Warren v. Donegal Mut. Ins. Co.

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DREW WARREN, Plaintiff, v. DONEGAL MUTUAL INSURANCE COMPANY and PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Defendants.

Civil No. 1:22-CV-01309

United States District Court, M.D. Pennsylvania

May 4, 2023

MEMORANDUM

JENNIFER P. WILSON United States District Judge.

Before the court is a motion to dismiss the complaint. Plaintiff Drew Warren (“Warren”) was hit by an automobile driven by an underinsured motorist and seeks insurance coverage from the insurance companies named as defendants in this action. Defendants, Donegal Mutual Insurance Company (“Donegal”) and Pennsylvania National Mutual Casualty Insurance Company (“Penn National”) argue that the complaint should be dismissed for insufficient service of process, improper venue, and failure to state a claim. (Docs. 8, 11.) For the reasons explained below, the court will deny the motion to dismiss. Additionally, the court will grant Warren leave to effectuate proper service.

Factual Background and procedural History

On the night of September 3, 2021, Warren was riding a bicycle in Avalon, New Jersey. (Doc. 1, ¶ 13.) While riding through an intersection, he was hit by an automobile driven by an underinsured third-party motorist (“Tortfeasor”) who did not see him. (Id.) As a result of the injuries Warren sustained from the accident, he was airlifted to Atlantic City Trauma Center. (Id. ¶ 2.) Warren avers that the accident caused him “serious and permanent injuries,” which require ongoing medical treatment. (Id.)

Warren alleges that, at the time of the accident, he had an insurance policy with Penn National, which included Underinsured Motorist (UIM) coverage up to $100,000. (Id. ¶ 16.) Warren's parents, with whom he lived at the time of the accident, live in Pennsylvania and have an insurance policy with Donegal.^[1] (Id. ¶ 11.) Their policy provided UIM coverage up to $600,000 per person. (Id. ¶ 12.) Warren asserts that by being a resident relative of his parents, who are the Donegal policyholders, he was eligible for stacking coverage under their policy. (Id. ¶ 3.) Defendant Donegal does not contest this claim. By virtue of Warren residing with his parents, this stacking coverage entitled Warren to UIM benefits under his parent's policy. (Id.)

On or about May 27, 2022, Warren received Tortfeasor's insurance policy limit of $25,000. (Doc. 15, p 5).^[2] On June 16, 2022, Warren sent a demand for the UIM policy limits to Defendants to cover the rest of Warren's expenses. (Doc 1, ¶¶ 33, 40.) After Defendants denied the demands for UIM coverage, Warren commenced this action on August 19, 2022. (Doc. 15, p. 3.) In the complaint, Warren alleged that Tortfeasor's negligence caused the accident. (Doc. 1, ¶¶ 51, 61.) Warren alleges that Tortfeasor operated his vehicle in violation of the Motor Vehicle Code; failed to observe and yield the right of way; and knew Warren was in danger yet did not exercise care. (See id.; Doc. 15, p. 2.) The complaint also alleges that Tortfeasor's State Farm insurance paid Warren, suggesting fault on behalf of Tortfeasor. (Id.)

Warren served Defendants using certified mail on or about September 1, 2022. (See Docs. 3, 4.) On September 20, 2022, Penn National filed a motion to dismiss. (Doc. 8.) Donegal filed a motion to join Penn National's motion to dismiss on September 29, 2022, which this court granted.^[3] (Docs. 11, 12.) In Defendants' motion to dismiss, they argue that the complaint should be dismissed, pursuant to Fed.R.Civ.P. 12(b) for three reasons. (Doc. 8, p. 3.) First, they argue that Warren failed to effectuate valid service under Fed.R.Civ.P. 12(b)(5). (Id.) Next, they argue that under Fed.R.Civ.P. 12(b)(3) the insurance contract's forum selection clause renders the United States District Court for the Middle District of Pennsylvania an improper venue. (Id.) Finally, they argue that Warren failed to plead a plausible claim under Fed.R.Civ.P. 12(b)(6). (Id.)

In Warren's opposition brief, he concedes that service was improper and requests that the court grant him leave to effectuate valid service. (Doc. 15, p. 7.) Warren, however, disputes Defendants' arguments regarding venue and the sufficiency of his pleading under Rule 12(b)(6). (Id.)

Jurisdiction

This court has jurisdiction under 28 U.S.C. § 1332 because the parties are citizens of different states and, based on the allegations in the complaint, the amount in controversy exceeds $75,000.

Discussion

Defendants bring three arguments to dismiss Warren's complaint under Rule 12(b). (Doc. 8, p. 2). First, they argue that service was insufficient under Rule 12(b)(5) due to Warren's use of certified mail-a method not permitted under state or federal rules when serving process on a corporation. (Id.) Warren concedes this point, and requests leave to effectuate proper service. (Doc. 15, p. 8.) Second, Defendants argue under Rule 12(b)(3) that the language of the insurance policies impose a binding forum selection clause which renders this venue improper. (Doc. 8, p. 9.) Warren counters that the language of the clause permits the action to proceed in this court. (Doc. 15, p. 9.) Finally, Defendants argue that the facts alleged in the complaint are generic, and that the allegations of negligence are conclusory and thus fail to meet pleading standards under Rule 12(b)(6). (Doc. 8, p. 7.) In response, Warren claims that the pleadings adequately state a plausible claim that meets the pleading standard. (Doc 15, p. 11.)

A. Insufficient Service

In Defendants' motion to dismiss, they first argue that service through certified mail is insufficient for effectuating service of process upon a corporate entity. (Doc. 8, p. 7.) They maintain that Warren's reliance on certified mail and failure to send a waiver is ineffective under the state and federal rules governing service. (Id.) Warren concedes this point. He asks the court to strike his prior attempts at service and grant him leave to effectuate proper service. (Doc. 15, p. 1.)

Rule 12(b)(5) allows for dismissal for insufficient service of process. Fed.R.Civ.P. 12(b)(5). The party alleging the insufficiency of service “bears the burden of proof on that issue.” Grand Ent. Group v. Star Media Sales, 988 F.2d 476, 488 (3d Cir.1993).

When evaluating a motion to dismiss for insufficient service of process, district courts possess “broad discretion.” See Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir.1992). Often, courts are reluctant to dismiss an action when a plaintiff fails to effect proper service but acts in good faith. Ramada Worldwide Inc. v. Shriji Krupa, LLC, No. 07-2726 (JLL) 2013 WL 1903295, at *5 (D.N.J. Apr.17, 2013). Instead, “courts will elect to quash service and grant plaintiff additional time to properly serve the defendant.” Id.

Rule 12(b)(5) requires effective service. Fed.R.Civ.P. 12(b)(5). Rule 4(e) defines the allowable ways to provide effective service in a judicial district of the United States. See Fed.R.Civ.P. 4(e). Under the federal rules, service may be effectuated by following the rules of the state in which the district court is located or where service is made. Id. Unless a plaintiff obtains a waiver, Rule 4 does not allow service by mail. See id. Moreover, the Pennsylvania Rules of Civil Procedure do not authorize service by mail, including certified mail. See Pa. R. Civ. P. 400 (requiring that “original process shall be served within the Commonwealth only by the Sheriff”); See also Kucher v. Fisher, 167 F.R.D. 387, 399 (E.D. Pa. 1996) (citing Cahill v. Schults, 643 A.2d 121, 125 (Pa. 1994) (holding that process delivered through certified mail is improper)). Accordingly, in this case, Warren properly concedes that service by certified mail was improper.

Because service was ineffective, the next task is to determine whether good cause exists to grant plaintiff an extension of time to effectuate service. Cunningham v. New Jersey, 230 F.R.D. 391, 393 (D.N.J. 2005) (citing Petrucelli v. Bohringer and Ratzinger, GMBH, 46 F.3d 1298, 1305 (3d Cir. 1995)); see also Fed. R. Civ. Pro. 4(m) (providing that courts may grant additional time for a plaintiff who failed to deliver proper service beyond the statutory time limit if good cause for the failure can be shown). If there is good cause, the court “must extend time for service and the inquiry is ended.” Id. Absent good cause, a court has discretion whether to grant a plaintiff extended time or to dismiss the case without prejudice. Id.

In determining whether a plaintiff has shown good cause to warrant an extension to effectuate proper service, court should consider: “(1) reasonableness of plaintiff's efforts to serve, (2) prejudice to the defendant by lack of timely service, and (3) whether plaintiff moved for an enlargement of time to serve.” Cunningham, 230 F.R.D. at 393 (quoting MCI Telecomm. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1097 (3d Cir.1995)).

Here, although Warren relied on an improper method to service process, Defendants make no argument that Warren's use of mail was unreasonable. After failing to comply with the service requirements, Warren has been in communication with county sheriffs to obtain proper personal service. Moreover, Warren's counsel has made three attempts to confer with counsel for each Defendant on this matter to no avail. Warren has demonstrated that he acted reasonably in attempting to cure the deficiency. In addition, Defendants, whose counsel entered their appearances, were on notice of this action and filed a motion to dismiss. As a result, they will not be prejudiced if the court grants Warren leave to effectuate valid service. See Boley v. Kaymark, 123 F.3d 756, 759 (3d Cir.1997) (holding that prejudice occurs where plaintiff's delay limits defendant's ability to defend).

Given the good faith attempts...