Articles & Updates

Case Dismissed – Federal Court Finds “Totality” of Allegations Insufficient to Support Bad Faith Complaint

Aug 24, 2023 | Articles & Updates

Article by Adam Murdock, Esq.

The United States District Court for the Western District of Pennsylvania recently granted an insurer’s motion to dismiss a claim for statutory bad faith after finding that the “totality” of the allegations regarding “timing, adequate investigation, and settlements offers” did not support that the insurer had acted in bad faith with regard to the insured’s UIM claim. The Court further found that amendment of the bad faith claim would be futile because the allegations provided the Court “with a clear picture of [the insurer’s] pre-suit conduct.”  Moody v. State Farm Ins. Co., 2023 WL 5003219 (W.D. Pa. Sep. 4, 2023).

In Moody, the insured was injured in an automobile accident on September 19, 2022, and sought UIM benefits under his insurance policy.  The Complaint alleged that on December 8, 2022, the insured requested that a UIM claim be opened on his behalf.  On March 27, 2023, and April 5, 2023, the insured requested that the insurer consent to settle with the tortfeasor, and on April 5, 2023, the insurer provided its consent.  On April 28, 2023, the insurer offered $25,000 to resolve the insured’s UIM claim, but the insured rejected the offer and demanded the $100,000 UIM policy limits.  The insurer agreed to re-review the insurer’s records, and on May 8, 2023, the insurer increased its offer to $32,000.  After the insured rejected this offer, the insurer requested an examination under oath.  On May 15, 2023, before an examination under oath could be scheduled, the insured filed suit for breach of contract and bad faith.  The insurer moved to dismiss the bad faith claim.

The Court granted the insurer’s motion after finding that the insured’s allegations could not support a claim for bad faith.  The Court noted that the insured filed suit “a mere five months and one week” after his request to open a UIM claim and a “mere eight months” from the date of the accident.  The Court noted that such a delay, even if attributable to the insurer, was insufficient alone to constitute bad faith.  The Court further found that any delay was not solely attributable to the insurer because the insured did not pursue and obtain consent to settle, as required by the policy, until “mere weeks before filing suit.”

As to the settlement discussions, the Court held that an alleged lowball offer, or an offer that falls below an insured’s UIM limits, is not by itself sufficient to constitute bad faith.  Moreover, an insurer has a right and obligation to investigate a claim.  The Court found that, at the time the insured filed suit, the insurer was open to negotiation, was actively negotiating with the insured, and initiated further investigation by requesting an examination under oath.

The Court recognized that “the totality of these circumstances regarding allegations of timing, adequate investigation, and settlement offers” were insufficient to establish that the insurer engaged in any bad faith conduct with regard to the insured’s UIM claim. The Court further held that any amendment of the bad faith claim would be futile because the allegations “provide the Court with a clear picture of pre-suit conduct” of the insurer.