Opinion
CIVIL ACTION NO. 19-cv-3128
03-27-2020
JUDITH VELAZQUEZ, et al., Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
REPORT AND RECOMMENDATION
Plaintiffs Judith and Fernando Velazquez ("Plaintiffs"), on behalf of themselves and all others similarly situated, filed the instant action against Defendant State Farm Fire and Casualty Company ("Defendant" or "State Farm") for failing to pay certain costs associated with accessing a plumbing line that caused water damage to Plaintiffs' insured property. Presently before the Court is Defendant's Motion to Dismiss. For the following reasons, I respectfully recommend the Motion to Dismiss be granted, the Amended Complaint be dismissed without prejudice, and Plaintiffs be granted leave to amend.
I. BACKGROUND
Plaintiffs purchased a homeowners insurance policy ("the Policy") from Defendant to insure their home. (Am. Compl., ECF No. 14, at ¶¶ 14; Def.'s Mot. Dismiss, Ex. 1, ECF No. 19-2). The Policy covers "accidental direct physical loss to the property . . . except as provided in Section 1 - Losses Not Insured." (Id. at 24). Included in the "Losses Not Insured" were losses caused by "continuous or repeated seepage or leakage of water or steam from a: (1) heating, air condition or automatic fire protective sprinkler system; (2) household appliance; or (3) plumbing system, including from, within or around any shower stall, shower bath, tub installation, or other plumbing fixture, including their walls, ceiling or floors; which occurs over a period of time. If loss to covered property is caused by water or steam not otherwise excluded, we will cover the cost of tearing out and replacing any part of the building necessary to repair the system or appliance." (Id. at 26) (emphasis added).
Plaintiffs did not attach a copy of the Policy to the Amended Complaint, but Defendant attached the Policy to its Motion to Dismiss. (Ex. 1, ECF No. 19-2). The Court may permissibly rely on the Policy because "[d]ocuments that the defendant attaches to the motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to the claim; as such, they may be considered by the court." Pryor v. NCAA, 288 F.3d 548, 560 (3d Cir. 2002); Borough of Moosic v. Darwin Nat'l Assur., 556 F. App'x 92, 95 (3d Cir. 2014).
In August 2015, Defendant notified Plaintiffs of an Endorsement to the Policy that would be effective September 27, 2015. (Def.'s Mot., ECF No. 19-3, at 6). The Endorsement notice summarized the changes providing for a "Potential Reduction in Coverage," explaining that "[a]lthough not intended to change coverage, this change could potentially reduce or eliminate coverage depending on how it is interpreted and, in that regard, should be viewed as either an actual or potential reduction in or elimination of coverage." (Id. at 8). The Endorsement deleted the above-italicized Tear Out provision and added the following: "Tear Out. If a Loss Insured to Coverage A property is caused by water or steam escaping from a system or appliance, we will also pay the reasonable cost you incur to tear out and replace only that particular part of the building or condominium unit owned by you necessary to gain access to the specific point of that system or appliance from which the water or steam escaped. We will not cover the cost of repairing or replacing the system or appliance itself." (Id. at 8).
On September 22, 2018, Plaintiffs suffered an "escape of water from within the Property's plumbing system, resulting in damage to the insured premises which required access to the plumbing line to properly repair the system." (Pls.' Am. Compl., ECF No. 14, at ¶ 30). Plaintiffs timely reported the loss to Defendant and retained a plumber to access and repair the plumbing line. (Id. at ¶¶ 32-35). The plumber's invoice indicated access to repair the broken line cost $6,450. (Id.; see also Ex. C). Plaintiffs allege "State Farm did not pay for the entire access bill." (Am. Compl., ECF No. 14, at ¶ 35).
In their Amended Complaint, Plaintiffs assert twelve counts against Defendant—six individual counts and six class action counts. (Am. Compl., ECF No. 14, at ¶¶ 47-140). Plaintiffs allege that Defendant engaged in "fraudulent or deceptive conduct" by including the Endorsement in the Policy, in violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. §§ 201-2, et seq. (Counts I and VII); Pennsylvania's Unfair Insurance Practices Act ("UIPA"), 40 P.S. §§ 1171.1, et seq. (Counts II and VIII); and Pennsylvania's Unfair Claims Settlement Practices Administrative Code, 31 Pa. Code §§ 146.1, et seq. (Counts VI and XII). Plaintiffs also bring breach of contract claims (Counts IV and X); and bad faith claims, 42 Pa.C.S. § 8371 (Counts V and XI) related to the Endorsement and Defendant's alleged failure to pay the entire access bill. Plaintiffs lastly request a declaratory judgment under 28 U.S.C. § 2201 that the Endorsement to the Policy is void due to its alleged unconscionability (Counts III and IX).
Plaintiffs filed the initial Complaint against Defendant on July 16, 2019. (Compl., ECF No. 1). Defendant filed a Motion to Dismiss, which was ultimately denied as moot in light of the Amended Complaint filed by Plaintiffs on October 2, 2019. (Mot., ECF No. 8; Am. Compl., ECF No. 14; Order, ECF No. 15).
On November 1, 2019, Defendant filed a Motion to Dismiss the Amended Complaint. (Mot., ECF No. 19). Plaintiffs responded in opposition on November 29, 2019, and Defendant filed a Reply in further Support. (Pls.' Resp., ECF No. 22; Def.'s Reply, ECF No. 23). By Order dated February 5, 2020, the Honorable Nitza I. Quiñones-Alejandro referred this matter to me for a Report and Recommendation. (Order, ECF No. 24).
II. LEGAL STANDARDS
A. Rule 12(b)(6)
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is governed by the well-established standard set forth in Ashcroft v. Iqbal, 556 U.S. 662 (2009). See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). "[W]e accept as true all allegations in the plaintiff's complaint as well as all reasonable inferences that can be drawn from them, and we construe them in a light most favorable to the non-movant." Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010). "To survive dismissal, 'a complaint must contain sufficient factual matter, accepted as true, to state a claim that is plausible on its face.'" Tatis v. Allied Interstate, LLC, 882 F.3d 422, 426 (3d Cir. 2018) (quoting Iqbal, 556 U.S. at 678). Facial plausibility is "more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Iqbal, 556 U.S. at 678). Rather, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Iqbal, 556 U.S. at 678).
Under Federal Rule of Civil Procedure 12(b)(2), a party may move to dismiss a complaint for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). The court accepts allegations in the complaint as true and draws reasonable inferences in support of the plaintiff. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). "A district court sitting in diversity may assert personal jurisdiction over a nonresident party to the extent allowed under the law of the forum state." Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009); Fed. R. Civ. P. 4(k). Pennsylvania's long-arm statute allows courts to exercise personal jurisdiction "to the full extent allowed under the Constitution of the United States." 42 Pa.C.S. § 5322(b). The Constitution's Due Process Clause requires that "minimum contacts" exist between the non-resident and forum state, "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks and citations omitted). Generally, the plaintiff bears the burden of proving personal jurisdiction by a preponderance of the evidence. Control Screening LLC v. Tech. Application & Prod. Co., 687 F.3d 163, 167 (3d Cir. 2012) (quoting Carteret Sav. Bank v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992)).
Two forms of personal jurisdiction exist: general and specific. Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984). General jurisdiction exists where the defendant's contacts with the forum are "continuous and systematic," even if the cause of action is unrelated to the defendant's activities in the forum state. See id. at 414-16. "Specific jurisdiction is established when a non-resident defendant has 'purposefully directed' his activities at a resident of the forum and the injury arises from or is related to those activities." General Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)); see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (discussing personal jurisdiction where "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.").
III. DISCUSSION
In its Motion to Dismiss, Defendant first contends that many of Plaintiffs' individual claims should be dismissed for failure to state a plausible claim. (Mem. Law, ECF No. 19-5, at 2). Defendant also argues that Plaintiffs' request for declaratory judgment should be dismissed because it is duplicative of their breach of contract claim. (Id.). Defendant lastly asserts that Plaintiffs' putative class action claim for breach of contract should be dismissed because the Court lacks personal jurisdiction over non-Pennsylvania residents in the putative class. (Id.). I will address Defendant's arguments in turn. For the following reasons, I respectfully recommend that Defendant's Motion to Dismiss be granted, the Amended Complaint be dismissed without prejudice, and Plaintiffs be afforded leave to amend their complaint.
Defendant also asserts "Plaintiffs' claims are barred by the filed rate doctrine" whici "bars recovery for injuries, including fraud-relates injuries, arising from rates properly filed with the appropriate regulatory agency." (Def.'s Mem. Law, ECF No. 19-5, at 23-24 (quoting Christoph v. AARP, Inc., No. 18-cv-3453, 2019 WL 4645172, at *3 (E.D. Pa. Sept. 23, 2019))). Plaintiffs' claims arise from the Endorsement in the Policy and Defendant's alleged breach for failing to cover all reasonable costs associated with tear out, the claims do not "aris[e] from rates properly fild with the appropriate regulatory agency." Therefore, the filed rate doctrine is inapplicable here.
A. Pennsylvania's Unfair Trade Practices and Consumer Protection Law
Defendants first argue that Plaintiffs fail to state a claim under Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 Pa. Cons. Stat. § 201-2. (Def.'s Mem. Law, ECF No. 19-5, at 5). Specifically, Defendant assert (1) Plaintiffs fail to plead the elements under the UTPCPL's catch-all provision; (2) Plaintiffs fail to allege malfeasance as required; and (3) the economic loss doctrine bars Plaintiffs' claim. (Id. at 5-12). Plaintiffs respond that the UTPCPL claim should not be dismissed because they have alleged sufficient facts to plausibly state a claim. (Pls.' Resp., ECF No. 22, at 11). I respectfully recommend Plaintiffs' UTPCPL claim be dismissed without prejudice.
The UTPCPL includes a "catch-all" provision that prohibits "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding." 73 Pa. Cons. Stat. § 201-2(4)(xxi). "In Pennsylvania, only 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." Horowitz v. Federal Kemper Life Assur. Co., 57 F.3d 300, 307 (3d Cir. 1995) (citing Gordon v. Pa. Blue Shield, 548 A.2d 600, 604 (Pa. Super. Ct. 1988)); McDonough v. State Farm Fire and Casualty Co., 365 F. Supp. 3d 552, 559 (E.D. Pa. 2019) ("Under the UTPCPL, 'only malfeasance, rather than nonfeasance, raises a cause of action.'"). To state a claim under the UTPCPL, a plaintiff must show: (1) a deceptive act that is likely to deceive a consumer acting reasonably under similar circumstances; (2) justifiable reliance; and (3) that the plaintiff's justifiable reliance caused ascertainable loss. Hall v. Equifax Info. Servs. LLC, 204 F. Supp. 3d 807, 810 (E.D. Pa. 2016); Seldon v. Home Loan Servs., 647 F. Supp. 2d 451, 470 (E.D. Pa. 2009).
Plaintiffs fail to state a plausible claim under the UTPCPL; therefore, I respectfully recommend this claim be dismissed. First, Plaintiffs have not alleged sufficient facts demonstrating a deceptive act. In their Amended Complaint and Response in Opposition, Plaintiffs contends the "deceptive act" consists of the language in the notice of the Endorsement. (Am. Compl., ECF No. 14, at ¶ 50 ("State Farm intended to change the coverage provided by the Policy despite indicating on the Endorsement that it is 'not intended to change coverage.'"); Pls.' Resp., ECF No. 22, at 13 ("The deception lies in the fact that State Farm knowingly reduced Plaintiffs' coverage but told Plaintiffs otherwise under the "Potential Reduction of Coverage" provision at the top of the Endorsement.")). Plaintiffs have not shown the complained-of language in the Endorsement's notice is a "deceptive act." The Endorsement's notice states the changes involved a "Potential Reduction in Coverage." (Mot., ECF No. 19-3, at 8). The notice informed the policyholder "[a]lthough not intended to change coverage, this change could potentially reduce or eliminate coverage depending on how it is interpreted and, in that regard, should be viewed as either an actual or potential reduction in or elimination of coverage." (Id.). Plaintiff has failed to plausibly show this is a "deceptive act" when the notice's language explicitly states that the policyholder should treat the change as a reduction in coverage.
Plaintiffs also originally argued the deception was ostensibly shown because "[t]he Endorsement's 'Access Coverage' provision, although advertised as 'Additional Coverages,' actually eliminates/limits coverage which is otherwise provided under the terms of Policy." (Am. Compl., ECF No. 14, at ¶ 51). As Defendant points out in its Motion, the phrase "Section 1 - Additional Coverage" is merely a section header in the Policy and is meant to denote where the newly-added tear out provision is located. (Def.'s Mem. Law, ECF No. 19-5, at 8-9). Indeed, the prior tear out provision was under "Section I - Losses Not Insured" and the new tear out provision was added under "Section 1 - Additional Coverage." I agree with Defendant that this is not deceptive because "[t]he fact that the Endorsement uses the phrase 'Additional Coverages' with respect to the new tear-out provision does not signify that the coverage is 'additional' to what the Policy provided before the Endorsement. Rather, that language simply identifies the part of the Policy where the new provisions belongs[.]" (Id.).
Second, Plaintiffs have failed to plausibly assert justifiable reliance. In their Amended Complaint, they blanketly allege "State Farm materially misrepresented the nature and quality of coverage to Plaintiffs, who justifiably relied on those misrepresentations." (Am. Compl., ECF No. 14, at ¶ 51). Such a conclusory allegation is insufficient to show justifiable reliance. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005) ("[A] court need not credit either 'bald assertions' or 'legal conclusions' in a complaint when deciding a motion to dismiss."). Moreover, justifiable reliance in this context means that Defendant's conduct caused Plaintiffs to purchase the Policy. Hunt v. U.S. Tobacco Co., 538 F.3d 217, 227 (3d Cir. 2008) ("[Plaintiff] has not adequately alleged that he justifiably relied on [Defendant's] deception, for he has not alleged that [Defendant's] deception induced him to purchase [Defendant's] products or engage in any other detrimental activity."). Plaintiffs make no claims as to how Defendant's alleged deceptiveness impacted their conduct or induced them to do anything. Because they allege no facts showing justifiable reliance, this claim fails. See, e.g., Kemezis v. Matthews, 394 F. App'x 956, 959 (3d Cir. 2010) (affirming dismissal of UTPCPL claim because plaintiff failed to "at least allege facts from which plausible inferences of deceptive conduct and justifiable reliance thereon can be drawn."); Cessna v. REA Energy Cooperative, Inc., 258 F. Supp. 3d 566, 582-83 (W.D. Pa. 2017) (dismissing UTPCPL claim for failure to allege justifiable reliance because "[p]rivate plaintiffs, . . . may pursue UTPCPL claims only when the alleged deceptive act prompted them to act to their detriment.").
Accordingly, I respectfully recommend Plaintiffs' claim under the UTPCPL be dismissed because they fail to plausibly allege Defendant engaged in deceptive conduct or that they justifiably relied on that alleged conduct. I further recommend this dismissal be without prejudice and that Plaintiffs be granted leave to amend their complaint, as amendment would not be inequitable or futile. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008) ("If a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile."); cf. Filippello v. Transamerica Premier Life Ins. Co., No. 17-5743, 2018 WL 451639, at *4 (E.D. Pa. Jan. 16 2018) (dismissing UTPCPL claim for failure to state plausible claim but granting leave to amend).
B. Pennsylvania's UIPA and UCSPR
Defendant next asserts Plaintiffs' claims under Pennsylvania's UIPA, 40 P.S. § 1171.1, and Pennsylvania's UCSPR, 31 Pa. Code §§ 146.1, should be dismissed because there is no private cause of action under the UIPA or UCSPR. (Def.'s Mem. Law, ECF No. 19-5, at 12). Plaintiffs concede this point. (Pls.' Resp., ECF No. 22, at 18). Because there is no private right of action under the UIPA or UCSPR, I respectfully recommend these counts be dismissed with prejudice. See, e.g., Leach v. Northwestern Mut. Ins. Co., 262 F. App'x 455, 459 (3d Cir. 2008) ("[T]here is no private right of action under the UIPA, which can only be enforced by the state insurance commissioner."); Swan Caterers, Inc. v. Nationwide Mut. Fire Ins. Co., No. 12-0024, 2012 WL 5508371, at *8 (E.D. Pa. Nov. 13, 2012) ("Courts within the Third Circuit and Commonwealth of Pennsylvania continue to recognize that the UIPA and UCSPR do not provide plaintiffs with a private cause of action."); Connolly v. Reliastar Life Ins. Co., No. 03-5444, 2006 WL 3355184, at *12 (E.D. Pa. Nov. 13, 2006) ("The case law is abundantly clear that there is no private cause of action under the UIPA or UCSPR.").
C. Declaratory Judgment
Defendant next argues Plaintiffs' declaratory judgment count should be dismissed because it is duplicative of their breach of contract count, and because Plaintiffs failed to plausibly state a claim for declaratory judgment. (Def.'s Mem. Law, ECF No. 19-5, at 13-16). Plaintiffs respond that the declaratory judgment count is not duplicative of their breach of contract count, and states a valid claim for declaratory judgment. (Pls.' Resp., ECF No. 22, at 19-23). I agree with Plaintiffs that the declaratory judgment count is not duplicative of their breach of contract claim. But, I conclude Plaintiffs have failed to state a plausible claim for declaratory judgment. I respectfully recommend this Count be dismissed without prejudice, and that Plaintiff be granted leave to amend.
The two counts are certainly related—Plaintiffs' breach of contract count hinges on their declaratory judgment count; however, the two claims are distinct. In the declaratory judgment count, Plaintiffs seek a declaration the Endorsement is unconscionable and unenforceable. In their breach of contract count, they allege Defendant breached the contract by "attempting to enforce the unconscionable endorsement and by denying Plaintiffs the benefits they are entitled to under the Policy without the Endorsement." As Plaintiffs state in their Response, "[i]f this Court rules that the Endorsement which State Farm is attempting to enforce is unconscionable and void, then the original Policy would apply. If the original Policy applies, then Plaintiffs have clearly stated a claim for breach of contract." (Pls.' Resp., ECF No. 22, at 24). So although the claims are related, they are not duplicative.
Plaintiffs request a "judgment declaring the Endorsement void, as it would be unconscionable to enforce the Endorsement against Plaintiffs due to State Farm's deceptive conduct and misrepresentations regarding the Policy and Endorsement." (Am. Compl., ECF No. 14, at ¶ 68). Defendant argues this count should be dismissed because (1) unconscionability is a defense to contract enforcement, and Plaintiffs point to no law indicating that unconscionability may be used affirmatively; and (2) even if they may claim unconscionability, Plaintiffs fail to plausibly state such a claim. (Def.'s Mem. Law, ECF No. 19-5, at 14-16). Plaintiffs respond that "[i]t is well-known that 'unconscionability is a defensive contractual remedy which serves to relieve a party from an unfair contract or from an unfair portion of a contract'" but maintain they are "not making an affirmative claim for damages as a result of the unconscionable Endorsement, but rather, seeking relief from State Farm's enforcement of the unconscionable Endorsement." (Pls.' Resp., ECF No. 22, at 21 (quoting Andrichyn v. TD Bank, N.A., 93 F. Supp. 3d 375, 389 (E.D. Pa. 2015)). Plaintiffs further respond that they have alleged sufficient facts to state a claim for unconscionability.
"To prove unconscionability under Pennsylvania law, a party must show that the contract was both substantively and procedurally unconscionable." Quilloin v. Tenet HealthSystem Phila., Inc., 673 F.3d 221, 230 (3d Cir. 2012) (citing Salley v. Option One Mortg. Corp., 925 A.2d 115, 119 (Pa. 2007)). This requires the plaintiff show "(1) that the contractual terms are unreasonably favorable to the drafter ('substantive unconscionability'), and (2) that there is no meaningful choice on the part of the other party regarding the acceptance of the provisions ('procedural unconscionability')." Cardinal v. Kindred Healthcare Inc., 155 A.3d 46, 53 (Pa. Super. Ct. 2017) (citing MacPherson v. Magee Mem. Hosp., 128 A.3d 1209, 1219 (Pa. Super. Ct. 2015) (en banc)).
Plaintiffs have not plausibly shown either substantive or procedural unconscionability. In Pennsylvania, "[s]ubstantive unconscionability refers to contractual terms that are unreasonably or grossly favorable to one side and to which the disfavored party does not assent." Quilloin, 673 F.3d at 230 (quoting Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999)). Plaintiffs have not adequately alleged the Policy's terms are unreasonably or grossly favorable to Defendant. Plaintiffs allege grossly unfavorable terms because "[t]he enforcement of provisions contained within the Endorsement serves to only benefit State Farm and provides no benefit to the insured when compared to the coverage originally provided to the Policy." (Am. Compl., ECF No. 14, at ¶ 61). The Policy covers reasonable costs incurred to tear out and replace materials to gain access to a system or appliance that caused covered water damage. (ECF No. 19-2, at 9). That serves a benefit to the insured, and does not "serve[] to only benefit State Farm." Also, the unconscionability analysis does not require the Court compare the Policy before and after the Endorsement. We solely look at the contractual terms at issue here, which is the Policy with the Endorsement. Moreover, Plaintiffs have not plausibly alleged this is a situation where "the disfavored party does not assent." Quilloin, 673 F.3d at 230. Plaintiffs were notified of the Endorsement in August 2015, to be effective September 27, 2015. (See Am. Compl., ECF No. 14, at ¶¶ 16-18; Ex. 2, ECF No. 19-3, at 2-8). They renewed the Policy. They subsequently renewed the policy each year until September 2018, when the water damage loss occurred. (See id.). Because Plaintiffs have not plausibly alleged the contractual terms were grossly favorable to Defendant or that they did not assent, they have not articulated sufficient facts to support a claim of substantive unconscionability.
Plaintiffs also have not alleged sufficient facts to show procedural unconscionability. "A contract is procedurally unconscionable where 'there was lack of meaningful choice in the acceptance of the challenged provision.'" Quilloin, 673 F.3d at 235 (quoting Salley, 925 A.2d at 119). In their Amended Complaint, the facts alleged that might support the procedural unconscionability claim are: "[a]s a policy of insurance, the Policy is a contract of adhesion. Plaintiffs and State Farm are not of equal bargaining power, and Plaintiffs were forced to adhere to the terms of the form contract which were not negotiable." (Am. Compl., ECF No. 14, at ¶ 36, 59). Plaintiffs essentially rely on the mere fact that the Policy is an insurance contract to assert procedural unconscionability. As another court in the Third Circuit reasoned, "[t]his is simply legally incorrect. Pennsylvania courts have consistently emphasized that merely because a contract is one of adhesion does not render it unconscionable. Indeed, there is no basis under Pennsylvania law for finding that any insurance contract, simply by virtue of being one, is procedurally unconscionable." Hepler v. Transamerica Premier Life Ins. Co., No. 17-299, 2019 WL 4854133, at *5 (W.D. Pa. Sept. 30, 2019) (citing Salley, 925 A.2d at 127; Bishop v. Washington, 480 A.2d 1088, 1094 (Pa. Super. Ct. 1984); Delinger, Inc. v. Dendler, 608 A.2d 1061, 1067 (Pa. Super. Ct. 1992)).
In any event, Plaintiffs' conclusory allegations are insufficient to show a "'lack of meaningful choice in the acceptance of the challenged provision.'" Quilloin, 673 F.3d at 235 (quoting Salley, 925 A.2d at 119). First, Plaintiffs could have chosen to reject the Endorsement by cancelling their Policy. (ECF No. 19-2, at 36). They did not, and instead renewed the Policy each year from when the Endorsement was added in September 2015, until the water damage in September 2018. Second, Plaintiffs could have also sought another policy from a different provider to cover all costs associated with tear out and replacement to access covered water damage. Cf. Neil v. Allstate Ins. Co., 549 A.2d 1304, 1310 n.4 (Pa. Super. Ct. 1988) (concluding policy not unconscionable because "the Neils, as insurance consumers, had available to them in the insurance marketplace other types of insurance which could have provided coverage of the type which they seek[.]"). Lastly, there are no plausible allegations that Plaintiffs were precluded from negotiating the terms of the Endorsement's tear out provision. Cf. Zawierucha v. Phila. Contributionship Ins. Co., 740 A.2d 738, 740 (Pa. Super. Ct. 1999) (concluding party "failed to establish they lacked meaningful choice as to whether to accept the provision in question" because they "failed to offer any evidence that they were in any way prohibited from negotiating different contract terms."); Elcom Techs. Corp. v. Amer. Dynasty Surplus Lines Ins. Co., 2000 WL 1470217, at *6 (E.D. Pa. 2000) (finding plaintiffs failed to show they lacked meaningful choice because, inter alia, "there is no evidence that plaintiffs had to accept the National Union policy as written."). The Policy included options that Plaintiffs elected to include, and the Endorsement specifically states in the Declarations "[w]hen you request changes to this policy . . . ." (ECF No. 19-2, at 9). In sum, Plaintiffs have failed to plausibly allege procedural unconscionability and lack of a meaningful choice.
Accordingly, I conclude Plaintiffs have failed to plausibly allege that declaratory relief is due. Plaintiffs have not plausibly alleged the Policy is unenforceable due to unconscionability because they have failed to allege sufficient facts supporting substantive and procedural unconscionability. Therefore, I respectfully recommend Plaintiffs' declaratory judgment count be dismissed. I further recommend the dismissal be without prejudice and that Plaintiffs be granted leave to amend.
D. Breach of Contract
Defendant next moves to dismiss Plaintiffs' breach of contract claim. (Def.'s Mem. Law, ECF No. 19-5, at 17-18). "To state a claim for breach of contract, Pennsylvania law requires a plaintiff to establish: (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract, and (3) resultant damages." Frank B. Fuhrer Wholesale Co. v. Millercoors LLC, 602 F. App'x 888, 891 (3d Cir. 2015) (citing Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003)).
Plaintiffs breach of contract theory is two-fold. Plaintiffs first allege "[g]iven State Farm's attempt to enforce the unconscionable exclusion, State Farm breached its contract with Plaintiffs." (Am. Compl., ECF No. 14, at ¶ 73). This argument is related to their declaratory judgment count. They assert "[i]f this Court rules that the Endorsement which State Farm is attempting to enforce is unconscionable and void, then the original Policy would apply. If the original Policy applies, then Plaintiffs have clearly stated a claim for breach of contract." (Pls.' Resp., ECF No. 22, at 24). Plaintiffs then allege Defendant's purported failure to pay for the entire access bill constitutes a breach of the Policy, even if the Endorsement is not deemed unconscionable. (Am. Compl., ECF No. 14, at ¶¶ 74-77; Pl.'s Resp., ECF No. 22, at 25).
To the extent Plaintiffs attempt to bring an independent count asserting Defendant breached a duty of good faith in the insurance contract, such a claim is impermissibly brought under Pennsylvania law. Plaintiffs mention a duty of good faith in their Amended Complaint and allege "State Farm did not act in good faith while adjusting this claim and enforcing the contract." (See Am. Compl., ECF No. 14, at ¶ 76). However, "Pennsylvania law does not recognize a separate breach of contractual duty of good faith and fair dealing where said claim is subsumed by a separately pled breach of contract claim." Simmons v. Nationwide Mut. Fire Ins. Co., 788 F. Supp. 2d 404, 409 (W.D. Pa. 2011). As the Simmons Court noted, "applying Pennsylvania law, several courts have held that, where the plaintiff alleges that the defendant breached its duty of good faith and fair dealing by denying first party benefits under an insurance policy, said claim is subsumed by the plaintiff's breach of insurance claimpremised on the same conduct." Id. (collecting cases). That reasoning applies with equal force here. Accordingly, to the extent Plaintiffs assert the alleged breach of good faith as independent of the breach of contract claim, that independent assertion is improper under Pennsylvania law.
Plaintiffs have failed to plausibly state a breach of contract claim. In Boring v. State Farm Fire and Casualty Company, No. 19-1833, 2019 WL 3774191 (E.D. Pa. Aug. 9, 2019), the court concluded the plaintiff failed to state a breach of contract claim where the plaintiff requested the court deem unconscionable the same Endorsement as here. The Boring court provided persuasive reasoning:
[Plaintiff] pleads existence of a contract. An insurance policy is a contract. But he ignores the contract terms. He argues the Endorsement is unconscionable. He wants us to read out the Endorsement. Under Pennsylvania law, the law of unconscionability is a defense, not a cause of action. Our Court of Appeals explains, "[u]nconscionability is a defense contractual remedy which serves to relieve a party from an unfair contract or from an unfair portion of the contract." [Plaintiff] is not entitled to claim unconscionability as he is the party seeking enforcement of the Policy. The Endorsement is read into the Policy. We must interpret the Policy with the Endorsement.Id. at *3 (footnotes omitted).
[Plaintiff] does not allege a breach of the Policy. He alleges State Farm would need to pay his plumber's full estimate if the Endorsement did not apply. He may be right but this is a different case. The contract we must look to is the Policy with the Endorsement. Under the Policy, [Plaintiff] does not allege State Farm breached as they reimbursed [Plaintiff] under the Endorsement. He just did not get paid for the full amount he wanted under the original Policy. [Plaintiff] fails to state a claim for breach of contract.
This case is slightly distinguishable from Boring, but the reasoning still holds true. In Boring, the plaintiff attempted to assert unconscionability in the breach of contract claim. Here, Plaintiffs raised the unconscionability issue as an independent count, the declaratory judgment count addressed supra. That aside, the contention, and the conclusion, remain the same. Unconscionability does not apply for the reasons discussed above. The Endorsement is part of the Policy. Therefore, Plaintiffs theory that "[g]iven State Farm's attempt to enforce the unconscionable exclusion, State Farm breached its contract with Plaintiffs" does not plausibly state a breach of contract claim.
Even assuming arguendo the Endorsement was unconscionable, and the original Policy applied, Plaintiffs still failed to plausibly state a breach of contract claim. Plaintiffs assert "[i]f the original Policy applies, then Plaintiffs have clearly stated a claim for breach of contract." (Pls.' Resp., ECF No. 22, at 24). I disagree. Plaintiffs allege nothing in the Amended Complaint that indicates the access bill would have been covered under the original Policy. (See generally Am. Compl., ECF No. 14).
Plaintiffs also fail to plausibly state a claim for breach of contract under the Policy with the Endorsement. The Policy states Defendant will "pay the reasonable cost you incur to tear out and replace only that particular part of the building or condominium unit owned by you necessary to gain access to the specific point of that system or appliance from which the water or steam escaped." (Def.'s Ex. 1, ECF No. 19-2, at 9). Plaintiffs' Amended Complaint is devoid of allegations that would allow the conclusion that this duty was breached, resulting in damages. Frank B. Fuhrer Wholesale Co., 602 F. App'x at 891 (citing Ware, 322 F.3d at 225). Indeed, in their Amended Complaint, they claim the plumber charged $6,450 to access the plumbing line, "State Farm did not pay for the entire access bill," and that "State Farm's refusal to indemnify Plaintiffs' loss constitute a breach of the insurance contract." (Am. Compl., ECF No. 14, at ¶¶ 34-35, 77). However, the Policy did not require Defendant cover the "entire access bill" and there is nothing for the Court to bridge the gap and infer that the failure to pay the full access bill equated to a breach of the Policy. Stated differently, Plaintiffs do not allege that whatever amount Defendant paid was a breach of their duty to pay the reasonable cost incurred to tear out and replace the part of their home necessary to gain access. Accordingly, because they do not allege sufficient facts showing Defendant breached a duty under the Policy resulting in damages, I respectfully recommend this count be dismissed. Cf. Boring, 2019 WL 3774191, at *3. I further recommend the dismissal be without prejudice and that Plaintiffs be granted leave to amend.
Similar to Boring, in their Opposition to Defendant's Motion, Plaintiffs for the first time allege that terms of the Policy are ambiguous and thus should be construed against Defendant. (Pls.' Resp., ECF No. 22, at 26). As the Boring court stated, "[w]e cannot guess as to how we would find 'access' is ambiguous. [Plaintiff] does not plead the Endorsement is ambiguous. We cannot add allegations to create a potential cause of action. If [plaintiff] has a good faith belief the term 'access' in the Endorsement is unenforceable as ambiguous, he (and his counsel) needs to satisfy Rule 11 and, if warranted, assert this claim." Boring, 2019 WL 3774191, at *3. As in Boring, Plaintiffs make no mention of ambiguity in their Amended Complaint. (See generally Am. Compl., ECF No. 14). "A party cannot avoid a motion to dismiss by raising new factual allegations in an opposition brief." Yandrisovitz v. Ohio State Life Ins. Co., No. 18-1036, 2018 WL 4203840, at *6 n.8 (E.D. Pa. Aug. 31, 2018) (citing Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) ("[I]t is axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss.")). If Plaintiffs have a good faith belief terms of the Policy are ambiguous, they must so allege in their complaint.
E. Bad Faith Claim
Defendant next moves to dismiss Plaintiffs' bad faith claims brought under 42 Pa. Cons. Stat. § 8371. Plaintiffs allege Defendant's bad faith is shown by a range of conduct. (Am. Compl., ECF No. 14, at ¶ 80(a)-(i)). I conclude that Plaintiffs do not state a plausible bad faith claim, and I respectfully recommend this Count be dismissed without prejudice.
The Pennsylvania General Assembly enacted 42 Pa. Cons. Stat. § 8371 to create a statutory cause of action for bad faith. "Although the term 'bad faith' is not defined by the Pennsylvania bad faith statute, Pennsylvania courts have interpreted it as 'any frivolous or unfounded refusal to pay proceeds of a policy.'" J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir. 2004). "Under Pennsylvania law, a plaintiff can only recover for bad faith of an insurer under 42 Pa.C.S. § 8371 if he or she shows, by clear and convincing evidence, that the insurer: (1) did not have a reasonable basis for denying benefits under the policy; and (2) knew or recklessly disregarded its lack of a reasonable basis in denying the claim." Id.; Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 377 (Pa. 2017) (same).
Plaintiffs have failed to plausibly state a claim for bad faith. The Amended Complaint is devoid of any facts indicating Defendant lacked a "reasonable basis for denying benefits under the policy." Id. As to Defendant's state of mind, Plaintiffs have failed to plausibly allege that Defendant "knew or recklessly disregarded its lack of reasonable basis." Plaintiffs allege that they "pled that State Farm knowingly reduced or eliminated Plaintiffs' coverage while representing to Plaintiffs that they did not intend to change their coverage and that their coverage might remain unchanged." (Pls.' Resp., ECF No. 22, at 28 (citing Am. Compl., ECF No. 14, at ¶¶ 47-53)). The cited pleadings are Plaintiffs' claim under the UTPCPL—once again relying on the Endorsement's notice of a "Potential Reduction in Coverage" which informs policyholders that "[a]lthough not intended to change coverage, this change could potentially reduce or eliminate coverage depending on how it is interpreted and, in that regard, should be viewed as either an actual or potential reduction in or elimination of coverage." (Mot., ECF No. 19-3, at 8). The Court fails to see how that notice, provided to Plaintiffs three years prior to the water damage here, shows that Defendant knew or recklessly disregarded its alleged lack of reasonable basis in denying Plaintiffs' entire costs for the plumber's access bill.
In essence, Plaintiffs claim that Defendant engaged in bad faith because Defendant included the Endorsement in the Policy. (Am. Compl., ECF No. 14, at ¶ 80). They allege Defendant's bad faith is evinced, for example, "by interpreting the portion of the Policy, advertised as 'Additional Coverages,' as actually reducing coverage; by selling additional coverage with the knowledge and belief that the coverage would in fact reduce coverage; by misleading Plaintiffs into believing that they had coverage for access while never intending to cover all access charges; by arbitrarily taking coverage away from Plaintiffs and titling the elimination of coverage as 'Additional Coverages,' with no legal or factual basis; by misrepresenting to Plaintiffs that they are being provided 'Additional Coverages,' when in fact, coverage is being taken away[.]" (Am. Compl., ECF No. 14, at ¶ 80).
Such allegations do not advance a claim for bad faith under 42 Pa.C.S. § 8371. Section 8371 encompasses a variety of insurer conduct, but such conduct must be related to the denial of benefits. "As such, Section 8371 'do[es] not apply to [mere] disputes over contract terms.'" Purvi, LLC v. Nat'l Fire & Marine Ins. Co., No. 19-4250, 2019 WL 6117356, at *3 (E.D. Pa. Nov. 18, 2019) (quoting UPMC Health Sys. v. Metropolitan Life Ins. Co., 391 F.3d 497, 506 (3d Cir. 2004)). Indeed, as the Third Circuit has explained, "[w]hile 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." UPMC Health Sys., 391 F.3d at 506 (citations omitted). Here, Plaintiffs' allegations do not relate to the denial of coverage of the access bill, they relate to the Endorsement notice's language and how Defendant engaged in alleged misrepresentation because of the purportedly confusing notice. (Am. Compl., ECF No. 14, at ¶ 80). As another court in this district stated, "Plaintiffs' apparent claim that the drafting of policy language was in bad faith is not actionable under Pennsylvania law . . . . Plaintiffs point to no case—nor has the Court found any case—that holds just the drafting of a policy, or 'using confusing and contradictory policy of insurance,' actionable. The Court declines to extend statutory bad faith to territory where neither the Pennsylvania legislature nor its courts have gone before." Mitch's Auto Serv. Ctr., Inc. v. State Auto. Mut. Ins. Co., No. 10-3413, 2011 WL 5042480, at *7 (E.D. Pa. Oct. 24, 2011).
I thus conclude that Plaintiffs have failed to plausibly state a bad faith claim. They have alleged no evidence that Defendant lacked a reasonable basis in denying coverage for the full access bill, nor have they plausibly alleged facts showing Defendant knew or recklessly disregarded its alleged lack of a reasonable basis. Pilosi, 393 F.3d 356, 367 (3d Cir. 2004); see also Elican v. Allstate Ins. Co., No. 17-3105, 2017 WL 6525781, at *4 (E.D. Pa. 2017) (collecting cases and noting "[c]ourts in this Circuit have routinely dismissed bad faith claims reciting only 'bare-bones' conclusory allegations unsupported by facts sufficient to raise the claims to a level of plausibility."). Bad faith claims cover a range of conduct relating to the improper denial of benefits under the applicable contract. Toy v. Metropolitan Life Ins. Co., 928 A.2d 186, 199 (Pa. 2007) ("In other words, the term [bad faith] captured those action an insurer took when called upon to perform its contractual obligations of defense and indemnification or payment of a loss that failed to satisfy the duty of good faith and fair dealing implied in the parties' insurance contract."). However, Plaintiffs have not sufficiently alleged any such conduct constituting bad faith here. Accordingly, I respectfully recommend this count be dismissed. I further recommend the dismissal be without prejudice and that Plaintiffs be granted leave to amend.
F. Putative Class Action
Defendant lastly requests the Court dismiss Plaintiffs' Count X, asserting a class action breach of contract claim. (Def.'s Mem. Law, ECF No. 19-5, at 24-30). Defendant asserts the claim "should be dismissed pursuant to Federal Rule 12(b)(2) because this Court cannot exercise personal jurisdiction over State Farm with respect to the claims of non-Pennsylvania insureds." (Id. at 25). Defendant primarily relies on the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S.Ct. 1773, 1780 (2017) ("Bristol-Myers"), as well as other decisions, interpreting Bristol-Myers to find that the Due Process Clause precludes the exercise of personal jurisdiction over the defendant for the claims of nonresident putative class members. (Def.'s Mem. Law, ECF No. 19-5, at 29 n.7 (collecting cases)).
I respectfully recommend Defendant's request to dismiss this Count be denied without prejudice to re-raise this issue at a later date, if appropriate. I recommend against extending Bristol-Myers at this time. First, Bristol-Myers is distinguishable: Bristol-Myers did not involve a proposed class action suit as here. Rather, in Bristol-Myers, more than 600 named plaintiffs, residents and nonresidents of California, instituted a mass tort action in California against Bristol-Myers Squibb Company related to a prescription drug, Plavix. 137 S.Ct. at 1778. The Bristol-Myers Court held that California lacked specific jurisdiction over the nonresident plaintiffs' claims. Id. at 1781-83. The Court reasoned that because the nonresidents were not prescribed, did not purchase, did not ingest, and were not injured by the drug in California, there was no "connection between the forum and the specific claims at issue." Id. at 1781. The Court explained that "[t]he mere fact other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents' claims." Id. at 1781.
However, the Bristol-Myers holding left some questions unanswered. For example, the Court noted that "since our decision concerns the due process limits on the exercise of specific jurisdiction by a State, we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court." Id. at 1783-84. The Bristol-Myers holding also did not address class actions: as Justice Sotomayor noted in her dissent, "[t]he Court today does not confront the question whether this opinion here would apply to a class action in which a plaintiff injured in the forum State seeks to represent a nationwide class of plaintiffs, not all of whom were injured there." Id. at 1789, n.4 (Sotomayor, J., dissenting).
Since Bristol-Myers, there has been no guidance by the Supreme Court regarding the applicability of Bristol-Myers to class actions. The D.C. Circuit in Molock v. Whole Foods Market Group, Inc., ___ F.3d ___, 2020 WL 1146733 (D.C.Cir. Mar. 10, 2020), addressed the issue presented by Defendant's instant Motion to Dismiss. In Molock, Whole Foods moved to dismiss pre-certification class action claims, arguing the District Court lacked personal jurisdiction over nonresident putative class members following Bristol-Myers. Id. at *1. On interlocutory appeal following the District Court's denial of the motion to dismiss, the D.C. Circuit did not rule on whether Bristol-Myers applied; rather, it concluded that "[b]ecause the class in this case has yet to be certified, Whole Foods' motion to dismiss the putative class members is premature." Id. at *3. The court reasoned that "putative class members . . . are always treated as nonparties" and explained that "[m]otions to dismiss nonparties for lack of personal jurisdiction are thus premature—not to mention 'novel and surely erroneous.'" Id. (quoting Smith v. Bayer Corp., 564 U.S. 299, 313 (2011)). The court concluded that "[p]utative class members become parties to an action—and thus subject to dismissal—only after class certification" and therefore held that "Whole Foods' motion to dismiss the putative class members is premature. Only after the putative class members are added to the action—that is, when the action is certified as a class under Rule 23—should the district court entertain Whole Foods's motion to dismiss the nonnamed class members." Molock, 2020 WL 1146733, at *3 (internal quotations and citations omitted). I find the Molock Court's reasoning persuasive.
The Seventh Circuit addressed an analogous situation in Mussat v. IQVIA, Inc., ___ F.3d ___, 2020 WL 1161166, at *1 (7th Cir. Mar. 11, 2020) and "h[e]ld that the principles announced in Bristol-Myers do not apply to the case of a nationwide class action in federal court under a federal statute." In Mussat, the District Court reasoned that under Bristol-Myers, the Due Process Clause "precludes the exercise of personal jurisdiction over a defendant in a putative class action where nonresident absent members seek to aggregate their claims with an in-forum resident, even though the defendant allegedly injured the nonresidents outside of the forum." (Def.'s Mem. Law, ECF No. 19-5, at 29 (quoting Mussat v. IQVIA, Inc., 2018 WL 5311903, at *3 (N.D. Ill. 2018))). The Seventh Circuit rejected that conclusion because "the district court failed to recognize the critical distinction between this case and Bristol-Myers"; namely, "[a]lthough Bristol-Myers arose in the context of consolidated indivial suits, the district court in our case thought that the Bristol-Myers approach should be extended to certified class actions." Mussat, 2020 WL 1161166, at *3-4.
In the absence of binding precedent on the applicability of Bristol-Myers to class actions, I respectfully recommend against extending its holding at this time. Cf. Gress, 386 F. Supp. 3d at 465 (declining to apply Bristol-Myers to class action claim because "[i]t is plain to see that Bristol-Myers Squibb is not squarely on point, and we see no basis to extend the application of what otherwise appears to be a limited holding."). Moreover, as the Molock Court reasoned, no class has been certified, and it would premature to assess whether specific jurisdiction is proper for the claims of unnamed class members at this early pre-certification stage. See Molock, 2020 WL 1146733, at *3; see also Chernus, 2018 WL 1981481, at *8 (declining to apply Bristol-Myers and observing "[a]t this state of the litigation, no class has been certified, and therefore, to determine whether this Court has specific jurisdiction over Defendant with respect to the claims of unnamed class members prior to class certification would put the proverbial cart before the horse."). Also, as explained above, I conclude that Plaintiffs' individual claims do not state plausible claims, and recommend that these claims be dismissed without prejudice. Because no class has been certified, I conclude, and recommend, that the class allegations should follow the same fate. See, e.g., Plavin v. Group Health Inc., 323 F. Supp. 3d 684, 706 (M.D. Pa. 2018) ("Because Plavin is the only named Plaintiff in this case, and having ruled that his claims must be dismissed, the putative class action claims must also fail."); Donacy v. Intrawest U.S. Holdings, Inc., No. 10-4038, 2012 WL 869007, at *9 (D.N.J. Mar. 14, 2012) ("Because this Court dismisses all of Plaintiffs' individual claims, and Plaintiffs' purported class has not yet been certified, Plaintiffs' class allegations must also be dismissed." (citing Bass v. Butler, 116 F. App'x 376, 385 (3d Cir. 2004) ("Because no class has been certified here, if Bass' claim fails, the entire action must be dismissed."))). Lastly, Plaintiffs have not clearly identified the putative class, as Plaintiffs have made contradictory statements on this important point. In the Amended Complaint, they identify two different proposed classes. Plaintiffs first allege the class is comprised of:
Defendant's theory of Bristol-Myers' applicability to class actions would also contravene the purpose of representative class actions. A Rule 23 class is an administrative device whereby the Plaintiff seeks to represent similarly situated individuals, and "[i]ts historical purpose was to alleviate the burden on the court and its facilities in cases where a claim was common to a large number of persons." Kramer v. Scientific Control Corp., 534 F.2d 1085, 1091 (internal quotations omitted). As Defendant itself recognizes, "[a] Rule 23 class action is simply a procedural device that 'enables a federal court to adjudicate claims of multiple parties at once, instead of in separate suits.'" (Def.'s Mem. Law, ECF No. 19-5, at 28 (quoting Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 408 (2010))). Defendant's theory would directly cut against the purpose of "adjudicat[ing] claims of multiple parties at once, instead of in separate suits" as it would force fifty separate class actions be filed because no one State could assert jurisdiction over nonresident plaintiffs. Indeed, in light of the representative nature of the class procedural device, Courts focus on the named Plaintiff for jurisdictional purposes, the unnamed class members are not relevant. See, e.g., Neale v. Volvo Cars of North Amer., LLC, 794 F.3d 353, 364 (3d Cir. 2015) ("Named plaintiffs are the individuals who seek to invoke the court's jurisdiction and they are held accountable for satisfying jurisdiction." (citing Ortiz v. Fireboard Corp., 527 U.S. 815, 832 (1999))); Szewczyk v. United Parcel Serv., Inc., 2019 WL 5423036, at *8 (E.D. Pa. Oct. 22, 2019) ("[I]t is well-established that when a single named plaintiff seeks to bring a claim on behalf of a class or collective, that named plaintiff must establish that the court has personal jurisdiction over the defendant with respect to his or her claim." (collecting cases)).
All former or current Pennsylvania property owners, either persons or entities, who purchased or maintained insurance, for
home, condominium, landlord, business, commercial or other property, in the past (six) 6 years from the date of this filing, which was insured under a policy issued by State Farm or any of its subsidiaries or other entities; for which the policy contains the Amendatory Endorsement FE-2340; who submitted a claim for damage as a result of water damage to their insured property which included a claim to access the broken line or system; were denied coverage for their damage, in whole or in part, for access and related damages citing Amendatory Endorsement FE-2340 by State Farm.(Am. Compl., ECF No. 14, at ¶ 12) (emphasis added).
Plaintiffs later identify a broader proposed class, to which Defendant objects:
All former or current United States property owners, either persons or entities, who purchased or maintained insurance, for home, condominium, landlord, business, commercial or other property, in the past (ten) 10 years from the date of this filing, or whatever the statutory limitations is for breach of contract in that state, which was insured under a policy issued by State Farm or any of its subsidiaries or other entities; for which the policy contains the Amendatory Endorsement FE-2340; who submitted a claim for damage as a result of water damage to their insured property which included a claim to access the broken line or system; were denied coverage for their damage, in whole or in part, for access and related damages citing Amendatory Endorsement FE-2340 by State Farm.(Id. at ¶ 115) (emphasis added). As I recommend that Plaintiffs be granted leave to amend their complaint, I further recommend that they be afforded the opportunity to allege and clarify which particular class(es) upon whose behalf they seek to bring these claims.
Accordingly, I respectfully recommend Defendant's request to dismiss the class action Count X for lack of personal jurisdiction be denied without prejudice to raise this issue again at a later date, if appropriate. I recommend against extending Bristol-Myers to class actions at this time because Bristol-Myers involved a mass tort action with named nonresident plaintiffs; not a putative class action with resident plaintiffs serving as representatives on behalf of others similarly situated. Moreover, because I recommend that Plaintiffs' individual claims be dismissed, I similarly recommed that the Count X class action claims be dismissed. In light of all these considerations, I respectfully recommend Defendant's request for dismissal be denied without prejudice.
IV. CONCLUSION
For the foregoing reasons, I conclude the Amended Complaint fails to state plausible claims and respectfully recommend Defendant's Motion to Dismiss be granted. I further recommend the dismissal be without prejudice as to Count I, violation of the UTPCPL; Count III, declaratory judgment; Count IV, breach of contract; and Count V, bad faith claim. I recommend Plaintiffs be granted leave to amend the Complaint as to those Counts I, III, IV, and V, as amendment would not be inequitable or futile. I further recommend Plaintiffs' Count II, violation of UIPA; and Count VI, violation of UCSPR, be dismissed with prejudice because those laws and regulations do not provide a private right of action. Lastly, I recommend Defendant's request to dismiss the class action Count X be denied without prejudice to re-raise the issue at a later date, if appropriate.
RECOMMENDATION
AND NOW, this 27TH day of March, 2020, I RESPECTFULLY RECOMMEND the Motion to Dismiss be granted, Counts II and VI be dismissed with prejudice, the remaining Counts be dismissed without prejudice, and that Plaintiffs be granted leave to amend.
BY THE COURT:
/s/ Lynne A. Sitarski
LYNNE A. SITARSKI
United States Magistrate Judge