LISA CARR v. TRAVELERS HOME AND MARINE INSURANCE COMPANY
NO. 23-1993
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
October 31, 2023
MEMORANDUM
Presently before the Court is Defendant Travelers’ Motion to Dismiss the Complaint. (“Mot.,” ECF No. 4.) For the following reasons, the Motion is granted. This case involves a settlement dispute between Lisa Carr and her insurer, Travelers Home and Marine Insurance Company (“Travelers“). After being injured in a car accident, Carr filed a claim with Travelers under her automobile insurance policy for underinsured motorist (“UIM“) benefits. The parties engaged in an extensive back and forth over the course of more than two years in which Travelers ultimately made three settlement offers, each of which was rejected by Carr and her counsel. The parties’ dispute was eventually submitted to arbitration, and Carr was awarded $100,000, the maximum UIM benefit under her policy. Carr filed a complaint in the Court of Common Pleas of Philadelphia County against Travelers, alleging common law bad faith, a statutory bad faith claim under
I. BACKGROUND
In her complaint, Plaintiff alleges the following:
On September 20, 2017, Plaintiff Lisa Carr was in the front passenger seat of a Honda Civic that was rear-ended by a Hyundai station wagon traveling at a high rate of speed. (“Compl.,” ECF No. 1-7, ¶ 6.) As a result of the collision, Carr sustained several serious and permanent injuries. (Id. ¶ 7.) Following the collision, Carr made a claim against the driver of the Hyundai and the driver‘s insurer, Geico. (Id. ¶ 13.) On August 8, 2019, Carr finalized a settlement with Geico for $15,000, the benefit limit under that policy. (Id. ¶¶ 10, 18.)
At the time of the accident, Carr, together with her sister Amy Carr, had UIM coverage with defendant Travelers that provided $100,000 in benefits.1 (Id. ¶¶ 11-12.) Following her settlement with Geico, Carr filed a claim with Travelers for UIM benefits under her policy. (Id. ¶ 19.) On June 6, 2019, Carr‘s counsel, Adam Soll, discussed Carr‘s injuries with Mark
$20,000, of which Geico had already paid $15,000. (Id. ¶ 24.) Soll disputed Travelers’ evaluation and represented that he would provide Travelers with “additional support” regarding Carr‘s injuries. (Id. ¶ 25.)
On January 6, 2020, Soll mailed Scott a narrative report prepared by a neurologist that addressed Carr‘s medical history, injuries, and the findings of his physical examination of Carr, as well a separate document prepared by Soll containing descriptions of Carr‘s injuries and their impact on her life. (Id. ¶¶ 27-29.) Two days later, Soll and Scott spoke over the phone again. (Id. ¶ 31.) Scott asked Soll what Carr was “looking for” and Soll reiterated that Carr was seeking the policy limit of $100,000. (Id.) Scott stated that he would “talk to his people” and get back to Soll. (Id.)
On January 31, 2020, Joseph Birmingham, an attorney for Travelers, called Soll and represented that he had been assigned to legally represent Travelers in Carr‘s claim. (Id. ¶ 43.) After discussing the claim, Birmingham stated that “it appeared to have value” and represented that he would discuss Carr‘s case with Scott and get back to Soll to discuss it further. (Id.) On March 16, 2020, Birmingham mailed Soll a letter acknowledging his representation of Travelers and expressing an intention to schedule a taking of Carr‘s statement under oath once he had the opportunity to review her medical records. (Id. ¶ 44.)
Throughout 2020 and into 2021, Carr received medical care from four different doctors, consulted with a fifth, and participated in a course of physical therapy. (Id. ¶¶ 46-51.) On January 27, 2021, Soll mailed Birmingham more of Carr‘s medical records along with a narrative report authored by one of Carr‘s treating physicians detailing his diagnosis of her condition and his recommendation for treatment. (Id. ¶¶ 52-53.) Soll also attached a letter reiterating Carr‘s demand that her claim be settled for $100,000 and requesting that Birmingham respond within thirty days. (Id. ¶ 54.) Neither Birmingham nor any other representative of Travelers responded to Soll‘s letter. (Id. ¶¶ 55-57.)
On April 8, 2021, Soll left Birmingham a voice message requesting a response to his letter. (Id. ¶ 58.) On April 15, Birmingham informed Soll that he was unable to respond to the settlement demand until he had an opportunity to speak with Scott and represented that he would do so and call Soll by the following Monday, April 19. (Id. ¶ 59.) After not receiving a response by Monday, Soll emailed Birmingham on Tuesday, April 20, requesting a response. (Id. ¶ 60.) The same day, Birmingham told Soll over the phone that he was still waiting to hear from Scott and would call Soll back on Thursday, April 22. (Id. ¶ 61.) Soll did not hear from Birmingham on Thursday and sent him and email asking for an explanation regarding Travelers continued delay in evaluating the claim.” (Id. ¶ 62.)
On May 5, 2021, Soll spoke over the phone with Scott during which Scott increased Travelers’ settlement offer from $5,000 to $40,000. (Id. ¶ 63.) During that call, Scott stated that Carr‘s claim “posed a danger” and could be found to have a
On June 16, 2021, Soll sent Travelers a written demand to arbitrate the claim. (Id. ¶ 77.) Keith Mason, who had assumed responsibility for representing Travelers from Birmingham, responded to Soll on June 18 and requested that Carr be examined under oath and be given an independent medical examination and represented that these matters “would be expeditiously scheduled.” (Id. ¶ 78.) An examination under oath was eventually scheduled for August 31 and an independent medical examination for September 30.2 (Id. ¶¶ 80, 82.) On September 9, after Mason had completed his examination of Carr under oath, Mason stated to Soll over the phone that he believed Carr was credible and would make a good impression before a panel of arbitrators. (Id. ¶ 87.)
On October 5, Travelers, through Mason, produced a medical report from Dr. Richard Levenberg, who had performed the scheduled medical examination on Carr. (Id. ¶¶ 88.) In that report, Dr. Levenberg assessed Carr to be “at maximum medical improvement without the need for ongoing testing or treatment.” (Id. ¶ 88.) Dr. Levenberg also requested certain of Carr‘s MRI films; however, Travelers never delivered those films to Dr. Levenberg. (Id. ¶¶ 88-90.) On October 10, Mason stated to Soll that Travelers was “resolved to defend the claim” based on Dr. Levenberg‘s diagnosis. (Id. ¶ 91.) Over the next two weeks, Soll sent Mason updated medical records as well as a medical cost projection, which projected Carr‘s future care to cost $327,586.33. (Id. ¶¶ 92-95.)
On October 26, 2021, Chris Carling assumed responsibility for handling Carr‘s claim on behalf of Travelers. (Id. ¶ 96.) Carling sent an email to Soll the next day increasing Travelers
offer to $50,000, which was rejected by Carr. (Id. ¶¶ 97-98.) He also attached a report by Dr. David Lobas, a neurologist, who suggested that Carr did not suffer a concussion based on his review of her records. (Id. ¶¶ 99-100.) This was in contrast to the opinions of Carr‘s treating physicians. (Id. ¶ 100.)
On November 3, 2021, the arbitration of Carr‘s claim was conducted before a panel of three arbitrators. (Id. ¶ 102.) The panel ultimately awarded Carr $500,000, of which Travelers paid $100,000, the limit under Carr‘s policy. (Id. ¶¶ 106-07.)
On April 25, 2023, Carr filed a complaint with the Court of Common Pleas of Philadelphia County, asserting three causes of action against Travelers: common law bad faith (“Count I“), statutory bad faith,
II. LEGAL STANDARD
When considering a motion to dismiss under
Carr maintains that “[c]ourts will grant a motion to dismiss ‘only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.‘” (“Resp.,” ECF No. 6, at 10 (citing Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984))). However, the Supreme Court explicitly retired this more deferential standard Twombly and Iqbal. See Iqbal, 550 U.S. at 670.
III. ANALYSIS
A. Count I: Common Law Bad Faith
In Count I, Carr alleges that Travelers violated its common law duty to act in good faith. To the extent that Carr alleges a tortious violation of this duty, she does not present an actionable cause of action. It is well-established that “Pennsylvania does not recognize a cause of action for breach of good faith and fair dealing sounding in tort.” Purvi, LLC v. Nat‘l Fire & Marine Ins. Co., No. CV 19-4250, 2019 WL 6117356, at *3 (E.D. Pa. Nov. 18, 2019); see also UPMC Health System v. Metro. Life Ins. Co., 391 F.3d 497, 505 (3d Cir. 2004) (citing D‘Ambrosio v. Pa. Nat‘l Mutual Cas. Ins. Co., 431 A.2d 966, 970 (Pa. 1981)) (“The Pennsylvania Supreme Court [has] held that there is no common law remedy for bad faith on the part of insurers.“).
“Under Pennsylvania law, bad faith by an insurance company can give rise to two separate causes of action: a breach of contract action for violation of an insurance contract‘s implied duty of good faith, and a statutory action under the terms of Pennsylvania‘s bad faith statute, [Section 8371].” Wolfe v. Allstate Prop. & Cas. Ins. Co., 790 F.3d 487, 496-97 (3d Cir. 2015). “With respect to a breach of contract action, Pennsylvania courts have held that the common law duty of good faith and fair dealing is implied in every contract.” Pommells v. State Farm Ins., No. 18-5143, 2019 WL 2339992, at *6 (E.D. Pa. 2019) (internal quotations omitted). Consequently, “courts have consistently concluded that a plaintiff cannot bring a freestanding common law bad faith claim and a separate breach of contract claim, as the former is subsumed within the latter.” Id. (collecting cases).
To the extent that Carr suggests that her common law bad faith claim amounts to a breach of contract claim, (see Resp. at 10-16), that claim is barred under the principle of res judicata. “Res judicata, or claim preclusion, prohibits parties involved in prior, concluded litigation from subsequently asserting claims in a later action that were raised, or could have been raised, in the previous adjudication.” Wilkes ex rel. Mason v. Phoenix Home Life Mut. Ins. Co., 902 A.2d 366, 376 (Pa. 2006) (emphasis added). Carr voluntarily submitted to arbitration to adjudicate what she was owed under the terms of her policy with Travelers. She had the opportunity to raise her common law bad faith claim there, as it was subsumed within her breach of contract claim and it only concerned alleged conduct that occurred before the arbitration proceeding. She cannot now bring that claim in a judicial adjudication. See Clientron Corp. v. Devon IT, Inc., 154 F. Supp. 3d 132, 145 (E.D. Pa. 2015) (citing the Restatement (Second) of Judgments § 84 (1982)) (a valid and final arbitration award has the same effect under the rules of res judicata as a judgment of a court); Fineman, Krekstein & Harris, P.C. v. Perr, 278 A.3d 385, 399 n.3 (Pa. Super. 2022)
(Bowes, J., concurring in part and dissenting in part) (“Pursuant to existing precedent, an arbitration award is considered a final judgment on the merits of the issues arbitrated for purposes of res judicata and collateral estoppel.“).3 Accordingly, Count I is barred and is dismissed with prejudice.
B. Count II: Statutory Bad Faith
In Count II, Carr alleges that Travelers is also liable for its alleged bad faith under Section 8371, Pennsylvania‘s statutory bad faith cause of action. In order to show bad faith on the part of an insurer under that statute, and insured must demonstrate that (1) the insurer did not have a reasonable basis for denying benefits under the relevant policy, and (2) the insurer knew or recklessly disregarded its lack of a reasonable basis in denying the insured‘s claim. Rancosky v. Washington Nat‘l Ins. Co., 170 A.3d 364, 377 (Pa. 2017). In other words, bad faith on part of an insurer “is a frivolous or unfounded refusal to pay” a claim. Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999). Bad faith can also be shown by lack of investigation into the facts of a claim or a failure to communicate with a claimant. Bussie v. Am. Sec. Ins. Co., No. 20-3519, 2021 WL 2206282, at *6 (E.D. Pa. June 1, 2021).
While Carr‘s allegations lay out a possibility that Travelers behaved in a way that meets the standard of bad faith under Section 8371, they ultimately do not rise to the level that makes it plausible that Travelers did so. See Ashcroft v. Iqbal, 556 U.S. at 678. Importantly,
cause of action that are plainly insufficient to survive a motion to dismiss. See id. For example, Carr alleges that Travelers acted in bad faith by
engaging in unfair or deceptive acts or practices ... failing to fully, fairly and promptly investigate the claims of the plaintiff . . . failing to fully, fairly and promptly evaluate the claims of the plaintiff . . . failing to effectuate a prompt and fair settlement . . . acting in a dilatory and obdurate manner in the handling of the underinsured motorist claims . . . breaching the duties of good faith and fair dealing... [and] fail[ing] to settle the claims of the plaintiff . . . with knowing and reckless disregard of its lack of a reasonable basis for failure to do so[,]
among other similarly conclusory reasons.4 (Compl. ¶¶ 134-35.)
Critically, Carr‘s factual allegations do not provide sufficient support to her claim of bad faith for this claim to survive a motion to dismiss. These allegations essentially amount to frustration that Travelers provided settlement offers that were lower than she desired, responded more slowly and less frequently than she would have liked, and relied on its own experts. However, Carr‘s allegations do not on their face paint a picture of Travelers knowingly or recklessly disregarding a lack of a reasonable basis for denying Carr‘s claim.
To the extent Carr alleges that Travelers engaged in bad faith by making unreasonably low settlement offers, she does not make a cognizable claim of bad faith. “‘[B]ad faith is not present merely because an insurer makes a low but reasonable estimate of an insured‘s damages.‘” Smith v. State Farm Mut. Auto. Ins. Co., 506 F. App‘x 133, 136 (3d Cir. 2012) (quoting Johnson v. Progressive Ins. Co., 987 A.2d 781, 784 (Pa. Super. Ct. 2009)). Nor does “the failure to immediately accede to a demand for the policy limit . . . without more, amount to bad faith” under Section 8371. Id. at 137. Travelers’ settlement offers of $5,000, $40,000, and
$50,000, while all considerably lower than the ultimate award of $100,000, were not unreasonable in light of the fact that Traveler‘s increased its offer considerably from $5,000 to $40,000 (and eventually $50,000) after being given the chance to review new medical records sent by Soll. Notably, in Zappile v. AMEX Assurance Co., the arbitration award under an underinsured motorist policy was “roughly $70,000 more than the offer,” yet the court reversed the trial court‘s finding of bad faith under Section 8371, holding that “[a] difference between the offer and the amount awarded is not, by itself, evidence of bad faith.” 928 A.2d 251, 261 (Pa. Super. 2007); see also Insetta v. First Liberty Ins. Corp., No. 14-1890, 2015 WL 1279479, at *4 (E.D. Pa. Mar. 20, 2015) (quoting Johnson, 987 A.2d at 785) (disagreements over the damages suffered by an insured are routine, and “[i]n such situations, an arguably low offer is not indicative of bad faith because ‘a low but reasonable estimate of an insured‘s damages’ does not constitute an actionable bad faith claim under § 8371“); Dattilo v. State Farm Ins. Co., 1997 WL 644076 (E.D. Pa. 1997) (granting summary judgment for insurer on a Section 8371 claim
Nor does Travelers’ level of responsiveness to Soll‘s settlement demands support a plausible claim of bad faith under Section 8371. Significantly,
a long period of time between demand and settlement does not, on its own, necessarily constitute bad faith. Rather, courts have looked to the degree to which a defendant insurer knew that it had no basis to deny the claimant; if delay is attributable to the need to investigate further or even to simple negligence, no bad faith has occurred.
Kosierowski v. Allstate Ins. Co., 51 F. Supp. 2d 583, 589 (E.D. Pa. 1999). Moreover, “[w]hether something is untimely . . . may be an element of a bad faith claim only to the extent that it itself
has sufficient support; otherwise, an allegation that a claim was not timely paid and investigated is a legal conclusion which a court must disregard at a motion to dismiss stage.” Meyers v. Protective Ins. Co., No. 3:16-CV-01821, 2017 WL 386644, at *9 (M.D. Pa. Jan. 27, 2017).
Within two months of Soll first reaching out to Travelers regarding Carr‘s claim, and after receiving and evaluating medical records sent by Soll, Travelers communicated to Soll its evaluation of Carr‘s claim and provided its first settlement offer. (See id. ¶¶ 20-24.) Carr and Soll rejected this offer, and Soll promised to provide Travelers with “additional support” regarding Carr‘s injuries. (Id. ¶ 25.) Five months went by before Soll sent Travelers this additional support, after which Scott, on behalf of Travelers, said it would get back to Soll after discussing the matter further with colleagues. (See id. ¶¶ 27-31.) Just a few weeks later, Birmingham contacted Soll to acknowledge his representation of Travelers and recognized that Carr‘s claim had merit. (Id. ¶ 43.) About a month and a half later, Birmingham sent Soll a letter stating that he would be in touch again once he had the chance to review her medical records and intended to take Carr‘s statement under oath. (Id. ¶ 44.) Neither party reached out to the other for several months after this. While Birmingham did not get back in touch with Soll, Soll did not send Birmingham additional medical records until ten months after their last call. (See id. ¶¶ 52-53.) Along with sending those records, Soll again demanded that Travelers settle the claim for the policy limits and respond to Soll within thirty days. (Id. ¶ 54.)
Birmingham did not meet the deadline imposed by Soll, but Birmingham eventually responded to a voicemail left by Soll two plus months later. (Id. ¶¶ 55-59.) Over the next two weeks, the two had a back and forth where Birmingham emphasized, to Soll‘s dissatisfaction, that he was waiting to confer with Scott before he could respond to Soll‘s demand. (Id. ¶¶ 58-62.) About two weeks after this exchange ended, Scott raised Travelers’ settlement offer
from $5,000 to $40,000, acknowledging the potential merit of Carr‘s claim. (See id. ¶ 63.) Soll rejected this offer, sent Travelers additional medical records, and requested a prompt response, which he did not receive. (Id. ¶¶ 64-70.) About a month later, Soll sent Travelers an arbitration demand. (Id. ¶ 77.)
This timeline does not suggest that Travelers engaged in a “dilatory and obdurate manner” towards Carr, (see Compl. ¶ 134), or failed to make a good faith investigation into the facts of her case, see Bussie, 2021 WL 2206282, at *6. While
Finally, to the extent Carr argues that Travelers engaged in bad faith by placing more credence in its own experts compared to hers, that does not support a claim for bad faith under Section 8371. An insurer is under no obligation to accept the determinations of the insured‘s treating physicians at face value. Richardson v. United Fin. Cas. Co., No. 11-7688, 2013 WL 2357519, at *9 (E.D. Pa. 2013). Moreover, the fact that Carr takes issue with how Dr. Lobas and Dr. Levenberg conducted their evaluations of her injuries and the ultimate conclusions they reached is not evidence that Travelers knowingly or recklessly disregarded a lack of a reasonable
basis for rejecting Carr‘s settlement demands. See Zinno v. Geico Gen. Ins. Co., No. 16-792, 2016 WL 5100540, at *3 (E.D. Pa. Sept. 19, 2016) (“Plaintiffs allegation . . . that Defendant‘s expert reached an opposite conclusion as his own experts . . . does not lead to a non-speculative inference of bad faith.“). Travelers was well within its rights to rely on its own experts. Nor is the fact that Travelers never seemingly provided Dr. Levenberg with the MRI films he requested, without more, evidence of bad faith. Again, Carr has not presented a plausible claim of bad faith.
Ultimately, while Carr‘s allegations “perhaps suggest that a bad faith claim is possible, they do not allow for any non-speculative inference that a finding of bad faith is plausible.” Pasqualino v. State Farm Mut. Auto. Ins. Co., No. 15-0077, 2015 WL 3444288, at *5 (E.D. Pa. May 28, 2015). They ultimately amount to another in a line of bad faith claims that “[c]ourts in this Circuit have routinely dismissed[,] . . . reciting only ‘bare-bones’ conclusory allegations that are not accompanied by factual allegations sufficient . . . to survive a
C. Count III: Consumer Protection
In Count III, Carr alleges that Travelers’ conduct with regards to her UIM claim violated Pennsylvania‘s consumer protection statute, the UTPCPL. Travelers argues that the UTPCPL does not apply to this matter, as the “[m]ere refusal to pay a claim, or failure to investigate or take other action, is nonfeasance and is, thus, not actionable” under this law. Nordi v. Keystone Health Plan West, Inc., 989 A.2d 376, 385 (Pa. Super. 2010). As this Court held a few years ago,
The insurance bad faith statute applies to post-contract formation conduct. The UTPCPL, on the other hand, applies to conduct surrounding the insurer‘s pre-
formation conduct. The UTPCPL applies to the sale of an insurance policy. It does not apply to the handling of insurance claims. . . . Rather, § 8371 provides the exclusive statutory remedy applicable to claims handling.
Kelly v. Progressive Advanced Ins. Co., 159 F. Supp. 3d 562, 564 (E.D. Pa. 2016).
In any event, because Carr did not respond at all to Travelers’ arguments with regard to Count III in its response, she has waived this claim. See Markert v. PNC Fin. Servs. Grp., Inc., 828 F. Supp. 2d 765, 773 (E.D. Pa. 2011) (“Where an issue of fact or law is raised in an opening brief, but it is uncontested in the opposition brief, the issue is considered waived or abandoned by the non-movant in regard to the uncontested issue.“). Consequently, Count III is dismissed with prejudice.
IV. CONCLUSION
For the forgoing reasons, Defendant‘s Motion is granted. Counts I and III are dismissed with prejudice. Count II is dismissed without prejudice.
An appropriate order follows.
BY THE COURT:
/s/ R. Barclay Surrick
R. Barclay Surrick, J.