United States District Court, M.D. Tennessee, Nashville Division
MEMORANDUM OPINION AND ORDER
KEVIN H. SHARP, District Judge.
In this insurance coverage dispute that was recently transferred to the undersigned, Defendant USAA Casualty Insurance Company ("USAA") has filed a "Motion to Dismiss Plaintiffs' Bad Faith Claim." (Docket No. 26). Plaintiffs Christopher and Crystal Negron have filed a response in opposition to the Motion (Docket No. 28) to which Defendant has replied (Docket No. 31). For the following reasons, USAA's Motion to Dismiss will be granted, but Plaintiffs will be provided an opportunity to amend their Complaint.
According to the allegations in the Amended Complaint, which the Court accepts as true for present purposes, Plaintiffs own property located at 1041 Waterford Circle in Clarksville, Tennessee that is insured under a policy issued by USAA. The policy provides dwelling coverage in the amount of $118, 000.00, and insures against a number of risks, including sinkholes.
On January 1, 2012, while the policy was in full force and effect, the property was damaged as a result of sinkhole activity. In accordance with the terms of the policy, Plaintiffs provided USAA with a notice of a loss. In response, USAA "sent a professional engineer, Rimkus Consulting Group, Inc. (Rimkus'), to Plaintiffs' Property who confirmed that there was damage to the home, but stated that was caused by perils excluded under the policy and not by sinkhole activity." (Docket No. 22, Amended Complaint ¶ 12).
In a letter dated July 18, 2012, USAA informed Plaintiffs that Rimkus had determined the sinkhole activity was not the cause of a covered loss, and denied the claim. Thereafter, on June 6, 2013, counsel for Plaintiffs sent a letter to USAA demanding full payment, otherwise Plaintiffs would "seek a bad faith penalty for the handling of [the] claim." ( Id. ¶ 14). A little over a week later, USAA confirmed denial of Plaintiffs' claim. Plaintiffs then filed suit in the Circuit Court of Montgomery County, Tennessee.
After the case was removed to this Court, Plaintiff filed an Amended Complaint alleging breach of contract and bad faith. With regard to the bad faith count, Plaintiffs incorporate the general factual background just referenced and further allege:
27. Defendant's failure and refusal to pay is not in good faith, and such failure to pay has inflicted expense, loss, and injury upon Plaintiffs. Accordingly, Plaintiffs are entitled to recover, in addition to the amount of the insured loss and interest thereon, an amount equal to twenty-five percent (25%) of the liability for the loss, pursuant to Tenn. Code Ann. § 56-7-105.
28. The acts and/or omissions of Defendant constitute bad faith with respect to the exercise of its duties and obligations to the Plaintiffs, including, but not limited to:
(A) Defendant failed to exercise the skill, care and knowledge required of a licensed insurance carrier with respect to the investigation and handling of insurance claims;
(B) Defendant failed to investigate the Plaintiffs' claims in a prompt and thorough manner; and,
(C) Defendant intentionally ignored requests to pay the claim of insurance policy coverage for the Plaintiffs' claims.
29. Defendant has exhibited a pattern of conduct with regard to its claims handling practices, which has resulted in repeated misconduct amounting to intentional or reckless bad faith toward its insureds. A history of court determinations and complaints of bad faith conduct on the part of Defendant has put Defendant on notice that its claims handling practices have resulted in repeated incidents of bad faith. In spite of such notice, Defendant has intentionally or recklessly or carelessly failed ...