King et al v. The Travelers Companies, Inc. et al
MEMORANDUM (Order to follow as separate docket entry) re 4 MOTION to Dismiss Partial Motion to Dismiss the Complaint filed by The Travelers Indemnity Co., The Travelers Companies, Inc., The Travelers Home and Marine Insurance Company Signed by Honorable James M. Munley on 10/11/18. (sm)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
NICHOLAS KING, JOAN KING,
and KRISTEN KING,
THE TRAVELERS COMPANIES, INC., :
THE TRAVELERS INDEMNITY CO.,
And THE TRAVELERS HOME AND
MARINE INSURANCE COMPANY,
Before the court for disposition is a partial motion to dismiss filed by the
defendants in this breach of contract action. The motion has been briefed and
the matter is ripe for disposition.
On May 24, 2014, Plaintiff Nicholas King operated a 2008 Audi Q7 in the
Borough of Stroudsburg, Monroe County, Pennsylvania. (Doc. 1-2, Ex. A,
Compl. ¶ 5). Plaintiff Kristen King sat in the front passenger seat of the vehicle
and Plaintiff Joel King sat in the rear seat. (Id.)
At the same time, Christina Migliaccio operated a 2006 Lincoln town car—a
vehicle owned by Pocono Cab Company—and was right behind Plaintiff King’s
vehicle on Main Street. (Id. ¶ 6). As Plaintiff Nicholas King waited for opposing
traffic to clear so that he could make a left hand turn onto Main Street, Migliaccio
struck the plaintiff’s vehicle in the rear. This impact caused the plaintiffs to
sustain severe personal injuries. (Id. ¶ 8-10).
The plaintiffs’ injuries, damages, and medical expenses exceeded the
value of Migliaccio and Pocono Cab Company’s third-party insurance policy. (Id.
At the time of the accident, the plaintiffs were covered by an automobile
insurance policy issued by Defendant The Travelers Home and Marine Insurance
Company (hereinafter “Travelers”) that provided the full tort option, which allows
the plaintiffs to recover non-economic damages even if their injuries are
determined not to be serious. (Id. ¶ 11).
Although the plaintiffs were covered under Travelers’s insurance policy, the
plaintiffs allege that Travelers not only refused to fully compensate the plaintiffs
for their injuries, they also refused to conduct a good faith reasonable
investigation in order to effectuate a prompt, fair, and equitable settlement of the
plaintiffs’ claims. (Id. ¶¶ 11, 18-20, 24).
Based on these facts, the plaintiffs initiated this lawsuit against Travelers,
The Travelers Companies, Incorporated, and The Travelers Indemnity Company
for breaching the terms of the insurance policy. The plaintiffs’ complaint raises
the following two causes of action: Count 1, Breach of Contract/Enforcement of
Contractual Obligations; and Count 2, Bad Faith. (Id. ¶ 24).
On August 13, 2018, the defendant filed the instant motion to partially
dismiss the plaintiff’s complaint. First, the defendants seek dismissal of the
plaintiffs’ bad faith claim. (Id.) Second, the defendants seek to dismiss
Defendant The Travelers Companies, Inc. and Defendant The Travelers
Indemnity Company from the lawsuit. Because the plaintiffs do not oppose
dismissing these parties from the action, those parties will be dismissed. We will,
therefore, only address the plaintiffs’ bad faith claim.
This case is before us based upon diversity of citizenship. 28 U.S.C. §
1332(a). Cases are properly brought in federal district court under the diversity
statute when the action involves citizens of different states and an amount in
controversy, exclusive of interest and costs, in excess of $75,000. See 28
U.S.C. § 1332(a). Instantly, the plaintiffs are all citizens of Pennsylvania.
(Doc.1-2, Ex. A, Compl. ¶ 1-3). Defendant Travelers is a citizen of Connecticut.
(Doc. 1, Notice of Removal ¶ 7). The amount in controversy exceeds $75,000.
As a federal court sitting in diversity, the substantive law of Pennsylvania shall
apply to the instant case. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir.
2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).
The defendants filed their partial motion to dismiss the plaintiffs’ complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. When a
12(b)(6) motion is filed, the sufficiency of the allegations in the complaint is
tested. Granting the motion is appropriate if, accepting as true all the facts
alleged in the complaint, the plaintiff has not pleaded “enough facts to state a
claim to relief that is plausible on its face,” or put another way, “nudged [his or
her] claims across the line from conceivable to plausible.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The Third Circuit interprets Twombly to
require the plaintiff to 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. County of Allegheny, 515 F.3d 224, 234 (3d
Cir. 2008) (quoting Twombly, 550 U.S. at 556). Moreover, the plaintiff must
allege facts that “justifying moving the case beyond the pleadings to the next
stage of litigation.” Id. at 234-35.
The issue is whether the facts alleged in the complaint, if true, support a
claim upon which relief can be granted. In deciding a 12(b)(6) motion, the court
must accept as true all factual allegations in the complaint and give the pleader
the benefit of all reasonable inferences that can fairly be drawn therefrom, and
view them in the light most favorable to the plaintiff. Morse v. Lower Merion Sch.
Dist., 132 F.3d 902, 906 (3d Cir. 1997). To decide a motion to dismiss, a court
generally should consider only the allegations in the complaint, exhibits attached
to the complaint, matters of public record, and documents that form the basis of a
claim. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d.
Cir. 1997); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d
1192, 1196 (3d Cir. 1993).
As stated above, Travelers challenges the legal sufficiency of the plaintiffs’
bad faith claim. The Pennsylvania bad faith statute establishes a private cause
of action against an insurer that has acted in bad faith toward its insured. See
42 PA. STAT. AND CONS. STAT. ANN. § 8371 (West).
Pennsylvania state and federal courts have held that “‘[b]ad faith’ on the
part of an insurer is any frivolous or unfounded refusal to pay proceeds of a
policy; it is not necessary that such refusal be fraudulent.” (emphasis added)
Bergman v. USAA, 742 A.2d 1101, 1106 (Pa. Super. Ct. 1999). Conducting a
thorough investigation into a questionable claim, being negligent, or exercising
bad judgment, alone, is insufficient to establish a bad faith claim. Northwestern
Mut. Life. Ins. Co. v. Babayan, 430 F.3d 121, 138 (3d Cir. 2005); Rancosky v.
Washington Nat'l Ins. Co., 170 A.3d 364, 373-374 (Pa. 2017).
To test the sufficiency of bad faith claims, Pennsylvania courts apply a twopart test, both elements of which must be supported with clear and convincing
evidence: (1) that the insurer did not have a reasonable basis for denying
benefits under the policy and (2) that the insurer knew of or recklessly
disregarded its lack of reasonable basis in denying the claim. Rancosky, 170
A.3d 364 at 365; Terletsky v. Prudential Prop. and Cas. Ins. Co., 649 A.2d 680,
688 (Pa. Super. Ct. 1994).
The defendant argues that the plaintiffs’ bad faith claim should be
dismissed because a mere disagreement over the valuation of a claim does not
constitute bad faith. As a result, the defendant avers that the plaintiffs have not
pled sufficient facts. The plaintiffs, however, contend that they have pled
sufficient facts for a bad faith claim to proceed at this preliminary stage. We
agree with the plaintiffs.
The plaintiffs allege that although the insurance policy possessed by
Migliaccio and Pocono Cab Company was inadequate to fully compensate them
for their injuries, Travelers refused to “offer monies sufficient to fully compensate
[p]laintiffs for their injuries . . . in breach of the terms of the applicable automobile
insurance policy . . . .” (Doc. 1-2, Ex. A, Compl. ¶ 18-20). The plaintiffs aver with
detail and specificity that Travelers also refused to conduct a good faith
reasonable investigation in order to effectuate a prompt, fair, and equitable
settlement of the plaintiffs’ claims. (Id. ¶ 24). Specifically, paragraph 24 of the
complaint sets forth twenty actions taken by the defendant that are specific to
bad faith. Based on the facts pled, it is plausible that Travelers acted in bad faith
when it failed to conduct an investigation before denying the plaintiffs’ insurance
Because the pleadings allege that the defendant failed to conduct a
reasonable investigation into the plaintiffs’ claims, it appears from the face of the
complaint that Travelers denied the plaintiffs benefits with reckless disregard
regardless of whether or not such a decision had a reasonable basis. The
plaintiff has pled enough facts to raise a reasonable expectation that discovery
will reveal evidence of bad faith on the part of the defendant. Viewing these
allegations of the complaint as true and in the light most favorable to the
plaintiffs, we find that the plaintiffs have pled sufficient facts to justify moving the
plaintiffs’ bad faith claim beyond the pleadings stage.
For the reasons set forth above, we will grant in part and deny in part the
defendants’ partial motion to dismiss. We will grant the defendants’ motion as it
relates to dismissing The Travelers Companies, Inc. and The Travelers
Indemnity Company from the case. We will deny the defendants’ motion to
dismiss as it relates to the plaintiffs’ bad faith claim. An appropriate order
Date: October 11 , 2018
BY THE COURT:
s/ James M. Munley
JUDGE JAMES M. MUNLEY
United States District Court
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