The court denied the insurer’s motion to dismiss the insured’s claim for breach of the covenant of good faith and fair dealing, but granted the motion to dismiss the claim for declaratory judgment. Jimenez v. State Farm Fire & Cas. Co., 2026 U.S. Dist. LEXIS 182079 (D. Conn. Aug. 15, 2026).
The insured owned a two-family property which was insured by State Farm. After a fire damaged the property, the insured submitted a claim to State Farm. The policy provided for Fair Rental Value coverage “[w]hen a loss insured causes that part of the residence premises rented to others or held for rental by you to become uninhabitable.”
Before the fire, the insured alleged that he rented part of the property under an oral lease agreement. In support of his claim for Fair Rental Value, the insured alleged that he provided State Farm with bank deposit receipts demonstrating that he collected rent in cash. The insured further alleged that his rental ledger was destroyed in the fire.
State Farm denied fair rental value coverage because the insured failed to provide requested records and documents. The insured alleged that he complied with this requirement by providing all responsive and relevant documents in his possession and that he was not able to provide to State Farm documents that did not exist. His complaint further alleged that State Farm made “improper and unreasonable requests” that were “impossible to comply with” in “an intentional effort to avoid its contractual obligations to Plaintiff” and “avoid issuing further payment.”
State Farm moved to dismiss the insured’s complaint for breach of the implied covenant of good faith and fair dealing, and declaratory judgment. The count for breach of contract was not challenged by State Farm.
State Farm argued the complaint did not sufficiently allege a breach of the covenant of good faith and fair dealing. State Farm characterized the parties’ disagreement as one concerning “the sufficiency of documents produced by an insured during the process of adjusting an insurance claim,” which, “even if the insurer is wrong,’ did not itself establish bad faith.
The court disagreed. The allegations plausibly alleged more than a mere dispute or negligent investigation. For example, the complaint alleged that “plaintiff complied with said provisions by providing Defendant all responsive and relevant documentation in Plaintiff’s possession” and that “Plaintiff is unable to provide Defendant with documents that do not exist, as seemingly and nonsensically requested by Defendant.” Taken together, these allegations plausibly alleged more than a mere coverage dispute or negligent investigation.
State Farm may ultimately establish that its requests were reasonable, that the materials provided were insufficient under the policy, or that its denial resulted from an honest interpretation of the policy. At the pleading state, however, the insured needed to only allege sufficient factual content to permit a reasonable inference that State Farm acted with the dishonest purpose under Connecticut law, and he did so here. Accordingly, State Farm’s motion to dismiss the breach of implied covenant of good faith and fair dealing claim was denied.
The count for declaratory judgment was duplicative of the count for breach of contract and for breach of the implied duty of good faith and fair dealing. The insured simply restated the breach of contract and bad faith counts in his claim for declaratory judgment. A separate declaratory judgment would not serve a useful purpose in clarifying or settling the legal issues involved or provide meaningful relief form uncertainty. Therefore, State Farm’s motion to dismiss the declaratory judgment claim was granted.
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