JUNE 2014 BAD FAITH CASES: CONCLUSORY LEGAL ALLEGATIONS ARE INSUFFICIENT TO STATE BAD FAITH CLAIM UNDER TWOMBLY/IQBAL, BUT COURT GAVE PLAINTIFF OPPORTUNITY TO AMEND AND CURE PLEADING DEFICIENCIES (Middle District)

In Warnstorff v. State Farm Automobile Insurance Company, the insured brought a bad faith claim against its carrier for unreasonably delaying the evaluation of her underinsured motorist claim, and withholding payment. The plaintiff alleged four specific actions in her complaint which she claimed constituted bad faith. These allegations were: “failing to promptly evaluate the claim and make an offer,” “failing to promptly request any additional information [the insurer] believes it needs and evaluate that information and make an offer [sic],” “attempting to find any unfounded reason to refuse to pay underinsured motorist benefits,” and “delaying in evaluating the claim and making an offer.” Applying the Twombly/Iqbal standards, the court found that these allegations were conclusory legal statements; and were therefore insufficient to create a cause of action for bad faith.

First, the insured did not provide any indication of the length of time over which all the events occurred to support her allegation of unreasonable delay. The court clearly found that it was necessary to plead facts indicating the time frame in which the claim was or was not evaluated, or the allegation was not factual but a mere legal conclusion. Next, without any factual support about the length of any delay, the allegation that the carrier failed to promptly request any information it would have needed to fully evaluate the claim was again a mere conclusion.

The plaintiff also alleged an unreasonable refusal to pay benefits, but she did not allege the total amount of her damages. She only pleaded that she received $90,000 from the underinsured tortfeasor, and that she felt entitled to more. These allegations only show that there is some dispute over her insurance contract that has, at the time of the complaint, not concluded in her favor. This failed to plead sufficient facts to state a claim to relief that is plausible on its face. Further, the plaintiff did not raise a reasonable expectation that discovery would reveal evidence of necessary elements to prove her bad faith claim.

Plaintiff attempted to flesh out her claims by attaching letters to her brief opposing the motion to dismiss, which were not part of the complaint.  The court declined to consider those documents outside the complaint, and, for the forgoing reasons dismissed the bad faith claim.  However, the court granted leave to amend to provide plaintiff with the opportunity to cure the pleading deficiencies.

Date of Decision: June 19, 2014

Warnstorff v. State Farm Auto. Ins. Co., CIVIL ACTION NO. 3:14-0077, 2014 U.S. Dist. LEXIS 83551 (M.D. Pa. June 19, 2014) (Mannion, J.)