In Merrill v. State Farm Fire and Casualty Co., insured homeowners brought suit against their homeowner’s insurance carrier, alleging breach of contract, breach good faith and fair dealing, bad faith, and Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). The suit was commenced in the Westmoreland County Court of Common Pleas after the carrier refused to provide coverage for damage incurred by the insureds’ home during a tornado and hailstorm. The carrier removed the case to federal court and moved to dismiss all claims, except the breach of contract count.
First, the court ruled that the “gist of the action” doctrine barred the insureds’ breach of good faith and fair dealing claim because their breach of contract claim cannot be recast as a tort claim. [Note: It is not clear from this Opinion if the plaintiffs attempted to assert the claims for a common law contractual breach of the duty of good faith under Cowden or Birth Center.] Second, the court dismissed the insureds’ statutory bad faith claim, reasoning that they failed to allege sufficient facts in support of their claim that the carrier acted with an intent to underestimate the amount of damages that their home sustained. Citing Third Circuit case law (Brewer v. U.S. Fire Ins. Co.), the court observed that mere insinuations of bad faith cannot meet the Twombly/Iqbal pleading standards. Lastly the court ruled that the insureds did not state a plausible UTPCPL claim.
As such, the only remaining claim was the insureds’ breach of contract count against the carrier. Since the court was now without jurisdiction to hear the case, it remanded to state court for further proceedings.
Date of Decision: February 13, 2013
Merrill v. State Farm Fire and Casualty Co., No. 12-1328, 2013 U.S. Dist. LEXIS 19660 (W.D. Pa. Feb. 13, 2013) (Lancaster, J.)