NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 12-1681

_____________

ANGELA SMITH, 

 Appellant

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

______________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. Civil No. 11-cv-07589)

District Judge: Honorable Mary A. McLaughlin

____________

Submitted Under Third Circuit LAR 34.1(a)

November 2, 2012

____________

Before: SLOVITER, AMBRO and BARRY, Circuit Judges

(Opinion Filed: November 27, 2012)

____________

OPINION

____________

BARRY, Circuit Judge

Angela Smith appeals from a Rule 12(b)(6) dismissal of the two remaining counts 

of her three-count complaint against State Farm Mutual Automobile Insurance Company 

(“State Farm”). We will affirm. 
2

I. Background

On February 24, 2010, Smith was injured in an automobile accident caused by 

Brian Griffaton. Her injuries included herniated discs and cervical radiculopathy. Smith 

learned that Griffaton had only a $15,000 policy with Nationwide, and so, on October 25, 

2010, she filed a claim with State Farm, with which she had a policy for Underinsured 

Motorist (“UIM”) coverage of up to $45,000.

We summarize those events which led to the issue now before us: 

October 27, 2010: Adjuster Kevin McDonnell is assigned to Smith’s 

UIM claim. He requested further information and 

documentation, including total liability insurance 

available to Smith, a proposed release for the third 

party claim, an affidavit of all household insurance 

policies, and authorization to review her medical 

payments file.

December 2, 2010: State Farm consented to Smith’s $15,000 settlement 

with Nationwide, Griffaton’s insurer, and waived 

subrogation. 

December 8, 2010: Smith supplied medical records and noted her excess 

medical bills were currently $26,474. 

January 3, 2011: Smith provided an affidavit of no health insurance and 

demanded full tender of the $45,000 UIM limit. 

January 7, 2011: State Farm repeated its October 27th request for 

authorization, stating that it needed the authorization to 

obtain pre-accident health records as well as a preaccident workers’ compensation claim. 

January 26, 2011: Smith returned the requested authorization and 

disclosed her pre-accident healthcare providers. 

Again, she demanded the $45,000 coverage limit. 
3

March 22, 2011: Smith supplied additional health records and reiterated 

her demand for $45,000.

April 13, 2011: State Farm made an initial settlement offer of $21,000. 

April 19, 2011: Smith rejected the $21,000 offer and demanded the 

$45,000 policy limit within twenty days. Smith stated 

that the excess medical bills now totaled more than 

$28,000. 

April 20, 2011: Recognizing that negotiations had reached an impasse, 

State Farm requested the necessary tax information to 

issue payment of the initial $21,000 offer, to serve as a 

minimum recovery pending further negotiations. 

McDonnell advised he did not have the authority to 

resolve Smith’s claim at the demanded $45,000 policy 

limit. 

April 25, 2011: Smith reiterated her April 19th demand for $45,000 to 

be paid within twenty days of the April 19th letter. 

State Farm paid Smith $21,000 and emphasized the 

payment was made without prejudicing her right to 

receive a higher amount after further negotiations. 

May 11, 2011: McDonnell again advised he did not have authority to 

resolve the claim for $45,000 and requested any 

additional information or a different demand. 

August 19, 2011: Smith provided an additional medical report and 

demanded that the remaining $24,000 of the policy 

limit be paid within twenty days. Smith claimed that 

excess medical bills had reached nearly $30,000.

 

August 25, 2011: State Farm increased its settlement offer to $32,225, 

inclusive of its previous $21,000 payment, and 

requested a response. 

Smith responded on November 16, 2011 by filing a three-count complaint against 

State Farm in the Court of Common Pleas of Philadelphia County. The complaint 
4

asserted claims for bad faith under 42 Pa. Cons. Stat. § 8371 (“§ 8371”) (Count I);

violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law 

(“UTPCPL”), 73 Pa. Cons. Stat. § 201-1, et seq. (Count II); and breach of contract 

(Count III). On December 12, 2011, State Farm removed the case to the District Court 

based on diversity jurisdiction, and soon thereafter, moved to dismiss under Rule 

12(b)(6). On February 16, 2012, the District Court granted State Farm’s motion as to 

Counts I and II and remanded Count III. Smith timely appealed. 

II. Jurisdiction & Standard of Review

The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1332(d). We 

have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of an order granting a Rule 

12(b)(6) dismissal is plenary. Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 

(3d Cir. 2006). We must decide whether the complaint1

 1 A court can also look to exhibits attached to the complaint and matters of public record. 

McTernan v. City of York, Penn., 577 F.3d 521, 526 (3d Cir. 2009) (citing Lum v. Bank of 

Am., 361 F.3d 217, 221 n.3 (3d Cir. 2004)). 

contains “sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 

570 (2007)). Although we must accept as true the complaint’s allegations and 

reasonable inferences drawn therefrom, we “need not credit a complaint’s bald assertions 

or legal conclusions.” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 

1997). 
5

III. Analysis

A. Bad Faith (Count I) 

A claim based on an insurer’s bad faith conduct against an insured is recognized in 

Pennsylvania by means of § 8371. Pennsylvania courts define bad faith in this context as 

“[a] frivolous or unfounded refusal to pay proceeds of a policy . . . a breach of a known 

duty (i.e., good faith and fair dealing), through some motive of self-interest or ill will; 

mere negligence or bad judgment is not bad faith.” Nw. Mut. Life Ins. Co. v. Babayan, 

430 F.3d 121, 137 (3d. Cir. 2005) (citing Terletsky v. Prudential Prop. & Cas. Ins. Co., 

649 A.2d 680, 688 (Pa. Super. Ct. 1994) (quoting Black’s Law Dictionary 139 (6th ed. 

1990))). A two-part test is applied to bad faith claims brought under § 8371, both 

elements of which must be supported by clear and convincing evidence: (1) whether the 

insurer lacked a reasonable basis for denying benefits under the insured’s policy, and (2) 

whether the insurer knew or recklessly disregarded the lack of a reasonable basis. See id; 

Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 225 (3d Cir. 2000); Condio v. 

Erie Ins. Exch., 899 A.2d 1136, 1142 (Pa. Super. Ct. 2006). “[B]ad faith is not present 

merely because an insurer makes a low but reasonable estimate of an insured’s damages.” 

Johnson v. Progressive Ins. Co., 987 A.2d 781, 784 (Pa. Super. Ct. 2009) (citing Condio, 

899 A.2d at 1142–43). 

On its face, Smith’s complaint (to which was attached copies of the parties’ 

correspondence) fails to allege a legally sufficient cause of action for bad faith under 

§ 8371. The complaint consists of conclusory statements unsupported by facts—State 
6

Farm, e.g., “breach[ed] covenants of good faith and fair dealing,” (Compl. ¶ 62(r)), and 

“engag[ed] in unfair settlement negotiations.” (Compl. ¶ 62(u)). There are no details 

describing what was unfair about the negotiations. Similarly, Smith simply asserts that

State Farm “intentionally misrepresent[ed] coverage in the policy,” (Compl. ¶ 62(d)), and 

“misrepresent[ed] facts and its evaluation of Plaintiff’s claim,” (Compl. ¶ 62(k)), without 

explaining what those misrepresentations may have been. 

Not only is the complaint replete with broad and conclusory statements, but 

several of those statements are plainly contradicted by the facts of the case. Smith states

that State Farm “fail[ed] to properly investigate [her UIM claim],” (Compl. ¶ 62(a)), and 

“fail[ed] to timely respond to inquiries and correspondence.” (Compl. ¶ 62(f), (m)). The 

course of the parties’ dealings, as seen in the exhibits Smith attached to her complaint 

which we have summarized above, clearly does not support these statements. To the 

contrary, State Farm promptly opened a claim at Smith’s request, assigned an adjuster 

within two days, consented to settlement with the tortfeasor’s insurance company, waived 

subrogation, made an initial settlement offer, and issued payment for the initial offer. 

There was never a break in communications or a period in which State Farm was 

unresponsive. Smith also states that State Farm “fail[ed] to make payments of undisputed

amounts of coverage owed to Plaintiff,” (Compl. ¶ 62(n)). This, too, is incorrect. State 

Farm did issue payment for its initial offer, $21,000, even though it was under no duty to 

do so. See Keefe, 203 F.3d at 228 (noting an insurer is not required to pay a partial 

settlement absent a request from the insured). 
7

There was, to be sure, a disagreement over the amount of the settlement of Smith’s 

UIM claim. This, of course, is not unusual. See Johnson, 987 A.2d at 785 (stating that 

“[t]he underlying facts involve nothing more than a normal dispute between an insured 

and insurer over the value of an UIM claim . . . [a] routin[e] [scenario] in the processing 

of an insurance claim.”). However, the failure to immediately accede to a demand for the 

policy limit cannot, without more, amount to bad faith. The District Court did not err in 

dismissing Count I. 

B. UTPCPL (Count II) 

The UTPCPL prohibits “unfair methods of competition” and “unfair or deceptive 

acts or practices.” See § 201-2(4) (listing prohibited conduct). It includes a privateplaintiff standing provision which “creates a private right of action in persons upon 

whom unfair methods of competition and unfair or deceptive acts or practices are 

employed and who[,] as a result, sustain an ascertainable loss.” Hunt v. U.S. Tobacco 

Co., 538 F.3d 217, 221 (3d Cir. 2008) (quoting Toy v. Metro. Life. Ins. Co., 928 A.2d 

186, 191 n.4 (citing 73 Pa. Cons. Stat. § 201-9.2) (emphasis added))). Thus, a private 

plaintiff pursuing a claim under the UTPCPL must prove justifiable reliance. Id. at 221 

& 224 (citing Pennsylvania authority, including Weinberg v. Sun Co., 777 A.2d 442, 446 

(Pa. 2001) and Schwartz v. Rockey, 932 A.2d 885, 897 n.16 (Pa. 2007)). 

Although, as the District Court properly noted, Smith may have alleged wrongful 

conduct, she did not allege actions pursued on the basis of that conduct. Because

justifiable reliance is a necessary element for standing under the UTPCPL’s private-
8

plaintiff standing provision, and reliance cannot be presumed, Hunt, 538 F.3d at 227, the 

District Court did not err in dismissing Count I.2

 2 Given this disposition, we need not reach the issue of whether Smith also failed to 

allege other essential elements of a UTPCPL claim, namely deceptive or fraudulent 

conduct by State Farm. 

IV. Conclusion

The order of the District Court will be affirmed.