Winslow v. Progressive Specialty Ins. Co.

GREG WINSLOW, Plaintiff, v. PROGRESSIVE SPECIALTY INSURANCE COMPANY, INC.,d/b/a PROGRESSIVE DRIVE INSURANCE, Defendant.

CIVIL ACTION NO. 3:18-CV-1094

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

December 12, 2018

(Judge Sylvia H. Rambo)

MEMORANDUM

Here the Court considers Defendant's Motion to Dismiss (Doc. 5) which seeks dismissal of five of the six counts contained in Plaintiff's Complaint (Doc. 1-1). The action arises from a dispute between Plaintiff Greg Winslow ("Winslow" "Plaintiff") and Defendant Progressive Specialty Insurance Company, Inc., d/b/a Progressive Drive Insurance ("Progressive" "Defendant") regarding a claim for collision benefits under Winslow's policy with Progressive. (Doc. 1-1.) In his Complaint, Winslow asserted claims for breach of contract, bad faith, fraud and misrepresentation, declaratory judgment, specific performance, and unjust enrichment. (Id. at 6-13.)

I. Background

Winslow was insured by Progressive when he was involved in an automobile accident on April 4, 2016. (Doc. 1-1 ¶ 6.) He alleges that he was operating his Volkswagen Jetta when another vehicle forced him from the road and caused his vehicle to strike a telephone pole, resulting in the total loss of the vehicle. (Id. ¶¶ 3, 6.) Winslow submitted a claim to Progressive for the damage to his vehicle. (Id. ¶ 7.) Progressive denied the claim on April 12, 2016. (Id. ¶ 10; Doc. 6 at 3.)

Winslow filed his Complaint in the Court of Common Pleas of Luzerne County on March 8, 2018. (Doc. 1-1.) Progressive removed the case to this Court on May 25, 2018. (Doc. 1.) After Progressive filed the pending Motion to Dismiss and supporting brief on June 1, 2018 (Docs. 5, 6), Plaintiff filed a motion to remand and motion to stay proceedings pending resolution of the motion to remand (Docs. 8, 9). The Court granted the motion to stay by Order of June 15, 2015. (Doc. 11.) On July 24, 2018, the Court denied the motion to remand and lifted the stay of proceedings. (Docs. 16, 17.) Plaintiff filed his opposition brief to the Motion to Dismiss on August 7, 2018. (Doc. 19.) Defendant did not file a reply brief and the time for doing so has passed. Therefore, this matter is ripe for disposition.

With the pending motion, Progressive argues that all but the breach of contract claim must be dismissed because Winslow does not allege facts to support his other claims. (Doc. 6 at 4.) Winslow maintains that all claims are properly pled. (Doc. 19 at 7.) Progressive also maintains that Plaintiff's request for attorney fees in his breachof contract claim must be stricken. (Doc. 6 at 19.) Winslow does not respond to this argument.

II. Discussion

A. Motion to Dismiss Standard¹

Pursuant to Federal Rule of Civil Procedure 12(b)(6), the reviewing court may dismiss a complaint for "failure to state a claim upon which relief may be granted." Detailed pleading is not required--"Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give fair notice of what the . . . claim is and the grounds upon which it rests,' Conley v. Gibson, 355 U.S. 41, 47 . . . (1957)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the Court noted that, although Rule 8 does not require detailed factual allegations, "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (citing Twombly, 550 U.S. at 555). Iqbal also reiterated the Twombly guidance that "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of theelements of a cause of action will not do.' 550 U.S. at 555 . . . Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.' Id. at 557." 556 U.S. at 678.

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." [Twombly, 550 U.S.] at 570, 127 S. Ct. 1955. 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. Id., at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id., at 557, 127 S. Ct. 1955 (brackets omitted).

556 U.S. at 678.

Pursuant to Twombly and Iqbal, the Court of Appeals for the Third Circuit set out three steps required of a court reviewing the sufficiency of a claim in Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016).

First, it must "tak[e] note of the elements [the] plaintiff must plead to state a claim." Iqbal, 556 U.S. at 675, 129 S.Ct. 1937. Second, it should identify allegations that, "because they are no more than conclusions, are not entitled to the assumptions of truth." Id. at 679, 129 S.Ct. 1937. See also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) ("Mere restatements of the elements of a claim are not entitled to the assumption oftruth." (citation and editorial remarks omitted)). Finally, "[w]hen there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

809 F.3d at 787. Importantly, a Plaintiff is not required to establish the elements of a prima facie case--"the post-Twombly pleading standard 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s].'" Connelly, 809 F.3d at 789 (quoting Twombly, 550 U.S. at 556); see also Phillips v. City of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).

Finally, the district court must extend the plaintiff an opportunity to amend before dismissing a complaint unless amendment would be inequitable or futile. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002).

B. Defendant's Motion

As noted above, Progressive seeks dismissal of all counts contained in Winslow's Complaint except Count I for Breach of Contract. (Doc. 5 ¶¶ 6-18.) Progressive also moves to strike Winslow's claim for attorney fees related to his breach of contract claim. (Id. ¶¶ 19-20.)

1. Bad Faith

Progressive first contends that the Complaint fails to assert sufficient factual allegations to support Winslow's statutory bad faith claim. (Doc. 6 at 6.) Winslowavers that his Complaint adequately states a claim for bad faith. (Doc. 19 at 13.) The Court concludes Winslow has not pled sufficient facts to proceed pursuant to 42 Pa. C.S. § 8371.

An action for bad faith in Pennsylvania is governed by 42 Pa. C.S. § 8371 which provides:

In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:

(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.

(2) Award punitive damages against the insurer.

(3) Assess court costs and attorney fees against the insurer.

42 Pa. C.S. § 8371.

The statute does not define what constitutes bad faith but Pennsylvania courts, the Third Circuit Court of Appeals, and decisions from district courts within the Third Circuit provide ample guidance. "The term 'bad faith' under section 8371 concerns 'the duty of good faith and fair dealing in the parties' contract and the manner in which an insurer discharged . . . its obligation to pay of a loss in the first party claim context.'" Berg v. Nationwide Mut. Ins. Co., Inc., No. 12 MDA 2008, 44 A.3d 1164, 1176 (Pa. Super. 2012) (quoting Toy v. Metrolpolitan Life Ins. Co., 928 A.2d 186, 199(Pa. 2007)) (alteration in original). A panel of the Court of Appeals for the Third Circuit summarized the relevant framework for considering an insurance bad faith claim under Pennsylvania law in Treadways LLC v. Travelers Indem. Co., 467 F. App'x 143 (3d Cir. 2012) (not precedential).

"Bad faith" under Pennsylvania's bad faith statute--42 Pa. Const. Stat. § 8371, which provides a remedy in an action under an insurance policy--is defined as "any frivolous or unfounded refusal to pay proceeds of a policy." J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir. 2004) (quoting Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994)). A valid cause of action for bad faith requires "clear and convincing evidence . . . that the insurer: (1) did not have a reasonable basis for denying benefits under the policy; and (2) knew or recklessly disregarded its lack of a reasonable basis in denying the claim." Id. Under the "clear and convincing" standard, "the plaintiff [must] show 'that the evidence is so clear, direct, weighty and convincing as to enable a clear conviction, without hesitation, about whether or nor the defendants acted in bad faith.'" Id. (quoting Bostick v. ITT Hartford Grp., Inc., 56 F. Supp. 2d 580, 587 (E.D. Pa. 1999)). Though we have found that bad faith may be found in circumstances other than an insurer's refusal to pay, "[a] reasonable basis is all that is required to defeat a claim of bad faith." Id. See also Frog, Switch & Mfg. Co. V. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999).

Treadways, 467 F. App'x at 146-47.

The Pennsylvania Superior Court has observed that "[b]ad faith claims are fact specific and depend on the conduct of the insurer vis a` vis the insured." Condio v. Erie Ins. Exchange, 899 A.2d 1136, 1143 (Pa. Super. 2006) (citing Williams v.Nationwide Ins. Co., 750 A.2d 881, 887 (Pa. Super. 2000)). Bad faith is not restricted to an insurer's denial of benefits...