Clapps v. State Farm Ins. Cos.

Decision Date18 March 2020
Docket NumberCIVIL ACTION NO. 19-3745
Citation447 F.Supp.3d 293
Parties Sandra CLAPPS, Plaintiff, v. STATE FARM INSURANCE COMPANIES, Defendant.
CourtU.S. District Court — Eastern District of Pennsylvania

Anthony Joseph Diulio, Jonathan Wheeler PC, Philadelphia, PA, for Plaintiff.

Yolanda Konopacka Desipio, Bennett, Bricklin & Saltzburg, Blue Bell, PA, for Defendant.

MEMORANDUM

JONES, II, District Judge.

I. BACKGROUND

Sandra Clapps ("Plaintiff"), initiated this insurance dispute against State Farm Fire and Casualty Company1 ("Defendant"), by filing a Complaint in the Philadelphia County Court of Common Pleas on July 16, 2019. On August 20, 2019, Defendant removed the case to this Court. (ECF No. 1.) Presently before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 3.) Plaintiff filed a Response in Opposition to Defendant's Motion to Dismiss on September 10, 2019. (ECF No. 4.) A brief summary of the pertinent facts alleged in Plaintiff's Complaint is set forth below.

Defendant issued Plaintiff an insurance policy (the "Policy")2 covering Plaintiff's property located at 15 Wisler Avenue, Chalfont, Pennsylvania 18914 (the "Property"). (Compl. ¶ 3.) On or about September 2, 2018, Plaintiff's Property sustained physical loss and damage, believed by Plaintiff "to be the result of a peril insured against under the Policy." (Id. at ¶ 4.) Plaintiff promptly notified Defendant of the loss. (Id. at ¶ 5.) However, Defendant refused and has continued to refuse to pay Plaintiff monies owed for the covered loss and damage to the Property. (Id. at ¶ 6.) Based on these and other allegations, Plaintiff alleges that Defendant breached the parties' insurance contract, acted in bad faith, and violated Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), Unfair Insurance Practices Act ("UIPA"), and Unfair Claims Settlement Practices ("UCSP") regulations.

II. STANDARD OF REVIEW

In ruling on a Rule 12(b)(6) motion, courts must " ‘accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.’ " Phillips v. Cty. of Allegheny , 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd. , 292 F.3d 361, 374 n.7 (3d Cir. 2002) ). However, " ‘threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’ " Fowler v. UPMC Shadyside , 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). "To prevent dismissal, all civil complaints must [ ] set out sufficient factual matter to show that the claim is facially plausible." Fowler , 578 F.3d at 210 (internal quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "The plausibility standard ... asks for more than a sheer possibility that a defendant has acted unlawfully." Id. It is the "defendant [who] bears the burden of demonstrating that a plaintiff has failed to state a claim upon which relief can be granted." McDonough v. State Farm Fire & Cas. Co. , 365 F. Supp. 3d 552, 557 (E.D. Pa. 2019) (citing Hedges v. United States , 404 F.3d 744, 750 (3d Cir. 2005) ).

III. DISCUSSION
A. Breach of Contract

Count I of Plaintiff's Complaint alleges that Defendant breached the parties' insurance contract. (Compl. ¶¶ 8–12.) Ordinary contract law principles apply to interpretation of insurance policies because "insurance policies are considered contracts." Transamerican Office Furniture v. Travelers Prop. & Cas. , 222 F. Supp. 2d 689, 691 (E.D. Pa. 2002). To state a claim for breach of contract under Pennsylvania law, a plaintiff is required to plead: " (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract[,] and (3) resultant damages.’ " Orange v. Starion Energy PA, Inc. , 711 F. App'x 681, 683 (3d Cir. 2017) (quoting Ware v. Rodale Press, Inc. , 322 F.3d 218, 225 (3d Cir. 2003) ).

Under Federal Rule of Civil Procedure 8(a), "a plaintiff [may] assert the existence of an express, written contract either by setting it forth verbatim in the complaint, or the plaintiff may attach a copy as an exhibit, or plead it according to its legal effect." Pierce v. Montgomery Cty. Opportunity Bd., Inc. , 884 F. Supp. 965, 970 (E.D. Pa. 1995) (internal quotation marks omitted). Accordingly, it is not fatal to Plaintiff's breach of contract claim that the Policy was not attached to the Complaint. See Transp. Int'l Pool, Inc. v. Ross Stores, Inc. , No. 6-1812, 2009 WL 1033601, at *3 (E.D. Pa. Apr. 15, 2009) (acknowledging that a plaintiff asserting a breach of contract claim is not required to attach the contract to the complaint). And in any event, Defendant attached a copy of the Policy to its motion. (Mot. Dismiss Ex. B.) There is therefore no dispute regarding the existence of a contract between the parties. See Kofsky v. Unum Life Ins. Co. of Am. , No. 13-5647, 2014 WL 4375725, at *1 n.1 (E.D. Pa. Sept. 2, 2014) ("We will consider the content of the Policy, even though it was provided by [the defendant] as part of its Motion and not by [the plaintiff] as part of his Complaint.").

Defendant argues that Plaintiff's breach of contract claim should be dismissed because the Complaint does not identify the terms of the Policy applicable to Plaintiff's claim, does not allege facts establishing that it breached a duty owed to Plaintiff under the Policy, and does not relate Plaintiff's alleged damages to any contract terms allegedly breached by Defendant. (Mot. Dismiss Br. 3.) However, Defendant does not support its argument with citations to any analogous cases, and the relevant case law from this circuit weighs heavily against Defendant's position. As the court explained in Transport Int'l Pool, Inc. :

When a plaintiff pleads a contract according to its legal effect, the complaint does not need to resort to formulaic recitation of the elements of the alleged contract; rather, the complaint must allege facts sufficient to place the defendant on notice of the contract claim in such a way that the defendant can reasonably respond.

2009 WL 1033601, at *3. In another case, the court expressly rejected the same arguments raised by Defendant here and held that the plaintiff's complaint adequately alleged breach of an insurance contract:

First, [the plaintiffs] have pleaded the existence of a contract with State Farm, namely the insurance policy, and they have alleged that an essential term of this policy was that State Farm was to cover losses to the insured property. Second, they have alleged that State Farm breached this contract when it failed to pay benefits due under the policy. Third, [the plaintiffs] have alleged actual loss or injury, as set forth by the estimates attached to the Complaint.

Yeoman v. State Farm Fire & Cas. Co. , No. 5:17-cv-4159, 2018 WL 2363608, at *2 (E.D. Pa. May 24, 2018). And in Kofsky v. Unum Life Ins. Co. of Am. , the court found that although an insured's allegations of damages "lack[ed] detail," the allegations concerning damages were sufficient to overcome a motion to dismiss because the plaintiff "claim[ed] that he suffered damages as a result of [the defendant's] alleged breach." 2014 WL 4375725, at *2.

Here, Plaintiff provided the location of the Property, and alleged that the Property suffered damage insured against under the Policy. (Compl. ¶¶ 3–4.) Plaintiff pleads that she promptly and timely notified Defendant of the covered losses, but that Defendant has refused to pay her monies owed for the damage. (Id. at ¶¶ 5–6, 10.) And Plaintiff expressly alleges that she suffered damages due to Defendant's breach of its duties under the insurance contract, i.e., that Plaintiff has not received "funds sufficient to bring [her] home to [its] pre-loss condition." (Id. at ¶¶ 6–7, 10.)

"[A]ccept[ing these] factual allegations as true" and "constru[ing] the complaint in the light most favorable to the plaintiff," as the Court must do at this stage of the litigation, it is clear that Plaintiff has adequately stated a claim for breach of contract. Phillips , 515 F.3d at 233. Although the Complaint may not recite each of the essential terms of the parties' contract, it sufficiently places Defendant on notice of the claim such that it can reasonably respond. See Transp. Int'l Pool , 2009 WL 1033601, at *3. Plaintiff has alleged the same level of detail that courts in this district have repeatedly found sufficient to state a breach of contract claim, and this Court declines to depart from those holdings here. See Yeoman , 2018 WL 2363608, at *2 ; Kofsky , 2014 WL 4375725, at *2. Accordingly, Defendant's Motion to Dismiss with respect to Count I of Plaintiff's Complaint is denied.

B. Bad Faith

Count II of Plaintiff's Complaint alleges that Defendant's conduct constituted statutory bad faith. (Compl. ¶¶ 13–16.) In Pennsylvania, a claim of bad faith brought against an insurer is recognized by 42 Pa.C.S.A. § 8371. Given the absence of an explicit definition of "bad faith" in § 8371, Pennsylvania courts have provided a definition. See Terletsky v. Prudential Prop. & Cas. Ins. Co. , 437 Pa.Super. 108, 649 A.2d 680, 688 (1994). Bad faith in the insurance context is a " ‘frivolous or unfounded refusal to pay proceeds of a policy[, evidencing] a breach of a known duty (i.e., good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith.’ " Smith v. State Farm Mut. Auto. Ins. Co. , 506 F. App'x 133, 136 (3d Cir. 2012) (quoting...

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