The opinion of the court was delivered by: ROSEMARY COLLYER, District Judge
*fn1 Defendant was initially identified as "Ohio Casualty Group,
Inc." Its correct corporate name is substituted without
This is a lawsuit about insurance coverage. American Registry
of Pathology ("ARP") asked its insurer, Ohio Casualty Insurance
Co. ("Ohio Casualty"), to pay and defend two lawsuits alleging
negligent hiring by ARP. See Amended Complaint ("Am. Compl.")
at 1. Ohio Casualty refused to do so. Initially, ARP advanced two
breach-of-contract claims and a claim of bad faith refusal to pay
(i.e., bad faith refusal to provide insurance coverage), for
which it seeks $30 million in punitive damages. Ohio Casualty
moved to dismiss the third claim on the basis that such a tort is
not recognized in the District of Columbia. ARP then filed leave
to amend its complaint and an amended complaint that alleges two
breach of contract claims, a breach of the covenant of good faith
and fair dealing, and a bad faith refusal to pay. Ohio Casualty
opposes the motion for leave to amend.
The facts of the underlying litigation are not germane to the
pending motions. Suffice it to say that ARP was sued twice for alleged negligent hiring of
a cytotechnologist who misread the Pap smears of two individuals.
Despite repeated requests, Ohio Casualty refused to provide a
defense. Both cases have now been settled. ARP's two allegations
of breach of contract rely on its commercial general liability
insurance policy with Ohio Casualty and the alleged failure of
the insurer to follow the terms of that contract. In addition,
ARP alleges that Ohio Casualty showed willful and reckless
disregard of its obligations to defend and pay. The complaint
here was filed on September 30, 2004. Ohio Casualty filed its
motion to dismiss Count 3 of the complaint on October 29, 2004,
and it is now fully briefed. ARP filed a motion for leave to
amend the complaint on November 4, 2004. That motion is also
fully briefed and ready for decision.
Pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure, dismissal for failure to state a claim upon which
relief can be granted is appropriate where it "appears beyond
doubt that a plaintiff can prove no set of facts in support of
his claim that would entitle him to relief." Conley v. Gibson,
355 U.S. 41, 45-46 (1957); Kowal v. MCI Communications Corp.,
16 F.3d 1271, 1276 (D.C. Cir. 1994). The primary issue in
resolving a motion to dismiss is not whether the plaintiff will
ultimately prevail, but whether he or she is entitled to offer
evidence to support his or her claims. See Scheuer v. Rhodes,
416 U.S. 232, 236 (1984), overruled on other grounds, Davis v.
Scherer, 468 U.S. 183 (1984). At this early stage of the
proceedings, the court must accept as true all of the plaintiff's
well-pled factual allegations and draw all reasonable inferences
in favor of the plaintiff. See Alexis v. District of Columbia,
44 F. Supp. 2d 331, 3363-7 (D.D.C. 1999). Although the court must
construe the complaint in the light most favorable to the plaintiff, it "need not accept inferences drawn by the
plaintiff if such inferences are not supported by the facts set
out in the complaint." Kowal, 16 F.3d at 1276. In addition, the
court need not accept the plaintiff's legal conclusions as true.
See Alexis, 44 F. Supp. 2d at 337.
B. Motion for Leave to Amend Complaint
Under Rule 15 of the Federal Rules of Civil Procedure, a
pleading may be amended after service of a responsive pleading
"only by leave of court or by written consent of the adverse
party; and leave shall be freely given when justice so requires."
Fed.R.Civ.P. 15(a). "Consequently, leave to amend is to be
granted absent bad faith, dilatory motive, undue delay . . . or
prejudice on the non-moving party." Mississippi Assoc. of
Cooperatives v. Farmers Home Admin., 139 F.R.D. 542, 543 (D.D.C.
1991) (citing Forman v. Davis, 371 U.S. 178, 182 (1962) and
Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321
There are two related but distinct issues before the Court: (1)
can ARP maintain a contract or a tort suit for bad faith refusal
to provide insurance coverage under the laws of the District of
Columbia and, regardless of the answer to that question, (2) can
ARP maintain a contract suit for breach of the duty of good faith
and fair dealing that seeks punitive damages?
A. Bad Faith Refusal to Pay
ARP contends that Count III of the complaint "asserts a viable
cause of action for Ohio Casualty's bad faith refusal to pay
ARP's claim under a contractual theory" and that ARP "is eligible
to recover punitive damages as a part of this contractual theory
of liability." Plaintiff's Opposition to Defendant's Motion to
Dismiss ("Pl.'s Opp.") at 13-14. ARP seeks to recover ...