Daily Archive for February 8th, 2021

IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING CLAIM DISMISSED BECAUSE IT DUPLICATED BREACH OF CONTRACT CLAIM (New Jersey Federal)

The court denied a motion to dismiss the insured’s breach of insurance contract claim, pleaded on a third party beneficiary basis.

New Jersey Federal Judge Wolfson, however, did dismiss the insured’s breach of the implied covenant of good faith and fair dealing count, agreeing that the plaintiff could not “maintain a cause of action for breach of the implied covenant of good faith and fair dealing because that claim is duplicative of [the] breach of contract claim.”

In circumstances “where it is undisputed that a valid and unrescinded contract governs the conduct at issue, breach of implied duty claims can be dismissed at the motion to dismiss stage.” Judge Wolfson further observed, “[w]here a party has breached a specific term of a contract, that party cannot be found separately liable for breaching the implied covenant of good faith and fair dealing when the two asserted breaches basically rest on the same conduct.”

The present bad faith claim met all the criteria for dismissal. The bad faith claim was based on a valid and unrescinded insurance policy. Further, the plaintiff’s  “Complaint does not even attempt to differentiate the allegations relating to the breach of contract claim … and the allegations relating to the breach of the implied covenant of good faith and fair dealing. Rather, the Complaint simply acknowledges that [the insurer’s] ‘aforementioned actions and inactions’ provide a basis for their breach of implied covenant claim ….”

Judge Wolfson concluded defendant’s alleged “actions and inactions” concerning bad faith were the same “actions and inactions” pleaded to support the breach of contract claim. She found simply adding an allegation that the same conduct was done in bad faith did not make out a plausible bad faith claim: “A conclusory statement that a breach of contract is done in bad faith is insufficient to state a [separate] claim for breach of the implied covenant of good faith.”

Thus, the bad faith claim was duplicative and merited dismissal.

Date of Decision:  January 28, 2021

760 NEW BRUNSWICK URBAN RENEWAL LLC v. NAVIGATORS SPECIALTY INSURANCE CO., U.S. District Court District of New Jersey No. CV 20-5877 (FLW), 2021 WL 287876 (D.N.J. Jan. 28, 2021) (Wolfson, J.)