Moravia Motorcycle, Inc. v. Allstate Ins. Co.
| Decision Date | 09 May 2022 |
| Docket Number | Civil Action No. 21-1274 |
| Citation | 602 F.Supp.3d 762 |
| Parties | MORAVIA MOTORCYCLE, INC., Thomas McKinney and Deborah McKinney, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Pennsylvania |
Bradley G. Olson, Jr., Law Offices of Bradley G. Olson, Jr., Esquire, New Castle, PA, for Plaintiff.
Joseph A. Hudock, Jr., Summers, McDonnell, Hudock, Guthrie & Skeel, Pittsburgh, PA, for Defendant.
Plaintiffs Moravia Motorcycle, Inc. and Thomas and Deborah McKinney bring this action against Defendant Allstate Insurance Company ("Allstate") in which they seek benefits under an insurance policy issued by Allstate to Moravia Motorcycle for damage to their motor home. In addition to a breach of contract claim, Plaintiffs have also alleged claims of negligence and bad faith in violation of 42 Pa. C.S. § 8371.
Pending before the Court is Allstate's partial motion to dismiss in which it seeks dismissal of Plaintiffs’ negligence and bad faith claims. For the reasons that follow, Allstate's motion will be denied.1
Plaintiffs commenced this action in July 2021 in the Court of Common Pleas of Lawrence County, Pennsylvania. Allstate subsequently removed the action to this Court on the basis of diversity jurisdiction and filed a partial motion to dismiss the non-contractual claims (ECF No. 3 ), which was granted in part. Plaintiffs filed an Amended Complaint (ECF No. 17 ), and Allstate has again moved to dismiss the non-contractual claims (ECF No. 18 ). The motion has been fully briefed (ECF Nos. 19, 22).
Plaintiffs own a 2008 Coachman motor home which they insured with Allstate. They parked their motor home on property they owned in Chesterfield, South Carolina and winterized it as instructed by the owner's manual. During the month of April 2020, multiple storms passed through the area, causing a tree branch to fall on top of the motor home, damaging its roof and seal. Because of the damage to the seal, rainwater and other moisture penetrated into the motor home, causing damage to the interior and Plaintiffs’ property located inside. (Am. Compl. ¶¶ 7-12.)
Plaintiffs allege that in seeking insurance coverage for their motor home, they relied on the expertise and representations of Allstate and were advised that the policy they obtained would provide coverage for this kind of loss. (Id. ¶¶ 13-15.)
Plaintiffs notified Allstate about the damage to their motor home. (Am. Compl. ¶ 16.) Allstate initially sent a claims adjuster who concluded that the damage was a covered loss under the policy, so Plaintiffs took the motor home to a qualified mechanic to perform repairs. Then, without explanation, Allstate sent a second claims adjuster to reevaluate the loss. The second adjuster concluded there was no coverage and Allstate denied payment to Plaintiffs. As a result, the repairs were never performed, resulting in additional damage to the motor home, including electrical issues, decay of the interior walls and mold. Allstate has continued to deny coverage under the policy. (Id. ¶¶ 17-25.)
Plaintiffs seek the policy limits of $100,000, plus damages for bad faith and punitive damages.
"Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds that plaintiff's claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc. , 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "This requires a plaintiff to plead "sufficient factual matter to show that the claim is facially plausible," thus enabling "the court to draw the reasonable inference that the defendant is liable for misconduct alleged." Id. (quoting Fowler v. UPMC Shadyside , 578 F.3d 203, 210 (3d Cir. 2009) ). While the complaint "does not need detailed factual allegations ... a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. See also Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
As noted by the Third Circuit in Malleus v. George , 641 F.3d 560, 563 (3d Cir. 2011), a 12(b)(6) inquiry includes identifying the elements of a claim, disregarding any allegations that are no more than conclusions and then reviewing the well-pleaded allegations of the complaint to evaluate whether the elements of the claim are sufficiently alleged.2
In Count I, Plaintiffs allege that Allstate was negligent by misrepresenting the status of the policy, failing to fully advise them of the actual terms of the coverage, failing to train its agents about coverage under the policy, failing to inform its agents as to the proper manner by which policyholders should be advised about the scope and extent of insurance coverage and failing to inspect the motor home in a workmanlike manner. Allstate seeks dismissal of this claim under the gist of the action doctrine and for lack of specificity.
The parties do not dispute that Plaintiffs’ claims must be analyzed under Pennsylvania law. "A federal court sitting in diversity must apply state substantive law and federal procedural law." Chamberlain v. Giampapa , 210 F.3d 154, 158 (3d Cir. 2000) (citation omitted).
In Bruno v. Erie Ins. Co. , 630 Pa. 79, 106 A.3d 48 (2014), the plaintiff homeowners sued their insurer, Erie Insurance Co., after its adjuster and engineer came to their home to investigate mold that plaintiffs found in their basement and told them that the mold was harmless and had no health consequences. Plaintiffs followed this advice but later suffered health problems from mold exposure and the house eventually became uninhabitable. Erie paid plaintiffs $5,000 that was owed under the insurance policy for testing and attempted remediation of the mold but denied coverage for Plaintiff's other claimed losses. The plaintiffs then brought an action against Erie for negligence regarding the assurances made by Erie. Erie asserted that their negligence claim was barred by the gist of the action doctrine.
As noted by the Pennsylvania Supreme Court in Bruno:
The general governing principle which can be derived from our prior cases is that our Court has consistently regarded the nature of the duty alleged to have been breached, as established by the underlying averments supporting the claim in a plaintiff's complaint, to be the critical determinative factor in determining whether the claim is truly one in tort, or for breach of contract. In this regard, the substance of the allegations comprising a claim in a plaintiff's complaint are of paramount importance, and, thus, the mere labeling by the plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract—i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract—then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant's violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort.
106 A.3d at 68 (footnotes and citations omitted).
As the Bruno court observed, "the mere existence of a contract between two parties does not, ipso facto , classify a claim by a contracting party for injury or loss suffered as the result of actions of the other party in performing the contract as one for breach of contract." Id. at 69. Finding that plaintiffs were not limited to a breach of contract claim, the Pennsylvania Supreme Court held that while Erie had contractual obligations under its policy, the plaintiffs’ allegations were not that it failed to perform these duties, but rather, it acted in a negligent manner during the course of fulfilling these duties by making false assurances and certain recommendations upon which plaintiffs relied. "Consequently, these allegations of negligence facially concern Erie's alleged breach of a general social duty, not a breach of any duty created by the insurance policy itself." Id. at 71.
Here, Allstate argues that its only duties to Plaintiffs, and their corresponding entitlement to benefits, were created by the policy, not by the larger social policies embodied in the law of torts. It contends that in the absence of any insurance policy, there would be no relationship between the parties and, therefore, no duty to pay benefits. Allstate distinguishes Bruno, on which Plaintiffs rely, because Plaintiffs essentially allege that Allstate or its unnamed agents negligently failed to advise them of the terms and coverage provided under the policy. As Allstate argues, all of these duties arose pursuant to the contractual relationship between the parties, not from some separate societal duty. The Court agrees that these allegations do not state a negligence claim against Allstate.
Plaintiffs also contend that Allstate owed them a duty to inspect the motor home in a workmanlike manner and that Allstate's failure to do so led to additional damages (electrical issues, decay of the interior walls and mold) and the complete loss of the motor home. See Bruno , 106 A.3d at 63 ().
The fatal flaw in Plaintiffs’ argument, however, is that unlike Bruno , the...
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