IN THE UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA 

 

LIN WANG and JUN HUANG, 

 Plaintiffs, 

 v. 

ALLSTATE INDEMNITY 

COMPANY, 

 Defendant. 

 No. 4:24-CV-01619 

 (Chief Judge Brann) 

 

 

MEMORANDUM OPINION 

DECEMBER 17, 2024 

I. BACKGROUND 

A. Procedural History 

In August 2024 Plaintiffs filed a complaint in state court, which was 

subsequently removed to this Court, alleging that Allstate Indemnity Company 

(“Allstate”) breached an insurance contract (Count One) and did so in bad faith 

(Count Two) when it denied Plaintiffs’ insurance claim.1

 Presently before the Court 

is Allstate’s motion to dismiss Count Two of the complaint.2

 Plaintiffs filed a brief 

in opposition and, although Allstate has not filed a reply brief, the time to so do has 

lapsed, rendering this matter is ripe for disposition.3

 For the following reasons, the 

Court will deny Allstate’s motion. 

1

 Doc. 1. 

2

 Doc. 7. 

3

 Doc. 8. 

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B. Facts4

Plaintiffs carried a landlord insurance policy (the “Policy”) for their real 

property located in State College, Pennsylvania; the Policy was provided by Allstate 

and was in effect at all times relevant to this litigation.5

 The Policy “insured against 

sudden and accidental direct physical loss to the insured premises” with certain 

exceptions.6

 Among those exceptions is one that provides Allstate will not cover 

damage “if the policyholder does not use reasonable care to maintain heat at the 

property.”7

In January 2024, Plaintiffs’ property suffered water damage and Plaintiffs 

filed a claim with Allstate for losses associated with the damage.8

 Prior to submitting 

this claim, Plaintiffs “substantially performed all conditions required by the Policy,”9

including setting the furnace to 55 degrees in the property.10 Three days after the 

claim was submitted, Allstate denied it and refused to cover the damages.11 The 

initial denial letter provided no basis for the denial of coverage but, during a 

4

 As discussed below, for purposes of this motion, the Court accepts as true all allegations 

contained in the amended complaint. See Fed. Trade Comm’n v. AbbVie Inc, 976 F.3d 327, 

351 (3d Cir. 2020) (in evaluating motion to dismiss court “must accept all factual allegations 

as true, construe the complaint in the light most favorable to the plaintiff, and determine 

whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief” 

(internal quotation marks omitted)). 

5

 Doc. 1-1 ¶¶ 2, 4. 

6

 Id. ¶ 6. 

7

 Id. ¶ 33. 

8

 Id. ¶¶ 7-8. 

9

 Id. ¶ 10. 

10 Id. ¶ 30. 

11 Id. ¶¶ 11, 26. 

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telephone call, a claims adjuster for Allstate informed Plaintiffs that the claim was 

denied because the property was vacant.12 After Plaintiffs challenged the denial of 

coverage, Allstate issued a second denial letter stating that the claim had been denied 

because “‘heat was not maintained’ at the dwelling”13 despite the fact that coverage 

may only be denied if a “policyholder does not use reasonable care to maintain heat 

at the property,” not simply because heat was not maintained.14

II. LAW 

Under Federal Rule of Civil Procedure 12(b)(6), courts dismiss a complaint, 

in whole or in part, if the plaintiff fails to “state a claim upon which relief can be 

granted.” Following the landmark decisions of Bell Atlantic Corp. v. Twombly15 and 

Ashcroft v. Iqbal,

16 “[t]o 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.’”17 The United States Court of Appeals for the Third Circuit has 

instructed that “[u]nder the pleading regime established by Twombly and Iqbal, a 

court reviewing the sufficiency of a complaint must take three steps”: (1) “take note 

of the elements the plaintiff must plead to state a claim”; (2) “identify allegations 

that, because they are no more than conclusions, are not entitled to the assumption 

12 Id. ¶¶ 27-28. 

13 Id. ¶ 31. 

14 Id. ¶ 33; see id. ¶ 32. 

15 550 U.S. 544 (2007). 

16 556 U.S. 662 (2009). 

17 Id. at 678 (quoting Twombly, 550 U.S. at 570). 

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of truth”; and (3) “assume the[] veracity” of all “well-pleaded factual allegations” 

and then “determine whether they plausibly give rise to an entitlement to relief.”18

III. ANALYSIS 

Defendant contends that Plaintiffs’ complaint provides no more than 

conclusory assertions to support Count Two, and that count must therefore be 

dismissed.19 Plaintiffs in contrast argue that the complaint provides sufficient facts 

to establish, at the motion to dismiss stage, that Allstate acted in bad faith in denying 

Plaintiffs’ insurance claim.20

To state a claim for the bad faith denial of an insurance claim under 

Pennsylvania law, a plaintiff must adequately allege “two elements: (1) that the 

insurer had no reasonable basis for denying benefits under the policy and (2) that the 

insurer knew or recklessly disregarded its lack of reasonable basis in denying the 

claim.”21 “Proof of the insurer’s subjective motive of self-interest or ill-will, while 

perhaps probative of the second prong of the above test, is not a necessary 

prerequisite to succeeding in a bad faith claim.”22

Here, the complaint alleges the following facts relevant to Plaintiffs’ bad faith 

claim. First, Plaintiffs carried an Allstate policy at the time that they suffered 

18 Connelly v. Lane Construction Corp., 809 F.3d 780, 787 (3d Cir. 2016) (internal quotations 

and citations omitted). 

19 Doc. 7. 

20 Doc. 8. 

21 Berg v. Nationwide Mut. Ins. Co., Inc., 235 A.3d 1223, 1232 (Pa. 2020) (internal quotation 

marks omitted). 

22 Id. (brackets and internal quotation marks omitted). 

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property damage, and that damage was covered by the Policy.23 Second, the policy 

provided only that the Plaintiffs must “use reasonable care to maintain heat at the 

property”24 but, despite this provision, Allstate denied the claim only three days after 

it was submitted because heat was not maintained at the dwelling—this reason is 

contrary to the contractual terms of the insurance policy.25 Third, prior to denying 

coverage, Allstate failed to conduct an investigation into how Plaintiffs’ maintained 

heat at the property.26

These allegations provide two independent and equally sufficient bases upon 

which Plaintiffs’ bad faith claim may proceed. First, the official reason provided for 

the denial of Plaintiffs’ claim—that heat had not been maintained in the property—

is not consonant with the terms of the insurance policy itself. The Policy provides 

that coverage may be denied if the insured fails to take reasonable care to maintain 

heat at the premises, but does not provide that it may be denied simply because heat 

was not maintained, regardless of the efforts taken to maintain such heat.27

“[D]enying coverage based upon a position that is . . . contrary to the language of 

the policy” may constitute bad faith,28 meaning this alone supports Plaintiffs’ claim. 

23 Doc. 1-1 ¶¶ 2, 4, 6-8. 

24 Id. ¶ 33. 

25 Id. ¶¶ 27, 32-33. 

26 Id. ¶ 29. 

27 Id. ¶¶ 31-33. 

28 Mega Const. Corp. v. Quincy Mut. Fire Ins. Co., 42 F. Supp. 3d 645, 662 (E.D. Pa. 2012). 

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Second, Plaintiffs allege that Allstate denied the claim within three days and 

without inquiring into what efforts were made to maintain heat at the premises—an 

inquiry that would have been necessary to deny coverage based on the absence of 

heat at the premises. It is well established that “[a]n insurer may also be found liable 

for bad faith conduct if the insurer has violated the Unfair Insurance Practices Act 

by failing to properly investigate the claim.”29 Allstate’s lack of a reasonable 

investigation into the facts necessary to support its denial of Plaintiffs’ insurance 

claim therefore also supports a claim of bad faith.30

The Court concludes that Plaintiffs’ have adequately stated a claim for the bad 

faith denial of their insurance claim under Pennsylvania state law. These allegations 

demonstrate both that Allstate had no reasonable basis for denying Plaintiffs’ 

insurance claim, and that it knew or recklessly disregarded the lack of reasonable 

basis to deny that claim. Accordingly, Allstate’s motion to dismiss will be denied. 

IV. CONCLUSION 

For the reasons stated herein, Defendant’s motion to dismiss Plaintiffs’ 

complaint is denied. 

29 Gavasto v. 21st Century Indem. Ins. Co., No. 1625 WDA 2019, 2021 WL 754026, at *5 (Pa. 

Super. Ct. Feb. 26, 2021) (citing O’Donnell ex. rel. Mitro v. Allstate Ins. Co., 734 A.2d 901, 

906 (Pa. Super. 1999)). 

30 See Pereira v. State Farm Fire & Cas. Co., No. 3:24-CV-01097, 2024 WL 3879377, at *5 

(M.D. Pa. Aug. 20, 2024) (allegations that insurance company “failed to pay their claim in full, 

investigate their claims properly, and respond to requests for an appraisal and other 

documentation” supported a bad faith claim (collecting cases)). 

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An appropriate Order follows. 

 

 

BY THE COURT: 

s/ Matthew W. Brann 

 Matthew W. Brann 

 Chief United States District Judge 

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