Conclusory Allegations of Bad Faith Against Insurer Insufficient to Survive Motion to Dismiss (PA)
Recently, in Patrick A. Kline and Sharon L. Kline v. Progressive Specialty Insurance Company, the Middle District of Pennsylvania considered whether the factual averments in the plaintiffs, Patrick Kline (“P. Kline”) and Sharon Kline’s (“S. Kline”) (P. Kline and S. Kline collectively “Kline”) complaint were sufficient to overcome Progressive Specialty Insurance Company’s (“Progressive”) partial motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).
By way of brief background, P. Kline was involved in a motor vehicle accident with Victor Mowen (“Mowen”). At the time of the accident, Kline was insured under an auto policy issued by Progressive. Ultimately, Kline settled with Mowen for the maximum amount of Mowen’s auto insurance policy. Soon thereafter, P. Kline submitted an underinsured motorist claim (“UIM”) with Progressive, as the settlement was allegedly insufficient to cover P. Kline’s injuries. After Progressive disclaimed coverage, Kline filed the instant action against Progressive alleging claims for breach of contract, bad faith, and unfair claim settlement practices.
In support of its motion to dismiss, Progressive first argued that Kline failed to state a bad faith claim upon which relief can be granted. In pertinent part, Kline alleged in its complaint that Progressive “delayed paying [Kline its] policy proceeds for unknown reasons”, forced Kline to pursue litigation to resolve its claim, “engaged in deceptive acts”, “made false statements” to Kline “for the purposes of creating an apparent reason” to deny Kline’s claim, and “made oppressive demands” of Kline to deny payment of Kline’s claim. In consideration of 42 Pa.C.S. § 8371 through the lens of the Court’s well-established standard of review, the Court determined Kline’s complaint consisted of “bare-bones conclusory allegations” of bad faith. As the Court held the complaint failed to make any real factual averments, the Court dismissed Kline’s claim for bad faith without prejudice. Although, as a matter of law, the Court was not required to grant Kline leave to amend its complaint, the Court granted Kline leave to amend its bad faith claim since it is common practice in the Middle District of Pennsylvania for courts to permit a plaintiff’s to revise its complaint where its bad faith claim is dismissed for failure to state a claim upon which relief can be granted.
In addition, Progressive argued Kline’s claim for unfair claim settlement practices should be dismissed because neither Pennsylvania’s Insurance Practices Act (“UIPA”), nor Pennsylvania’s unfair claim settlement practices regulations allow for a private cause of action. In reliance on Pennsylvania case law, the Court agreed with Progressive’s proposition that there is no private cause of action under UIPA or for the regulations governing unfair claim settlement practices. Accordingly, the Court dismissed Kline’s unfair claim settlement practices claim with prejudice. Further, the Court also accepted Progressive’s argument that Kline’s breach of contract claim should be dismissed to the extent it seeks attorneys’ fees. In doing so, the Court reasoned that “absent express statutory authorization, clear agreement between the parties, or a clear exception”, attorneys’ fees are unavailable in a breach of contract claim, as under Pennsylvania law, litigants generally bear the responsibility for their own costs and attorneys’ fees. The Court ultimately, held that Kline’s prayer for attorneys’ fees should be stricken form its complaint. Ultimately, this case is a reminder of impact motions to dismiss can have on litigation in federal courts, and the premium courts place on well-pled complaints.
Thanks to Lauren Berenbaum for her contribution to this post. Please email Vito A. Pinto with any questions.