Odgers v. Progressive N. Ins. Co.

• Decision Date: 23 June 2015
• Docket Number: No. 3:15cv329.,3:15cv329.
• Citation: 112 F.Supp.3d 286
• Parties: Kerry ODGERS, Plaintiff v. PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

112 F.Supp.3d 286

Kerry ODGERS, Plaintiff

v.PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant.

No. 3:15cv329.

United States District Court, M.D. Pennsylvania.

Signed June 23, 2015.

Joseph P. Comerota, Comerota Law, P.C., Wilkes–Barre, PA, for Plaintiff.

Robert E. Dapper, Jr., Dapper Baldasare Benson Behling & Kane PC, Pittsburgh, PA, for Defendant.

MEMORANDUM

JAMES M. MUNLEY, District Judge.

Plaintiff Kerry Odgers (hereinafter "plaintiff") asserts a state law breach of contract claim and several tort claims arising from an automobile accident with Defendant Progressive Northern Insurance Company's (hereinafter "Progressive") insured. Before the court for disposition is Progressive's motion to dismiss certain claims within plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons that follow, the court will grant in part and deny in part Progressive's motion to dismiss.

Background

On January 18, 2013, Progressive's insured, Rodrigo Solera, struck plaintiff with his automobile. (Doc. 1–1, Compl. (hereinafter "Compl.") ¶¶ 14–15). Specifically, Solera's 2011 Chevrolet Cruz ran over plaintiff as she walked within a pedestrian crosswalk. (Id. ) After Solera ran over plaintiff the first time, he placed his automobile in reverse and ran over plaintiff a second time. (Id. ¶ 20). Plaintiff screamed and pleaded with Solera to stop. (Id. ¶ 21). Solera, however, placed his automobile in drive and ran over plaintiff a third time, causing plaintiff severe injuries including a spiral fracture

of the left tibia/fibula and multiple cuts, abrasions and swelling in her hips, ankles and feet. (Id. ¶¶ 21–22; Doc. 6–1, state court compl. against Solera ¶ 11).

At the time of the accident, plaintiff resided alone, did not own an automobile, and was not an insured on any other automobile insurance policy. (Compl. ¶¶ 24– 37). Accordingly, on February 13, 2013, plaintiff informed Progressive, Mr. Solera's automobile insurance company, that she would be filing a first-party claim for benefits. (Id. ) Plaintiff intended to file her claim with Progressive pursuant to 75 PA. CONS.STAT. ANN. § 1713(a), which allows plaintiff, a pedestrian, to recover first-party benefits from an insurance policy on any motor vehicle involved in her accident.

On February 22, 2013, Progressive responded that plaintiff would be required to complete an application for benefits, submit proof of residency, and sign a broad medical authorization release of information prior to the processing of any first-party benefits claim. (Id. ¶¶ 38–39). Plaintiff submitted her first medical bill to Progressive on March 19, 2013. (Id. ¶ 43). Progressive, however, refused to process plaintiff's first-party medical benefits claim. (Id. ¶¶ 44–64). As such, plaintiff initiated a state court action against Progressive and Progressive's insured on April 18, 2013. (Id. ¶ 44).

Plaintiff's state court complaint contained all of the information Progressive requested to process plaintiff's first-party benefits claim. (Id. ¶ 45). Additionally, on May 10, 2013, plaintiff provided Progressive with three (3) months of her pay stubs, which indicated her residential address. (Id. ¶ 49). Progressive, however, engaged in a pattern and practice of dilatory tactics, including feigning ignorance of plaintiff's residence, resulting in the failure to approve plaintiff's first-party benefits claim. (Id. ¶¶ 51–64, 83). In fact, Progressive failed to approve or deny plaintiff's first-party benefits claim for over a year until a Court of Common Please of Lancaster County Judge issued an order in the underlying state court action compelling Progressive to produce its claims manuals and claims investigation notes. (Id. ¶¶ 79–82). Rather than produce these materials, on May 2, 2014, Progressive "performed an about-face and announced that it would now accept plaintiff's claim for first-party benefits and begin paying the same." (Id. ¶ 83).

Based on these factual allegations, plaintiff filed a five-count complaint in the Court of Common Pleas of Lackawanna County on January 16, 2015. (Doc. 1, Notice of Removal ¶ 1). Plaintiff asserts the following claims: Count I–Breach of Contract; Count II–Bad Faith under 42 PA. CONS.STAT. ANN. § 8371 ; Count III–Breach of Fiduciary Duty; Count IV–Negligence; and Count V–Negligence Per Se.

Progressive removed the case to this court on February 16, 2015. Subsequent to removal, Progressive moved to dismiss Counts II–V of the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The parties have briefed their respective positions and the matter is ripe for disposition.

Jurisdiction

The court has jurisdiction pursuant to the diversity statute, 28 U.S.C. § 1332. Plaintiff Kerry Odgers is a citizen of Pennsylvania. (Compl. ¶ 1). Defendant Progressive is incorporated under the laws of the State of Wisconsin with its principal place of business in Ohio. (Doc. 1, Notice of Removal ¶ 6). Additionally, the amount in controversy exceeds $75,000. Because complete diversity of citizenship exists among the parties and the amount in controversy exceeds $75,000, the court has jurisdiction over the case. See 28 U.S.C. § 1332 ("district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States [.]"); 28 U.S.C. § 1441 (A defendant can generally remove a state court civil action to federal court if the federal court would have had original jurisdiction to address the matter pursuant to the diversity jurisdiction statute). As a federal court sitting in diversity, the substantive law of Pennsylvania applies to the instant case. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir.2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ).

Legal Standard

Progressive filed a motion to dismiss specific counts within plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The court tests the sufficiency of the complaint's allegations when considering a Rule 12(b)(6) motion. All well-pleaded allegations of the complaint must be viewed as true and in the light most favorable to the non-movant to determine whether, " ‘under any reasonable reading of the pleadings, the plaintiff may be entitled to relief.’ " Colburn v. Upper Darby Twp., 838 F.2d 663, 665–66 (3d Cir.1988) (quoting Estate of Bailey by Oare v. Cnty. of York, 768 F.2d 503, 506 (3d Cir.1985) ). The plaintiff must describe " ‘enough facts to raise a reasonable expectation that discovery will reveal evidence of’ [each] necessary element" of the claims alleged in the complaint. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Moreover, the plaintiff must allege facts that "justify moving the case beyond the pleadings to the next stage of litigation." Id. at 234–35. In evaluating the sufficiency of a complaint the court may also consider "matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 2 (3d Cir.1994) (citations omitted). The court does not have to accept legal conclusions or unwarranted factual inferences. See Curay–Cramer v. Ursuline Acad. of Wilmington, Del., Inc., 450 F.3d 130, 133 (3d Cir.2006) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997) ).

Discussion

Progressive's motion to dismiss raises the following three issues: 1) does Pennsylvania's Motor Vehicle Financial Responsibility Law (hereinafter "MVFRL"), 75 PA. CONS.STAT. ANN. § 1797, preempt plaintiff's bad faith claim under 42 PA. CONS.STAT. ANN. § 8371 ; 2) does the "gist of the action" doctrine preclude plaintiff from asserting tort claims and 3) does plaintiff's breach of fiduciary claim fail as a matter of law. We will address each issue in turn.

1. Bad Faith

Plaintiff contends Progressive violated Pennsylvania's insurance bad faith statute, 42 PA. CONS.STAT. ANN. § 8371 (hereinafter " section 8371"), and seeks punitive damages against Progressive. Progressive asserts plaintiff cannot seek punitive damages because Pennsylvania's MVFRL, which does not allow punitive damages, preempts plaintiff's section 8371 bad faith claim. At issue, therefore, is whether the MVFRL provides the exclusive remedy for plaintiff's bad faith claim.

Section 8371 is a general statute authorizing recovery for an insurance company's bad faith towards an insured. It provides for several remedies upon a finding of bad faith: (1) an award of "interest on the amount of the claim" at a rate equal to "the prime rate of interest plus 3%"; (2) an award of "punitive damages against the insurer"; and/or (3) an assessment of "court costs and attorney fees against the insurer." 42 PA. CONS.STAT. ANN. § 8371.

The MVFRL is a more specific statute requiring automobile insurers to provide medical benefit coverage "for reasonable and necessary medical treatment and rehabilitative services ..." after a motor vehicle accident.¹

75 PA. CONS.STAT. ANN. § 1712(1). "In the event an insurer is found to have acted with no reasonable foundation in refusing to pay [first-party benefits] when due, the insurer shall pay, in addition to the benefits owed and the interest thereon, a reasonable attorney fee based upon actual time expended." Id. § 1798(b). Additionally, if a court finds the insurer's conduct wanton, that insurer "shall be subject to a payment of treble damages to the injured party." Id. § 1797(b)(4). Thus, under Pennsylvania's general insurance bad faith statute, section 8371, plaintiff may seek punitive damages, which are not available under the MVFRL.

The Third Circuit Court of Appeals, in predicting how the Pennsylvania Supreme Court would interpret these...