Cohen v. Mutual of Omaha Insurance Company

First MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM PURSUANT TO FRCP 12

E.D. Pa.June 19, 2017

1 of 2 1119845v.1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STUART COHEN Plaintiff, v. MUTUAL OF OMAHA INSURANCE COMPANY, Defendant CIVIL ACTION NO.: 5:17-cv-02828-EGS DEFENDANT MUTUAL OF OMAHA INSURANCE COMPANY’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FED.R.CIV.P. 12(b)(6) and 12(f) Defendant, Mutual of Omaha Insurance Company by and through its attorneys, WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP, hereby moves this Honorable Court to grant Defendant’s Motion to Dismiss Plaintiff’s Complaint pursuant to Fed.R.Civ.P. 12(b)(6) and (f) for failure to state claims upon which relief may be granted for negligence, bad faith, attorney fees, violation of statutory duties, violation of fiduciary duties, “other wrongful conduct”, Employee Retirement Income and Security Act of 1974 concepts of “arbitrary” and “capricious” and de novo standard or review, and as set forth in its brief in support of this motion, incorporated herein, and filed contemporaneously herewith. Respectfully submitted, WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP _s/Salvatore A. Clemente________ Salvatore A. Clemente Two Commerce Square - Suite 3100 2000 Market Street Philadelphia, PA 19103 Case 5:17-cv-02628-EGS Document 3 Filed 06/19/17 Page 1 of 2 2 of 2 1119845v.1 Salvatore.Clemente@wilsonelser.com Attorneys for Defendant, Mutual of Omaha Insurance Company Case 5:17-cv-02628-EGS Document 3 Filed 06/19/17 Page 2 of 2 1120067v.2 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STUART COHEN Plaintiff, v. MUTUAL OF OMAHA INSURANCE COMPANY, Defendant CIVIL ACTION NO.: 5:17-cv-02828-EGS DEFENDANT MUTUAL OF OMAHA INSURANCE COMPANY’S BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S COMPLAINT PURSUANT TO FED.R.CIV.P. 12(b)(6) and 12(f) WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP Salvatore A. Clemente Two Commerce Square - Suite 3100 2000 Market Street Philadelphia, PA 19103 Ph: (215) 627-6900 Fx: (215) 627-2665 Em: Salvatore.Clemente@wilsonelser.com Attorneys for Defendant, Mutual of Omaha Insurance Company Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 1 of 20 i 1120067v.2 TABLE OF CONTENTS Page I. INTRODUCTION .............................................................................................................. 1 II. PROCEDURAL HISTORY................................................................................................ 1 III. BRIEF SUMMARY OF ALLEGED FACTS..................................................................... 2 A. Policy Provisions .................................................................................................... 3 IV. LEGAL ARGUMENT........................................................................................................ 4 A. Fed.R.Civ.P. 12(b)(6) Motion to Dismiss Standard................................................ 4 B. Fed.R.Civ.P. 12(f) Motion to Strike Standard ........................................................ 5 C. Futility of Amending the Complaint....................................................................... 5 D. Plaintiff’s Complaint Fails to State Claims for Bad Faith, Negligence, Breach of Statutory Duty, Breach of Fiduciary Duty and Attorney Fees and Includes Impertinent Matter Pertaining to ERISA that Should be Stricken.......................... 6 1. Plaintiff’s Complaint Fails to State a Claim for Bad Faith for which Relief can be Granted and Should be Dismissed and Stricken from the Complaint with Prejudice ............................................................................................. 6 2. Plaintiff’s Complaint Fails to State a Claim for Negligence for which Relief May be Granted and Should Be Dismissed and Stricken from the Complaint with Prejudice ........................................................................... 9 3. Plaintiff’s Complaint Fails to State a Claim for Breach of Fiduciary Duty for which Relief May be Granted and Should Be Dismissed and Stricken from the Complaint with Prejudice........................................................... 11 4. Plaintiff’s General Catch-All Allegations of Other Wrongful Conduct and Breach of Statutory Duties Fail to State Claims for which Relief May be Granted and Should be Dismissed and Stricken from the Complaint with Prejudice ................................................................................................... 13 5. Plaintiff’s Complaint Fails to State a Claim for Attorney Fees and Costs for which Relief May be Granted ............................................................. 13 6. Employee Retirement Income Security Act of 1974 Concepts of “Arbitrary and Capricious” and “De Novo” Review should be Dismissed and Stricken from Plaintiff’s Complaint for Failing to State a Claim upon which Relief May be Granted ................................................................... 14 V. CONCLUSION................................................................................................................. 15 Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 2 of 20 ii 1120067v.2 TABLE OF AUTHORITIES Page(s) Cases 3039 B St. Assocs. v. Lexington Ins. Co., 740 F. Supp. 2d 671 (E.D. Pa. 2010) .......................................................................................... 7 Addie v. Kjaer, 737 F.3d 854, 60 V.I. 881 (3d Cir. 2013) ................................................................................. 10 Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).................................................................................................... 4, 5, 6, 8 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007).................................................................................................... 4, 5, 6 Bruno v. Erie Insurance Co., 630 Pa. 79 (2014)...................................................................................................................... 10 Conley v. Gibson, 355 U.S. 41 (1957)...................................................................................................................... 6 Connecticut Indem. v. Markman, 1993 U.S. Dist. LEXIS 10853 (E.D. Pa. Aug. 6, 1993) ........................................................... 11 Consolidated Oil and Gas, Inc. v. Ryan, 250 F. Supp. 600 (W.D. Ark. 1966), aff'd, 368 F.2d 177 (8th Cir. 1966) ................................ 12 Cortec Indus., Inc. v. Sum Holding, L.P., 949 F.2d 42 (2d Cir. 1991), cert. denied, U.S. , 112 S. Ct. 1561 (1992) ............................... 2 Cortez v. Keystone Bank, Inc., 2000 U.S. Dist. LEXIS 5705 (E.D. Pa. May 2, 2000) .............................................................. 10 Dolfi v. Disability Reinsurance Mgmt. Servs., 584 F. Supp. 2d 709 (Pa. M.D. 2008)....................................................................................... 14 Doroshow v. Hartford Life and Accident Ins. Co., 574 F.3d 230 (3d Cir. 2009) ..................................................................................................... 14 eToll, Inc. v. Elias/Savion Adver., Inc., 2002 Pa. Super Ct. 347, 811 A.2d 10 (2002)........................................................................ 9, 10 Frank C. Pollara Grp., LLC v. Ocean View Inv. Holding, LLC, 784 F.3d 177 (3d Cir. 2015) ....................................................................................................... 9 Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 3 of 20 iii 1120067v.2 Glazer v. Chandler, 414 Pa. 304, 200 A.2d 416 (1964).............................................................................................. 9 Goodwin v. Elkins & Co., 730 F.2d 99 (3d Cir.), cert. denied, 469 U.S. 831, 105 S. Ct. 118, 83 L. Ed. 2d 61 (1984) ....... 2 Harrisburg v. Bradford Tr. Co., 621 F. Supp. 463 (M.D. Pa. 1985)............................................................................................ 12 Hayes v. Am. Int'l Group, No. 09-2874, 2014 U.S. Dist. LEXIS 103564 (E.D. Pa. July 29, 2014) .................................. 11 Jablonski v. Pan American World Airways, Inc., 863 F.2d 289 (3rd Cir. 1988) ...................................................................................................... 6 Keefe v. Prudential Prop. and Casualty Ins. Co., 203 F.3d 218 (3d Cir. 2000) ....................................................................................................... 7 Klinger v. State Farm Mutual Automobile Ins. Co., 115 F.3d 230 (3d Cir. 1997) ................................................................................................... 7, 8 Lawson v. Fortis Ins. Co., 146 F. Supp. 2d 737 (E.D. Pa. 2001) .......................................................................................... 7 Lehner v. Crane Co., 448 F. Supp. 1127 (E.D. Pa. 1978) ........................................................................................... 11 McInerney v. Moyer Lumber & Hardware, 244 F. Supp. 2d 393 (E.D. Pa.2002) ........................................................................................... 5 Mu'Min v. Allstate Prop. & Cas. Ins. Co., 2011 U.S. Dist. LEXIS 94365 (E.D.Pa. 2011) ....................................................................... 7, 8 Papasan v. Allain, 478 U.S. 265, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986)............................................................ 5 Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192 (3d Cir. Pa. June 30, 1993) ................................................................................. 2 Pierce v. Rossetta Corporation, 1992 U.S. Dist. LEXIS 9065 (1992)........................................................................................... 6 Polselli v. Nationwide Mut. Fire Ins., Co., 23 F.3d 747 (3d Cir. 1994) ..................................................................................................... 7, 8 Razak v. Uber Technologies, Inc., 2016 U.S. Dist. LEXIS 173351 (2016)............................................................... 5, 11, 12, 13, 14 Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 4 of 20 iv 1120067v.2 Rhodes v. Principal Fin. Group, Inc., 2011 U.S. Dist. LEXIS 150011 (Pa. M.D. 2011) ..................................................................... 14 Smith v. Berg, 2000 U.S. Dist. LEXIS 4513 (E.D. Pa. Apr. 10, 2000) ............................................................ 11 Terletsky v. Prudential Property & Casualty Ins. Co., 437 649 A.2d 680 (Pa. Super. Ct. 1994)..................................................................................... 7 Toy v. Metro. Life Ins. Co., 593 Pa. 20, 928 A.2d 186 (Pa. 2007).......................................................................................... 7 Ward v. Cheltenham Township, No. 89-6833, 1990 U.S. Dist. LEXIS 10983, slip op. (E.D. Pa. August 21, 1990).................... 6 Watterson v. Page, 987 F.2d 1 (1st Cir. 1993)........................................................................................................... 2 Young v. Am. Int’l Life Assur. Co., 2009 U.S. App. LEXIS 27788 (3d Cir. 2009) .......................................................................... 14 Statutes 42 Pa.C.S.A. § 1726(a)(1)............................................................................................................. 13 42 Pa.C.S.A. § 8371........................................................................................................................ 7 Employee Retirement Income Security Act of 1974 .................................................................... 14 Rules Federal Rules of Civil Procedure 12(b)(6).......................................................................... 6, 14, 15 Federal Rules of Civil Procedure 12(f) ............................................................. 5, 11, 12, 13, 14, 15 Federal Rules of Civil Procedure 8(a)(2).................................................................................... 4, 6 Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 5 of 20 1 1120067v.2 I. INTRODUCTION Defendant, Mutual of Omaha Insurance Company (hereinafter “Mutual of Omaha”), by and through its attorneys, WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP, respectfully submits the following Brief in support of its Motion to Dismiss Plaintiff’s Complaint for failure to state a claim for which relief can be granted. The Complaint arises out of Mutual of Omaha’s rescission of a disability income policy due to material misrepresentations made in the application. Plaintiff’s complaint should be limited to the alleged breach of the disability income policy contract at issue. However, the complaint mentions nonviable claims without facts or substantiation sufficient to state claims to relief that are plausible on their face. The complaint is devoid of any enumerated counts; however, it mentions negligence, bad faith, violation of statutory duties, undefined “other wrongful conduct,” and ERISA concepts of violation of fiduciary duties, de novo standard of review and arbitrary and capricious conduct. All of these apparent claims do not meet basic pleading standards by stating claims upon which relief may be granted in addition to being redundant, immaterial, impertinent and/or scandalous. Thus, they fail as a matter of law to state claims upon which relief may be granted and thereby warrant dismissal with prejudice.1 II. PROCEDURAL HISTORY Plaintiff, Stuart Cohen, a Chiropractor, (hereinafter “Dr. Cohen”) filed a Complaint in the Court of Common Pleas of Philadelphia County on May 9, 2017 and was assigned number 1705022591. Pursuant to the Affidavit of Service filed by Dr. Cohen on May 22, 2017 in the Court of Common Pleas, the Complaint was served via Certified Mail on May 15, 2017. See 1 Attempts were made to come to an agreement concerning these issues without a response from plaintiff. Please see true and correct copies of letters dated June 2 and 12, 2017 attached as Exhibit “D.” Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 6 of 20 2 1120067v.2 Docket No. 1 at 39-41. The Complaint was timely removed to this Court on June 12, 2017. See Docket No. 1. III. BRIEF SUMMARY OF ALLEGED FACTS Dr. Cohen is a chiropractor who was issued an individual long term disability policy on September 8, 2014. See Docket No. 1 at 12 ¶ 5, Docket No. 1 at 38, see also Docket No. 1 at 17- 38. The application is expressly identified as part of the policy [Docket No. 1 at 32] but was not attached to the complaint. A true and correct copy of the signed application is attached hereto as Exhibit “A.”2 Dr. Cohen alleges that on July 11, 2016 he became totally disabled from his occupation [chiropractor] within the meaning of the terms of the policy. See Docket No. 1 at 12 ¶8. However, Dr. Cohen did not submit a claim for disability benefits to Mutual of Omaha until three (3) months later, dated October 17, 2016. Although referenced in the Complaint, Dr. Cohen does not attach a copy of his claim for disability benefits thereto. See id. at 12 ¶9. A true and correct copy of the Insured’s Statement for Disability Benefits is attached hereto as Exhibit “B.” On February 10, 2017, after a contestable claim review, Mutual of Omaha advised Dr. Cohen that the policy was rescinded due to the material misrepresentations he made in the application for the policy. See id at 13 ¶12. Although referenced in the Complaint, Dr. Cohen also does not attach a copy of the February 10, 2017 letter thereto. See id. A true and correct 2 The court may consider a document referenced in the complaint but not attached. “We now hold that court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. Pa. June 30, 1993) citing Cortec Indus., Inc. v. Sum Holding, L.P., 949 F.2d 42, 48 (2d Cir. 1991), cert. denied, U.S. , 112 S. Ct. 1561 (1992); Goodwin v. Elkins & Co., 730 F.2d 99, 113 (3d Cir.), cert. denied, 469 U.S. 831, 105 S. Ct. 118, 83 L. Ed. 2d 61 (1984); cf. Watterson v. Page, 987 F.2d 1, 4 (1st Cir. 1993). “Otherwise, a plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing to attach a dispositive document on which it relied.” See Pension Benefit 998 F.2d at 1196; see also Goodwin, 730 F.2d at 113 (Becker, J., concurring). Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 7 of 20 3 1120067v.2 copy of the February 10, 2017 letter is attached hereto as Exhibit “C.” Although the rescission of the policy was articulated on February 10, 2017, which is more than two (2) years after the policy was issued, Dr. Cohen waited until after the two (2) year contestable period to make his claim for a disability that allegedly began on July 11, 2016, which was during the contestable period. See id. at 13 ¶13 and 38; see also Exhibit “B.” The contestable claim period was thereby tolled on July 11, 2016 and the fact that Dr. Cohen waited until after the contestable claim period expired to make his claim is of no import to the timely rescission of the policy. Nevertheless, the policy, and law of this Commonwealth provide that disability income policies may be rescinded after two (2) years due to fraudulent material misrepresentations in the application. See Docket No. 1 at 32. A. Policy Provisions The Policy expressly states: PLEASE REVIEW YOUR APPLICATION Please review the attached copy of your application. If anything is incorrect or if any past medical history has been left out, you should tell us. Your policy was issued on the basis that all information shown in the application is correct and complete. If not, your policy may not be valid. See Docket No. 1 at 23 (emphasis original). Entire Contract and Changes The entire contract of insurance is: (a) the policy; (b) the attached signed application; (c) any supplemental applications made part of the policy; (d) any riders and amendment riders; and (e) any endorsements and amendments. No agent may change the contract of insurance in any way. Only an executive officer of ours can approve a change. Any such change must be shown in or attached to the policy. Any rider, endorsement or application added after the Policy Date which Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 8 of 20 4 1120067v.2 reduces or eliminated coverage under this policy will require your signed acceptance to be valid. See Docket No. 1 at 32 (emphasis original). Time Limit on Certain Defenses After two years from the date you become covered under this policy, we cannot use misstatements, except fraudulent misstatements in your application, to void coverage or deny a claim for loss incurred or disability that starts after the two-year period. No claim for loss incurred or disability that starts after two years from the date you become covered under the policy will be reduced or denied on the ground that a Sickness or Injury, not excluded from coverage by name or specific description, existed prior to the effective date of your coverage. See Docket No. 1 at 32 (emphasis original and added). IV. LEGAL ARGUMENT A. Fed.R.Civ.P. 12(b)(6) Motion to Dismiss Standard Fed.R.Civ.P. 8(a)(2) only requires a plain statement of the claim demonstrating entitlement to relief. However, the United States Supreme Court has gone further in defining the requirements of an initial pleading. Although the standards articulated in Bell Atl. Corp. v. Twombly and Ashcroft v. Iqbal are well known, they bear repeating due to the specious nature in which the complaint is plead. The Supreme Court dictates that a complaint requires: “[I]t demands more than an unadorned, the-defendant-unlawfully- harmed-me accusation. A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. 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. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 9 of 20 5 1120067v.2 acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-557, 570 (U.S. 2007)). Although detailed factual allegations are not required, the rules demand more than an unadorned, “the-defendant-unlawfully-harmed-me accusation.” Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986)). While this Court must accept as true all factual allegations in the Complaint, that tenet is “inapplicable to legal conclusions,” and “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Id. quoting Twombly, 550 U.S. at 555. B. Fed.R.Civ.P. 12(f) Motion to Strike Standard “The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.” Razak v. Uber Technologies, Inc., 2016 U.S. Dist. LEXIS 173351 at *15 (2016) citing McInerney v. Moyer Lumber & Hardware, 244 F. Supp. 2d 393, 402 (E.D. Pa.2002). A motion to strike is “not favored and usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties.” Id. C. Futility of Amending the Complaint The Third Circuit has explained the concept of futile amendments as follows: Amendment of the complaint is futile if the amendment will not cure the deficiency in the original complaint or if the amended complaint cannot withstand a renewed motion to dismiss. Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 10 of 20 6 1120067v.2 Pierce v. Rossetta Corporation, 1992 U.S. Dist. LEXIS 9065 at *16 (1992) citing Jablonski v. Pan American World Airways, Inc., 863 F.2d 289, 292 (3rd Cir. 1988). The futility of amending a complaint is determined by the same standard governing a motion to dismiss for failure to state a claim upon which relief can be granted under F.R.Civ.P. 12(b)(6). See id.; see also Ward v. Cheltenham Township, No. 89-6833, 1990 U.S. Dist. LEXIS 10983, slip op. at *2-3 (E.D. Pa. August 21, 1990). Thus, amending a complaint is futile where “it appears beyond doubt that the plaintiff can pose no set of facts in support of his claim which would entitle him to relief.” Pierce, 1992 U.S. Dist. LEXIS 9065 at *17 citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957). D. Plaintiff’s Complaint Fails to State Claims for Bad Faith, Negligence, Breach of Statutory Duty, Breach of Fiduciary Duty and Attorney Fees and Includes Impertinent Matter Pertaining to ERISA that Should be Stricken The Complaint sounds in contract. See Docket No. 1 at 11-14. All the other cursory references to claims do not meet basic pleading requirements under Fed.R.Civ.P. 8(a)(2) and as articulated in Twombly and Iqbal. See Docket No. 1 at 13-14 ¶¶17-21. 1. Plaintiff’s Complaint Fails to State a Claim for Bad Faith for which Relief can be Granted and Should be Dismissed and Stricken from the Complaint with Prejudice It is unclear whether Dr. Cohen is alleging that Mutual of Omaha acted in bad faith as he simply mentions the words “bad faith” without any elements or facts supporting the mention. See Docket No. 1 at 13 ¶18. If Dr. Cohen is claiming “bad faith,” there is simply not enough factual or even legal content in the complaint to support a prima facia claim for it. Moreover, without more, rescission (voiding) of the policy beyond two (2) years is contractually permitted under the terms of the policy language and under the law of this Commonwealth. Mutual of Omaha’s actions cannot rise to the level of “bad faith.” See Docket No. 1 at 32. Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 11 of 20 7 1120067v.2 “To establish a claim of bad faith under 42 Pa.C.S. § 8371, a plaintiff must establish that the insurer (1) lacked a reasonable basis for denying benefits and (2) knew or recklessly disregarded its lack of a reasonable basis.” Mu'Min v. Allstate Prop. & Cas. Ins. Co., 2011 U.S. Dist. LEXIS 94365 at *43 (E.D.Pa. 2011) (citing Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997); Toy v. Metro. Life Ins. Co., 593 Pa. 20, 928 A.2d 186, 193 (Pa. 2007)). “In the insurance context, bad faith denotes a “frivolous or unfounded” refusal to pay policy proceeds, which imports a dishonest purpose and a breach of a known duty, such as good faith and fair dealing.” Id. (emphasis added) (citing Polselli v. Nationwide Mut. Fire Ins., Co., 23 F.3d 747, 751 (3d Cir. 1994) (quotations omitted)). “While mere negligence or bad judgment are insufficient, a showing of reckless disregard will suffice to establish bad faith.” Mu'Min at *43 (citing 3039 B St. Assocs. v. Lexington Ins. Co., 740 F. Supp. 2d 671, 677 (E.D. Pa. 2010)). In Terletsky v. Prudential Prop. & Cas. Ins. Co., the Pennsylvania Superior Court set out the prima facie case for bad faith causes of action. Terletsky v. Prudential Property & Casualty Ins. Co., 437 649 A.2d 680, 688 (Pa. Super. Ct. 1994). There, the court held that to state a claim for bad faith under 42 Pa.C.S. § 8371, a plaintiff must “show that defendant did not have a reasonable basis for denying benefits under the policy and that defendant knew or recklessly disregarded its lack of reasonable basis in denying the claim.” Id. at 688; see also Klinger v. State Farm Mutual Automobile Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997) (recognizing that Terletsky established the test for 42 Pa.C.S. § 8371 causes of action). Courts interpreting the meaning of bad faith under 42 Pa.C.S. § 8371 have repeatedly said that the statute does not protect against mere negligence or bad decision-making. See e.g., Keefe v. Prudential Prop. and Casualty Ins. Co., 203 F.3d 218, 225 (3d Cir. 2000) (“Mere negligence or bad judgment is not bad faith.”); Lawson v. Fortis Ins. Co., 146 F. Supp. 2d 737, Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 12 of 20 8 1120067v.2 746 (E.D. Pa. 2001) (“Mere negligence on part of insurer is insufficient to sustain as bad faith claim.”) (citation omitted). Dr. Cohen’s allusion to “bad faith” (Complaint, ¶18) is devoid of any factual or even legal basis thereby rendering the claim wholly deficient on its face. Dr. Cohen simply states that Mutual of Omaha’s “actions” in voiding the policy and not paying benefits was done in “bad faith.” However, he fails to allege any facts other than Mutual of Omaha voided the policy and did not pay benefits. Both of which were done due to Dr. Cohen’s material misstatements in the application. Mutual of Omaha had a “reasonable basis” for rescinding the policy more than two years after the policy was issued since Dr. Cohen, whether by neglect or design, did not file his claim for a disability until October 17, 2016, when his disability in fact arose on July 11, 2016, which is well within the two (2) year contestable claim period. Moreover, since rescission of the policy is contractually permitted after two (2) years due to fraudulent material misrepresentations in the application, rescission after two (2) years is a reasonable application of the policy language. The mere denial of an insurance claim, with nothing more, cannot constitute bad faith, and in this case, nothing more has been alleged. Dr. Cohen fails to plead any facts which demonstrate frivolous or unfounded actions or a dishonest purpose. Therefore, Dr. Cohen has not satisfied Iqbal’s requirement by alleging any “factual content that allows the court to draw the reasonable inference that the defendant” acted in a “frivolous or unfounded” manner, with a “dishonest purpose” or in “reckless disregard.” Therefore, Dr. Cohen fails to demonstrate a plausible claim for bad faith as required by Mu’Min, Polselli and Klinger. Therefore, bad faith should be dismissed for failure to state a claim upon which relief may be granted. Additionally, as amending the Complaint for bad faith is futile, bad faith should Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 13 of 20 9 1120067v.2 also be stricken from the complaint with prejudice as there are no facts that plaintiff can plead to demonstrate that Mutual of Omaha’s rescission of the disability income policy resulting from fraudulent and/or material misrepresentations in the application was in bad faith. 2. Plaintiff’s Complaint Fails to State a Claim for Negligence for which Relief May be Granted and Should Be Dismissed and Stricken from the Complaint with Prejudice The Complaint at ¶17 mentions “negligence” and, like bad faith, is devoid of any factual or legal basis for the apparent claim. See Docket No. 1 at 13 at ¶17. It is not clear if Dr. Cohen is making a claim for negligence, but under the gist of the action doctrine, negligence is not appropriate in a breach of contract case. Therefore, “negligence” should be stricken from the Complaint and dismissed with prejudice. The gist of the action doctrine is “designed to maintain the conceptual distinction between breach of contract claims and tort claims.” See Frank C. Pollara Grp., LLC v. Ocean View Inv. Holding, LLC, 784 F.3d 177, 186 (3d Cir. 2015), citing eToll, Inc. v. Elias/Savion Adver., Inc., 2002 Pa. Super Ct. 347, 811 A.2d 10, 14 (2002). The doctrine is public policy based and arises from the concern that tort recovery should not be permitted for breaches of contract. See Glazer v. Chandler, 414 Pa. 304, 308, 200 A.2d 416, 418 (1964) (“To permit a promisee to sue his promissor in tort for breaches of contract inter se would erode the usual rules of contractual recovery and inject confusion into our well-settled forms of actions. Most courts have been cautious about permitting tort recovery for contractual breaches and we are in full accord with this policy.”). Generally, courts apply the gist of the action doctrine when the claims are (1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contact claim or the success of which is Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 14 of 20 10 1120067v.2 wholly dependent on the terms of a contract. See eToll, Inc. v. Elias/Savion Adver., Inc., 2002 PA Super 347, 811 A.2d 10, 19 (Pa. Super. Ct. 2002) (internal citations omitted). Although the existence of a contract does not per se prevent tort actions between parties, the gist of the action doctrine does in fact preclude tort claims for breach of contractual duties. Consequently, in order to sustain a tort action, a plaintiff must allege independent actions and events giving rise to the tort (negligence) that are separate and distinct of the contractual relationship. See Addie v. Kjaer, 737 F.3d 854, 865-66, 60 V.I. 881 (3d Cir. 2013); see also Cortez v. Keystone Bank, Inc., 2000 U.S. Dist. LEXIS 5705, *24-25 (E.D. Pa. May 2, 2000) (“A dispute which is essentially contractual in nature cannot be resolved under tort law merely because a plaintiff alleges that the breach of a contract was the result of negligence, gross negligence or even wanton and wil[l]ful behavior.” (citations omitted)). Recently, in Bruno v. Erie Insurance Co., 630 Pa. 79 (2014) the Supreme Court of Pennsylvania recognized that courts have consistently regarded the nature of the duty alleged in the complaint to have been breached, which is critical in determining if the cause of action is in tort or for breach of contract. In this regard, the substance of the allegations comprising a claim in a plaintiff's complaint are of paramount importance, and, thus, the mere labeling by the plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract--i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract--then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant's violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort. Id. at 112. Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 15 of 20 11 1120067v.2 As Dr. Cohen’s Complaint solely pertains to a breach of the disability income policy, he cannot maintain a tort action for negligence. Therefore, “negligence” should be dismissed for failure to state a claim upon which relief may be granted. Additionally, negligence should also be stricken from the Complaint with prejudice. The Court is permitted under Fed.R.Civ.P. 12(f) to strike from the complaint any immaterial or impertinent matter “to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.” Razak, 2016 U.S. Dist. LEXIS 173351 at *15 (2016). There are no facts that plaintiff can plead to demonstrate that Mutual of Omaha’s rescission of the disability income policy was “negligent” based upon the fraudulent and/or material misrepresentations in the application by Dr. Cohen. Therefore, since amending the Complaint for this claim would be futile, negligence should be stricken from the Complaint with prejudice. 3. Plaintiff’s Complaint Fails to State a Claim for Breach of Fiduciary Duty for which Relief May be Granted and Should Be Dismissed and Stricken from the Complaint with Prejudice “Under Pennsylvania law, an insurer does not have a fiduciary duty to an insured, except in limited circumstances such as where the insurer asserts a right to defend claims against the insured.” Smith v. Berg, 2000 U.S. Dist. LEXIS 4513, at *14-15 (E.D. Pa. Apr. 10, 2000) citing Connecticut Indem. v. Markman, 1993 U.S. Dist. LEXIS 10853 (E.D. Pa. Aug. 6, 1993); see also Hayes v. Am. Int'l Group, No. 09-2874, 2014 U.S. Dist. LEXIS 103564 at *18 (E.D. Pa. July 29, 2014) (“[A]n insurer does not have a fiduciary duty to an insured, except in limited circumstances such as where the insurer asserts a right to defend claims against the insured.”). “In order to demonstrate the existence of a fiduciary relationship, the plaintiff must show “a relationship involving trust and confidence, and ‘the proof must show confidence reposed by one side and domination and influence exercised by the other.”” Lehner v. Crane Co., 448 F. Supp. 1127, 1131 (E.D. Pa. 1978) (citations omitted). “A fiduciary relationship ‘arises whenever Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 16 of 20 12 1120067v.2 a trust, continuous or temporary, is specially reposed in the skill or integrity of another, or the property, or pecuniary interest, in the whole or in a part...is placed in the charge of another; it may exist in the absence of a specific or technical trust or agency.’” See Harrisburg v. Bradford Tr. Co., 621 F. Supp. 463, 473 (M.D. Pa. 1985) citing Consolidated Oil and Gas, Inc. v. Ryan, 250 F. Supp. 600, 604 (W.D. Ark. 1966), aff'd, 368 F.2d 177 (8th Cir. 1966). In addition to trust, a plaintiff must also demonstrate that the alleged fiduciary accepted the fiduciary relationship. See id. In the case sub justice, the complaint merely mentions a violation of “fiduciary” duties without any factual or legal support for the claim. See Docket No. 1 at 13, ¶17. There are no allegations in the Complaint that Mutual of Omaha owed Dr. Cohen a fiduciary duty or accepted any such relationship as required by Harrisburg. See Docket No. 1 at 11-14. Dr. Cohen does not include any such allegations because none exist. The disability income policy is nothing more than an arm’s length contract between Dr. Cohen and Mutual of Omaha which does not give rise to a fiduciary relationship. Therefore, any claim for breach of fiduciary duties should be dismissed for failure to state a claim upon which relief may be granted. Moreover, Fed.R.Civ.P. 12(f) permits the court to strike from a pleading any immaterial or impertinent matter for the purpose “to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters." Razak, 2016 U.S. Dist. LEXIS 173351, *15 (2016). Since a breach of fiduciary duties claim is impertinent and immaterial and can only confuse matters, it should also be stricken from the Complaint with prejudice. There are simply no facts that plaintiff can plead to demonstrate that Mutual of Omaha was in a fiduciary relationship with Dr. Cohen when it rescinded the disability income policy due to Dr. Cohen’s fraudulent and/or material misrepresentations in the application. As amending the Complaint for this claim would be futile, breach of fiduciary duty should be stricken from the Complaint with prejudice. Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 17 of 20 13 1120067v.2 4. Plaintiff’s General Catch-All Allegations of Other Wrongful Conduct and Breach of Statutory Duties Fail to State Claims for which Relief May be Granted and Should be Dismissed and Stricken from the Complaint with Prejudice The Complaint at ¶17 also vaguely alleges “other wrongful conduct” and “violation of statutory duties.” See Docket No. 1 at 13, ¶17. However, the Complaint does not specify the alleged “other wrongful conduct” or identify the “statutory duties” that are violated. Consequently, it is unreasonable to require Mutual of Omaha to defend against such catchall general ambiguous allegations. As both these allegations fail to state claims upon which relief may be granted, they should be dismissed from the Complaint. Moreover, Fed.R.Civ.P. 12(f) permits the court to strike from a pleading any immaterial or impertinent matter for the purpose “to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters." Razak, 2016 U.S. Dist. LEXIS 173351, *15 (2016). “Other wrongful conduct” and “violation of statutory duties” are impertinent and immaterial allegations to plaintiff’s breach of contract claim. There are simply no facts that plaintiff can plead to demonstrate “other wrongful conduct” or the “violation of statutory duties” resulting from Mutual of Omaha’s denial of benefits due to the rescission of the disability income policy resulting from Dr. Cohen’s own fraudulent and/or material misrepresentations in the application. As amending the Complaint for these claims would be futile, these claims should be stricken from the Complaint with prejudice. 5. Plaintiff’s Complaint Fails to State a Claim for Attorney Fees and Costs for which Relief May be Granted Dr. Cohen claims entitlement to attorney fees. See Docket No. 1 at 14, ¶¶22 and 23 and “Wherefore” clause. Pennsylvania follows the bed rock principal set forth in the “American rule” that each party involved in litigation pays its own attorney’s fees. See e.g., 42 Pa. C.S. A. §1726(a)(1). Dr. Cohen is not entitled to any attorney fees for the denial of benefits due to the rescission of the disability income policy as a result of his own fraudulent and/or material Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 18 of 20 14 1120067v.2 misrepresentations in the application. Therefore, any claims for attorney fees should be dismissed and stricken from the Complaint with prejudice. 6. Employee Retirement Income Security Act of 1974 Concepts of “Arbitrary and Capricious” and “De Novo” Review should be Dismissed and Stricken from Plaintiff’s Complaint for Failing to State a Claim upon which Relief May be Granted Paragraph 18 of the Complaint [Docket No. 1 at 13] includes “arbitrary” and “capricious” which are terms of art for a standard of review for certain benefit claims being made under the Employee Retirement Income Security Act of 1974 (“ERISA”). See e.g., Doroshow v. Hartford Life and Accident Ins. Co., 574 F.3d 230 (3d Cir. 2009); Young v. Am. Int’l Life Assur. Co., 2009 U.S. App. LEXIS 27788 (3d Cir. 2009) (not precedential). Rhodes v. Principal Fin. Group, Inc., 2011 U.S. Dist. LEXIS 150011 (Pa. M.D. 2011); Dolfi v. Disability Reinsurance Mgmt. Servs., 584 F. Supp. 2d 709 (Pa. M.D. 2008). Additionally, ¶21 of the Complaint [Docket No. 1 at 14] also references ERISA based terms such as conflict of interest, deference and de novo review. See e.g., id. The policy at issue is not governed by ERISA. “Arbitrary” and “capricious”, “conflict of interest”, “deference” and “de novo review” are immaterial and/or impertinent and should be dismissed under Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 12(f). These terms should also be stricken for the purpose “to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters." Razak, 2016 U.S. Dist. LEXIS 173351, *15 (2016). As such, “arbitrary” and “capricious” should be stricken from the Complaint at ¶18. Additionally paragraphs 21 and 22 of the Complaint should also be stricken in their entirety, with prejudice, as the policy at issue is not governed by ERISA. Therefore, the Complaint cannot be amended to include an ERISA claim and any attempt to do so would be futile and inappropriate. Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 19 of 20 15 1120067v.2 V. CONCLUSION For all of the forgoing reasons, Mutual of Omaha prays this Honorable Court grant its Motion to Dismiss Plaintiff’s Complaint pursuant to Fed.R.Civ.P 12(b)(6) and (f) for Failure to State a Claim upon which relief may be granted in the form of the Order attached hereto. Respectfully submitted, WILSON, ELSER, MOSKOWITZ EDELMAN & DICKER, LLP s/Salvatore A. Clemente______ Salvatore A. Clemente Pa. Attorney No. 80830 One Commerce Square 2000 Market Street Suite 3100 Philadelphia, PA 19103 Ph: (215) 627-6900 Fx: (215) 627-2665 Em: Salvatore.Clemente@wilsonelser.com Attorneys for Defendant, Mutual of Omaha Insurance Company Case 5:17-cv-02628-EGS Document 3-1 Filed 06/19/17 Page 20 of 20 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 1 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 2 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 3 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 4 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 5 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 6 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 7 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 8 of 9 Case 5:17-cv-02628-EGS Document 3-2 Filed 06/19/17 Page 9 of 9 Case 5:17-cv-02628-EGS Document 3-3 Filed 06/19/17 Page 1 of 3 Case 5:17-cv-02628-EGS Document 3-3 Filed 06/19/17 Page 2 of 3 Case 5:17-cv-02628-EGS Document 3-3 Filed 06/19/17 Page 3 of 3 Case 5:17-cv-02628-EGS Document 3-4 Filed 06/19/17 Page 1 of 3 Case 5:17-cv-02628-EGS Document 3-4 Filed 06/19/17 Page 2 of 3 Case 5:17-cv-02628-EGS Document 3-4 Filed 06/19/17 Page 3 of 3 Case 5:17-cv-02628-EGS Document 3-5 Filed 06/19/17 Page 1 of 5 Case 5:17-cv-02628-EGS Document 3-5 Filed 06/19/17 Page 2 of 5 Case 5:17-cv-02628-EGS Document 3-5 Filed 06/19/17 Page 3 of 5 Case 5:17-cv-02628-EGS Document 3-5 Filed 06/19/17 Page 4 of 5 Case 5:17-cv-02628-EGS Document 3-5 Filed 06/19/17 Page 5 of 5 1 of 2 1119846v.1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STUART COHEN Plaintiff, v. MUTUAL OF OMAHA INSURANCE COMPANY, Defendant CIVIL ACTION NO.: 5:17-cv-02828-EGS ORDER AND NOW, this _____ day of __________________ 2017, upon consideration of Defendant, Mutual of Omaha Insurance Company’s Motion to Dismiss Plaintiff’s Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) and (f), Brief in support thereof and any response thereto, it is hereby ORDERED that said motion is GRANTED. IT IS ORDERED that negligence, violation statutory duties, violation of fiduciary duties and “other wrongful conduct” are dismissed and stricken from the Complaint with prejudice. IT IS FURTHER ORDERED that bad faith is dismissed and stricken from the Complaint with prejudice. IT IS FURTHER ORDERED that “arbitrary” and “capricious” are dismissed and stricken from the Complaint with prejudice. IT IS FURTHER ORDERED that any claims for attorney fees are dismissed and stricken with prejudice IT IS FURTHER ORDERED that Paragraphs 21, 22 and 23 of the Complaint are dismissed and stricken from the Complaint with prejudice in their entirety. Case 5:17-cv-02628-EGS Document 3-6 Filed 06/19/17 Page 1 of 2 2 of 2 1119846v.1 BY THE COURT ________________________________ EDWARD G. SMITH UNITED STATES DISTRICT JUDGE Case 5:17-cv-02628-EGS Document 3-6 Filed 06/19/17 Page 2 of 2 1120147v.1 CERTIFICATE OF SERVICE The undersigned counsel for Defendant, Mutual of Omaha hereby certifies that a true and correct copy of the foregoing Motion to Dismiss Plaintiff’s Complaint and Brief in Support thereof with attachments was served on all counsel of record electronically via the Court’s ECF system when uploaded for filing. BY: s/Salvatore A. Clemente Salvatore A. Clemente, Esquire Date: June 19, 2017 Case 5:17-cv-02628-EGS Document 3-7 Filed 06/19/17 Page 1 of 1