Opinion
Civil Action 20-CV-1066
08-16-2021
TERRANCE A. COLBERT, Plaintiff v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, et al., Defendants
(MANNION, D.J.)
REPORT AND RECOMMENDATION
WILLIAM I. ARBUCKLE U.S. MAGISTRATE JUDGE
I. INTRODUCTION
Defendants, an insurance company and its agent, filed the present motion to dismiss (Doc. 6), arguing that Plaintiff's action is barred by a one (1)-year limitation provision in Plaintiff's insurance policy. The limitation provision bars Plaintiff's breach of contract claim. However, because statutory bad faith claims are independent of underlying contract claims, and Defendants do not address any other limitation period or the merits of the bad faith claim, they have not shown entitlement to dismissal of that claim. Defendants also do not establish that all of Plaintiff's tort claims arise under the contract, are subject to the policy's limitation clause, are barred by the policy's limitation period or applicable statute of limitations, or that they fail on the merits. I therefore recommend that Defendant's Motion be granted only in part and denied in part.
II. FACTUAL BACKGROUND & PROCEDURAL HISTORY
On June 24, 2020, Terrance A. Colbert (“Plaintiff”) and Hal H. Harris commenced this civil suit (see Doc. 1) against Defendants Allstate Property and Casualty Insurance Company (“Allstate”) and Debra Colucci, in her individual capacity and as an agent of Allstate (collectively, “Defendants”). On April 28, 2021, Harris filed a Notice of Voluntary Dismissal (Doc. 19), causing his termination as a plaintiff in this matter. (See Doc. 25). Plaintiff's action arises from Allstate's denial of his homeowners' insurance claim for personal property coverage under a policy issued by Allstate for a residence at which Plaintiff, Harris, and non-party Leticia R. Couttien lived, following the taking of personal property by Couttien.
On July 23, 2020, Defendants filed a Motion to Dismiss for Failure to State a Claim (Doc. 6) and a Brief in Support (Doc. 7). On August 7, 2020, I issued a briefing requiring Plaintiff to file a Brief in Opposition, or risk having the Motion to Dismiss deemed unopposed. (Doc. 10). On September 9, 2020, Plaintiff filed Brief in Opposition (Doc. 11). On September 21, 2020, Defendants filed a Reply Brief (Doc. 12). On October 23, 2020, I issued an Order (Doc. 16) granting a Motion to Stay Discovery (Doc. 14) by Defendants, pending the resolution of the Motion to Dismiss (Doc. 6).
On March 31, 2021, I issued an Order (Doc. 17) directing Plaintiff to explain why this Court has subject-matter jurisdiction, given an apparent lack of diversity between then-plaintiff Harris and Defendant Colucci. Harris's subsequent Notice of Voluntary Dismissal (Doc. 19) resulted in complete diversity of citizenship among the parties and proper diversity jurisdiction. See 28 U.S.C. § 1332(a); (Doc. 25).
A. Purchase of the Real Property and Allstate Policy
According to the Complaint, Plaintiff and Harris are close friends and business associates. On June 10, 2010, Plaintiff and Harris's fiancée, non-party Couttien, became co-owners of a residential property in Taminent, Pennsylvania (the “Real Property”). (See Doc. 1, ¶¶ 10, 14, 22). Harris, as a real estate broker, assisted Plaintiff and Couttien with the purchase of the Real Property, and all three planned to move into it, along with Couttien's daughter. Id. at ¶¶ 10, 20, 23. Harris was not on the mortgage or deed. Id. at 19. Plaintiff, Harris, and Couttien agreed that Harris would invest “sweat equity” by making or overseeing repairs, and he and Plaintiff would finance the repairs. Id. at ¶¶ 10, 20. The three agreed that Harris could buy Plaintiff's property interest if Harris and Couttien got married before April 1, 2013. Id. at ¶ 21. If Harris and Couttien did not marry by that date, or if Couttien did not repay monies owed to Plaintiff and Harris by that date, then Couttien's interest in the Real Property would be surrendered to Plaintiff. Id.
Harris referred Plaintiff and Couttien to Defendant Debra Colucci, an insurance agent of Defendant Allstate, to procure homeowners' insurance for the Real Property. Id. at ¶ 24. Before the insurance policy was issued, Allstate sent an Evidence of Insurance document to Harris, who provided it to Plaintiff and Couttien. Id. at ¶ 29. Plaintiff noticed that the Evidence of Insurance omitted him as an insured, and he asked Harris to contact Colucci about the omission. Id. at 30. Colucci stated the omission would be corrected, and Plaintiff would be listed as an insured. Id. Allstate issued a Homeowners Insurance Policy for the Real Property (“Policy”) on July 2, 2010. Id. at 32; (Doc. 6-4). The Policy lists Plaintiff as an “Additional Insured” instead of an “Insured, ” which Plaintiff believes was due to verbal requests by Couttien that were unknown to Plaintiff or Harris. (Doc. 1, ¶ 33).
Harris and Couttien accrued debts to Plaintiff. In 2012, due to his debts, Harris surrendered his personal property in the Real Property to Plaintiff. Id. at ¶¶ 40, 45. In September 2012, due to debts Couttein owed Plaintiff and Harris, Harris informed Couttien that her interest in the Real Property would be transferred to Plaintiff, unless she became current by April 1, 2013. Id. at ¶ 41. To ensure this transfer if needed, Couttien provided Harris with Power of Attorney (“POA”). Id. Both Couttien and Plaintiff executed notarized POA forms granting Harris power to make various financial, real estate, and insurance transactions on behalf of each. Id. at 42-44; (Doc. 2, pp. 10-13 (Couttien POA), pp. 14-17 (Colbert POA)).
On October 15, 2012, after execution of the POAs, Harris instructed Defendant Colucci to remove Couttien as an insured in the Policy. (Doc. 1, ¶¶ 46-49). Harris did this by delivering a copy of a letter to a front-desk employee at Colucci's office and by mailing the letter and POA forms to Colucci. Id. at ¶¶ 46, 49. The letter instructed Colucci to “immediately remove” Couttien from the Policy. Id. at ¶ 48; (Doc. 2, p. 18). Harris also mailed the letter to Couttien and Plaintiff. (Doc. 1, ¶ 46).
On April 8, 2013, Harris executed a quit claim deed that transferred Couttien's ownership interest in the Real Property to Plaintiff. Id. at ¶ 52. Couttien did not object. Id. On June 5, 2013, pursuant to a state court Protection from Abuse Order (“PFA”) obtained by Couttien against Harris, based on allegations that Harris sexually assaulted Couttien's daughter, Harris was evicted from the Real Property and Couttien was granted temporary exclusive control of it. Id. at ¶¶ 61, 64-65. Later in June 2013, Plaintiff served a Notice to Quit requiring Couttien to vacate the Real Property by July 25, 2013, due to her lacking a written lease or ownership interest Id. at ¶ 66-67. On July 21, 2013, Couttien called Allstate and removed Plaintiff from the Policy, without Plaintiff's knowledge or permission. Id. at 69.
Harris was ultimately acquitted in 2017 of all related criminal charges, following a jury trial. (Doc. 1, ¶ 113). Plaintiff argues that the nature of the charges against Harris affected Allstate's consideration of his claim.
On July 24, 2013, Couttien filed a state court civil action against Plaintiff and Harris regarding ownership of the Real Property. Id. at ¶¶ 71-72. Couttien continued living in the Real Property. The state court case was stayed in May 2014, when Couttien filed for Chapter 7 bankruptcy. Id. at ¶¶ 83-84.
Plaintiff, Harris, and Couttien agreed in the state civil case to extend Couttien's exclusive possession of the Real Property, based on an agreement that Couttien would purchase it within ninety (90) days of February 3, 2014. Id. at ¶¶ 75-76.
B. Theft of the Personal Property
On August 21, 2014, Couttien's attorney informed Plaintiff's attorney that Couttien had vacated the Real Property. Id. at ¶ 89. On August 22, 2014, Plaintiff discovered that personal property covered by the Policy was missing from the Real Property. Id. at ¶ 91. Couttien later admitted in her bankruptcy proceeding that she stole the property and that Plaintiff had not authorized her to remove him as an insured in the Policy in 2013. Id. at ¶¶ 100, 124-25; see also (Doc. 2, pp. 22, 29-31).
C. Plaintiff's Claim to Allstate
After discovering the personal property missing, Plaintiff reported a theft by Couttien of covered personal property to Allstate and to the Pennsylvania State Police. Id. at ¶ 92. Allstate provided Plaintiff with a claim number. Id. On September 17, 2014, an Allstate representative sent a letter to Plaintiff informing him that
we were unable to provide coverage for property removed from the home by Leticia Couttien. Please refer to Losses We Cover Under Coverage C, paragraph 15 of your Homeowner's policy. It states:
. . . .
We do not cover:
a) Theft or attempted theft committed by an insured person[.]
. . . .
I hope you understand the basis for this decision. (Docs. 1, ¶ 95; 2 at p. 20).
Plaintiff's counsel in the state civil case, Attorney Brown, assumed representation of Plaintiff in connection with the insurance claim. (Doc. 1, ¶ 96). Attorney Brown contacted Allstate after its September 17, 2014 letter and relayed to Plaintiff that Allstate requested “1) Proof Couttien was not a co-owner of The Real Property at the time of loss 2) Proof the personal property was stolen by Couttien and 3) Proof the stolen personal property was not owned or co-owned by Couttien.” (Doc. 1, ¶ 98). On December 15, 2014, Attorney Brown sent a follow-up letter to Allstate asserting that Allstate had already been provided with a letter removing Couttien from the Policy, stating that Couttien had been removed from the deed as co-owner of the Real Property, and “requesting Allstate reconsider the determination set forth in [the September 17, 2014 letter].” Id. at ¶ 102; (Doc. 2, p. 21).
In late December 2014, Attorney Brown informed Plaintiff that Allstate responded to his letter and stated it was reconsidering its determination. (Doc. 1, ¶ 105). He relayed that Allstate also “requested that Plaintiffs a) ‘drop' Plaintiffs' Counterclaims against Couttien in the State Case, . . . b) provide proof Couttien did not own the personal property she ‘removed' and c) provide proof that Couttien had in fact stolen the personal property from The Real Property.” Id.
On September 16, 2016, Harris sent a letter to the Allstate representative informing her that Plaintiffs were working to satisfy “Allstate's requests for proof” (Doc. 1, ¶ 112.A). Harris sent similar letters on November 22, 2016 and February 2, 2017. (Doc. 1, ¶ 112.B).
On October 31, 2018, Harris mailed a letter to Allstate providing proof of the information Allstate requested in late December 2014. (Doc. 1, ¶ 112.B). This followed the February 28, 2018 approval in Couttien's bankruptcy proceeding of a Stipulation to Resolve Adversary Proceeding, in which she admitted to taking the personal property at issue, among other matters. Id. at ¶ 118-24. On May 2, 2019, Harris and an Allstate claims adjuster discussed the claim by phone, and the adjuster stated the claim was reopened and Allstate would investigate further to determine the claim's settlement. Id. at ¶ 129. Per request of the adjuster, Harris sent a copy of the POA form authorizing him to act as attorney-in-fact for Plaintiff, as well as other documentation regarding Plaintiff's claim. Id. at ¶¶ 129-31.
On June 25, 2019, Allstate sent a letter denying Plaintiff's claim on the basis that it is barred by three (3) provisions in the Policy: (1) “the Policy specifically excludes coverage for theft by a named insured;” (2) “the Policy's Intentional Act Exclusion is applicable to this Claim;” and (3) “the Policy's Joint Obligations Clause which is part of the Insuring Agreement.” Id. at ¶¶ 138-40.
Plaintiff now brings several claims against Defendants: (1) Breach of Contract, (2) Negligent Misrepresentation, (3) Bad Faith, (4) Civil Conspiracy, (5) Unfair and Deceptive Trade Practices, and (6) Unjust Enrichment. Id. at pp. 27-32.
III. STANDARD OF REVIEW
When ruling on a motion to dismiss under Rule 12(b)(6), the Court “must accept all factual allegations in the complaint as true, construe the complaint in the light favorable to the plaintiff, and ultimately determine whether plaintiff may be entitled to relief under any reasonable reading of the complaint.” Id. at 229. The defendant has the burden of showing that the plaintiff fails to state a claim. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
The Court must “consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the [plaintiff's] claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). If a court considers outside matters, Federal Rule of Civil Procedure 12(d) the requires that “the motion must be treated as one for summary judgment under Rule 56.” The parties here appear to agree, and I conclude, that it is proper to consider the full Policy because Plaintiff's claims are based on it, and it is an “undisputedly authentic document” that Defendants attached with their Motion to Dismiss. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993); see also (Doc. 7, p. 7 n.1).
Plaintiff included only portions of the Policy as an exhibit to the Complaint. (See Doc. 2, pp. 5-9).
IV. ANALYSIS
Defendants argue that the Court need not reach the merits of Plaintiffs' claims because (1) he has not appeared pro se or through counsel, as only Harris signed the Complaint, and the case therefore must be dismissed, and (2) Plaintiff did not comply with the Policy's one (1)-year suit-limitation clause. (Doc. 7, p. 8, 11, 13). Defendants also argue in their Reply Brief (Doc. 12) that the Court should strike Plaintiff's Brief in Opposition (Doc. 11) due to procedural defects. (See Doc. 12, pp. 2-3). I first address Defendants' argument regarding procedural defects in Plaintiff's Brief in Opposition, then turn to Defendants' arguments regarding Plaintiff's appearance in this matter and the Policy's one (1)-year suit-limitation clause.
I do not address Defendants' argument that Harris lacks standing, because Harris has since been dismissed as a plaintiff.
A. Procedural Defects with Plaintiff's Brief in Opposition
First, Defendants argue that Plaintiff filed the Brief in Opposition on September 9, 2020, but this Court ordered Plaintiff to file it by September 8, 2020.
Id. While pro se Plaintiff is an e-filer, the docket indicates that he filed the Brief at 12:08 a.m. on September 9, 2020, and it appears to be the first document Plaintiff e-filed. Mindful of this and Plaintiff's pro se status, I accept the late-filed Brief and consider the arguments raised therein.
Second, Defendants argue that Plaintiff's Brief is longer than fifteen (15) pages, does not contain the required word-count certification for briefs that exceed fifteen (15) pages but contain fewer than 5, 000 words, and does not contain a table of contents or table of authorities, as required under the Local Rules for briefs that exceed fifteen (15) pages. (Doc. 12, p. 3); see also L.R. 7.8(a), (b)(2). Plaintiff's Brief is nineteen (19) pages long, and it contains no word-count certification, table of contents, or table of authorities. (See Doc. 11). However, the Brief appears to contain approximately 4, 250 words. See Id. I will consider Plaintiff' Brief (Doc. 11) despite the lack of full compliance with Local Rule 7.8. I remind Plaintiff that, even though he is proceeding without counsel, he must adhere to the Federal Rules of Civil Procedure and the Local Rules of the Middle District of Pennsylvania. Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013) (stating pro se litigants “cannot flout procedural rules”).
B. Plaintiff's Appearance
Defendants argue that the Complaint must be dismissed because only Harris, not Plaintiff, signed the Complaint. (Doc. 7, p. 17). They argue that the POA Harris has for Plaintiff does not permit him to litigate cases on Plaintiff's behalf. Id. at p. 16. Plaintiff argues that both he and Harris signed the Verification, Certificate of Compliance, and Certificate of Service form filed with the Complaint, in which both verified and certified that “[t]he statements/averments contained in the below listed document(s)/pleading(s) are true and correct to the best of the undersigned knowledge, information, and belief” (Doc. 1, p. 33). Plaintiff asserts that Harris delivered the unsigned Complaint and signed Verification to the Court for filing, but the Clerk of Court told him he must sign the Complaint. (Doc. 11, p. 16). Harris therefore signed the Complaint for himself and wrote Plaintiff's name, but he did not attempt to sign for Plaintiff as his attorney in fact. Id.
As Defendants argue, a grant of power of attorney “does not permit [the attorney-in-fact] to represent [another] pro se in federal court.” Williams v. United States, 477 Fed.Appx. 9, 11 (3d Cir. 2012). However, here, it does not appear that Harris attempted to sign the Complaint for Plaintiff or otherwise litigate this case as Plaintiff's attorney. (See Doc. 1, p. 2). Because the Verification submitted with the Complaint is signed by Plaintiff (see Doc. 1, p. 33), and because Plaintiff has signed the other filings in this matter, I am satisfied that he is proceeding as himself pro se and that Harris did not unlawfully attempt to litigate on Plaintiff's behalf by virtue of the POA Plaintiff granted him.
C. The Policy's One (1)-Year Suit-Limitation Clause
Defendants argue that a one (1)-year suit-limitation clause in the Policy precludes Plaintiff's suit. (Doc. 12, p. 2). The Policy includes a provision under “Section I Conditions” governing actions against Allstate, stating the following:
No one may bring an action against us in any way related to the existence or amount of coverage, or the amount of loss for which coverage is sought, under a coverage to which Section I Conditions applies, unless:
a) there has been full compliance with all policy terms; and
b) the action is commenced within one year after the inception of loss or damage.(Doc. 6-4, p. 22).
Suit-limitation provisions in insurance contracts are uniformly upheld in Pennsylvania, so long as the provision is reasonable. See Palek v. State Farm Fire & Cas. Co., No. CV 20-170, 2020 WL 5077461, at *3 (W.D. Pa. Aug. 26, 2020); Com. v. Transamerica Ins. Co., 341 A.2d 74, 76 (Pa. 1975) (“This Commonwealth has long recognized the validity of a policy provision limiting the time of bringing suit under its terms and rendering the normal statute of limitations for the cause of action in question inapplicable.”). Courts have generally found reasonable suit-limitation periods that require the filing of suit within one (1) year after the loss or damage. See Moran Indus., Inc. v. Netherlands Ins., Co., No. 4:12-CV-01435, 2014 WL 643723, at *4 (M.D. Pa. Feb. 19, 2014) (listing cases). A limitation period beginning on the “date of loss” or at the “inception of loss” begins on “the date of the occurrence of the destructive event or casualty insured against.” See Bostick v. ITT Hartford Grp., Inc., 56 F.Supp.2d 580, 586 (E.D. Pa. 1999) (quoting Gen. State Auth. v. Planet Ins. Co., 346 A.2d 265, 267 (Pa. 1975)).
Plaintiff argues that this one (1)-year limitation period does not apply because Allstate acted in bad faith and because Allstate waived the provision or should be estopped from asserting it. (Doc. 11, pp. 17-18). I first address Plaintiff's bad faith claim, then his breach of contract claim, then his tort claims.
1. Plaintiff's Bad Faith Claim
Plaintiff alleges a claim of “bad faith” for Allstate's actions, including its “deliberately delayed [] denial of [his] claim, ” investigation of the claim, and denial based on “clearly frivolously reasons.” (Doc. 1, ¶¶ 152-56). I construe this pro se pleading liberally as alleging statutory bad faith under 42 Pa. C.S.A. § 8371.
In Pennsylvania, 42 Pa. C.S.A. § 8371 provides a private right of action for “bad faith” investigation and denial of insurance claims. A bad faith claim is independent of an underlying contract claim, and success on a contract claim is not a prerequisite for success on a bad faith claim. March v. Paradise Mut. Ins. Co., 646 A.2d 1254, 1256 (Pa. 1994); see also Ash v. Cont'l Ins. Co., 932 A.2d 877, 885 (Pa. 2007). Further, bad faith claims are not subject to insurance policies' suit-limitation provisions. Gold v. State Farm Fire & Cas. Co., 880 F.Supp.2d 587, 594 n.6 (E.D. Pa. 2012) (“The contractual limitations period does not operate to bar the bad faith claim brought in Count II. Bad faith claims arise separately from a contract and are not governed by contractual limitations periods found in insurance policies.”); id. at 1257 (“[T]he bad faith claim is not affected by the one-year limitations period in the insurance contract. Hence, the trial court erred in granting appellee's motion for summary judgment regarding appellant's claim of bad faith.”). Rather, the Supreme Court of Pennsylvania has held that claims of bad faith under Section 8371 are subject to a two-year statute of limitations. Ash, 932 A.2d at 885.
The statute provides that “[i]n 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 all of 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. C.S.A. § 8371.
A plaintiff making a bad faith claim under Section 8371 must show by clear and convincing evidence that the insurer (1) lacked “a reasonable basis for denying benefits under the policy” and (2) “knew of or recklessly disregarded its lack of reasonable basis in denying the claim.” Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167, 179 (3d Cir. 2011), as amended (Dec. 9, 2011) (quoting Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. 1994)); see also Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 377 (Pa. 2017). “Bad faith is a frivolous or unfounded refusal to pay, lack of investigation into the facts, or a failure to communicate with the insured.” Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999). “[M]ere negligence” is not enough; “knowledge or reckless disregard of a lack of a basis for denial of coverage is necessary.” Id.
See also Palek v. State Farm Fire & Cas. Co., No. CV 20-170, 2020 WL 5077461, at *6 (W.D. Pa. Aug. 26, 2020); Moran Indus., Inc., No. 4:12-CV-01435, 2014 WL 643723, at *4, 9 (addressing limitations provision as to breach-of-contract claim, but addressing merits of bad faith claim); Palmisano v. State Farm Fire & Cas. Co., No. CIV.A. 12-886, 2012 WL 3595276, at *11 (W.D. Pa. Aug. 20, 2012) (stating “Plaintiffs are not precluded from potentially recovering under a bad faith theory solely because the contractual limitations period has been enforced and the breach of contract claim has been dismissed, ” and addressing merits of bad faith claim); Atiyeh v. Nat'l Fire Ins. Co. of Hartford, No. 07-CV-04798, 2008 WL 4444253, at *7 (E.D. Pa. Sept. 30, 2008) (“[A] claim for bad faith can survive even if a plaintiff's breach of contract claim is barred by the policy's limitation provision.”).
Here, Plaintiff alleges that Allstate denied his claim on June 25, 2019, after it “reopened” it on May 2, 2019. Id. at ¶¶ 129, 138-40. He alleges Allstate's September 17, 2014 letter informing him that it was “unable to provide coverage for property removed from the home by Leticia Couttien” was not a denial. Id. at ¶ 95. Plaintiff began this action on June 24, 2020. (See Doc. 1). This would be within the two (2)-year limitation period for bad faith claims if Plaintiff's bad faith claim accrued on June 25, 2019, but not if it accrued on September 17, 2014.
Defendants argue that all of Plaintiff's claims are barred by the contractual one (1)-year limitation period; they do not address the two (2)-year limitation period for bad faith claims. (See Docs. 7, 12). Defendants do point to another suit-limitation provision in the Policy that provides a one (1)-year limitation period beginning on “the date the cause of action accrues.” (Doc. 7, p. 20). That provision, which is in the Policy's “General” section, states,
No one may bring an action against us unless there has been full compliance with all policy terms.
Any action against us to which neither the Action Against Us provision located in Section I Conditions nor the Action Against Us provision located in Section II Conditions applies must be commenced within one year of the date the cause of action accrues.Id. at pp. 20-21; (Doc. 6-4, p. 8). Defendant argues that all allegations in the Complaint, “with the exception of Allstate's [June 25, 2019] reiteration of its reasons for denying Mr. Colbert's claim, ” occurred more than one (1) year before Plaintiff filed this suit. (Doc. 7, p. 21).
Even if this general one (1)-year contractual limitation period applied to Plaintiff's bad faith claim, a view of the Complaint in the light most favorable to Plaintiff suggests the bad faith claim could have accrued as late as June 25, 2019, which falls within one (1) year of the filing of this action. Therefore, considering Plaintiff's allegations, Allstate has not established that Plaintiff's bad faith claim is barred by any limitation period.
2. Plaintiff's Breach of Contract Claim
The loss here occurred sometime before August 22, 2014, when Plaintiff discovered the personal property to be missing. (Doc. 1, ¶ 91). Allstate issued its decision declining to provide coverage on September 17, 2014. Id. at ¶ 95. After reopening the claim on May 2, 2019, Allstate denied it on June 25, 2019. Id. at ¶¶ 129, 138-40. Plaintiff filed this action on June 24, 2020, which is nearly six (6) years after the loss. Therefore, Plaintiff filed suit after the expiration of the one (1)-year suit-limitation period in the Section I Conditions of the Policy. (See Doc. 6-4, p. 22).
Plaintiff nonetheless argues that Defendants are estopped from asserting or that they waived the limitation provision. He first argues that “[t]he Policy does not say there is a one-year limit to bring a lawsuit.” (Doc. 11, pp. 16-17). He explains that the limitation language uses only the term “action, ” without defining it, and he thought contacting an attorney to seek reconsideration of Allstate's September 17, 2014 letter was “taking action.” Id. at p. 17. He next argues Allstate should not be able to assert the limitation period because it (1) required Plaintiff to prove Couttien caused the loss and (2) allowed an “appeal” of the September 17, 2014 initial decision letter, in response to Plaintiff's written request for reconsideration. (Doc. 15, pp. 12-13). After Allstate informed Plaintiff's attorney in late December 2014 that it was reconsidering its September 17, 2014 decision, the next communication alleged between the parties occurred in September 2016, when Harris informed Allstate that Plaintiff and he were working to satisfy “Allstate's requests for proof.” (Doc. 1, ¶¶ 105, 112.A). I address the issues of estoppel and waiver in turn.
a. Estoppel
Estoppel and waiver can be defenses to a suit-limitation clause. Palek v. State Farm Fire & Cas. Co., No. CV 20-170, 2020 WL 5077461, at *3 (W.D. Pa. Aug. 26, 2020) (citing Prime Medica Assocs. v. Valley Forge Ins. Co., 970 A.2d 1149, 1156 (Pa. Super. 2009)). To establish estoppel, “a plaintiff must show ‘the defendant causes the plaintiff to relax his vigilance or deviate from his right of inquiry.'” Moran Indus., Inc., No. 4:12-CV-01435, 2014 WL 643723, at *7 (quoting Molineux v. Reed, 532 A.2d 792, 794 (Pa. 1987)).
An insurer's declaration that it is investigating a claim “is insufficient to prove [the] Insured was induced to forbear from commencing suit.” Prime Medica Assocs., 970 A.2d at 1158 (citing Lardas v. Underwriters Ins. Co., 231 A.2d 740, 742 (Pa. 1967)). Further, “mere negotiations, without more, do not amount to conduct sufficient to invoke equitable estoppel.” Melhorn v. AMREP Corp., 373 F.Supp. 1378, 1380-81 (M.D. Pa. 1974). Accordingly, estoppel does not occur when there is “no allegation that the defendants affirmatively duped the plaintiffs as to any relevant statutes of limitations” or “offered a settlement or compromise in exchange for plaintiffs' forebearance to bring suit.” Id.; see also Palmisano, No. CIV.A. 12-886, 2012 WL 3595276, at *10 (concluding estoppel did not apply when “the facts pled show that State Farm promptly investigated Plaintiffs' claim and reached its coverage decision in less than four (4) months”); Lardas, 231 A.2d at 742 (finding no waiver or estoppel when insurer did not mislead plaintiff about settlement or “in any manner induce or persuade [plaintiff] to refrain from commencing suit”).
Allstate's alleged reconsideration of the claim in December 2014, including its request to Plaintiff for certain information, appears to be nothing more than a statement that Allstate is “investigating the claim, ” which is insufficient to prove that an insured “was induced to forbear from commencing suit.” See Prime Medica Assocs., 970 A.2d at 1158. Plaintiff also makes no allegation that Allstate “mislead [him] about the possibility of settlement” or “induce[d] or persuade[d] [him] to refrain from commencing suit.” Lardas, 231 A.2d at 742. After December 2014, the next communication with Allstate from either Plaintiff or Harris appears to have occurred in 2016. Any statements by Allstate at that time or later could not establish estoppel, as the limitation period had already expired. See Reinhart v. Erie Ins. Co., No. 2034 MDA 2014, 2015 WL 6159391, at *8 (Pa. Super. Apr. 30, 2015) (“[T]he actions of [Insurer] taken after the limitations period had expired could not have caused Plaintiffs to miss the limitations period.”). For these reasons, Allstate should not be estopped from asserting the one (1)-year limitation period.
b. Waiver
Waiver occurs when a party “voluntar[ily] and intentional[ly] abandon[s] or relinquish[es] of a known right.” Prime Medica Assocs., 970 A.2d at 1156. Waiver “may be established by a party's express declaration or by a party's undisputed acts or language so inconsistent with a purpose to stand on the contract provisions as to leave no opportunity for a reasonable inference to the contrary.” Id.
Plaintiff argues that Allstate's requests for additional information and its reconsideration of its initial denial of coverage are the basis for waiver. (Doc. 15, pp. 12-13). But neither of these actions show an “express declaration” of waiver or are “so inconsistent” with the purpose of the limitation period as to leave no “reasonable inference” other than waiver. See Prime Medica Assocs., 970 A.2d at 1156-57. Plaintiff alleges no actions or statements by Allstate that would reasonably serve as a waiver of the contractual limitation period.
Because Plaintiff filed this action more than one (1) year after the loss, and because neither estoppel nor waiver apply, Plaintiff's breach-of-contract claim is barred by the contractual limitation period, and that claim should be dismissed.
3. Plaintiff's Tort Claims
Defendants do not separately address Plaintiff's tort claims of negligent misrepresentation, unjust enrichment, “unfair and deceptive trade practices, ” or civil conspiracy.
Although the specific cause of action Plaintiff is alleging in his claim of “Unfair and Deceptive Trade Practices” is not entirely clear, the Third Circuit, looking to Pennsylvania law, has stated that claims for certain unfair and deceptive practices in insurance may be brought under the common law claims of fraud and deceit. See Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 168 (3d Cir. 2001). Plaintiff's claim also appears to relate to two (2) statutes in Pennsylvania: The Unfair Insurance Practices Act (“UIPA”) and the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). However, the UIPA does not provide for a private right of action. Sabo v. Metro. Life Ins. Co., 137 F.3d 185, 192 (3d Cir. 1998) (citing Wright v. N. Am. Life Assur. Co., 539 A.2d 434, 438 (Pa. 1988)). The UTPCPL provides for a private right of action, see 73 Pa. Stat. §§ 201-1, -9.2, but it generally “applies to the sale of an insurance policy” and not “the handling of insurance claims.” Wenk v. State Farm Fire & Cas. Co., 228 A.3d 540, 551 (Pa. Super. 2020) (citation omitted); see also Horowitz v. Fed. Kemper Life Assur. Co., 57 F.3d 300, 307 (3d Cir. 1995) (“[O]nly malfeasance, the improper performance of a contractual obligation, raises a cause of action under the [UTPCPL], and an insurer's mere refusal to pay a claim which constitutes nonfeasance, the failure to perform a contractual duty, is not actionable.”).
It is not immediately clear whether the suit-limitation periods in the Policy bar tort claims that arise outside of the contract. See Prime Medica Assocs., 970 A.2d at 1156 (stating suit-limitation periods “are contractual undertakings between the parties to limit the time for bringing suit on the contract” (emphasis added)); cf. Gold, 880 F.Supp.2d at 594 n.6 (explaining bad faith claims are not subject to contractual limitation periods because they “arise separately from a contract”). Defendants provide no authority on the matter.
In addition, as with Plaintiff's bad faith claim, a view of the Complaint in the light most favorable to Plaintiff suggests some of his tort claims may have accrued as late as Allstate's June 25, 2019 letter. Any such claims would not be barred by the Policy's general one (1)-year limitation period. (See Doc. 6-4, p. 8). Further, to the extent the limitation period does not reach tort claims arising outside of the contract-meaning those not barred by Pennsylvania's “gist of the action” doctrine, discussed below-Defendant has not established that these claims, viewed in the light most favorable to Plaintiff, are barred by Pennsylvania's statute of limitations for torts. Defendants do not discuss the accrual date of any particular claim, stating only that Plaintiff alleges just one act by Allstate within the year before this suit: Allstate's June 25, 2019 letter. Defendants do not address the merits of the tort claims. Accordingly, I address Plaintiff's tort claims separately.
Plaintiff bases his tort claims of unjust enrichment, negligent misrepresentation, “unfair and deceptive trade practices, ” and civil conspiracy on actions including Colucci's failure to update the Policy to remove Couttien; Defendants' “thwart[ing]” of subpoenas he served on Allstate in the adversary proceeding against Couttien in bankruptcy court; Allstate's demand that Plaintiff and Harris drop their state-court cross-claim against Couttien; and “Allstate's practice and act of selling Colbert an insurance policy that provided insurance against theft and damage then denying Colbert's claim under the guise that Couttien was an insured when Allstate knew she was not.” (See Doc. 1, ¶¶ 148-69).
A claim of civil conspiracy requires an underlying tort. See Boyanowski v. Cap. Area Intermediate Unit, 215 F.3d 396, 405 (3d Cir. 2000) (predicting the Pennsylvania Supreme Court will require underlying tort); Rice v. Diocese of Altoona-Johnstown, No. 3 WAP 2020, 2021 WL 3073157, at *13 (Pa. July 21, 2021) (disapproving of lower court suggestion that timeliness of civil conspiracy claim could be considered “without reference to the timeliness of some other underlying tort”). Plaintiff does not specify the underlying torn on which his civil conspiracy claim rests. He alleges under that claim that Allstate and Colucci conspired to (1) deny Plaintiff's claim and (2) “thwart the subpoenas Plaintiffs served on Allstate [in the adversary proceeding against Couttien in bankruptcy court] that would lay bare their civil conspiracy and the wrongful way Allstate used Couttien['s] false and unproven allegations [regarding Harris sexually assaulting Couttien's daughter] to delay and ultimately deny Colbert's claim.” (Doc. 1, ¶ 159).
The “gist of the action” doctrine in Pennsylvania limits a party's ability to bring tort claims related to conduct arising from a contract. Pennsylvania courts apply the “gist of the action” doctrine “to maintain the conceptual distinction between breach of contract claims and tort claims” by “preclud[ing] plaintiffs from re-casting ordinary breach of contract claims into tort claims.” eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa. Super. 2002). Under the doctrine,
an alleged tort claim against a party to a contract, based on the party's actions undertaken in the course of carrying out a contractual agreement, is barred 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., 630 Pa. 79, 87, 106 A.3d 48, 53 (2014) (footnotes omitted). Accordingly, a tort claim fails where it is based upon the same conduct as a breach of contract claim. See Corrigan v. Loc. 6, Bakery, Confectionary & Tobacco Workers, 91 F.Supp.3d 618, 625 (E.D. Pa. 2015); see, e.g., Sunshine v. Reassure Am. Life Ins. Co., 515 Fed.Appx. 140, 145 (3d Cir. 2013) (stating insured cannot “convert his [breach of contract] claim to a tort claim by alleging that [Insurer's] failure to pay disability benefits . . . means [Insurer] made misrepresentations and false advertisements when selling him the disability insurance.”). To determine whether a tort claim is based upon the same conduct as a breach of contract claim, the court must ascertain the source of the duties allegedly breached. CRS Auto Parts, Inc. v. Nat'l Grange Mut. Ins. Co., 645 F.Supp.2d 354, 376-77 (E.D. Pa. 2009). Tort actions “lie from the breach of duties imposed as a matter of social policy while [contract actions] lie for the breach of duties imposed by mutual consensus.” Phico Ins. Co. v. Presbyterian Med. Servs. Corp., 663 A.2d 753, 757 (Pa. Super. 1995).
Tort claims based on “malfeasance, ” rather than nonfeasance, such as failure to pay a claim, may not always be barred by the gist of the action doctrine. See Wolfe v. Allstate Prop. & Cas. Ins. Co., No. 4:10-CV-800, 2011 WL 13160292, at *4 (M.D. Pa. Jan. 10, 2011) (concluding claim under UTPCPL survived motion to dismiss because plaintiff alleged malfeasance by insurer in evaluating insurance claim).
Similarly, misrepresentation claims against a party to a contract for acts during its performance of contractual obligations are not necessarily barred. See Bruno, 106 A.3d at 70 (permitting tort claims for statements by insurance adjuster and engineer that mold was not harmful during investigation of property damage caused by mold, as “contract is regarded merely as the vehicle, or mechanism, which established the relationship between the parties, during which the tort of negligence was committed”); Telwell Inc. v. Grandbridge Real Est. Cap., LLC, 143 A.3d 421, 429 (Pa. Super. 2016) (concluding dismissal of fraudulent and negligent misrepresentation claims based on gist of the action doctrine premature, when claims were based on company sending billing statements with incorrect mortgage interest rate); see also, e.g., Dixon v. Nw. Mut., 146 A.3d 780, 790-91 (Pa. Super. 2016) (concluding at preliminary objection stage that UTPCPL claim based on “negligent[] misrepresent[ation] [of] premium amount by sending incorrect billing statements” not barred by gist of the action); Falcon v. Nw. Mut. Life Ins. Co., No. CV 19-404, 2020 WL 7027482, at *12 (W.D. Pa. Nov. 30, 2020) (concluding insurer did not show gist of the action doctrine barred negligence and negligent misrepresentation claims when insured alleged insurer had “not provid[ed] [insured] with the policy that he requested”); N. Am. Elite Ins. Co. v. Victory Fire Prot., Inc., No. CV 17-3554, 2018 WL 4051803, at *4 (E.D. Pa. Aug. 24, 2018) (concluding tort claims not barred when “duty allegedly breached is not one ‘to inspect' [under the contract] but to non-negligently carry out the inspection” and “[Defendant] points to no portion of the contract that would encompass such a duty”). But see Sadtler v. Jackson- Cross Co., 587 A.2d 727, 730 (Pa. Super. 1991) (stating professional negligence claims against accountants are generally barred and concluding claim of negligently performed real estate appraisal sounds in contract).
a. Unjust Enrichment
Some of Plaintiff's allegations under his tort claims appear squarely based on the contract. In his claim of unjust enrichment, Plaintiff alleges, “Despite realizing substantial premium [sic] from plaintiff, Allstate withheld the insurance proceeds owed to Colbert for the theft of his property by Couttien.” (Doc. 1, ¶ 167). Plaintiff seeks payment of his claim as a remedy. Plaintiff's unjust enrichment claim is a simple a “re-casting” of his breach of contract claim into a tort claim. See eToll, Inc., 811 A.2d at 14. In addition, under Pennsylvania law, unjust enrichment is inapplicable when the parties' relationship is based upon an express contract. See Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d Cir. 1987).
Plaintiff's unjust enrichment claim is barred by the gist of the action doctrine, as it sounds in contract. Plaintiff's unjust enrichment claim should be dismissed.
b. Remaining Claims
Plaintiff's claims of negligent misrepresentation, civil conspiracy, and “unfair and deceptive trade practices” include both allegations that are clearly based on contractual duties and allegations that may not arise squarely from contractual duties. As an example of the latter, he makes allegations regarding Allstate's conduct in responding to subpoenas in the adversary proceeding with Couttien in bankruptcy court and in demanding that Plaintiff and Harris drop their state-court cross-claim against Couttien. (See Doc. 1, ¶¶ 159, 164).
For example, in his negligent misrepresentation claim, Plaintiff alleges that “Allstate further breached its contract with Plaintiffs and/or acted negligently by . . . Failing to properly and timely adjust Plaintiffs claim consistent with insurance industry standards; Failing to provide any reasonable basis for denying payment on Colbert claim for years following the incident.” (Doc. 1, ¶ 149(B), (C)).
Without briefing on the “gist of the action” doctrine by Defendants, who bear the burden of proving Plaintiff fails to state a claim, see Gould Elecs. Inc., 220 F.3d at 178, and at this early stage of the proceedings, it is premature to determine whether all of Plaintiff's tort claims fail. See Weber Display & Packaging v. Providence Washington Ins. Co., No. CIV.A. 02-7792, 2003 WL 329141, at *4 (E.D. Pa. Feb. 10, 2003) (noting “courts have cautioned against deciding whether the gist of an action is in contract or tort at the motion to dismiss stage of a proceeding”). Because Defendants have not established that Plaintiff's remaining claims, viewed in the light most favorable to him, are barred by the Policy's suit-limitation provisions or the gist of the action doctrine, they have not shown entitlement to dismissal of these claims. While I have doubts about the merits of these claims and their timeliness, Defendants have not adequately addressed these issues, and I decline to do so sua sponte. Therefore, Plaintiff's negligent misrepresentation, civil conspiracy, and unfair and deceptive trade practices claims should not be dismissed at this point.
V. RECOMMENDATION
Based on the foregoing, IT IS HEREBY RECOMMENDED THAT:
(1) Defendants' Motion to Dismiss (Doc. 6) be GRANTED in part and DENIED in part as follows:
a. Plaintiff's Breach of Contract claim (Count 1) should be DISMISSED WITH PREJUDICE.
b. Plaintiff's Unjust Enrichment claim (Count 6) should be DISMISSED WITH PREJUDICE.
c. Defendants' Motion to Dismiss should be DENIED as to Plaintiff's claims of Negligent Misrepresentation (Count 2), Bad Faith (Count 3), Civil Conspiracy (Count 4), and Unfair and Deceptive Trade Practices (Count 5).
Defendants may raise a statute of limitations defense to these claims at a later point.
NOTICE OF LOCAL RULE 72.3
NOTICE IS HEREBY GIVEN that any party may obtain a review of the Report and Recommendation pursuant to Local Rule 72.3 which provides: Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses, or recommit the matter to the magistrate judge with instructions.