Barry v. Nationwide Mut. Ins. Co.
298 F. Supp. 3d 826
D. Maryland2018Background
- On July 27, 2014 Amanda Barry was injured in a crash; the tortfeasor's GEICO policy offered its $30,000 limits and Plaintiffs had a $100,000 UIM policy with Nationwide.
- Plaintiffs' counsel sent a Section 19-511 notice to Nationwide on August 12, 2016 requesting consent to accept GEICO's offer; Nationwide did not respond until November 30, 2016 (allegedly after the 60‑day statutory deadline).
- Nationwide later offered $33,924 and declined further negotiation; Plaintiffs allege Nationwide did not dispute medicals but gave no explanation for its valuation.
- Amanda filed an administrative complaint with the Maryland Insurance Administration (MIA); the MIA did not find in Plaintiffs’ favor, and Plaintiffs then sued in state court asserting breach of contract (Count I) and statutory bad‑faith (Md. Code Cts. & Jud. Proc. § 3‑1701) (Count II); the case was removed to federal court.
- Nationwide moved to dismiss Count II under Rule 12(b)(6); the court evaluated whether the Amended Complaint plausibly alleged lack of good faith, considering statutory timelines (Section 19‑511) and Maryland caselaw distinguishing contract claims from bad‑faith claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs plausibly alleged lack of good faith under § 3‑1701 | Nationwide missed the 60‑day § 19‑511 response deadline and also acted dilatorily, failed to explain valuation, refused to negotiate — collectively showing bad faith | Delay alone cannot support a bad‑faith claim; plaintiffs only allege insufficient payment which is a contract claim | Court: Plaintiffs plausibly pleaded bad faith — delay beyond § 19‑511’s 60 days can be sole basis under § 3‑1701(f) and here delay is pleaded plus additional bad‑faith allegations, so dismissal denied |
| Whether delay can be the sole basis for bad faith when a statutory response period exists | § 3‑1701(f) allows delay to be the sole basis if it exceeds a statutory/regulatory time period; Nationwide exceeded § 19‑511’s 60 days | Delay can never (or rarely) by itself support bad faith; plaintiffs rely only on delay | Court: § 3‑1701(f) permits delay to be sole basis where insurer missed a statutory time period; at pleading stage assumed § 19‑511 deadline missed |
| Whether dispute over amount paid can be the sole basis for bad faith | Plaintiffs allege more than just an amount dispute (delay, no explanation, refusal to negotiate), so amount alone is not the sole theory | A mere disagreement over the extent of payment is contract law only and cannot support § 3‑1701 claim | Court: Correct that amount alone cannot solely support bad faith, but plaintiffs pleaded other actionable facts; claim survives dismissal |
| Pleading deficiencies and party identification (Sean Barry) | Plaintiffs’ Amended Complaint (sloppily) names both Amanda and Sean but mostly treats Amanda as plaintiff; parties seek relief for both | Nationwide did not move to dismiss Sean for misjoinder or lack of clarity | Court: Although pleadings are sloppy and inconsistent, sufficient notice exists and court will not sua sponte dismiss Sean at this stage |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for federal pleadings)
- Bell Atlantic v. Twombly, 550 U.S. 544 (pleading must raise claim above speculative level)
- All Class Const., LLC v. Mutual Ben. Ins. Co., 3 F. Supp. 3d 409 (D. Md. 2014) (totality‑of‑circumstances factors for insurer good faith)
- Cecilia Schwaber Tr. Two v. Hartford Acc. & Indem. Co., 636 F. Supp. 2d 481 (D. Md. 2009) (good‑faith inquiry and insurer duties in coverage disputes)
- Bierman Family Farm, LLC v. United Farm Family Ins. Co., 265 F. Supp. 3d 633 (D. Md. 2017) (insurer’s failure to pay benefits is ordinarily a contract remedy; bad faith requires more)
- State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995) (illustrative authority on totality‑of‑circumstances bad‑faith review)