PFISTER et al v. STATE FARM FIRE AND CASUALTY COMPANY
Filing
21
MEMORANDUM OPINION GRANTING 15 Defendant's Motion to Dismiss Re: Bad Faith Claim. Count III of Plaintiffs' Amended Complaint is DISMISSED WITHOUT PREJUDICE. Plaintiffs may file a Second Amended Complaint on or before August 2, 2011. On or before August 9, 2011, Defendant may Answer or File a Renewed Motion to Dismiss; Reponse Thereto shall be filed on or before August 16, 2011. Signed by Judge Arthur J. Schwab on 7/26/2011. (lcb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
BRIAN D. PFISTER AND MICHELLE
M. PFISTER,
11cv0799
ELECTRONICALLY
FILED
Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant.
MEMORANDUM OPINION REGARDING DEFENDANT’S MOTION TO
DISMISS RE: BAD FAITH CLAIM (DOC. NO. 15)
I. Introduction
Presently before the Court is the Motion of Defendant State Farm Fire and Casualty
Company (“State Farm”) to Dismiss Count III of Plaintiffs Brian and Michelle Pfisters‟
Amended Complaint. Doc. No. 15. The parties‟ dispute centers on State Farm‟s handling of a
claim by Plaintiffs under their homeowners‟ insurance policy for water damage to their home. In
April 2011, Plaintiffs filed a Complaint in the Court of Common Pleas of Allegheny County,
Pennsylvania stating causes of action for breach of contract, declaratory judgment, and statutory
bad faith. Doc. No. 1 Ex. 2 On June 16, 2011, State Farm removed the case to this Court based
on the parties‟ diverse citizenship. Doc. No. 1. On June 23, 2011, State Farm filed a Motion to
Dismiss the declaratory judgment and bad faith claims in Plaintiffs‟ Complaint. Doc. No. 5.
State Farm‟s Motion to Dismiss was mooted when Plaintiffs filed an Amended Complaint on
July 6, 2011. Doc. No. 9. On July 13, the parties entered a Stipulation dismissing the
1
declaratory judgment claim contained in Plaintiffs‟ Amended Complaint. Doc. No. 12. The
same day, State Farm moved to dismiss Count III, the statutory bad faith claim, in Plaintiffs‟
Amended Complaint. For the reasons that follow, Defendant‟s Motion to Dismiss will be
granted.
II. Factual Background
When reviewing a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), the
Court accepts all factual allegations in the Complaint as true and draws all reasonable inferences
in favor of the Plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The
facts of this case are as follows:
Plaintiffs are husband and wife, Brian D. and Michelle M. Pfister, who reside in
Allegheny County, Pennsylvania. Doc. No. 9 ¶ 1. Since their house was built, Plaintiffs have
maintained a homeowners‟ insurance policy through Defendant. Id. ¶ 8. In 2010, Plaintiffs filed
a property loss claim with Defendant for damage to their home that occurred on or about April
25, 2010. Id. ¶ 10. In their loss claim, Plaintiffs allege that they suffered physical and structural
damage to their master bedroom floor, kitchen ceiling, kitchen cabinets and countertops, kitchen
floor, and second floor carpet due to a blocked shower drain in the master bathroom. Id. ¶ 11.
On or about June 29, 2010, Defendant accepted the claim and issued payment to the
Plaintiffs in the amount of $16,169.48. Id. ¶ 22. Despite numerous requests from Plaintiffs,
however, Defendant has declined to issue additional payment on Plaintiffs‟ claim. Id. ¶ 24.
III. Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), civil complaints must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” A complaint may be
dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) if it does not allege “enough facts
2
to state a claim to relief that is plausible on its face.” Phillips v. Cnty. of Allegheny, 515 F.3d
224, 234 (3d Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.544, 570 (2007)).1
To survive a motion to dismiss under Rule 12(b)(6), a claim for relief now “„requires
more than labels and conclusions‟” or “„a formulaic recitation of the elements of a cause of
action.‟” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1948 (2009) (quoting Twombly, 550 U.S. at 555).
While Rule 8 was “a notable and generous departure from the hyper-technical, code-pleading
regime of a prior era,” it does not “unlock the doors of discovery for a plaintiff armed with
nothing more than conclusions.” Iqbal, 129 S. Ct. at 1950.
Building upon the landmark United States Supreme Court decisions in Twombly and
Iqbal, the United States Court of Appeals for the Third Circuit recently explained that a District
Court must take three steps to determine the sufficiency of a complaint:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a
claim.” Second, the court should identify allegations that, “because they are no
more than conclusions, are not entitled to the assumption of truth.” Third,
“whe[n] there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement for
relief.” This means that our inquiry is normally broken into three parts: (1)
identifying the elements of the claim, (2) reviewing the complaint to strike
conclusory allegations, and then (3) looking at the well-pleaded components of
the complaint and evaluating whether all of the elements identified in part one of
the inquiry are sufficiently alleged.
Malleus v. George, No. 10-03539, 2011 WL 2044166, at *2 (3d Cir. May 26, 2011) (quoting
Iqbal, 129 S. Ct. at 1947, 1950). “While legal conclusions can provide the framework of a
Complaint, they must be supported by factual allegations.” Iqbal, 129 S. Ct. at 1950.
1
In Twombly, the United States Supreme Court abrogated its decision in Conley v. Gibson, 355
U.S. 41 (1957), which allowed dismissal of a claim only if “no set of facts” could be conceived
to support it. Conley, 355 U.S. at 45.
3
In conducting this analysis, a court will not accept bald assertions, unwarranted
inferences, or sweeping legal conclusions cast in the form of factual allegations. See In re
Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002); Morse v. Lower
Merion Sch. Dist., 132 F.3d 902, 906 n.8 (3d Cir. 1997). A court is not required to consider legal
conclusions; rather, it should determine whether the plaintiff should be permitted to offer
evidence in support of what is alleged in the relevant Complaint. See Maio v. Aetna, Inc., 221
F.3d 472, 482 (3d Cir. 2000). In short, a Motion to Dismiss should not be granted if a party
alleges facts, which if established at trial, would entitle him to relief. Fowler, 578 F.3d at 563
n.8.
IV. Discussion
Plaintiffs assert that State Farm‟s actions “in failing and refusing to provide full payment for
Plaintiffs‟ property loss constitutes bad faith” in violation of 42 Pa. Cons. Stat. § 8371. Doc. 1
Ex. 2 ¶ 47. Section 8371 states:
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.
Under Pennsylvania law, “[b]ad faith claims are fact-specific and depend on the conduct
of the insurer vis-a-vis its insured.” Williams v. Nationwide Mut. Ins. Co., 750 A.2d 881, 887
(Pa. Super. Ct. 2000). The relevant statute does not define bad faith, but in the insurance
context, the phrase generally describes a “frivolous or unfounded refusal to pay proceeds of a
4
policy.” Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994).
To succeed on a claim for bad faith, a plaintiff must ultimately demonstrate that “(1) the insurer
did not have a reasonable basis for denying coverage, and (2) the insurer knew or recklessly
disregarded its lack of reasonable basis.” Id. at 689-90.
Pennsylvania appellate courts have cautioned that what constitutes bad faith “cannot be
precisely defined in all circumstances.” Zimmerman v. Harleysville Mut. Ins. Co 860 A.2d 167,
172 (Pa. Super. Ct. 2004) (en banc). Bad faith has been found where an insurer failed to
investigate a claim fairly and objectively. See Pinkhasov v. Allstate Ins., No. 11-0171, 2011 WL
2470466, at *3 (M.D. Pa. June 20, 2011) (denying Motion to Dismiss section 8371 claim where
plaintiff alleged insurer “did not inspect the property, did not investigate the claim, and if it did
investigate the claim it did so without adopting and implementing reasonable standards”);
Giangreco v. U.S. Life Ins. Co., 168 F. Supp. 2d 417, 423 (E.D. Pa. 2001); Diamon v. Penn Mut.
Fire Ins. Co., 372 A.2d 1218, 1226 (Pa. Super. Ct. 1977) (noting that an insured is entitled to
expect that the insurer will exercise reasonable care in investigating the claim and reject it only
for good cause). Bad faith has also been found where an insurer fails to communicate its reasons
for denying a claim to an insured. Brown v. Progressive Ins. Co., 860 A.2d 493, 501 (Pa. Super.
Ct. 2004) (citing Romano v. Nationwide Mut. Fire Ins. Co., 646 A.2d 1228, 1232 (Pa. Super. Ct.
1994)). Unreasonable delay in handling claims is another bad faith insurance practice. See Ania
v. Allstate Ins. Co., 161 F. Supp. 2d 424, 430 (E.D. Pa. 2001). “[T]the crux of a bad faith claim
under § 8371 is denial of coverage by an insurer when it has no good reason to do so.” Lehman
v. Victoria Fire & Cas. Ins. Co., No. 09-01542, 2011 WL 2457928, at *6 (W.D. Pa. June 16,
2011) (quoting Jung v. Nationwide Mut. Fire. Ins. Co., 949 F. Supp. 353, 360 (E.D. Pa.1997)).
5
Plaintiffs‟ Complaint states that State Farm “has failed to settle in good faith, or to
negotiate in good faith to settle the action in full,” and that it “lacks a reasonable basis for
denying full benefits to the Plaintiffs.” Doc. No. 9 ¶¶ 43-44. To support these claims, Plaintiffs
identify three specific actions by State Farm they view as unreasonable. First, they claim that
State Farm “has failed and refused to adequately and completely address the nature of Plaintiffs‟
dwelling,” specifically the “seamless” carpet on the second floor of their home and the kitchen
flooring and cabinetry. Id. ¶ 24. Second, they claim that State Farm has “failed and refused to
adequately and completely address the numerous estimates and expense reports submitted by
Plaintiffs.” Id. Third, they object that State Farm has “continuously attempted to direct
Plaintiffs to use the services of contractors or subcontractors of [State Farm‟s] choosing, which
would result in a diminution of the aesthetic and pecuniary value of the Plaintiffs‟ residence.”
Id.
Plaintiffs have failed to allege facts that reasonably suggest a “frivolous or unfounded
refusal to pay proceeds of a policy.” Terletsky, 649 A.2d at 688. The Court notes that there is a
large discrepancy between the amount Plaintiffs claim under the policy – over $152,000 – and
the $16,169.48 offered to Plaintiffs by State Farm. Doc. 9 ¶¶ 17, 22. Yet this discrepancy alone
is not evidence of bad faith; Pennsylvania law generally does not treat as bad faith an insurer‟s
low but reasonable estimate of an insured‟s losses. Brown, 860 A.2d at 501. Based on the facts
alleged, the Court has no reason to believe that State Farm‟s offer was unreasonable. Plaintiffs
do not assert that State‟s Farm‟s failed to investigate their claim adequately, and it is not
surprising that State Farm disagrees with Plaintiffs‟ loss estimate, which was computed by
6
Plaintiff Brian Pfister himself.2 In short, the facts adduced in Plaintffs‟ Amended Complaint do
not suggest bad faith on the part of State Farm; at most, the Amended Complaint suggests an
honest dispute between Plaintiffs and State Farm over the value of Plaintiffs‟ claim under the
relevant homeowners‟ policy.
As Chief Judge Lancaster of this Court recently noted, district courts should be cognizant
that Plaintiffs in section 8371 actions are often at a disadvantage in averring facts because the
defendant insurer is usually “in exclusive possession of the information regarding its claims
decision.” Craker v. State Farm Mut. Auto. Ins. Co., No. 11–0225, 2011 WL 1671634, at *5
(W.D. Pa. May 3, 2011). Yet because the facts alleged by Plaintiffs do not support an
entitlement to relief, their section 8371 claim must be dismissed. See Fowler, 578 F.3d at 563
n.8.
V. Conclusion
For the reasons discussed above, Allstate‟s Motion to Dismiss will be GRANTED.
Order of Court
And now, this 26th day of July, 2011, for the reasons set forth in the foregoing
Memorandum Opinion, it is HEREBY ORDERED as follows:
(1)
2
Defendant‟s Motion to Dismiss (Doc. No. 15) is GRANTED;
The Amended Complaint states that Plaintiffs “received numerous estimates from third-party
companies,” Doc. 9 ¶ 12, and that Plaintiff “Brian Pfister, as a certified public adjuster, utilized
the estimates and expert reports and calculated and prepared a comprehensive and itemized claim
in accordance with acceptable standards in the insurance adjusting industry.” Id. ¶ 16.
7
(2)
Count III of Plaintiffs‟ Amended Complaint (Doc. No. 9) is DISMISSED without
prejudice. Plaintiffs may file a Second Amended Complaint on or before August
2, 2011.3
s/Arthur J. Schwab
Arthur J. Schwab
United States District Judge
cc: All Registered ECF Counsel and Parties
3
On or before August 9, 2011, Defendant may Answer or file a Renewed Motion to Dismiss
with Response Thereto due on or before August 16, 2011.
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?