This is the case of Moravia Motorcycle, Inc. v. Allstate Insurance Company, in the U.S. District Court Western District of Pennsylvania.

The plaintiffs commenced this action in July 2021 in the Court of Common Pleas of Lawrence County, Pennsylvania. However, Allstate moved for a change of venue and the case was transferred to the District Court Western District of Pennsylvania based on diversity jurisdiction; at the same time, Allstate filed a partial motion to dismiss.

Plaintiffs Moravia Motorcycle, Inc. and Thomas and Deborah McKinney filed their lawsuit against Allstate Insurance Company (“Allstate”), seeking benefits under an insurance policy for damage to their motor home.

Plaintiffs seek the policy limits of $100,000, plus damages for bad faith and treble damages under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”).

Relevant Factual Background

The Plaintiffs own a 2008 Coachman motor home which was insured with Allstate. The motor home was parked at the plaintiff’s property in Chesterfield, South Carolina.

In April 2020, numerous storms passed through the Chesterfield area, causing a tree branch to fall on top of the motor home, causing damage to the roof and seal.

Because there was damage to the seal, rainwater and other moisture were able to enter the motor home, causing severe damage to the motor home and the plaintiff's property located inside.

The complaint alleges that in initially looking for insurance coverage on their motor home, they inquired of the insurer about its motor home insurance and that the insurer represented to them that there would be coverage for the type of loss they eventually sustained.

Two Adjusters Took Opposite Positions

According to the complaint, after the insurance policy was issued and the loss actually occurred, Allstate initially sent a claims adjuster who found that the damage was covered under the policy.

The plaintiffs then took their motor home to a qualified mechanic to make the necessary repairs. They say that without explanation, Allstate sent a second claims adjuster to re-evaluate their claim.

The plaintiffs allege that the second adjuster concluded their loss was not covered and Allstate denied payment. As a result, the repairs were never performed, which resulted in further damage to the motor home, including electrical issues, decay of the interior walls, and mold.

Plaintiffs Commence their action

Unable to resolve the matter, In July 2021, the plaintiffs sued for breach of contract, negligence, and bad faith. Allstate filed a motion moving to dismiss the bad faith and negligence claims.

The plaintiffs alleged that one adjuster told them the loss was covered, and that they relied on his representation to begin repairs on the motor home, and then a second adjuster, without notice or explanation informed them that the loss was not covered.

The Plaintiff’s Bad Faith Claim

Patricia L. Dodge, United States Magistrate Judge, found that the plaintiff’s allegations as to bad faith attributed to Allstate did not meet the requisite standard of review. The court found the facts as currently alleged in the complaint were not sufficient to state a plausible bad faith claim.

Judge Dodge said “Plaintiffs have not met this standard. Rather, they merely allege that Allstate failed to review its file appropriately, wrongfully denied payment that it knew was owed, required Plaintiffs to incur costs and legal fees in obtaining what is rightfully theirs, and failed to use due care in handling the claim. These allegations are insufficient to support a claim of bad faith.”

However, even in the face of this rebuke, the court still gave the plaintiff a lifeline to bring their bad faith claims against Allstate back before the court, stating:

“Plaintiffs have requested leave to amend. As the Court cannot conclude that amendment would be futile, Allstate's motion to dismiss will be granted without prejudice and with leave to amend.”