In Pfister v. State Farm Fire and Casualty Company, plaintiffs’ home suffered physical and structural damage due to a blocked shower drain. When they turned to State Farm, seeking coverage under their homeowners’ insurance policy, the insurer accepted the claim and issued the insured a payment of just over $16,000. Plaintiffs’ however made repeated appeals for further coverage, and when they realized full payment for their property loss was not forthcoming they asserted causes of action for breach of contract, a declaratory judgment and statutory bad faith in the Allegheny County Court of Common Pleas.
State Farm removed to the Western District based on the parties’ diverse citizenship and then moved to dismiss the statutory bad faith claim.
In pointing to the “new” pleading standards set forth by the U.S. Supreme Court in Twombly and Iqbal, the Western District here noted that merely stating conclusory averments or listing the elements of a cause of action without establishing some factual basis upon which the plaintiff would be entitled to relief is not sufficient to withstand a motion to dismiss. In this vein, the court went on to find that the plaintiffs’ complaint was not sufficiently factual to reasonably suggest that State Farm frivolously or speciously refused to pay the policy’s proceeds.
Although there was a wide discrepancy between the amount the insured requested ($152,000) and the amount received ($16,169), the court cited to Brown v. Progressive Ins. Co., 860 A.2d 493 (Pa. Super. 2004), for the proposition that Pennsylvania law generally does not treat as bad faith an insurer’s low but reasonable assessment of an insured’s losses.
The court also noted that it was not surprising that State Farm disagreed with the Plaintiff’s loss estimate, as that estimate was computed by Brian Pfister himself and was not a reflection of State Farm’s own valuation of the claim. In fact, plaintiffs’ never alleged in their complaint that the insurer failed to adequately investigate the claim before making their settlement offer.
As such, the court found that there was not enough information pled to establish a cognizable claim of bad faith and, accordingly, granted State Farm’s motion to dismiss, with leave to amend.
Date of Decision: July 26, 2011