Opinion
CIVIL ACTION NO. 04-1436
May 24, 2004
MEMORANDUM AND ORDER
Plaintiff Richard J. Mandel, an orthopedic surgeon, purchased disability income insurance policies from defendant Chubb Life America on April 3, 1985 ("Policy 1"), August 25, 1985 ("Policy 2"), June 8, 1986 ("Policy 3"), and February 20, 1989 ("Policy 4"). Dr. Mandel suffered a back injury on May 25, 2001 that has required two surgical procedures.
Defendant Jefferson-Pilot is Chubb's successor in interest.See Def.'s Mem. at 1 n. 1.
For the remainder of 2001 and all of 2002, Dr. Mandel could only work on a restricted basis as a result of the injury, and he experienced a loss of income that, according to the claim he ultimately filed with defendant Jefferson-Pilot, entitled him to benefits under his disability policies. Jefferson-Pilot, however, took a different view of Dr. Mandel's eligibility for benefits and denied his claim.
Dr. Mandel then brought this action, which asserts claims against Jefferson-Pilot for breach of contract (Count I), negligent misrepresentation (Count II), violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("PUTPCPL"), 73 Pa. C.S. § 201-1 et seq. (Count III), intentional misrepresentation (Count IV), and breach of fiduciary duty and the duty of good faith and fair dealing (Count V).
Before us is Jefferson-Pilot's motion to dismiss Counts II, III, IV, and V of the complaint. For the reasons provided below, we grant the motion in part and deny it in part.
In resolving a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), we look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien Frankel, 20 F.3d 1251, 1261 (3d Cir. 1994). We accept as true all factual allegations in the complaint, and we draw all reasonable inferences therefrom in the light most favorable to the non-movant. Gen. Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 325 (3d Cir. 2001). Although we need not accept as true "unsupported conclusions and unwarranted inferences," we must deem the complaint to have alleged sufficient facts if it adequately provides the defendants with notice of the essential elements of the plaintiff's claims. Langford v. City of Atlantic City, 235 F.3d 845, 847 (3d Cir. 2000); Schuylkill Energy Res., Inc. v. Pennsylvania Power Light Co., 113 F.3d 405, 417 (3d Cir. 1997). We may dismiss a complaint "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King Spalding, 467 U.S. 69, 73 (1984).
Discussion
A. Counts II and IV (Negligent and Intentional Misrepresentation
Jefferson-Pilot argues that Dr. Mandel's claims for negligent and intentional misrepresentation must be dismissed because they violate Pennsylvania's "gist of the action" doctrine, which bars a contracting party from pursuing a tort claim against the other party where the essential nature of the claim is contractual. Etoll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa.Super. 2002). In Owen J. Roberts School Dist. v. HTE, Inc., No. 02-7830, 2003 WL 735098 (E.D. Pa. Feb. 28, 2003) we examined the application of the doctrine in cases involving pre and post-contractual statements. We concluded that the doctrine does not categorically bar or exempt a claim based on a pre-contractual statement. However, the doctrine does bar the claim if the statement became the basis for a contractual duty. Id. at *3. As to post-contractual statements, we concluded that, at the Rule 12(b)(6) stage, the doctrine does not bar a plaintiff's claim that the defendant breached the contract and then made misrepresentations about the breach to prevent the plaintiff from asserting rights under the contract. Id. at *6.
However, as we noted in Owen J. Roberts, if the defendant merely strings along the plaintiff with promises that it will fulfill its contractual obligations and then fails to do so, the gist of the action doctrine bars the plaintiff's tort claim. Owen J. Roberts, 2003 WL 735098, at *6.
Here, Dr. Mandel alleges that the defendants' ongoing statements about their willingness to pay claims induced him to take out Policy 1 and then simultaneously induced him to take out Policies 2-4 and continue paying premiums on the policies he had already purchased. The duty to pay claims is embodied in the policies themselves. See, e.g., Def.'s Resp. Ex. B at 2 (Policy 1) ("We will pay a reduced monthly income while the insured is residually disabled. . . ."). The gist of the action doctrine therefore bars Dr. Mandel's misrepresentation claims to the extent they focus on statements that induced him to take out the policies. However, to the extent that these claims concern post-breach misrepresentations that induced Dr. Mandel to continue paying premiums rather than abandon the policies, he has stated a claim upon which relief can be granted.
B. Count III (PUTPCPL)
Jefferson-Pilot also seeks dismissal of Count III, which alleges that it violated the PUTPCPL by engaging in a "deceitful course of conduct by promising disability benefits it never intended to pay on the basis of inaccurate, deceitful, biased and inappropriate claims processing . . . for the sole and calculated purpose of denying benefits to . . . Dr. Mandel." Compl. ¶ 47.
An insurer can be held liable under the PUTPCPL only if it makes fraudulent misrepresentations in order to sell a policy or engages in some other form of misfeasance. Fisker v. Aetna Life Ins. Ann. Co., 39 F. Supp.2d 508, 511 n. 1 (M.D. Pa. 1998); Aetna Cas. Sur. Co. v. Ericksen, 903 F. Supp. 836, 841 (M.D. Pa. 1995). Here, Dr. Mandel has alleged that the Jefferson-Pilot's misrepresentations induced him to purchase the four policies, and he has therefore stated a claim in Count III.
Jefferson-Pilot's objection to Count III is that it did not, in fact, make misrepresentations to Dr. Mandel. However, this is an issue that must await summary judgment or trial.
C. Count V (Breach of Fiduciary Duty and Breach of Duty of Good Faith and Fair Dealing)
Count V asserts that Jefferson-Pilot breached its fiduciary duty to Dr. Mandel and also violated the covenant of good faith and fair dealing. Under Pennsylvania law, both of these claims sound in contract and not tort, see Gen. Refractories Co. v. Liberty Mut. Fire Ins. Co., No. 97-7494, 1999 WL 1134530, at *2-3 (E.D. Pa. Dec. 9, 1999) (Hutton, J.), and Jefferson-Pilot therefore seeks the dismissal of Count V on the ground that it duplicates Dr. Mandel's breach of contract claim in Count I. Although we acknowledge the redundancy, there can be no harm in retaining Count V because, for discovery purposes, it focuses the parties on the full range of contractual theories of liability that Dr. Mandel is pursuing in this action.
It is hereby ORDERED that the motion is GRANTED IN PART and DENIED IN PART in accordance with the foregoing paragraphs.