262 F. Supp. 3d 200
E.D. Pa.2017Background
- Robert W. Toner (plaintiff) was injured in a March 25, 2015 motorcycle-automobile collision in Florida; medical expenses exceed $3,000,000 and he recovered $12,000 from the tortfeasor’s insurer.
- Toner submitted an underinsured motorist (UIM) claim under his parents’ GEICO auto policy (policy provided $300,000 UIM per vehicle, stacking to $900,000 for three vehicles).
- GEICO has not paid the claimed UIM benefits; Toner sued GEICO in Pennsylvania state court for breach of contract and bad faith under 42 Pa. Cons. Stat. § 8371; GEICO removed to federal court and moved to dismiss under Rule 12(b)(6).
- GEICO’s defenses at dismissal: (1) Toner was not a resident of his parents’ household (so not an insured), (2) an explicit policy exclusion bars UIM recovery while occupying an owned vehicle not insured under the policy (alleged here), and (3) the bad-faith claim lacks sufficient factual allegations.
- The court viewed contested factual allegations (residency and motorcycle ownership) in Toner’s favor at the 12(b)(6) stage and declined to consider extrinsic exhibits not referenced in the complaint.
- Holding: breach of contract claim survives (plausible that Toner was a household member and that the exclusion may not apply because ownership of the motorcycle is disputed); bad-faith claim dismissed for failure to plead specific facts supporting § 8371 elements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Toner was an insured under parents’ GEICO policy (residency) | Toner resided in parents’ Huntingdon Valley household and was temporarily in Florida for rehab | Toner had lived in Florida for 18 months and was a Florida resident, so not a household member | Court: dispute of fact; plausible Toner was a household member — breach claim survives dismissal |
| Whether a policy exclusion bars UIM recovery because the motorcycle was an owned vehicle not listed on the policy | Toner alleges he was operating “a” motorcycle but does not allege ownership of it | GEICO asserts Toner owned the motorcycle, invoking the exclusion for owned but uninsured vehicles | Court: ownership disputed and not resolved on 12(b)(6); cannot dismiss breach claim on exclusion ground |
| Whether Toner stated a bad-faith claim under 42 Pa. Cons. Stat. § 8371 | GEICO improperly and abusively handled the claim (dilatory, failed to evaluate, failed to promptly offer payment, delayed arbitration) | GEICO contends the bad-faith allegations are conclusory and lack specific factual support | Court: bad-faith claim dismissed — allegations are conclusory and do not plead facts showing insurer lacked reasonable basis or acted knowingly/recklessly |
| Whether extrinsic documents submitted by GEICO may be considered on motion to dismiss | Toner relies on complaint allegations and policy language cited therein | GEICO submitted various documents (Oaths, registration, police report) | Court: may consider the insurance policy (complaint relies on it) but not other exhibits not referenced or public-record-appropriate; factual disputes remain for later resolution |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: conclusory allegations insufficient; complaint must state plausible claim)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard for antitrust and broadly adopted standard for Rule 12(b)(6))
- Santiago v. Warminster Twp., 629 F.3d 121 (3d Cir. 2010) (three-part pleading analysis under Iqbal/Twombly)
- Malleus v. George, 641 F.3d 560 (3d Cir. 2011) (describing method for identifying and evaluating well-pleaded facts versus conclusions)
- St. Paul Fire & Marine Ins. Co. v. Lewis, 935 F.2d 1428 (3d Cir. 1991) (residence in insurance-context requires consistent personal contact; physical presence factors)
- Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230 (3d Cir. 1997) (elements of bad-faith claim under Pennsylvania law require lack of reasonable basis and insurer’s knowledge or reckless disregard)