FEBRUARY 2012 BAD FAITH CASES: FEDERAL COURT WILL NOT CONSIDER UIPA VIOLATIONS IN EVALUATION BAD FAITH OR UTPCPL CLAIMS (CONTRA THE SUPERIOR COURT) (Philadelphia Federal)

In Purcell v. State Farm Mutual Automobile Insurance Company, the court faced an insurance carrier’s motion to dismiss a complaint alleging bad faith and violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) brought by its insured. The claim stemmed from a car accident in which one of the insured claimants was injured as a passenger in another person’s vehicle. Both the negligent party and the driver of the vehicle in which the insured was injured were underinsured motorists (“UIM”). The negligent driver tendered his full liability policy benefits to the insured in the amount of $50,000. The same carrier insured all three parties in this case.
However, the insureds now claim that they should be awarded UIM benefits under their own two stacked automobile policies and the $100,000 policy held by the driver of the car in which one of the insureds rode on the day of the accident. The carrier offered and paid $17,500 of UIM benefits, but the insureds demanded the remainder of the UIM benefits available to them. After the insureds filed suit in Chester County, the carrier removed the case to federal court and filed a motion to dismiss.
First, the court addressed the insureds’ contention that the carrier’s motion to dismiss was untimely. They claimed that, under Federal Rule of Civil Procedure 12(a), the carrier had twenty-one days after the service of the complaint to file its motion to dismiss. However, the carrier took longer than the allotted time to file its motion. The court disagreed, citing Rule 81(c)(2) for the proposition that the carrier has until seven days after the notice of removal is filed to seek dismissal. As such, the court rejected the insureds’ timeliness argument.
Second, the court addressed the motion to dismiss the insureds’ bad faith claims. The insureds argue that the carrier acted in bad faith during the overall handling of their UIM claim, but fail to make any specific allegations to support this claim. However, the insureds did include “boilerplate assertions cut and pasted directly from the “UIPA statute.
To gauge this claim, the court examined the conflict between Pennsylvania state and federal courts with respect to the applicability of the UIPA in bad faith claims. While Pennsylvania state courts have allowed for consideration of UIPA claims in evaluating bad faith claims, the Third Circuit has predicted that the Pennsylvania Supreme Court would not allow a suit to proceed under a theory that a UIPA violation is a per se violation of the bad faith statute (or the UTPCPL). Therefore, the court dismissed the insureds’ complaint without prejudice, allowing them time to amend the complaint.
As set forth in footnote 17 of the Pennsylvania Supreme Court’s Toy Opinion, and as discussed in the federal cases, the Superior Court considers UIPA violations as evidence of bad faith, not as bad faith per se; but this is still a position the federal courts reject.
Lastly, the court turned to the UTPCPL claims brought by the insureds. Specifically, the parties allege that the carrier engaged in deceptive acts and conducted itself improperly, creating confusion and misunderstanding. However, the court again ruled that such skeletal allegations would not support an actionable claim under the UTPCPL. The court also dismissed this portion of the complaint, but allowed time to amend the underlying complaint.
Date of Decision: February 10, 2012
Purcell v. State Farm Mutual Automobile Insurance Company, No. 11-7004, 2012 U.S. Dist. LEXIS 17110 (E.D. Pa. Feb 10, 2012) (Kelly, J.)