APRIL 2018 BAD FAITH CASES: LEAVE TO AMEND AND ADD BAD FAITH CLAIM DENIED WHEN INSURED FAILED TO SHOW GOOD CAUSE AND AMENDMENT WOULD BE FUTILE (New Jersey Federal)

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The insured submitted a claim for property damage and business-income loss after Superstorm Sandy in 2012. Towards the end of the claim evaluation process, the insured sued for breach of contract. Roughly two years after filing its complaint, the insured moved for leave to amend, seeking to add a bad faith claim.

The Court ruled that the insured failed to demonstrate good cause to show it was entitled to amendment beyond the Court’s amendment deadline. Under the federal rules, parties must act diligently, and the insured failed to timely add the bad faith claim upon allegedly learning of new information.

In addition, the Court found that granting the motion to add a bad faith claim would be futile. New Jersey bad faith claims are subject to the “fairly debatable” standard, i.e., “if a claim is ‘fairly debatable,’ no liability in tort will arise.” Under that standard, a bad faith plaintiff must be able to establish bad faith on summary judgment as a matter of law. The Court ruled that because there was uncertainty with the material facts surrounding the claim, summary judgment would be precluded as a matter of law. Thus, the bad faith claim was futile, and the Court denied the insured’s motion to amend.

Date of Decision: April 20, 2018

Lasermaster International Inc. v. Netherlands Insurance Co., United States District Court, District of New Jersey, Civil Action No. 15-7614 (CCC), 2018 U.S. Dist. LEXIS 66520 (D.N.J. Apr. 20, 2018) (Clark, III, M.J.)

 

 

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