Wade Clark Mulcahy LLP

<p style="text-align: justify;">In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2020/08/Harris-v.-Allstate.pdf">Harris v. Allstate</a>,</em> the plaintiff brought an action against her insurer, alleging the insurer breached the terms of the policy and engaged in bad faith conduct. By way of brief background, it was alleged that Allstate issued a policy to plaintiff. It was further alleged that a covered “peril” occurred, which caused “direct physical damage” to the plaintiff’s property. Plaintiff alleged that although she promptly notified Allstate of the loss, Allstate refused to pay for the damage. Allstate filed a motion to dismiss in respect of plaintiff’s bad faith claim, arguing that plaintiff failed to allege sufficient facts to plausibly demonstrate Allstate committed bad faith in handling the claim.</p>
<p style="text-align: justify;">The Eastern District of Pennsylvania focused its analysis on the section of the complaint where plaintiff alleged the basis for the bad faith claim. In her complaint, plaintiff averred, <em>inter alia</em>, Allstate sent “correspondence falsely representing that Plaintiff’s loss [was not] caused by a peril insured against under the Policy”, failed to “objectively and fairly evaluate plaintiff’s claim”, failed to “fairly negotiate the amount of the loss”, and failed to “complete a prompt and thorough investigation” before denying coverage. The court found these averments to be “conclusory statements unsupported by facts”, as the plaintiff failed to provide adequate explanations for the averments. Accordingly, the court granted Allstate’s motion to dismiss, holding that the complaint’s “bald assertions and conclusory legal statements” were insufficient to state a claim for which relief could be granted.</p>
<p style="text-align: justify;">This case offers support that a bad faith claim may not survive, in federal court, if the plaintiff fails to allege sufficient factual detail of the alleged bad faith. As such, insurers should keep a watchful eye towards a complaint’s allegations to see if this is a basis to dismiss any bad faith claims.</p>
<p style="text-align: justify;">Thanks to Rachel Thompson for her contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>