New Jersey: Bad Faith Claims Must Contain Factual Support For Insurer’s Reckless Disregard

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NEW JERSEY, April 3 – A New Jersey Federal Court has dismissed a bad faith claim filed by homeowners seeking coverage for property damage sustained  in a fire loss on January 12, 2016.   In Williams v. State Farm, U.S. District Judge Joseph H. Rodriquez found that the homeowners’ bad faith  allegations fell short of the factual support required under the Federal Rules of Civil Procedure.   The allegations were based around State Farm’s failure to pay the claim, but added little factual detail.

In granting State Farm’s motioin to dismiss, Judge Rodriguez wrote:

 

“While the lack of a reasonable basis may be inferred and imputed to an insurance company, there must be allegations of reckless indifference to facts or to proofs submitted by the insured… (quotations and citations omitted).  Plaintiffs reference a ‘reckless disregard for the rights of the Plaintiffs’ but do so in conclusory fashion, thereby leaving the Court to infer reckless indifference from the fact that Defendant denied coverage; however, the Court declines to make such an inference. Plaintiffs do not  provide sufficient factual allegations to suggest an absence of a reasonable basis on the part of Defendant for denying coverage. The mere allegation that Defendant’s denial of coverage inferentially establishes bad faith relies on the very speculation forbidden by Twombly and Iqbal. Accordingly, the Court dismisses Plaintiffs’ claim for bad faith without prejudice.

Having determined that Plaintiffs’ claim for breach of the duty of good faith and fair dealing is insufficiently pled and therefore is dismissed, the Court need not address whether Plaintiffs are entitled to punitive damages under that claim.”

Williams v. State Farm Fire & Cas. Ins. Co., No. 16-9028, 2017 U.S. Dist. LEXIS 50261 (D.N.J. Apr. 3, 2017) (Rodriguez, J.)

Unsubstantiated Claims of Poor UM/UIM Claims Handling Not Sufficient Bad Faith Pleading, Federal Judge Rules

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PITTSBURGH, Dec. 21 — An insured failed to sufficiently plead bad faith in the handling of his underinsured motorist coverage claim by State Farm Insurance Company,  a federal judge ruled Dec. 21 in granting the insurer’s motion to dismiss without prejudice.

Robert R. Mondron was injured as a passenger in an auto accident, which allegedly caused injuries including head neck and facial injuries and internal injuries.  The driver of the vehicle tendered his full liability limits of $110,000 under his own policy, and Mondron sought UIM benefits from his insurer, State Farm.

According to Mondron, State Farm  “failed to make a reasonable offer of settlement,” sued the insurer in the Allegheny County, Pa., Court of Common Pleas, alleging breach of contract, bad faith,  and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).

State Farm moved to dismiss the bad faith claims after removing the case to the  Western District of Pennsylvania.  In granting the motion, U.S. District Judge Cathy Bissoon held that dismissal of the bad faith claim is proper:

 “The gravamen of Plaintiff’s bad faith claim is that the Defendant unreasonably denied UIM [underinsured motorist] benefits to which Plaintiff is entitled under the terms of his parents’ insurance policy.  As noted, he alleges that Defendant ‘unreasonably delayed’ the handling of his claim, ‘inadequately investigated’ the claim, ‘failed to make a reasonable offer of settlement’ and ‘knew of or recklessly disregarded its lack of reasonable basis in evaluating Plaintiff’s underinsured motorist claim.’  These types of conclusory allegations are insufficient to state a plausible basis for relief.”

Judge Bissoon also found that Mondron’s Pennsylvania Unfair Insurance Practices Act (UIPA) claims should also be dismissed, holding “these allegations are nothing more than redundant and conclusory re-assertions of Plaintiff’s prior bad faith  allegations…Plaintiff’s generic invocation of statutory language is insufficient to satisfy his federal pleading burden.” Judge Bissoon stated. She similarly dismissed UTPCPL claims, all without prejudice.

Robert R. Mondron v. State Farm Mutual Automobile Insurance Co., No. 16-412, W.D. Pa.; 2016 U.S. Dist. LEXIS 17604

Iqbal Used To Dismiss Bad Faith Claims Against Foremost

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SCRANTON, Aug. 5 — A federal magistrate judge has granted Foremost Insurance’s motion to dismiss a bad faith claim on the grounds it did not meet minimum fact pleading requirements under federal law.  The judge found that the Plaintiff’s reliance solely on the allegation of a breach of contract count and the bare language of the Pa. Bad Faith Statute were not enough to allow the claim to survive.

Plaintiff Beata Rogowski bought a policy of  homeowners insurance from Foremost Insurance Co. and filed a claim for fire damage sustained in her home.  After disagreements arose during the claim, Rogowski sued Foremost in U.S. District Court for the Middle District of Pennsylvania, claiming that Foremost did not properly handle adjustment of the claim.  She alleged both a breach of contract count and a bad faith count.

Foremost filed a motion to dismiss both claims, but Magistrate Judge Martin C. Carlson granted the motion only as to the bad faith count, finding it not to have been properly plead.

Judge Carlson wrote:

“In reaching this conclusion, we note that [the bad faith] count of the plaintiff’s complaint consists of little more than a paraphrase of the statute, coupled with a factual assertion that the defendant has breached the insurance policy in ways which are undefined, but allegedly willful and malicious. Upon consideration, we conclude that these ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice’ to state a claim under [42 Pa. Consolidated Statutes Annotated] §8371. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). In this bad faith context, we require more than conclusory, bare-bones allegations that an insurance company acted in bad faith to sustain such a claim. Since Rogowski has not met these pleading requirements in her current, spare complaint the bad faith claim set forth in Count II of the complaint should be dismissed. However, mindful of the fact that plaintiffs often should be afforded an opportunity to further amend and articulate their bad faith claims, it is recommended that this count of the complaint be dismissed without prejudice to the filing of an amended complaint which meets the pleading standards prescribed by law for such claims.”

Judge Carlson also found the complaint not sufficiently specific to allow him at that point to dismiss the breach of contract count on grounds it was time-barred:

“Given the legal and factual ambiguity of the plaintiff’s complaint, an ambiguity which prevent[s] us from determining whether there are any barriers to the application of the contractual terms which call for the filing of a lawsuit within one year of the alleged loss, we believe that the plaintiff should be required to provide a more definite statement of this claim before the Court is tasked with assessing the legal merits of this motion to dismiss. Therefore, it is recommended that the plaintiff be directed pursuant to [Federal Rule of Civil Procedure] Rule 12(e) to submit a more definite statement of this claim. Upon receipt of this more definite statement the Court could then determine whether that claim is time-barred.”

Beata Rogowski v. Foremost Insurance Co., No. 15-1606, M.D. Pa.; 2016 U.S. Dist. LEXIS 95930 (Carlson, Dist. Mag. Judge)