April 2015 Bad Faith Cases: Court Does Historical Review Of Cases Applying Twombly/Iqbal To Dismiss Bad Faith Claims For Barebones Pleading (Philadelphia Federal)

In Schor v. State Farm Fire & Casualty Insurance Company, the court conducted an historical review of cases applying the Twombly/Iqbal standards to bad faith pleadings, where those cases were dismissed for only setting out bare bones allegations.  It then found the case before it no different, and dismissed the complaint with leave to amend.  Thus, the following allegations, alone, could not set forth a plausible bad faith claim:

“Defendant has engaged in Bad Faith conduct toward Plaintiff and has treated Plaintiff unreasonably and unfairly with respect to its adjustment of Plaintiff’s covered loss, in violation of 42 Pa.C.S.A. § 8371.” “In furtherance of its bad faith and wrongful denial and refusal to pay benefits for Plaintiff’s covered loss, Defendant, acting by and through its duly authorized agents, servants, workmen or employees, has engaged in the following conduct:

(a) in forwarding correspondence to Plaintiff and/or Plaintiff’s representative, representing to Plaintiff and/or Plaintiff’s representatives that Plaintiff’s claim was not, in fact, covered under Defendant’s policy of insurance when Defendant knew or should have known that such representation was false and misleading.” (b) in failing to effectuate a prompt, fair and equitable settlement of Plaintiff’s claim when its liability under the policy became reasonably clear; (c) in misrepresenting pertinent facts or policy or contract provisions relating to the coverages at issue; (d) in treating the Plaintiff with reckless indifference and disregard under the circumstances; (e) in not having a reasonable basis or denying Plaintiff’s benefits under the policy and in knowingly or recklessly disregarding its lack of reasonable basis when it denied Plaintiff’s claim; (f) in interpreting ambiguous terms, provisions and/or conditions of the aforementioned policy in its favor and against Plaintiff.”

“Solely as a result of Defendant’s bad faith misconduct as aforesaid, Plaintiff has been required to obtain counsel to commence the present action to recover benefits due and owing under the policy of insurance issued by Defendant for Plaintiff’s covered loss, and has incurred costs and other expenses in connection with said claim.”

The court found that such “allegations assert, in cursory fashion only, that Defendant lacked a reasonable basis for denying Plaintiff’s claim for benefits, without providing any factual allegations from which the Court could make a plausible inference that Defendant knew or recklessly disregarded its lack of a reasonable basis for denying benefits.”  Further, “[a]lthough such assertions perhaps suggest that a bad faith claim is possible, they do not allow for any non-speculative inference that a finding of bad faith is plausible.” (Emphasis by Court).

Date of Decision:  March 18, 2015

Schor v. State Farm Fire & Cas. Ins. Co., CIVIL ACTION NO. 15-610, 2015 U.S. Dist. LEXIS 33266 (E.D. Pa. March 18, 2015) (Buckwalter, J.)