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H.E. McGonical, Inc. v. Harleysville Lake States Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

June 5, 2017

H.E. McGONIGAL, INC., Plaintiff,
v.
HARLEYSVILLE LAKE STATES INSURANCE COMPANY, and COREPOINTE INSURANCE COMPANY, Defendants.

          ENTRY ON PLAINTIFF'S MOTION TO CERTIFY INTERLOCUTORY APPEAL

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on Plaintiff H.E. McGonigal, Inc.'s (“McGonigal”) Motion to Certify Interlocutory Appeal filed pursuant to 28 U.S.C. § 1292(b) (Filing No. 84). Following motions to dismiss filed by Defendants Harleysville Lake States Insurance Company (“Harleysville”) and CorePointe Insurance Company (“CorePointe”), the Court dismissed McGonigal's claims for insurance bad faith against Harleysville and CorePointe (Filing No. 41; Filing No. 68). The Magistrate Judge denied McGonigal's request for leave to amend its Complaint because of McGonigal's lack of diligence in pursuing and pleading its bad faith claims and the unfair prejudice that would result against Harleysville and CorePointe (Filing No. 66). Thereafter, McGonigal asked the Court to reconsider the dismissal Orders and the Order denying leave to amend the Complaint. However, the Court denied the motion to reconsider because McGonigal failed to show an error of law or fact, and the Court, contrary to McGonigal's assertion, had not required a heightened pleading standard for McGonigal's bad faith claim (Filing No. 82 at 6). McGonigal now asks the Court to certify an interlocutory appeal of the Order denying reconsideration to allow immediate appellate review. For the following reasons, the Court DENIES McGonigal's Motion to Certify Interlocutory Appeal.

         I. BACKGROUND

         The Court provides only a brief background of the case in this Order because the parties are familiar with the background, and the issues are similar to those raised in McGonigal's motion to reconsider.[1]

         In January 2015, McGonigal brought this action against CorePointe and Harleysville, asserting claims for breach of contract and breach of the duty of good faith and fair dealing in connection with insurance policies sold by CorePointe and Harleysville to McGonigal. McGonigal is an Indiana car dealership company located in Kokomo, Indiana. CorePointe is an insurance company based in Birmingham, Michigan, and Harleysville is an insurance company based in Harleysville, Pennsylvania. McGonigal purchased insurance policies from both CorePointe and Harleysville to cover losses incurred in its car dealership business.

         Around January 18, 2013, McGonigal learned that approximately sixteen vehicles were fraudulently purchased with funds drawn on a McGonigal account, and McGonigal received no compensation for the vehicles. After discovering the loss, McGonigal submitted insurance claims to both CorePointe and Harleysville in accordance with the policies' terms. Even though McGonigal allegedly complied with the terms of the policies, and despite the loss allegedly being a loss covered by the policies, CorePointe and Harleysville denied McGonigal's claims.

         Because of the denial of the claims, McGonigal filed its Complaint, seeking coverage for the loss and damages for the insurers' breach of contract and failure to act in good faith. On April 13, 2015, Harleysville filed a motion to dismiss, asserting that the Complaint failed to provide any factual basis to support a claim of insurance bad faith (Filing No. 5). On October 26, 2015, the Court granted Harleysville's motion to dismiss the bad faith claim against Harleysville (Filing No. 41). On January 4, 2016, CorePointe filed its motion to dismiss the bad faith claim asserted against CorePointe, asserting the same argument advanced by Harleysville-that the Complaint failed to provide any factual basis to support a claim of insurance bad faith (Filing No. 45).

         More than a month after CorePointe's motion to dismiss was filed and almost four months after the Court's Order dismissing the bad faith claim against Harleysville, on February 23, 2016, McGonigal filed a motion requesting leave to amend its Complaint regarding its bad faith claims (Filing No. 49). This motion was filed after the deadline to amend the pleadings had expired. On July 18, 2016, the Court denied McGonigal's motion to amend the Complaint because of McGonigal's lack of diligence in pursuing and pleading its bad faith claims and the unfair prejudice that would result against Harleysville and CorePointe (Filing No. 66). Then on August 31, 2016, the Court granted CorePointe's motion to dismiss the bad faith claim asserted against CorePointe (Filing No. 68). Thereafter, McGonigal filed a motion to reconsider, asking the Court to vacate or amend the two dismissal Orders and the Order denying leave to amend the Complaint (Filing No. 69).

         On April 18, 2017, the Court denied McGonigal's motion to reconsider, explaining that McGonigal failed to show an error of law or fact concerning dismissal of the bad faith claim and denial of leave to amend the Complaint (Filing No. 82). The Court further explained that, contrary to McGonigal's assertion, the Court had not required a heightened pleading standard for McGonigal's bad faith claim. Rather, McGonigal had failed to provide anything beyond a recitation of the elements of a cause of action or mere labels for its bad faith claim, and thus, it did not meet the pleading standard of Federal Rule of Civil Procedure 8. Id. at 5. The Court denied the motion to reconsider because McGonigal simply showed its disappointment in and disagreement with the Court's reasoning and decision. Following the denial of the motion to reconsider, McGonigal filed its Motion to Certify Interlocutory Appeal on April 26, 2017.

         II. LEGAL STANDARD

         There are four statutory criteria for the grant of a section 1292(b) petition to guide the district court: there must be a question of law, it must be controlling, it must be contestable, and its resolution must promise to speed up the litigation. There is also a nonstatutory requirement: the petition must be filed in the district court within a reasonable time after the order sought to be appealed. . . . Unless all these criteria are satisfied, the district court may not and should not certify its order to [the appellate court] for an immediate appeal under section 1292(b).

Ahrenholz v. Bd. of Trs., 219 F.3d 674, 675-76 (7th Cir. 2000) (emphasis in original).

         III. DISCUSSION

         In its Motion to Certify Interlocutory Appeal, McGonigal argues that it meets all the criteria for certifying an interlocutory appeal, asserting that its question is a controlling question of law- does pleading “bad faith” in the context of a dispute between an insured and insurer ...


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