JULY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH ACTION WITH PREJUDICE AFTER INSUREDS FAILED TO JOIN NECESSARY PARTY (Philadelphia Federal)

In Cummings v. Allstate Ins. Co., the court heard a carrier’s motion to dismiss an action for breach of contract and bad faith alleged by its insured. The case stemmed from an injury that the decedent-insured sustained after the carrier denied benefits for a damaged floor, which was later repaired by the insureds’ nephew. After the decedent slipped on the damaged floor, she had surgery to correct her injuries, but died from cardiac arrest at the hospital.
The carrier’s first motion to dismiss was filed pursuant to Federal Rule 12(b)(7), alleging that the insureds failed to join their nephew as a defendant. The court heard the motion and deemed the nephew to be an indispensable party, ordering the insureds to join him as a defendant to the lawsuit. (See this blog).
However, the insureds’ nephew was merely added to the caption in the insureds’ amended complaint, not as a party within the substance of the pleading. The carrier thereafter filed another motion to dismiss, alleging that the insureds’ failure to join a necessary party pursuant to court order warranted dismissal with prejudice. Ultimately, the court dismissed the case with prejudice and granted the carrier’s motion.
Before granting the carrier’s motion to dismiss with prejudice as a sanction for failure to adhere to the Court’s first Order to join the nephew under Federal Rules 12(b)7 and 19, the Court reviewed the 6 Poulis factors set out by the Third Circuit in weighing whether to do so. The last factor looks at the “meritoriousness of the claim.” While the court stated that while it was too early to rule on the actual merits of the breach of contract and bad faith claims, it nevertheless reasoned that the carrier’s claim for the denial of coverage appeared to have merit, and because of the noncompliance with the court’s order to join a necessary party, under that 6 factor test, the case was dismissed with prejudice.
Date of Decision: June 19, 2012
Cummings v. Allstate Ins. Co., No. 11-02691, 2012 U.S. Dist. LEXIS 84673, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. June 19, 2012) (Kelly, J.)