In Bromily Inc., t/a Bankers v. State National Insurance Company, Inc., the insured filed a complaint asserting breach of contract and statutory bad faith against its insurer for wrongfully denying a claim for benefits under its insurance policy for property damage sustained.
After several procedural actions that transferred venue, the case finally resided in the United States District Court for the Middle District of Pennsylvania where the court granted a motion to withdraw by the insured’s counsel because the insured had failed to respond to counsel’s telephone calls and letters, failed to sign verification forms regarding outstanding responses to the insurer’s discovery requests as ordered by the court, and had never signed a fee agreement. The insured’s sole owner also failed to attend the oral argument on the withdrawal motion, in violation of the court’s order. As a Pennsylvania corporation, the insured must be represented in court by counsel and was given time to secure new counsel, but neither the insured, nor its sole owner, had any subsequent contact with the court.
The insurer moved to dismiss the complaint under Fed. R. Civ. P. 41(b) and 37(b), with prejudice. The insured did not timely respond, and, after a month, the court ordered the insured to file an opposition brief and gave it more time to obtain new counsel. Again, the insured failed to comply with the court’s order.
The court then made the required explicit findings as to each of the six factors from the balancing test in Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 867-68 (3d Cir. 1984) in addressing the insurer’s motion. The court found the first five factors weighed against the insured: it was, through its owner, responsible for violating the rules; its conduct caused prejudice by failing to meet scheduling orders and respond to discovery; it had a history of dilatoriness; its conduct was willful and evidence of bad faith; and other sanctions, such as a monetary sanction, would be pointless because the owner willfully failed to comply with previous court orders. As to the sixth factor, the meritoriousness of the claim, the court found in the insured’s favor: based upon the pleadings (including the insurer’s answer and affirmative defenses), the insured’s claim may have had merit. Since, however, all six factors do not need to be met to dismiss a plaintiff’s complaint, the court dismissed the case with prejudice and ordered the case closed.
Date of Decision December 6, 2008
Bromily, Inc. v. State Nat’l Ins. Co., CIVIL ACTION No. 07-2039, 2008 U.S. Dist. LEXIS 98857 (M.D. Pa. Dec. 6, 2008)(Blewitt, J.)