Miller v. Allstate Vehicle and Property Insurance Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF PENNSYLVANIA

JOHN MILLER, :

Plaintiff, : CIVIL ACTION NO. 3:24-cv-907

v. : (JUDGE MANNION)

ALLSTATE VEHICLE AND :

PROPERTY INSURANCE

COMPANY, :

Defendant. :

MEMORANDUM

Presently before the court in this diversity jurisdiction insurance

contract dispute is Defendant Allstate Vehicle and Property Insurance

Company’s partial motion to dismiss, (Doc. 10), Counts II, III, and IV of

Plaintiff John Miller’s Amendment complaint, which respectively allege bad

faith, intentional misrepresentation, and promissory estoppel. Defendant

moves to dismiss these counts based on Plaintiff’s failure to state a claim

upon which relief may be granted. For the reasons discussed below, the

court will DENY Defendant’s motion.

I. BACKGROUND

The background of this case is taken from the factual allegations set

forth in Plaintiff’s amended complaint, (Doc. 7), which the court must accept

as true on motion to dismiss. Prior to November 2022, Plaintiff purchased a

homeowners insurance policy from Defendant to provide insurance

coverage for his home in Pike County, Pennsylvania. On or about November

21, 2022, Plaintiff’s home was destroyed by fire. As a result, Plaintiff suffered

losses as to both the structure of his home and his personal property

contained therein.

Plaintiff subsequently submitted a claim to Defendant, who paid a

portion of Plaintiff’s structural losses. However, Defendant did not pay

Plaintiff for $89.767.79 in excavation, electrical, and plumbing bills related to

his structural losses. Defendant also did not pay Plaintiff for his lost personal

property totaling $446,775.37. Plaintiff, without counsel, subsequently spoke

with his insurance agent, Brian Lentz, who informed him that he had two

years from the date of his loss to file a lawsuit against Defendant over his

claim. The adjuster assigned to Plaintiff’s claim, William Moore, likewise told

Plaintiff that he had two years to file a lawsuit against Defendant. Moore also

did not present his claim estimate to Plaintiff until November 15, 2023, almost

a full year after the date of his loss. Accordingly, Plaintiff reasonably believed

and expected that he had two years not one within which to file a lawsuit

against Defendant.

On or about May 2, 2024, Plaintiff filed a lawsuit against Defendant in

the Pike County Court of Common Pleas regarding his claim from the fire on

November 21, 2022. Defendant removed to this court on June 3, 2024, (Doc.

1), and filed its answer and affirmative defenses on June 12, 2024. (Doc. 5.)

On June 17, 2024, Defendant filed a motion for judgement on the pleadings

arguing for the first time that Plaintiff’s insurance policy contained a one-year

limitation period that necessitated dismissal of the present suit. (Doc. 6) On

June 28, 2024, Plaintiff filed an amended complaint, (Doc. 7), and the court

denied without prejudice Defendant’s motion for judgment on the pleadings

as moot on July 2, 2024. (Doc. 9.) Defendant filed the present motion to

dismiss on July 12, 2024. (Doc. 10.) Defendant filed a brief in support of its

motion on July 16, 2024, (Doc. 11), and Plaintiff filed his brief in opposition

on July 23, 2024. (Doc. 12.) Defendant’s reply brief was therefore due on

August 6, 2024. See Local Rule 7.7. However, Defendant did not timely file

a reply or seek an extension to do so and its motion is now ripe for

disposition.

II. LEGAL STANDARD

Defendant’s partial motion to dismiss is brought pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure. Rule (12)(b)(6) provides for

the dismissal of a complaint, in whole or in part, for failure to state a claim

upon which relief may be granted. In considering a partial motion to dismiss,

the court generally relies on the complaint, attached exhibits, and matters of

public record. Sands v. McCormick, 502 F.3d 263 (3d Cir. 2007). The moving

party bears the burden of showing that no claim has been stated. Hedges v.

United States, 404 F.3d 744, 750 (3d Cir. 2005).

When resolving a Rule 12(b)(6) motion, “a court must consider no more

than whether the complaint establishes enough facts to raise a reasonable

expectation that discovery will reveal evidence of the necessary elements of

the cause of action.” Peters v. Geico Advantage Ins. Co., 2019 WL 3816929,

*2 (M.D. Pa. 2019) (citing Trzaska v L’Oreal USA, Inc., 865 F.3d 155, 162

(3d Cir. 2018)). The facts alleged must be sufficient to “raise a right to relief

above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

555 (2007). To satisfy federal pleading requirements, the non-moving party

must also “provide the grounds of his entitlement to relief,” which “requires

more than labels and conclusions, and a formulaic recitation of the elements

of a cause of action will not do.” Phillips v. County of Allegheny, 515 F.3d

224, 231 (3d Cir. 2008) (brackets and quotation marks omitted) (quoting

Twombly, 550 U.S. at 555). “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.’” Phillips, 515 F.3d at 231 (citing Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009).

Finally, “[i]inasmuch as Pennsylvania law governs this action[,] we treat

Pennsylvania Supreme Court Opinions as binding precedent and

Pennsylvania Superior Court opinions as persuasive precedent.” State Farm

Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 107 n.2 (3d Cir. 2009).

III. DISCUSSION

Defendant argues that Count II of Plaintiff’s amended complaint (bad

faith) is factually and legally insufficient and Counts III and IV (intentional

misrepresentation and promissory estoppel) fail to comply with federal

pleading requirements. Furthermore, to the extent Plaintiff’s bad faith claim

is based on a breach of the covenant good faith and fair dealing, Plaintiff’s

intentional misrepresentation claim sounds in quasi-contract, Plaintiff’s

estoppel claim is based on the Unfair Insurance Practices Act (UIPA) and/or

Unfair Claims Settlement Practices Act (UCSPA), and Plaintiff’s estoppel

claim is based on the doctrine of equitable estoppel, Defendant argues those

claims must be dismissed as a matter of law. However, through his brief in

opposition Plaintiff concedes that his bad faith claim is not based on the

covenant of good faith and fair dealing, and his estoppel claim is not a private

right of action under any statute. Accordingly, the court will not discuss those

issues but will address the rest of Defendant’s arguments in turn.

A. Plaintiff’s Bad Faith Claim

Defendant seeks dismissal of Plaintiff’s amended bad faith claim

pursuant to 42 Pa. Const. Stat. Ann. §8371 which states that:

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 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. Const. Stat. Ann. §8371. The Pennsylvania Supreme Court has long

held that an insurer must act with “the utmost good faith” towards its insured.

Romano v. Nationwide Mut. Fire Ins. Co., 646 A.2d 1128, 1231 (Pa. Super.

Ct. 1995) (citing Fedas v. Insurance Co. of Pa., 151 A. 285, 286 (Pa. 1930)).

The insurers duty of good faith is contractual and arises because the

insurance company assumes a fiduciary status through its policy which gives

it the right to handle claims and control settlement. Romano, 646 A.2d at

1231 (citing Gray v. Nationwide Mut. Ins. Co., 223 A.2d 8 (Pa. 1966)).

Under Pennsylvania law, bad faith is “any frivolous or unfounded

refusal to pay proceeds of a policy; it is not necessary that such refusal be

fraudulent. For purposes of an action against an insurer for failure to pay a

claim, such conduct imports a dishonest purpose and means a breach of a

known duty, through some motive of self-interest or ill will; mere negligence

is not bad faith.” Wolfe v. Allstate Prop. and Cas. Ins. Co., 790 F.3d 487, 498

(3d Cir. 2015) (citing Terletsky v. Prudential Prop. and Cas. Ins. Co., 64 A.2d

860 (Pa. Super. Ct. 1994)). “Bad faith claims are fact specific and depend on

the conduct of the insurer vis a vis the insured.” Condio v. Erie Ins. Exch.,

899 A.2d 1136, 1143 (Pa. Super. Ct. 2000).

To recover on a bad faith claim under §8371, a plaintiff must show by

clear and convincing evidence that (1) the insurer did not have a reasonable

basis for denying benefits under the policy and (2) that the insurer knew or

recklessly disregarded its lack of reasonable basis in denying the claim.

Wolfe, 790 F.3d at 498. A “dishonest purpose” or “motive of self-interest or

ill will” is not a third element of this test. Rancosky v. Washington Nat. Ins.

Co., 170 A.3d 364, 373 (Pa. 2017) (citing Greene v. United Services Auto.

Ass’n, 936 A.2d 1178, 1190 (Pa. Super. Ct. 2007)). However, a motive of

“self-interest” or “ill-will” may be considered in determining the second prong

of the bad faith test. Id. Recklessness on the part of the insurer can support

a finding of bad faith. Id. “Bare-bones” conclusory statements are not

sufficient to state a bad faith claim. Peters v. GEICO Advantage Ins. Co.,

2019 WL 3816929, at *6 (M.D. Pa. 2019).

Defendant argues that Plaintiff does not assert sufficient factual

allegations to support a bad faith claim. Defendant also argues that many of

the allegations provided by Plaintiff are similar to those routinely dismissed

as insufficient. See Krantz v. Peerless Indem. Ins. Co., 2019 WL 1123150

(E.D. Pa. 2019); Hwang v. State Farm Mut. Auto. Ins. Case, 2019 WL

1765938 (E.D. Pa. 2019).1 Specifically, Defendant argues that Plaintiff only

sets forth a number of conclusory allegations such as:

(a) “dilatory and abusive claim handling;”

(b) “knowingly and recklessly disregarding the lack of reasonable

basis in denying payment of benefits;”

(d) “failing to pay Plaintiffs’ claim;”

(e) “assuming a fiduciary obligation and then failing to carry out

the same in good faith;”

(j) “breaching its fiduciary duties of good faith and fair dealing;”

(o) “unlawfully, improperly and willfully asserting a basis for

action that defendant knew was incorrect and unlawful.”

(Doc. 7 pp. 10-11.)

1 Defendant states that “this district” routinely dismisses allegations like those

made by Plaintiff but only cites cases from the Eastern District of

Pennsylvania. (Doc. 10 ¶¶40, 44.)

In response Plaintiff asserts that Defendant is merely cherry-picking

allegations and recites a more complete list of its allegations. (Doc. 12 pp. 6-

9.) But many of the allegations recited by Plaintiff are equally conclusory to

those cited by Defendant and substantially similar to those previously

dismissed by this court. See Muckin v. Cincinnati Life Insurance Co., 2024

WL 3678689 (M.D. Pa. 2024; Allman v. Metro Group Prop. & Cas. Ins. Co.,

2021 WL 4502263 (M.D. Pa. 2021).

Still there are three allegations that appear unique to this case. First is

the allegation Defendant acted in bad faith by “misrepresenting to Plaintiff

that the statute of limitations on his claims arising out of the subject insurance

policy was two years from the date of loss, despite knowing that the

contractual limitations period was allegedly one year from the date of loss.”

(Doc. 12 p. 9.) The second allegation is Defendant acted in bad faith by

“delaying full payment of Plaintiff’s claim until after the expiration of the

alleged contractual limitations Period.” Id. The third allegation is Defendant

acted in bad faith by committing the first two acts while Plaintiff was not

represented by counsel. Id.

Plaintiff correctly asserts that Defendant completely ignores these

specific allegations, but also fails to cite any authority that supports the court

finding such allegations support a plausible bad faith claim under §8371.

Nonetheless the law is clear that “liability for bad faith can be premised on

more than just unreasonably denying benefits under the policy.” McMahon

v. Med. Protective Co., 92 F. Supp. 3d 367, 388 (W.D. Pa. 2015) (citing

UPMC Health Sys. v. Metro. Life Ins. Co., 391 F.3d 497, 506 (3d Cir. 2004)).

“Bad faith conduct also includes ‘lack of good faith investigation into fact[s],

and failure to communicate with the claimant.’” Brown v. Progressive Ins.

Co., 860 A.2d 493, 501 (Pa. Super. Ct. 2004) (quoting O’Donnell v. Allstate

Ins. Co., 734 A.2d 901, 910 (Pa. Super. Ct. 1999) (bad faith during pendency

of a lawsuit can violate §8371 if intended to aid denying a claim)).

Here Plaintiff has alleged that Defendant failed to communicate with

him about his ability to sue regarding his policy with intent to aid in denying

his claim. At this stage of the proceeding the court must accept these

allegations as true. See UPMC Health Sys., 391 F.3d at 506 (3d Cir. 2004)

(“While the alleged bad faith need not be limited to the literal act of denying

a claim, the essence of a bad faith claim must be the unreasonable and

intentional (or reckless) denial of benefits.”) Accordingly, Plaintiff’s bad faith

claim is not factually or legally insufficient and the court will deny Defendant’s

motion as to Count II.

B. Plaintiff’s Compliance with Federal Pleading Requirements

Defendant argues that Counts III and IV of Plaintiff’s Amendment

Complaint fail to comply with federal pleading requirements. Specifically,

Defendant argues that these claims fail to comply with Federal Rules of Civil

Procedure 8 and 10. Rule 8 states in relevant part:

(a) Claim for Relief. A pleading that states a claim for relief must

contain:

(1) a short and plain statement of the grounds for the

court’s jurisdiction, unless the court already has jurisdiction

and the claim needs no new jurisdictional support;

(2) a short and plain statement of the claim showing that

the pleader is entitled to relief; and

(3) a demand for the relief sought, which may include relief

in the alternative or different types of relief.

Fed.R.Civ.P. 8(a). Similarly Rule 10 state in relevant part:

(b) Paragraphs; Separate Statements. A party must state its

claims or defenses in numbered paragraphs, each limited as far

as practicable to a single set of circumstances. A later pleading

may refer by number to a paragraph in an earlier pleading. If

doing so would promote clarity, each claim founded on a

separate transaction or occurrence—and each defense other

than a denial—must be stated in a separate count or defense.

Fed.R.Civ.P. 10(b).

According to Defendant, Plaintiff’s amended complaint violates these

rules because it does not specifically state the causes of action alleged in

Counts III and IV in violation of Rule 8 and appears to allege multiple causes

of action under a single count in violation of Rule 10. As such Defendant

asserts that these counts constitute an impermissible “shotgun” pleading,

and it would be severely prejudiced if the court did not dismiss them. In

response Plaintiff does not deny that he has failed to explicitly label the

causes of action alleged in Courts III and IV but instead argues that he is not

required to separately label his legal theories or causes of action. Plaintiff

through his brief in opposition also concedes that in Counts III and IV he is

not bringing multiple causes of action but only brings claims for intentional

misrepresentation in Count III and promissory estoppel in Count IV.

The Third Circuit has an established policy against “shotgun

pleading[s].” See Hynson ex rel. Hynson v. City of Chester Legal Dep’t, 864

F.2d 1026, 1031 n.13 (3d Cir. 1988). Courts in this circuit have recognized

four types of shotgun pleadings: “(1) ‘a complaint containing multiple counts

where each count adopts the allegations of all preceding counts’; (2) a

complaint that is ‘replete with conclusory, vague, and immaterial facts not

obviously connected to any particular cause of action’; (3) a complaint that

does not ‘separat[e] into a different count each cause of action or claim for

relief’; and (4) a complaint that ‘assert[s] multiple claims against multiple

defendants without specifying which of the defendants are responsible for

which acts or omissions, or which of the defendants the claim is brought

against.” See Bartol v. Barrowclough, 251 F. Supp. 3d 855, 859. Ultimately

shotgun pleadings “fail[,] ... in one way or another, to give the defendants

adequate notice of the claims against them and the grounds upon which

each claim rests.” See Id.; see, e.g., M.B. v. Schuylkill County, 375 F. Supp.

3d 574, 586 (E.D. Pa. 2019).

Here it appears that Defendant construes Counts III and IV as

constituting the second and/or third type of shotgun pleading. However, as

discussed more fully below Counts III and IV, may be poorly written but are

not replete with only conclusory allegations, and do not fail to plead a claim

for relief in violation of Rule 8. Likewise, Plaintiff has conceded that Count III

only pleads a claim of intentional misrepresentation and Count IV only pleads

a claim for promissory estoppel, so these counts do not combine causes of

action like a shotgun pleading or in violation Rule 10. Accordingly, Plaintiff’s

amended complaint does not violate federal pleading requirements and the

court will not dismiss Counts III and IV solely on that basis.

C. Plaintiff’s Intentional Misrepresentation Claim

In addition to violating federal pleading requirements, Defendant

argues that Plaintiff’s intentional misrepresentation claim, which it refers to

as a detrimental reliance claim, must be dismissed because a written

contract exists between the parties. According to Defendant Count III seeks

quasi-contract relief and therefore cannot exists as a matter of law where a

written contract, in the form of insurance policy, exists between the parties.

In response Plaintiff acknowledges that its intentional misrepresentation

claim sounds in tort but nonetheless argues it can still plead that claim in the

alternative to its breach of contract claim.

Under Pennsylvania law the gist-of-the-action doctrine bars a tort

action “when the gist or gravamen of the cause of action stated in the

complaint, although sounding in tort, is, in actuality, a claim against the party

for breach of its contractual obligations.” Bruno v. Erie Ins. Co., 106 A.3d 48,

53 (Pa. 2014). Still Pennsylvania courts have cautioned against prematurely

dismissing a tort action on the basis of this doctrine, because Pennsylvania

law also permits the pleading of tort and contract claims in the alternative.

See Telwell, Inc. v. Grandbridge Real Estate Capital, LLC, 143 A.3d 421,

429 (Pa. Super. Ct. 2016). Although Plaintiff has alleged that Defendant

breached a contract, Defendant has indicated that it believes claims under

that contract to be time barred. As such, it is not clear at this stage of the

proceeding, whether the gist of Plaintiff’s action sounds in contract or tort.

Moreover, Plaintiff pleads facts sufficient to support a plausible

intentional misrepresentation claim. To maintain an action for intentional

misrepresentation under Pennsylvania law, a plaintiff must plead:

(1) [a] representation;

(2) which is material to the transaction at hand;

(3) made falsely, with knowledge of its falsity or

recklessness as to whether it is true or false;

(4) with the intent of misleading another into relying on it;

(5) justifiable reliance on the misrepresentation; and,

(6) the resulting injury was proximately caused by the

reliance.

Bortz v. Noon, 729 A.2d 555, 560 (Pa. 1999). Here Plaintiff has pled the

following, which the court must accept as true at this stage of the proceeding.

Defendant through its agents Moore and Lentz represented to him that he

would have two years to file a lawsuit against Defendant over his claim from

the fire on November 21, 2022. The representation is material to Plaintiff’s

actual ability to sue Defendant for breach of contract. Defendant and/or its

agents knew or should have known this representation was false.

Defendant’s misrepresentation was intentional. Plaintiff was justified in

relying on that misrepresentation and that reliance caused Plaintiff’s injury.2

Accordingly, Plaintiff intentional misrepresentation claim is not factually or

legally insufficient at this stage of the proceedings and the court will deny

Defendant’s motion as to Count III.

D. Plaintiff’s Promissory Estoppel Claim

Defendant argues that Count IV of Plaintiff’s Amended Complaint must

be dismissed because it brings a claim for equitable estoppel and there is no

such cause of action. In Pennsylvania, “equitable estoppel arises ‘where

one, by his acts, representations or admissions or by his silence . . . has

intentionally or by culpable negligence induced another to believe that

certain facts exist and the other rightfully relies and acts on such belief to his

prejudice. . .” Gilius v. Board of Supervisors of Fairview Township, 552 A.2d

327, 330 (Pa. Cmmw. Ct. 1988). But equitable estoppel is only a defense not

2 The court notes that the injury at issue in this claim is Plaintiff’s inability to

bring a breach of contract suit against Defendant because of the allegedly

misrepresented one-year limitation period in his policy. Since Plaintiff’s

breach of contract claim has not and will not be dismissed here, he has

technically not yet suffered this injury. Nonetheless this claim still meets the

injury in fact requirement for standing under Article III of the United States

Constitution because there is a substantial risk Plaintiff will suffer that injury

given Defendant’s apparent position regarding the one-year limitation period

in Plaintiff’s policy. See Susan B. Anthony List v. Driehaus, 573 U.S. 149,

158, (2014) (citing Clapper v. Amnesty International, 568 U.S., 398, 414, n.

5 (2013) (For the purpose of Article III standing “[a]n allegation of future injury

may suffice if the threatened injury is ‘certainly impending,’ or there is a

‘substantial risk’ that the harm will occur.”))

an independent cause of action. See Graham v. Pennsylvania State Police,

634 A.2d 849, 851–52 (Pa. Cmmw. Ct. 1993) (“Graham has not shown how

she acted or refrained from acting to her prejudice. Moreover, assuming for

the sake of argument that equitable estoppel would create a basis for our

jurisdiction, the doctrine has only been recognized as a defense and not a

cause of action in itself.”).

However, Plaintiff argues that Count IV does not bring a claim for

equitable estoppel but promissory estoppel, which is an independent cause

of action. See Greenwald Caterers Inc. v. Lancaster Host, LLC, 599 F. Supp.

3d 235, 266 (E.D. Pa. 2022) (“A cause of action for promissory estoppel

seeks to enforce a promise.”) To maintain an action in promissory estoppel,

the aggrieved party must show that “1) the promisor made a promise that he

should have reasonably expected to induce action or forbearance on the part

of the promisee; 2) the promisee actually took action or refrained from taking

action in reliance on the promise; and 3) injustice can be avoided only by

enforcing the promise.” Crouse v. Cyclops Indus., 745 A.2d 606, 610 (Pa.

2000).

Here Plaintiff has pled the following, which the court must accept as

true on motion to dismiss. Defendant through its agents Moore and Lentz,

told him he would have two years not one to file a lawsuit against Defendant

over his claim from the fire on November 21, 2022. As a result of that promise

Plaintiff waited more than one year to file a lawsuit against Defendant. If

Plaintiff is subsequently found to be time barred from bringing a lawsuit

against Defendant because of the one-year limitation period, injustice may

only be avoided through the enforcement of Moore and Lentz’s promises.

Accordingly, Plaintiff’s promissory estoppel claim is not factually or legally

insufficient and the court will deny Defendant’s motion as to count IV at this

stage of the proceedings.

IV. CONCLUSION

In light of the foregoing, Defendant’s motion to dismiss will be DENIED.

An appropriate order follows.

s/ Malachy E. Mannion

MALACHY E. MANNION

United States District Judge

DATE: August 29, 2024

24-907-01