In St. Clair v. State Farm Fire & Casualty Company, the court stated the following principles and legal conclusions:
- A plaintiff can recover attorney’s fees under the bad faith statute for a bad faith breach of an insurance contract, but cannot recover attorney’s fees for the simple breach of contract claim in the absence of bad faith, and claims for attorneys’ fees in such counts will be stricken.
- There is no claim for violation of a duty of good faith and fair dealing that can be pleaded outside a breach of contract claim, rather it is part of the breach of contract claim.
- Where an insured supports her breach of implied duty of good faith claim with the same allegations that she uses to support her statutory bad faith claim “the Third Circuit has held that ‘a party is not entitled to maintain an implied duty of good faith claim where the allegations of bad faith are “identical to” a claim for “relief under an established cause of action.”’” Because the insured supported her implied duty of good faith claim with allegations of bad faith that were identical to those used to support the statutory bad faith claim, the dismissed the action on this ground as well. [Note: It is clear that statutory bad faith and contractual bad faith may provide different remedies for the same conduct, so it is not clear if the court is stating that a breach of good faith claim untethered to a contract claim cannot stand because there is another cause of action to address that; or whether the court is stating that a breach of the contractual duty of good faith and fair dealing cannot stand if based on the same conduct as a statutory bad faith claim.]
- The Twombly Iqbal plausibility standard was met where the insured pleaded (i) she obtained a policy from the insurer that covered fire damages, (ii) she had a fire resulting in fire damage during the policy period, (iii) the insurer refused to pay the entire loss, (iv) that the insurer told her the loss was not covered but produced no evidence supporting that position, (v) that the insurer denied full payment while refusing to participate in the contractually required appraisal process on the basis that it did not have to participate in the appraisal process prior to agreeing to the scope of damage, contrary to the contract, (vi) that the insurer “fraudulently created values and assigned them to the covered losses to increase its own profitability, (vii) that the insurer accepted premiums intending not to pay out on covered losses; (viii) that the insurer denied the claim without proper investigation; and (ix) that the insurer “falsely misrepresented its responsibilities under the policy.”
- Compensatory and consequential damages are not available under the bad faith statute.
- Punitive damages are not available for a claim seeking to compel specific performance of the appraisal process under an insurance contract.
Date of Decision: May 6, 2015
St. Clair v. State Farm Fire & Cas. Co., CIVIL ACTION No. 15-0538, 2015 U.S. Dist. LEXIS 59117 (E.D. Pa. May 6, 2015) (Yohn, J.)