Thursday, December 7, 2017

Conclusory Bad Faith Allegations Result in Federal Court Complaint Being Dismissed With Leave to Amend

In the case of Irving v. State Farm Mut. Auto. Ins. Co., No. 17-1124, (E.D. Pa. Oct. 4, 2017 Slomsky, J.), the court dismissed a Plaintiff’s auto insurance bad faith Complaint with leave to amend.

In this underinsured motorist benefits action, the insured realized a recovery from the tortfeasor’s liability insurer, after which the UIM carrier made a settlement offer.  The insured rejected the UIM carrier’s offer and sued for bad faith and breach of contract.

In the Complaint, the insured enumerated several allegations of the insurer’s bad faith conduct. The insured asserted the insurer acted unreasonably and unfairly, failed to advance a reason for its denial of the full value of the claim, intentionally and/or recklessly disregarded the insured’s injuries, and refused to pay benefits owed under the policy.  The carrier moved to dismiss the bad faith claim.

The Court stated “[a] complaint must do more than allege a plaintiff’s entitlement to relief, it must ‘show’ such an entitlement with its facts.”

The Court held that the undisputed facts only show a disagreement between the parties to negotiate and settle the UIM claim. Furthermore, “[t]hese facts do not show that [the insured] has a plausible claim for bad faith because they do not shed light on the reasonableness of [the insurer’s] actions.”

The Court reasoned that the insured’s allegations are merely conclusory and are thus insufficient to state a claim for bad faith. The Court then dismissed the bad faith claim, but gave the insured twenty days leave to amend its complaint.

I do not have a copy of this case. 

I send thanks to Lee Applebaum of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention.

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