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

Filing 38

MEMORANDUM (Order to follow as separate docket entry)For the reasons discussed above, with the Courts clarification of the standard employed in the Courts June 13, 2016, Memorandum, Plaintiff has not shown that the Court erred in its determination th at Plaintiffs claim for bad faith was properly dismissed. Therefore, Plaintiffs Motion for Reconsideration of the June 13, 2016 Order (Doc. 32) is DENIED. An appropriate Order will be filed simultaneously with this Memorandum. re 32 MOTION for Reconsideration filed by Richard Myerski Signed by Honorable Richard P. Conaboy on 8/3/16. (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
Plaintiff’s Motion for Reconsideration of the June 13, 2016
Order (Doc. 32) is pending before the Court.

In his supporting

brief, Plaintiff asserts that the Court erred in granting
Defendants’ Motion to Dismiss (Doc. 7) for four reasons: 1) the
Court misapplied or applied the incorrect legal standard to
Defendants’ Rule 12(b)(6) motion; 2) the Court made factual
determinations regarding disputed issues; 3) the Court erroneously
adopted Defendants’ statement of facts and construed them in the
light most favorable to Defendants; and 4) the Court impermissibly
relied on statements contained in the police report.
6-7.)

(Doc. 33 at

Defendants respond that there is no ground upon which the

Court’s decision to dismiss Plaintiff’s bad faith claim need be
reconsidered.

(Doc. 35 at 14.)

With the July 25, 2016, filing of

Plaintiff’s reply brief (Doc. 37) in which he further supports and
clarifies the bases for relief previously asserted, this motion

became fully briefed and ripe for disposition.

For the reasons

discussed below, I conclude Plaintiff has presented no basis for
the Court to change its previous determination that Plaintiff’s bad
faith claim was properly dismissed.
I. Background
A detailed background is set out in the Court’s June 13, 2016,
Memorandum.

(Doc. 28 at 1-7.)

Plaintiff sets out the following

Statement of Facts in his supporting brief:
Defendants issued a policy of insurance
to Plaintiff’s Mother Sara Morris, Policy
Number 41 CSPA 43051 which was in effect from
June 5, 2015 through December 5, 2015. See
Complaint, attached hereto as Exhibit A, at
§23 and Exhibit A. On or about, August 19,
2015 Plaintiff Richard Myerski was involved
in an automobile accident, with an uninsured
driver, while operating his mothers [sic]
insured automobile. Id. at §§6-19. As a
result of the subject accident, Plaintiff
Richard Myerski sustained severe and
permanent injuries. Id.
On the day of the accident, Ms. Morris
put Defendant on notice of the accident and
advised that her son, the Plaintiff, was
injured. Id. at §25. Since that time
Defendants have continuously denied coverage
for all claims under the policy, including
Plaintiff’s UM and First Party Medical
Benefits claims. Id. At §§25-39.
Due to Defendants denial of coverage,
despite information from its insured that the
denial was not supported by facts, Plaintiff
was forced to retain counsel. Id. at §30.
In denying coverage, Defendants sent and
resent the same denial letter which was
originally sent to Plaintiff’s Mother on
August 25, 2015, denying Ms. Morris’ property
damage claim based on the household and/or
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frequent use of the vehicle exclusions, which
are inapplicable under the policy to claims
for UM and First Party Medical benefits. Id.
at §§25-36 and Exhibits B, D, and F.
Despite letters from Plaintiff’s counsel
which expressly stated that she represented
Richard Myerski as a result of the injuries
he sustained in a motor vehicle accident,
Defendants continued to send the same
property damage denial letter that was
entirely irrelevant to the Plaintiff’s
Claims. Id. at §25-36 and Exhibits C and E.
On December 2, 2015, Defendant agent Beverly
Bower contacted Plaintiff’s attorney’s office
and informed her that the Defendant was
maintaining its denial of all claims based on
the “household exclusion and the regular and
frequent use of the vehicle.” Id. at §36.
Plaintiff filed a Complaint in the
instant action on or about February 22, 2016
in the Court of Common Pleas of Lackawanna
County asserting claims for UM Benefits,
Breach of Contract, Good Faith and Fair
Dealing, Bad Faith, Negligence, Vicarious
Liability, and First Party Medical Benefits
pursuant to 75 Pa. C.S.A. §1716. The case
was then removed, by the Defendants, to the
United States District Court for the Middle
District of Pennsylvania on March 22, 2016.
On March 25, 2016, Defendants filed a Motion
to Dismiss Plaintiff’s bad faith claim.
On
June 13, 2016, this Court Granted Defendants
[sic] Motion. Plaintiff now seeks
reconsideration of the Court’s June 13, 2016.
(Doc. 33 at 4-5.)
In deciding the instant motion, the Court considers the
foregoing recitation and the background information set out in the
Court’s June 13, 2016, Memorandum.

(Doc. 28 at 1-7.)

II. Discussion
A. Legal Standard
A motion for reconsideration filed pursuant to Rule 59(e) or
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under the Local Rules of Court1 may be granted on one of the
following grounds: “1) an intervening change in the controlling
law; 2) the availability of new evidence that was not available
when the court [entered the order complained of]; or 3) the need to
correct a clear error of law or fact or to prevent injustice.”
Max’s Seafood Café v. Quinteros, 176 F.3d 669, 673 (3d Cir. 1999).
Courts should grant Rule 59(e) motions “sparingly because of the
interests of finality and conservation of scarce judicial
resources.”
1993).

Ruscavage v. Zuratt, 831 F.Supp. 417, 418 (E.D. Pa.

Here Plaintiff’s motion is based on the third ground for

relief: the need to correct clear errors of law.
B.

Plaintiff’s Claimed Errors

1.

(Doc. 33 at 5-6.)

Rule 12(b)(6) Legal Standard
Plaintiff first claims the Court misapplied the legal standard

applicable to a motion to dismiss filed pursuant to Federal Rule of
Civil Procedure 12(b)(6).

(Doc. 33 at 7.)

The Court agrees with

Plaintiff that plausibility is the key to surviving a motion to
dismiss.

(See Doc. 28 at 7-10; Doc. 33 at 7-8.)

Specifically,

Plaintiff alleges that the Court applied the “clear and convincing
evidence” standard in deciding that his bad faith claim was subject

1

A timely filed motion for reconsideration under a local
rule is a motion to alter or amend judgment under Federal Rule of
Civil Procedure 59(e). Schroeder v. McDonald, 55 F.3d 454, 459 (9th
Cir. 1995) (citing Bestran Corp. v. Eagle Comtronics, Inc., 720
F.2d 1019 (9th Cir. 1983)).
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to dismissal.

(Doc. 33 at 8 (citing Doc. 28 at 18, 21).)

Plaintiff is correct that the Court used the language cited.
Unfortunately, the Court did so in a shorthand version of
explaining its conclusion: the Court’s conclusion was that it was
not plausible from the allegations pled that Plaintiff could
succeed on the bad faith claim where he would need to show by
“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.”

J.C. Penney Life Ins. Co. v. Pilosi, 393

F.3d 356, 367 (3d Cir. 2004) (internal quotation omitted).
(Plaintiff would need to show under the “clear and convincing”
standard, “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.)

The

Court decided the bad faith claim in the context of the
requirements of such a claim under Pennsylvania law and applying
common sense to the circumstances presented in the documents
acceptably considered on a Rule 12(b)(6) motion.

See, e.g., Fowler

v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009); Pryor v.
Nat’l Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002).
The facts presented in the Complaint did “not permit the court to
infer more than the mere possibility of misconduct.”
Iqbal, 566 U.S. 662, 679 (2009).

Ashcroft v.

Keeping in mind that “[w]here a

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complaint pleads facts that are merely consistent with a
defendant’s liability, it stops short of the line between
possibility and plausibility of entitlement to relief,” 556 U.S. at
678, the Court determined that the thread-bare allegations in the
complaint did not meet the requisite standard.

With the

clarification of the standard employed set out here, the Court
finds no reason to reconsider its conclusion.2
2.

Factual Determinations
Plaintiff maintains that the “Court impermissibly made factual

determinations regarding disputed issues of fact and erroneously
adopted the Defendants [sic] statement of facts and constru[ed]
these facts in the light most favorable to the Defendants, the
moving party.”3

(Doc. 33 at 9.)

Plaintiff first specifically

2

Plaintiff’s criticism of the Court’s discussion of bad
faith related to the property damage claim is acknowledged. (See
Doc. 33 at 17, & n.5.) Because Plaintiff’s Complaint and
supporting brief discuss the dispute regarding Plaintiff’s
residence at the time of the accident (see, e.g., Doc. 1 ¶¶ 28, 29;
Doc. 12 at 10), the Court, in an abundance of caution, addressed
that possible aspect of the bad faith claim. The Court made no
determinations regarding Plaintiff’s actual residence at the time
of the accident or his frequency of use of the vehicle–-both
matters relevant to the property damage claim.
3

Plaintiff does not elaborate on his statement that the Court
erroneously adopted Defendants’ statement of facts. Plaintiff does
not identify any facts set out in that statement which were
inconsistent with facts set out in Plaintiff’s Complaint or other
documents appropriately considered. (See Doc. 33.) In its
Memorandum on the Motion to Dismiss (Doc. 28), the Court noted that
it adopted Defendants’ statement because Plaintiff provided no
citations to the record in his asserted factual background. (Doc.
28 at 1 n.1.) Furthermore, the Court’s “Background” section
included statements found in Plaintiff’s factual background which
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asserts that the Court impermissibly viewed the facts in the light
most favorable to Defendants by concluding that Defendants may not
have known that a claim for PIP and UM benefits was being asserted.
(Id. (citing Doc. 28 at 20).)
In the citation to the Court’s Memorandum identified by
Plaintiff, the Court looked at the allegations in Plaintiff’s
Complaint regarding the first call Ms. Morris made to Defendants
and concluded she had not clearly made a PIP claim and Plaintiff
made no assertion that Plaintiff’s injuries were mentioned
subsequently.

(Doc. 28 at 20.)

This is not viewing the facts in

the light most favorable to Defendant–-it is an assessment of
assertions contained in the Complaint where the allegations
establish that Ms. Morris only once, on the day of the accident,
mentioned that her son had been injured.
¶ 18.)

(Doc. 28 at 20-21; Doc. 1

The conclusion that mere mention of an injury, without

more, does not support a claim for bad faith on the part of the
Defendants for not opening a PIP claim upon the assertion of that
bare fact alone given that 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

were not contained in Defendants’ statement of facts. (See Doc. 28
at 6-7.) Therefore, Plaintiff has not shown, nor does the Court
find, any error in the recitation of facts which, for citation
purposes, were not taken directly from Plaintiff’s supporting
brief.
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the claim,” 393 F.3d at 367, is not viewing the facts in the light
most favorable to Defendant, it is assessing a claim for relief in
the proper context.

(Doc. 28 at 20.)

There was no resolution of a

factual dispute: Plaintiff said Ms. Morris told Ms. Bowers that
Plaintiff was injured in the accident on the day the accident
occurred, a factual assertion which the Court accepted as true,
Plaintiff does not assert that Ms. Morris again mentioned
Plaintiff’s injuries to Defendants, and Defendants do not contest
these facts.
Plaintiff’s criticism of the Court’s conclusion regarding the
UM claim is similarly unavailing.

(Doc. 33 at 12.)

Plaintiff’s

motion for reconsideration does not undermine the conclusion that
Plaintiff has not shown that a claim for bad faith is anything more
than possible on the basis of one phone call where he alleges that
Ms. Morris, based on the police report she had received, provided
information to Defendants regarding the insurance status of the
other vehicle involved in the accident (Doc. 1 ¶ 29)–-information
that in fact was an inaccurate reflection of the contents of the
police report.4

Accepting as true that Ms. Morris told Ms. Bowers

that “the other vehicle was uninsured according to the police
report” (id.), it is also true that the record before the Court
contained the police report which indicated that the other vehicle

4

For purposes of the bad faith analysis, the Court was not
concerned with, nor did the Court decide, whether it was ultimately
shown that the other vehicle was in fact insured.
8

was insured, (see Doc. 8-2 at 3 (Def.’s Ex. B, Police Rpt., 2
(other vehicle had insurance coverage through CSAA General))).
Plaintiff has not contested the discrepancy between what the report
indicated and what Ms. Morris told Ms. Bowers it indicated.

The

Court did not reference the police report for its accuracy but
rather for the discrepancy between the report itself and Ms.
Morris’s reliance upon it in her conversation with Ms. Bowers;
though Ms. Morris may have been factually correct in her assertion
that the other vehicle was uninsured, her attribution of the police
report as the source of the information was factually inaccurate.
The Court did not decide the bad faith issue based on what
Defendants may have known at the time of the phone call from Ms.
Morris, the Court concluded that, in the factual scenario
presented, Plaintiff did not show it was plausible that Defendants
“(1) did not have a reasonable basis for denying (UM) benefits
under the policy; and (2) knew or recklessly disregarded its lack
of a reasonable basis in denying the claim”-–elements he would need
to show by clear and convincing evidence to ultimately succeed on
his claim.

J.C. Penney Life Ins. Co., 393 F.3d at 367.

Whether the facts constitute or give rise to an inference of
legal notice of a PIP and UM claims is another question, one which
Plaintiff raises for the first time in his motion for
reconsideration with his argument related to the Unfair Claims
Settlement Practices Act (“UCSPA”).

9

(See Doc. 32 ¶¶ 31-34; Doc. 33

at 10-11.)

Relevant guidance instructs that the District Court

must accept all of the complaint’s well-pleaded facts as true, but
may disregard any legal conclusions.

Iqbal, 556 U.S. at 678.

To

the extent Plaintiff is arguing that Ms. Morris’s one mention that
her son was injured in the accident and single assertion that the
other vehicle was not insured satisfy notice of PIP and UM claims
under the USPCA, the Court need not accept the assertions as true.
Id.

The Court assessed facts as facts, not as legal conclusions.

Whether the statement that the insured’s son was injured in an
accident made on the day of the accident without detail or followup
was sufficient to constitute UCSPA notice is not at issue–-whether
bad faith could be found in the Defendants’ failure to open a PIP
claim on the basis of Ms. Morris’s sole, undetailed assertion of
injury was the question addressed in the cited language and the
Court determined Plaintiff had not presented facts which made such
a claim more than possible.

Again, this is a context specific

conclusion, the context including the consideration that a bad
faith claim requires more than negligence or bad judgment, Brown v.
Progressive Ins. Co., 860 A.2d 493, 501 (Pa. Super. 2004).

Even

assuming arguendo there was no reasonable basis to deny a PIP claim
in the abstract, there is no factual assertion in the Complaint
which gives rise to the inference that Defendants “knew or
recklessly disregarded the lack of a reasonable basis in denying
the claim,” J.C. Penney Life Ins. Co., 393 F.3d at 367, because all
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Defendants had to go on before counsel got involved was Ms.
Morris’s statement of injury (with absolutely no elaboration
alleged) on the day of the accident.
UM benefits is similarly deficient.

Plaintiff’s claim regarding
Thus, while the Court’s

shorthand language was unfortunate, the conclusion was appropriate.
Plaintiff also alleges error in the Court’s conclusion that he
had not presented sufficient evidence to show bad faith in the time
period beginning in late November 2015 when Plaintiff’s counsel
began communicating with Defendants.

(Doc. 33 at 12-15.)

The

clarification regarding the shorthand referencing “clear and
convincing evidence” needed to show a claim for bad faith and
establishing that this referenced Plaintiff’s ultimate burden of
satisfying the standard regarding the elements of the bad faith
claim (showing Defendants did not have a reasonable basis for
denying benefits under the policy and knew or recklessly
disregarded its lack of a reasonable basis in denying the claim),
applies to the Court’s determination that bad faith had not been
plausibly shown for this time period.

(Doc. 28 at 16-18.)

With

this clarification, the Court concludes Plaintiff has not shown
that the Court’s conclusion was error for the reasons discussed in
the June 13, 2016, Memorandum.

(Id.)

Plaintiff’s assertions that decisions made by the Court were
improper in light of the limited discovery conducted (Doc. 33 at 6,
15) are unavailing in that the Court’s determinations were based on

11

the paucity of information Ms. Morris had provided to Defendants
and the timeline of events provided by Plaintiff.

There was just

too little communicated to Defendants on too few occasions by the
insured in the early stage of the claims process to support a bad
faith claim (Doc. 28 at 18-21), and the same is true for the later
period based on the appropriate response of Defendants’ claims
supervisor within four business days of the initial correspondence
from Plaintiff’s attorney (id. at 16-18).

Considering the facts

asserted by Plaintiff in conjunction with other evidence properly
considered, the Court concluded that Plaintiff had not shown that
her bad faith claim was plausible.

If Ms. Morris provided

information to Defendants or communicated with Defendants beyond
what was factually averred in the Complaint and motion briefing,
such information was within Plaintiff’s control without discovery.
3.

Police Report
Plaintiff specifically argues that the Court impermissibly

relied on statements contained in the police report which are
contradicted by the averments contained in Plaintiff’s Complaint
and evidence already discovered in this matter.

(Doc. 33 at 15.)

As discussed above, the Court did not rely on statements contained
in the police report for the accuracy of the assertions but rather
for the discrepancy between what Ms. Morris said it said and what
it actually said.

While Plaintiff may be correct in some sense

that his “claims in this matter are not based on the police

12

report,” he alleges notice to Defendants of a UM claim based on the
information contained in the report (Doc. 1 ¶ 29) and the Court
correctly noted that the information conveyed to Ms. Bowers was
inaccurate as discussed in the previous section of this Memorandum.
The Court’s consideration of this report was acceptable as a
document attached to Defendants’ motion whose authenticity was not
questioned, as a matter of public record, or as a document whose
contents are alleged in the complaint whose authenticity was not
questioned.

See Pryor v. Nat’l Collegiate Athletic Ass’n, 288 F.3d

548, 560 (3d Cir. 2002) (citation omitted); U.S. Express Lines,
Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002); Pension Benefit
Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d
Cir. 1993) (citations omitted).

Plaintiff does not allege that the

police report attached to Defendants’ brief had been altered or was
otherwise a different document than the police report Ms. Morris
had relied upon.

Therefore, Plaintiff has not shown it was error

for the Court to reference the report in its discussion of
Plaintiff’s bad faith allegations.

Further, in the context of a

single phone call regarding the other vehicle’s status and Ms.
Morris’s misplaced reliance being the only attributed source of the
claimed UM status prior to the involvement of counsel, the Court
correctly concluded that Plaintiff had not shown the plausibility
of bad faith allegedly based on the assertion of a UM claim to Ms.
Bowers in the first instance.

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III. Conclusion
For the reasons discussed above, with the Court’s
clarification of the standard employed in the Court’s June 13,
2016, Memorandum, Plaintiff has not shown that the Court erred in
its determination that Plaintiff’s claim for bad faith was properly
dismissed.

Therefore, Plaintiff’s Motion for Reconsideration of

the June 13, 2016 Order (Doc. 32) is DENIED.

An appropriate Order

will be filed simultaneously with this Memorandum.

S/Richard P. Conaboy
RICHARD P. CONABOY
United States District Judge
DATED: August 3, 2016

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