facts.

In other words, “the court is ‘not bound to accept as true

a legal conclusion couched as a factual allegation.’”

Guirguis v.

Movers Specialty Services, Inc., 346 F. App’x 774, 776 (3d Cir.
2009) (not precedential) (quoting Twombly, 550 U.S. at 555).
Courts generally consider only the allegations contained in
the complaint, exhibits attached to the complaint and matters of
public record in deciding a motion to dismiss.

Pension Benefit

Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d
Cir. 1993) (citations omitted); see also Sands v. McCormick, 503
F.3d 263, 268 (3d Cir. 2007).

Courts may also consider

“undisputedly authentic document[s] that a defendant attaches as an
exhibit to a motion to dismiss if the plaintiff’s claims are based
on the [attached] document[s].”

Pension Benefit, 998 F.2d at 1196.

In addition, “documents whose contents are alleged in the complaint
and whose authenticity no party questions, but which are not
physically attached to the pleading, may be considered.”

Pryor v.

Nat’l Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002)
(citation omitted); see also U.S. Express Lines, Ltd. v. Higgins,
281 F.3d 383, 388 (3d Cir. 2002) (“Although a district court may
not consider matters extraneous to the pleadings, a document
9

integral to or explicitly relied upon in the complaint may be
considered without converting the motion to dismiss into one for
summary judgment.”) (internal quotation omitted).

The court may

not, however, rely on other parts of the record in making its
decision on a motion to dismiss.

Jordan v. Fox, Rothschild,

O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994)
In a motion to dismiss for failure to state a claim, the
defendant bears the burden of showing that no claim has been
presented.

Hedges v. United States, 404 F.3d 744, 750 (3d Cir.

2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406,
1409 (3d Cir. 1991)).
Finally, the district court must extend the plaintiff an
opportunity to amend before dismissing a complaint unless amendment
would be inequitable or futile.

See Grayson v. Mayview State

Hosp., 293 F.3d 103, 108 (3d Cir. 2002).
B.

Defendant’s Motion
As noted above, Defendants seek dismissal of Plaintiff’s

claims for breach of the covenant of good faith and fair dealing,
statutory bad faith, negligence, and vicarious liability.
at 8-15.)

Plaintiff maintains these claims are all properly pled

and should go forward.
1.

(Doc. 8

(Doc. 12 at 12-31.)

Bad Faith
Defendants maintain Plaintiff’s claim for bad faith is legally

insufficient and must be dismissed.
10

(Doc. 8 at 8.)

Plaintiff

asserts that he has provided sufficient factual averments to
support a claim against Defendants for bad faith: he has
sufficiently alleged that “Defendants relied on an exclusion,
inapplicable to Plaintiff’s claims, in denying coverage at the
outset and then refused to cooperate and communicate with Plaintiff
and his counsel regarding the Plaintiffs [sic] valid claims for
benefits under the insurance policy.”

(Doc. 12 at 19-20.)

Based

on a careful review of the Complaint and other documents properly
considered on a motion to dismiss, the Court concludes Plaintiff’s
claim for statutory bad faith is properly dismissed.
An action for bad faith in Pennsylvania is governed by 42 Pa.
C.S. § 8371 which provides:
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.
42 Pa. C.S. § 8371.
The statute does not define what constitutes bad faith but
Pennsylvania courts, the Third Circuit Court of Appeals, and
decisions from district courts within the Third Circuit provide
11

ample guidance.

“The term ‘bad faith’ under section 8371 concerns

‘the duty of good faith and fair dealing in the parties’ contract
and the manner in which an insurer discharged . . . its obligation
to pay of a loss in the first party claim context.’”

Berg v.

Nationwide Mut. Ins. Co., Inc., 44 A.3d 1164, 1175-76 (Pa. Super.
2012) (quoting Toy v. Metrolpolitan Life Ins. Co., 928 A.2d 186,
199 (Pa. 2007)) (alteration in original).

In Treadways LLC v.

Travelers Indem. Co., 467 F. App’x 143 (3d Cir. 2012) (not
precedential), the Court of Appeals for the Third Circuit set out
the relevant legal framework:
“Bad faith” under Pennsylvania’s bad faith
statute–-42 Pa. Const. Stat. § 8371, which
provides a remedy in an action under an
insurance policy–-is defined as “any
frivolous or unfounded refusal to pay
proceeds of a policy.” J.C. Penney Life Ins.
Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir.
2004) (quoting Terletsky v. Prudential Prop.
& Cas. Ins. Co., 649 A.2d 680, 688 (Pa.
Super. Ct. 1994)). A valid cause of action
for bad faith requires “clear and convincing
evidence . . . that the insurer: (1) did not
have a reasonable basis for denying benefits
under the policy; and (2) knew or recklessly
disregarded its lack of a reasonable basis in
denying the claim.” Id. Under the “clear
and convincing” standard, “the plaintiff
[must] show ‘that the evidence is so clear,
direct, weighty and convincing as to enable a
clear conviction, without hesitation, about
whether or nor the defendants acted in bad
faith.’” Id. (quoting Bostick v. ITT
Hartford Grp., Inc., 56 F. Supp. 2d 580, 587
(E.D. Pa. 1999)). Though we have found that
bad faith may be found in circumstances other
than an insurer’s refusal to pay, “[a]
reasonable basis is all that is required to
defeat a claim of bad faith.” Id.; see also
12

Frog, Switch & Mfg. Co. v. Travelers Ins.
Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999).
467 F. App’x at 146-47 (alteration in Treadways).
The Pennsylvania Superior Court has observed that “[b]ad faith
claims are fact specific and depend on the conduct of the insurer
vis a` vis the insured.”

Condio v. Erie Ins. Exchange, 899 A.2d

1136, 1143 (Pa. Super. 2006) (citing Williams v. Nationwide Ins.
Co., 750 A.2d 881, 887 (Pa. Super. 2000)).

In O’Donnell ex. rel.

Mitro v. Allstate Ins. Co., 734 A.2d 901 (Pa. Super. 1999), the
Pennsylvania Superior Court discussed the expanding nature of the
applicability of the bad faith statute and held that the conduct of
an insurer during the pendency of litigation may be considered as
evidence of bad faith.

O’Donnell, 734 A.2d at 906-08.

Bad faith

is not restricted to an insurer’s denial of benefits and includes a
wide variety of objectionable conduct including lack of good faith
investigation and failure to communicate with a client.

Brown v.

Progressive Ins. Co., 860 A.2d 493, 500-01 (Pa. Super. 2004)
(listing cases).

A claim for bad faith may be based on an alleged

violation of the Unfair Insurance Practices Act (“UIPA”), 40 P.S. §
1171.1 et seq.
Super. 1994).
faith.

Romano v. Nationwide, 646 A.2d 1228, 1230 (Pa.
Negligence or bad judgment do not constitute bad

Brown, 860 A.2d at 501 (citing Adamski v. Allstate Ins.

Co., 738 A.2d 1033, 1036 (Pa. Super. 1999)).

“To support a finding

of bad faith, the insurer’s conduct must be such as to ‘import a

13

dishonest purpose.’

In other words, the plaintiff must show that

the insurer breached its duty of good faith through some motive of
self-interest or ill will.”

Id. (quoting Adamski, 738 A.2d at

1036).
Defendants maintain Plaintiff’s statutory bad faith claim is
properly dismissed on several grounds,
most importantly [because] Plaintiff has not
alleged, nor can he, that he provided
Defendants with any proof of the value of his
UM claim or any unpaid bills subject to first
party medical payment. He does not allege he
submitted a single medical record or bill to
Defendants or any proof of lost wages and
earning capacity.
(Doc. 8 at 11 (citing Yohn v. Nationwide Ins. Co., Civ. A. No.
1:13-CV-024, 2013 U.S. Dist. LEXIS 80703, at *19 (M.D. Pa. May 10,
2013)).)

Defendants add that the only mention of a UM claim in the

correspondence is Defendants’ letter of December 10, 2015, which
indicated an ongoing investigation: the letter stated “‘we are
continuing our investigation into liability coverage and uninsured
motorist.

If you have a copy of a coverage denial from

the other

driver’s carrier, please provide that for our records.
Additionally, we are also taking a further look into the negligence
for this loss.’”
29)).)

(Id. at 12 (quoting Compl. Ex. A (Doc. 1 at

Defendants assert that this letter shows they did not have

a denial of coverage from the tortfeasor’s insurer so they did not
know whether UM or underinsured motorist (“UIM”) coverage would
apply.

(Id.)

They further note that the Complaint does not
14

include any allegations or documentation showing that Plaintiff or
his attorney provided the requested denial letter.

(Id.)

On these

facts, Defendants maintain they cannot be held to answer bad faith
allegations when Plaintiff is not contributing to the reasonable
investigation.

(Id.)

Defendants next point to the timeline showing that Plaintiff’s
attorney’s first letter was dated November 25, 2015, she sent a
second letter on November 27, 2015, and they responded to the
requests with their correspondence of December 2, 2015, which was
followed a week later with additional information.

(Doc. 8 at 12.)

Defendants maintain that “[a]t that point, the ball was in
Plaintiff and his attorney’s court and the Complaint, filed just
two moths later, does not provide further factual support to
advance Plaintiff’s claim, any misdeeds by Defendants or proofs of
loss from Plaintiff.”

(Id.)

Plaintiff first focuses on the insured’s contact with
Defendants’ representative, Beverly Bowers, asserting that her
denial of Plaintiff’s claims was unreasonable and unjustified.
(Doc. 12 at 14-15.)

Plaintiff also points to Defendants’ responses

to Plaintiff’s counsel’s correspondence as evidence of bad faith.
(Doc. 12 at 16-17.)
The facts alleged show that Defendants reasonably denied the
claim for damage to the insured’s vehicle based on the policy
exclusion: Plaintiff himself stated that he lived with his mother

15

and drove the vehicle “all the time.”

(See Doc. 8 at 4.)

Even if

there is evidence which could support a claim that Plaintiff
mistakenly made the August 25, 2015, statement about his residence,
Plaintiff does not point to evidence undermining his statement that
he used the car “all the time,” usage which would fall under the
“regular or frequent operator” exclusion.

In fact, Plaintiff does

not assert that this exclusion does not apply.

Importantly,

Defendants’ August 25, 2015, correspondence to Ms. Morris indicates
there is no coverage for damage to her auto based on the exclusion
set out above--it does not limit the application of the exclusion
to Plaintiff’s place of residence. (Doc. 1 at 77.)

Given the

admissions in Plaintiff’s statement and the basis for denial
identified in Defendants’ August 25, 2015, correspondence,
Plaintiff’s assertion that bad faith is evidenced by Defendants’
failure to properly investigate Plaintiff’s residence is not an
accurate assessment of the bases upon which the exclusion may apply
in this case.

It follows that Defendants’ alleged refusal to

further investigate Plaintiff’s residence and failure to pay for
damage to Ms. Morris’ auto cannot be considered “frivolous or
unfounded” refusals.

J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d

at 367.
The facts alleged also show that Defendants cannot be
considered to have acted in bad faith following Plaintiff’s
counsel’s November 25, 2015, letter informing Ms. Bowers that

16

Plaintiff was represented by counsel and requesting certain
information and an Application for Benefits.

(Doc. 1 at 79.)

Although Plaintiff alleges that Defendants’ initial response was
unsatisfactory, there is no dispute that Defendants’ Claim
Supervisor sent correspondence to Plaintiff’s counsel on December
2, 2015, four business days after Plaintiff’s counsel’s initial
correspondence, advising that the requested information would be
provided and Defendants had opened a claim for review of PIP
benefits.2

(Doc. 1 at 90; Doc. 14 at 7 & n.2.)

There is no

dispute that Defendants followed up with the requested
documentation on December 10, 2015.

(Doc. 1 at 29.)

The December

10, 2015, correspondence also advised Plaintiff’s counsel that
investigations were continuing into liability coverage and
uninsured motorist coverage, and requested a copy of a coverage
denial from the other driver’s carrier.

(Id.)

As noted by

Defendants, the Complaint in this action was filed just two months
later and “and does not provide any further factual support to
advance Plaintiff’s claim, particularly any misdeeds by Defendant
or proofs of loss from Plaintiff.”

(Doc. 8 at 12.)

Plaintiff does

not dispute Defendants’ assertion that the UM and PIP claims which
were opened in December 2015 were the subject of ongoing

2

No UM claim had been mentioned in Plaintiff’s counsel’s
letters (Doc. 1 at 79, 84) and Defendants’ representative did not
address that issue (Doc. 1 at 90).
17

consideration by Defendants when the Complaint was filed.
e.g., Doc. 14 at 8.)

(See,

Given this timeline, the facts alleged in the

Complaint, and reasonable inferences drawn from them, the “clear
and convincing” evidence needed to show Defendants acted
unreasonably going forward from the time they were contacted by
Plaintiff’s counsel is not presented.

393 F.3d at 367.

The question remains whether bad faith may be found in
Defendants’ initial handling of the case.

Plaintiff asserts that

the Complaint sets out a factual foundation “which demonstrates
that the Defendants arbitrarily denied coverage without any
justification and delayed in allegedly opening a pip claim until 4
months after the accident.”

(Doc. 12 at 14.)

Plaintiff also

maintains that Defendants, by and through agents, “made verbal
affirmations that they were denying all of the Plaintiff’s claims
based on an exclusion which does not apply to such claims and
cannot be relied upon by the Defendants to deny coverage.”3
These assertions are made without citation to the record.

(Id.)
As

discussed above, the facts of this case do not support the
conclusion that any refusal to pay the property damage claim
constituted bad faith.

To the extent Plaintiff claims a wrongful

refusal to pay claims for first party medical benefits and
uninsured motorist benefits immediately following the accident and
shortly thereafter, I review relevant allegations in the Complaint

3

These assertions are made without citation to the record.
18

and other evidence of record acceptably considered on a motion to
dismiss.
The Complaint alleges that on the day of the accident Ms.
Morris put Defendants on notice that the accident had occurred and
Plaintiff was injured.

(Compl. ¶ 25 (Doc. 1 at 11).)

The

Complaint also alleges that after receiving Defendants’ August 25,
2015, correspondence stating that the investigation to date
revealed there was no coverage for damage to her auto based on a
policy exclusion
Ms. Morris followed up with Ms. Bowers to
advise that the other vehicle was uninsured
according to the police report. Ms. Bowers
stated that “It was her problem.” Ms. Morris
offered to provide a copy of the police
report as well as Plaintiff’s license to
document his address. Ms. Bowers still
contended that Plaintiff resided with Ms.
Morris and that Defendant was denying all
claims under the policy. Ms. Bowers declined
the offer from Ms. Morris for further
information and/or documentation.
(Compl. ¶ 29 (Doc. 1 at 12).)

The Complaint states “Due to

Defendant’s denial of coverage, despite information from its
insured that the denial was not supported by facts, Plaintiff was
forced to retain counsel.”

(Compl. ¶ 30 (Doc. 1 at 12).)

The

Police Crash Reporting Form indicates that two cars and four people
were involved in the accident and no one was injured or transported
to a medical facility.4

(Doc. 8-2 at 2, 5.)

4

The Report also

Though not relevant to Plaintiff’s allegations regarding
PIP and uninsured motorist claims, the Report records Plaintiff’s
19

indicates that the vehicle driven by Timothy Brown was insured by
CSAA General.

(Id. at 3.)

Regarding Ms. Morris’ phone conversation with Ms. Bowers,
Plaintiff’s opposition brief states “this denial of Plaintiff’s
first party medical benefits and uninsured motorist benefits claims
was unreasonable and unjustified as the exclusion relied on by the
Defendants is not applicable to the Plaintiff’s claims.”

(Doc. 12

at 15.)
Although it is a true statement that the exclusion at issue
does not apply to first party medical benefits and uninsured
motorist claims, it does not necessarily follow that Ms. Bowers’
statement that Defendants were “denying all claims under the
policy” means they were denying first party medical benefits and
uninsured motorist benefits claims: such claims were not
specifically addressed and the record does not clearly establish
that these claims had been made at the time of the phone call.
Regarding the PIP claim, Plaintiff makes no assertion that Ms.
Morris provided information to Ms. Bowers regarding the nature or
seriousness of Plaintiff’s injuries when she informed Defendants of
the accident on the day it occurred, or that she raised the issue
of Plaintiff’s injuries in her follow up conversation in which the

address to be 1504 Green Ridge Street, Dunmore, Pennsylvania.
(Doc. 8-2 at 4.) As noted in the text, this differs from
Plaintiff’s August 25, 2015, recorded statement wherein he said he
resided at 1071 Bunnell Farm Road, Union Dale, Pennsylvania. (See
Doc. 8 at 4.)
20

content of the police report was discussed.
(Doc. 1 at 11-12).)

(Compl. ¶¶ 25, 29

Regarding the UM claim, Plaintiff’s only

relevant allegation is that Ms. Morris told Ms. Bowers that the
police report indicated the other driver was uninsured, an
assertion contrary to the information in the report indicating the
other vehicle was insured through CSAA General.
1 at 12); Doc. 8-2 at 3.)

(Compl. ¶ 29 (Doc.

Given the lack of factual support in the

record supporting Plaintiff’s assertion of PIP and UM claims at the
early stage of the claims handling process, the fact that there is
no evidence that Plaintiff sought clarification regarding PIP and
UM coverage following the call where Ms. Bowers allegedly denied
all claims, and the fact that the Police Report states that no one
was injured and the other vehicle was insured (Doc. 8-2 at 2, 3,
5), the “clear and convincing evidence” that Defendants acted in
bad faith on the basis of Ms. Morris’ conversation with Ms. Bowers
is lacking.

See Treadway, 467 F. App’x at 146-47.

Thus, I

conclude the record does not provide the evidentiary requirements
for establishing a bad faith claim during the initial period and
Plaintiff’s statutory bad faith claim is properly dismissed.
2.

Good Faith and Fair Dealing
Defendants assert that Plaintiff’s claim for a breach of the

covenant of good faith and fair dealing is inappropriate in this
action based on the Court’s decision in Cicon v. State Farm Mut.
Auto Ins. Co., Civ. A. No. 3:14-CV-2187, 2015 WL 926148 (M.D. Pa.

21

Mar. 4, 2015).

Defendants correctly point out that in Cicon this

Court cited D’Ambrosia v. Pennsylvania National Mutual Casualty
Ins. Co., 431 A.2d 966 (Pa. 1981), in support of the proposition
that “‘[t]he Pennsylvania Supreme Court has held that there is no
cause of action for a breach of the implied duty of good faith and
fair dealing in a case for first party insurance benefits, like
this one, where an insured is suing his insurer.’”
(quoting Cicon, 2015 WL 926148, at *2).)

(Doc. 8 at 13

Cicon also explained that

the implied covenant of good faith and fair dealing does not give
rise to an independent cause of action where a breach of contract
claim has been lodged.

2015 WL 926148, at *3 (citing Zaloga v.

Provident Life and Accident Ins. Co. of America, 671 F. Supp. 2d
623, 629 (M.D. Pa. 2009)).
Plaintiff points to Zaloga and other authority in support of
his argument that this claim should not be dismissed.
21-22.)

(Doc. 12 at

In Cicon, the Court concluded Zaloga did not support the

plaintiff’s argument.

2015 WL 926148, at *3.

The authority relied

upon here is precisely the authority Plaintiff’s counsel relied
upon in Cicon and Monck v. Progressive Corp., Civ. A. No. 3:15-CV250, 2015 WL 1638574 (April 13, 2015), which the Court rejected in
both cases, 2015 WL 926148, at *3; 2015 WL 1638574, at *4.
Plaintiff makes no attempt to distinguish the case at bar from
Cicon or Monck.

As we find no independent basis to reach a

different conclusion here, no further discussion is warranted and
22

Plaintiff’s claim for a breach of the covenant of good faith and
fair dealing is properly dismissed because Plaintiff also asserts a
breach of contract claim seeking PIP and UM benefits.
3.

Negligence
Defendant’s also argue that the Court’s Cicon decision

indicates Plaintiff’s negligence claim is properly dismissed under
the gist of the action doctrine because a review of the negligence
claim shows there is no cause of action separate from the breach of
contract claim.

(Doc. 8 at 14 (citing Cicon, 2015 WL 926148, at

*4; Compl. ¶¶ 69-73).)
Plaintiff acknowledges “[t]o be construed as a tort action,
the wrong ascribed to the Defendant must be the ‘gist of the
action’ with the contract being collateral.”

(Doc. 12 at 23

(citing Bash v. Bell Telephone, 601 A.2d 825 (Pa. Super. 1992)).)
He also notes that “the important difference between contract and
tort actions is that tort actions ‘lie from the breach of duties
imposed as a matter of social policy’ while contract actions lie
from the breach of duties imposed by mutual consensus.”
at 23-24 (quoting Bash, 601 A.2d 825).)

(Doc. 12

Plaintiff highlights a

2014 Pennsylvania Supreme Court decision, Bruno v. Erie Ins. Co.,
106 A.3d 48 (Pa. 2014), which explains that “a negligent [sic]
claim may be brought against a party for actions taken in
performance of contractual duties, if those actions constitute a
breach of a general duty of care created by law and owed to all the
23

public.”

(Doc. 12 at 24 (citing Bruno, 106 A.3d at 65).)

Plaintiff contends his negligence claim is not barred by the gist
of the action doctrine because Defendants’ duties are not imposed
solely by the contract, specifically noting that “an insurer owes a
duty to its insured to use reasonable care and due care in
investigating and adjusting a loss.”

(Doc. 12 at 26 (citing Damon

v. Penn Mutual Ins. Co., 372 A.2d 1218, 1226 (Pa. Super. 1997)).)
Plaintiff properly points to Bruno as the definitive
Pennsylvania case on the issue of whether a negligence action is
barred by the gist of the action doctrine when the alleged
negligence arose in the context of the performance of a contract.
In reviewing Pennsylvania cases on the subject, Bruno explained
that
[i]f the facts of a particular claim
establish that the duty breached is one
created by the parties by the terms of their
contract–-i.e., a specific promise to do
something that a party would not ordinarily
have been obligated to do but for the
existence of a contract–-then the claim is to
be viewed as one for breach of contract. . .
. If however, the facts establish that the
claim involves the defendant’s violation of a
broader social duty owed to all individuals,
which is imposed by the law of torts and,
hence, exists regardless of the contract,
then it must be regarded as a tort.
Bruno, 106 A.3d at 68.

The Court affirmed that the duty-based

demarcation recognized for over a century and a half in
Pennsylvania courts remained “the touchstone standard for
ascertaining the true gist or gravamen of a claim pled by a
24

plaintiff in a civil complaint.”

Id. at 69.

On its face, the duty identified by Plaintiff appears to be a
duty relating to the performance of contractual duties rather than
a general duty of care owed to all the public.
at 65.

See Bruno, 106 A.3d

A closer reading of Damon confirms this categorization.

In

considering the quality of an investigation conducted by an
insurance company following an insured’s claimed loss, the Superior
Court relied on an earlier decision where it stated
[t]he law is clear that “in the absence of an
express provision, the law will imply an
agreement by the parties to a contract to do
and perform those things that according to
reason and justice they should do in order to
carry out the purpose for which the contract
was made and to refrain from doing anything
that would destroy or injure the other
party’s right to receive the fruits of the
contract. Accordingly, a promise to do an
act necessary to carry out the contract must
be implied.” 8 P.L.E., Contracts, § 140.
Damon, 372 A.2d at 1226 (quoting D.B. Van Campen Corp. v. Building
and Construction Trades Council of Phila., 195 A.2d 134, 136-37
(Pa. Super. 1963)).

Applying the principle to the facts of the

case, Damon found that
implied in the policy was a promise by
appellee that it would exercise reasonable
care in investigating a claim by appellants.
. . . The insurer’s promise to exercise
reasonable care in investigating a claim is
necessary to ensure that the insurer refrains
from doing anything that would destroy or
injure the insured’s right to receive the
fruits of the contract.
Id. (internal quotation omitted).
25

Damon added that “[t]he duty of

good faith and due care in investigating the insured’s claim thus
implied in the contract is an express condition of the contract.”
Id. at 1227.

Damon also noted that the Pennsylvania Supreme Court

applied the same reasoning in a case involving a typical automobile
insurance policy in Gedeon v. State Farm Mut. Automobile Ins. Co.,
188 A.2d 320, 322 (Pa. 1963).

372 A.2d at 1227.

Thus, Plaintiff

is mistaken in relying on Damon to establish a negligence action
based on an insured’s “duty to its insured to use reasonable care
and due care in investigating and adjusting a loss.”

(Doc. 12 at

26 (citing Damon, 372 A.2d at 1226)): Damon clearly establishes
that the duty is a provision of the contract itself.
A review of Plaintiff’s negligence claim and the facts of this
case shows that, pursuant to Damon and Bruno, the duty allegedly
breached is one created by the parties by the terms of their
contract–-the claimed negligence is based on Defendants’ “handling
of Plaintiff’s uninsured motorist claim,” “denying coverage for
Plaintiff’s uninsured motorist claim and first party medical
benefits,” and “breach of the fiduciary duties owed to its
insured.”

(Compl. ¶¶ 70-72 (Doc. 1 at 25).)

Plaintiff’s

negligence claim does not point to a duty existing outside the
contract, i.e., it is not a claim involving “a broader social duty
owed to all individuals, which is imposed by the law of torts and,
hence, exists regardless of the contract . . . [and]
regarded as a tort.”

Bruno, 106 A.3d at 68.

26

must be

Accordingly,

Plaintiff’s negligence claim is properly dismissed.
4.

Vicarious Liability
Defendants again point to Cicon to support the assertion that

Plaintiff’s claim for vicarious liability must be dismissed.
8 at 14.)

(Doc.

Plaintiff maintains that this claim should go forward

because he has asserted causes of action against Defendants for
negligence, bad faith, and breach of the duty of good faith and
fair dealing, and these claims are based in part on the conduct of
Defendants’ “agents and/or employees including but not limited to
Beverly Bowers and Shannon Potts.”

(Doc. 12 at 29.)

Because the

Court has determined that Plaintiff’s claims for negligence, bad
faith, and breach of the covenant of good faith and fair dealing
are properly dismissed, the alleged bases for the vicarious
liability claim are lacking.

Therefore, further discussion is not

warranted and Plaintiff’s claim for vicarious liability is also
properly dismissed.
III. Conclusion
For the reasons discussed above, Defendants’ Motion to Dismiss
(Doc. 7) is GRANTED and the following counts are dismissed from
Plaintiff’s Complaint: Count Three, Good Faith and Fair Dealing;
Count Four, Bad Faith 42 Pa. C.S. § 8371; Count Five, Negligence;
and Count Six, Vicarious Liability.

Given the facts alleged and

the legal requirements of the claims dismissed, it appears that
amendment would be futile.

However, in an abundance of caution,

27

the Court will allow Plaintiff an opportunity to amend his
complaint as to these claims.
The following claims go forward: Count One, Uninsured Motorist
Claim; Count Two, Breach of Contract; and Count Seven, Claim
Pursuant to 75 Pa. C.S. § 1716.
An Order consistent with these determinations will be filed
simultaneously with this Memorandum.

S/Richard P. Conaboy
RICHARD P. CONABOY
United States District Judge
DATED: June 10, 2016

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