Lauf v. Allstate Ins. Co.
| Decision Date | 01 April 2022 |
| Docket Number | Civil Action 22-65 |
| Parties | BRIAN LAUF, et al., Plaintiffs v. ALLSTATE INSURANCE COMPANY, Defendant |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Brian Lauf and Rebecca Marhoefer agreed to resolve their disputed claims against Allstate through binding arbitration with an agreed-upon high and low range. After both parties executed the arbitration agreement but before the arbitration hearing Allstate offered to settle the case within the agreed-upon range established in the arbitration agreement. Now Mr. Lauf and Ms. Marhoefer claim that Allstate breached the terms of their insurance contract and that this "low-ball" offer was made in bad faith. But, as Allstate rightly argues both claims require significantly more than what Mr. Lauf and Ms. Marhoefer have alleged. As a result, the Court grants Allstate's motion to dismiss.
On September 26, 2019, Ms. Marhoefer was a passenger in the car Mr. Lauf was driving when they were involved in a rear-end accident in Philadelphia. At the time of that accident, Mr Lauf and Ms. Marhoefer were covered by an Allstate automobile insurance policy that provided for underinsured motorist benefits in the amount of $100, 000 per person and $300, 000 per accident. The driver of the other vehicle was covered by an insurance policy with liability limits of $15, 000 per person and $30, 000 per occurrence. Mr. Lauf and Ms. Marhoefer recovered the entirety of the $30, 000 from the other driver's policy, $15, 000 each, and also filed a claim with Allstate to recover under their underinsured motorist coverage.
Mr. Lauf and Ms. Marhoefer subsequently filed suit against Allstate in the Court of Common Pleas. Doc. No. 10-8. The parties, however, agreed to resolve this dispute through binding arbitration and the decision of a sole neutral arbitrator. Doc. No. 10-7, at 1. As especially relevant to the present suit, the parties signed an agreement establishing the terms of that binding arbitration ("Arbitration Agreement"). Doc. No. 10-7. Among other terms, the Arbitration Agreement set predetermined high and low ranges for both Mr. Lauf s and Ms. Marhoefer's damages. Mr. Lauf would receive at least $5, 000 and at most $65, 000 from Allstate while Ms. Marhoefer would receive at least $5, 000 and at most $85, 000 from Allstate. Doc. No. 10-7, at 1. The low of $5, 000 for each was in addition to the $15, 000 Mr. Lauf and Ms. Marhoefer each already received from the other driver's policy, meaning they would each receive a total of at least $20, 000. Id. at 2, Allstate agreed to prepay the first $5, 000 within 30 days of the parties executing the Arbitration Agreement. Id. at 1. Mr. Lauf and Ms. Marhoefer agree that they each received this payment.
After the parties signed the Arbitration Agreement but before the actual arbitration hearing, Allstate offered an additional $5, 000 to each Mr. Lauf and Ms. Marhoefer in exchange for settling the dispute and avoiding the arbitration hearing. Mr. Lauf and Ms. Marhoefer rejected the offer and proceeded to the arbitration hearing. The arbitrator awarded Mr. Lauf $50, 000 and Ms. Marhoefer $87, 671.42. When reduced by the $15, 000 each had already received from the other driver's policy, Mr. Lauf would receive $35, 000 from Allstate (minus the $5, 000 Allstate had paid up front) and Ms. Marhoefer would receive $62, 671.42 (minus the $5, 000 Allstate had paid up front). Thus, the awards to both Mr. Lauf and Ms. Marhoefer fell within the range established by the Arbitration Agreement.
In spite of that outcome, Mr. Lauf and Ms. Marhoefer subsequently sued Allstate, and Allstate removed the case to federal court. Once in federal court, Mr. Lauf and Ms. Marhoefer filed an amended complaint alleging two claims against Allstate: breach of contract (the insurance contract) and bad faith. Allstate moves to dismiss their complaint for failure to state a claim. Fed. R. Civ. P 12(b)(6).
In a complaint, a plaintiff must set out "a legally cognizable right of action" and "enough facts" to make that cause of action "plausible on its face." Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (internal quotation marks omitted). On a motion to dismiss for failure to state a claim, the Court takes all well-pleaded facts as true and draws all inferences in the light most favorable to the plaintiff. Vorchheimer v. Philadelphian Owners Ass % 903 F.3d 100, 105 (3d Cir. 2018). The Court does not decide whether the plaintiffs story is what happened, just whether it plausibly could have happened. Iqbal v. Ashcroft, 556 U.S. 662, 678 (2009). In doing so, the Court considers the complaint and documents attached to it or "integral" to it, like a contract in a breach-of-contract claim. Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014). "What is critical is whether the claims in the complaint are 'based' on an extrinsic document and not merely whether the extrinsic document was explicitly cited." Id. (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).[1]
Allstate moves to dismiss Mr. Lauf s and Ms. Marhoefer's complaint in its entirety, arguing that they have failed to allege a cognizable claim for breach of contract and that their bad faith claim is plainly prohibited by the terms of the Arbitration Agreement and also legally deficient. Mr, Lauf and Ms. Marhoefer oppose Allstate's motion. The Court concludes that Mr. Lauf and Ms. Marhoefer have failed to adequately plead both claims. Thus, the Court grants Allstate's motion to dismiss.
Mr. Lauf and Ms. Marhoefer first claim that Allstate breached the terms of their insurance contract. This is based on the allegations that Allstate was contractually obligated to investigate their claims and make a reasonable offer for their suffered injuries, which Mr. Lauf and Ms. Marhoefer allege Allstate failed to do. Doc, No. 5, Am. Compl. ¶¶ 34-36. In addition, Mr. Lauf and Ms. Marhoefer allege that Allstate violated the implied common law duty of good faith and fair dealing. Id. ¶ 37.
Allstate moves to dismiss this breach of contract claim for two reasons: (1) Mr. Lauf s and Ms. Marhoefer's claim is legally infirm because it fails to identify any clause in the insurance contract that Allstate breached and (2) Mr. Lauf s and Ms. Marhoefer's claim is legally infirm because Mr. Lauf and Ms. Marhoefer have suffered no damages.
"To state a claim for breach of contract under Pennsylvania law, a plaintiff must allege three things: (1) the existence of a contract, including its essential terms; (2) a breach of duty imposed by the contract; and (3) resultant damages." Alport v. Gen. Land Partners, Inc., 574 F.Supp.2d 491, 502 (E.D. Pa. 2008); see also Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C, 137 A.3d 1247, 1258 (Pa. 2016).
Allstate concedes that a contract existed between the parties. Doc. No. 9, at 18. Nevertheless, it is difficult for the Court to evaluate whether Allstate violated any of the insurance contract's "essential terms" because Mr. Lauf and Ms. Marhoefer did not attach the contract to their complaint or briefing. While certainly "integral" to their breach of contract claim, Schmidt, 770 F.3d at 249, without it, the Court is left with only the allegations in Mr. Lauf s and Ms. Marhoefer's complaint.
Making no more than conclusory statements, Mr. Lauf and Ms. Marhoefer allege that Allstate breached the contract because it failed to investigate plaintiffs' claims and failed to make a reasonable offer. They do not allege any facts that should have been examined but only that "Allstate[] had more than sufficient time and opportunity to fully investigate Plaintiffs UIM claims but failed to do so" and that "[t]he investigation . . . was conducted in a dilatory manner." Doc. No. 5, Am. Compl. ¶¶ 25, 27. But this does not set out "enough facts," or any facts for that matter, to make the claim "plausible on its face." Twombly, 550 U.S. at 570. These are merely "conclusory statements" which "do not suffice." Iqbal, 556 U.S. at 678.
Likewise, Mr. Lauf and Ms. Marhoefer's claim that Allstate failed to make a reasonable offer does not plead sufficient facts to survive a motion to dismiss. They allege that "Allstate made one arbitrary, low-ball offer of $5, 000 for each Plaintiff to resolve their claims." Doc. No. 5, Am Compl. ¶ 21. This seems to be tied into another claim, namely, that the "low-ball" $5, 000 offer was "in breach of. . .[the] duty of good faith and fair dealing." Id. ¶ 23. Again, however, these are conclusory statements. Mr, Lauf and Ms. Marhoefer do not explain how this breached Allstate's contractual obligations with any supporting factual allegations or even by referring to the contract provision Allstate supposedly breached. Thus, again, Mr. Lauf and Ms. Marhoefer failed to state sufficient facts to make this claim plausible on its face.
Without any plausible claim for breach of contract, Mr. Lauf s and Ms. Marhoefer's claim for breach of the covenant of good faith and fair dealing must also fail. Temple Univ. Hosp., Inc. v. Grp. Health, 7«c., No. 05-cv-102, 2006 WL 146426, at *6 (E.D. Pa. Jan. 12, 2006); accord Blue Mtn. Mushroom Co., Inc. v. Monterey Mushroom, Inc., 246 F.Supp.2d 394, 400-01 (E.D. Pa. 2002).
Mr Lauf and Ms. Marhoefer have also failed to plead facts supporting their claims that they suffered damages. Mr. Lauf and Ms. Marhoefer agreed to proceed with binding arbitration rather than litigate their claim and the arbitrator awarded them $35, 000 and $62, 671.42, respectively.[2] Court have repeatedly held that "[a]n action for breach of an...
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