The federal district court granted the insurer’s motion for judgment on the pleadings after determining that the insured’s claims for bad faith and unfair claims settlement practices were insufficiently pled. Navia v. State Farm Fire & Cas. Co., 2026 U.S. Dist. LEXIS 111261 (W.D. N. C. May 20, 2026).
The insured submitted a claim for damages to real property owned by the insured allegedly caused by Hurricane Helene. State Farm advised the insured that only some of the claimed damages were covered by the policy and payment for such damages were denied because the estimate for the covered damages did not exceed the policy’s deductible. The insured sued asserting claims for breach of contract, bad faith, and unfair claim settlement practices.
State Farm moved for partial judgment on the pleadings regarding the insured’s claims for bad faith and unfair claim settlement practices.
Under North Carolina law, a plausible claim for bad faith refusal to settle required the plaintiff to plead (1) a refusal to pay after recognition of a valid claim, (2) bad faith, and (3) aggravating or outrageous conduct. To plead bad faith, the plaintiff had to allege more than mere honest disagreement or innocent mistake. To plead aggravating or outrageous conduct, the plaintiff could allege fraud, malice, gross negligence, insult, rudeness, oppression, or wanton and reckless disregard of plaintiff’s rights.
Here, the insured’s complaint was problematic. It was a generic form presenting few particulars in support of the insured’s claims. For example, the insured alleged that the policy in question was his homeowner’s policy. The documents filed with the pleadings, however, clearly showed that the property was a rental unit and that the policy at issue was the landlord’s policy. The court concluded that the insured failed to adequately allege any of the three elements required for a bad faith claim.
The unfair claim settlement practices claim also failed. The unfair claim settlement practices statute enumerated fourteen unfair business practices, any of which could serve as examples of conduct to support a finding of unfair or deceptive acts or practices. Here, all the relevant allegations in the complaint were either general and conclusory or mere recitals of the relevant statutory provisions.
At most, the pleadings established only that the insured disagreed with State Farm’s decision to deny his claim. Such disagreement, without more, was insufficient as a matter of law to state a plausible claim for bad faith or unfair claim settlement practices. Therefore, the court granted State Farm’s motion dismissing the bad faith and unfair claim settlement practices claims.
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