In Muth v. State Farm Fire & Casualty Company, the insured owned a fire and casualty insurance policy for his residential property. A fire eventually damaged the property, and the insurer’s claims adjuster then sent Plaintiff a letter admitting coverage and stating that a partial payment was enclosed with the letter. However, at the time of the suit, the insured had not been paid.
The insured filed a Complaint with counts for breach of contract and bad faith. The bad faith allegation claimed that the insurer (1) had no reasonable basis to deny the insured’s claim, (2) failed to conduct a reasonable investigation into the claim, (3) failed to attempt to come to a fair and reasonable settlement of the claim when the liability was clear and (4) failed to promptly provide a reasonable explanation for denial of the claim.
The court determined that the Complaint failed to allege sufficient facts to state a bad faith claim. It stated that all of the allegations were simply conclusory allegations. The insured attempted to persuade the court that he should have the right to prove, after discovery, that bad faith has occurred when an insurer has not paid a covered loss for over a year. However, the court rejected this assertion, stating that “discovery is not permitted as a way for a plaintiff to see if he has a cause of action.” The court therefore dismissed the insured’s bad faith allegation.
Date of Decision: September 22, 2010
Muth v. State Farm Fire & Cas. Co., Civil No. 1:cv-10-1487, United States District Court for the Middle District of Pennsylvania, 2010 U.S. Dist. LEXIS 99745 (Sept. 22, 2010) (Caldwell, J.)