Smith v. State Farm Mutual Automobile Insurance
506 F. App'x 133
| 3rd Cir. | 2012Background
- Smith appeals a Rule 12(b)(6) dismissal of two counts of a three-count complaint against State Farm for UIM bad faith and UTPCPL claims.
- Feb. 24, 2010 Smith injured in an automobile collision with Griffaton; Griffaton’s liability policy was $15,000, Smith had State Farm UIM up to $45,000.
- State Farm assigned an adjuster Oct. 27, 2010; insurer requested extensive pre-accident and documentation; eventual consent to Griffaton settlement and waiver of subrogation on Dec. 2, 2010.
- Throughout 2011, State Farm repeatedly sought authorization to obtain pre-accident records; Smith demanded full $45,000 UIM payment and provided medical/billing information; initial offer of $21,000 made Apr. 13, 2011, later increased to $32,225 by Aug. 25, 2011.
- State Farm paid $21,000 in Apr. 2011; negotiation continued; Smith filed a three-count complaint in Nov. 2011; district court dismissed Counts I and II (bad faith and UTPCPL); Count III stayed/remanded.
- On appeal, court applies plausibility standard and affirms dismissal, finding no justiciable bad-faith or UTPCPL claims based on the pleaded facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the § 8371 bad-faith claim is pled with plausible facts | Smith asserted a breach of good faith and unfair settlement practices | State Farm contends the complaint is conclusory and lacks factual detail | Count I dismissed; no plausible bad-faith allegations |
| Whether the UTPCPL claim has private standing based on justifiable reliance | Smith alleged deceptive practices by State Farm | No alleged actions were pursued on basis of improper conduct; reliance not pleaded | Count II dismissed for lack of justifiable reliance; no private UTPCPL standing |
Key Cases Cited
- Nw. Mut. Life Ins. Co. v. Babayan, 430 F.3d 121 (3d Cir. 2005) (bad-faith standard requires clear and convincing evidence of lack of reasonable basis and knowledge/reckless disregard)
- Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994) (defining Pennsylvania bad-faith duty and high standard of proof)
- Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218 (3d Cir. 2000) (two-part test for bad-faith denial of benefits)
- Condio v. Erie Ins. Exch., 899 A.2d 1136 (Pa. Super. Ct. 2006) (clarifies that mere low damages estimate does not prove bad faith)
- Johnson v. Progressive Ins. Co., 987 A.2d 781 (Pa. Super. Ct. 2009) (normal dispute over value of UIM claim not per se bad faith)
- Hunt v. U.S. Tobacco Co., 538 F.3d 217 (3d Cir. 2008) (private UTPCPL standing requires justifiable reliance)
- Weinberg v. Sun Co., 777 A.2d 442 (Pa. 2001) (justifiable reliance required for UTPCPL standing)
- Schwartz v. Rockey, 932 A.2d 885 (Pa. 2007) (public-private nexus for UTPCPL standing requirements)