Archive for the 'NJ – Claims Handling (reasonable)' Category

NO BAD FAITH WHERE INSURER JUSTIFIABLY RELIES ON EXISTING CASE LAW PRECEDENT (New Jersey Appellate Division)

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In this case, the parties disputed the law governing the allocation of insurance coverage payments. At the end of the day, there was no actionable bad faith.

The insurer paid costs for home modifications to cover the needs of the quadriplegic insured, as well as some medical costs, both payments totaling the number provided as the policy limit. The partially paid hospital providing services to the insured asserted, however, that the insurer’s manner of allocating the funds was incorrect, i.e., the policy limits should have gone entirely to its medical costs and expenses. Thus, the hospital argued the insurer must pay additional sums for medical costs it should have paid originally, instead of paying for the home modifications.

The New Jersey Appellate Division panel agreed that the insurer properly relied upon prior Appellate Division precedent both in the manner of allocating payment, and the insurer’s refusal to pay the hospital any sums beyond its policy limits. The court stated the insurer “processed the claim in good faith for the benefit of its insured” in justifiably relying on this case law.

The court recognized that an “insurance carrier may be liable for payments even if such payment exceeds the policy’s coverage limit, if the manner in which the carrier has handled a claim evidences ‘misconduct or bad faith.’” In this case, however, the insurer “acted in good faith reliance on” controlling precedent, “which is evidenced by the fact that it actually exhausted [the insured’s] policy in paying for his necessary home modifications.” There was no evidence of misconduct or bad faith, and no damages beyond what was already paid could be awarded.

Date of Decision: June 25, 2019

Robert Wood Johnson University Hospital v. Plymouth Rock Assurance Insurance Co., New Jersey Superior Court Appellate Division DOCKET NO. A-4195-17T3, 2019 N.J. Super. Unpub. LEXIS 1453 (App. Div. June 25, 2019) (Hass, Mitterhoff, Sabatino, JJ.)

DECEMBER 2018 BAD FAITH CASES: NO BAD FAITH WHERE CARRIER’S SETTLEMENT OFFERS ARE BASED ON THIRD PARTY EVALUATION, AND ANY DELAYS WERE CREATED BY INSURED (New Jersey Appellate Division)

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This first party bad faith case centered on damage to plaintiff’s automobile. The insured claimed the carrier knowingly failed to tender the true value of plaintiff’s property damage. The lower court granted the insurer summary judgment on bad faith, and the insured appealed.

The appellate court found no bad faith. The insurer “made multiple offers to settle the claim that were all based upon third-party evaluations” of a vehicle with 269,000 miles on it. Moreover, it was the insured who “initially delayed the processing of the claim by insisting he would obtain an amended police report showing he was not at fault in the accident,” but “after the passage of several weeks, he relented.” Further, after finally supplying requested information to the insurer, the third party evaluator did substantially increase the settlement offer.

Under these circumstances, “no reasonable factfinder could conclude that defendant acted with knowledge or reckless disregard of the lack of a reasonable basis for denying the claim or with reckless . . . indifference to facts or to proofs submitted by the insured.”

Date of Decision: December 3, 2018

Ferro v. Travelers Insurance Co., Superior Court of New Jersey DOCKET NO. A-5174-16T3, 2018 N.J. Super. Unpub. LEXIS 2642, 2018 WL 6272940 (New Jersey Appellate Division Dec. 3, 2018)

OCTOBER 2018 BAD FAITH CASES: NO BAD FAITH WHERE CLAIM DENIAL SUPPORTED BY EXPERTS; POTENTIAL BAD FAITH FOR CLAIMS OF RETALIATION (New Jersey Federal)

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In this case, the insured’s damage claim would be covered if damages were caused by a sinkhole. The insured and insurer used a number of experts or investigators, who reached opposite conclusions. The insurer’s “team” relied upon its two engineers who concluded there was no sinkhole, and rejected the insured’s expert in favor of its own experts’ conclusions.

The insured brought breach of contract and bad faith claims. There were two distinct bad faith claims. The first was based on the sinkhole denial. The second was based on the insurer’s alleged threat to seek reimbursement of a previous payment on an earlier claim in retaliation for pursuing the sinkhole claim. The court granted summary judgment on the former, but allowed this threat based action to proceed.

No Bad Faith Where Denial Supported By Experts Made Denial Fairly Debatable

The court denied the insurer’s summary judgment motion on coverage, finding a dispute of fact on whether the loss resulted from a sinkhole. However, the court did grant summary judgment on the bad faith claim for denying coverage.

Under New Jersey’s fairly debatable standard, the bad faith plaintiff must show “the insurer knowingly or recklessly lacked a reasonable basis to deny the claim.” “A bad faith claim must fail where the insurer’s denial of the claim was fairly debatable.” Thus, a “claimant who could not have established as a matter of law a right to summary judgment on [the breach of contract claim] would not be entitled to assert a claim for an insurer’s bad-faith refusal to pay the claim.”

In this case, the insurer relied upon two expert engineers to deny the claim. The court found that “[n]o facts have been put forth to show that these reports were wholly fraudulent, or were crafted without any investigation or expertise.” It cited Bello v. Merrimack Mut. Fire Ins. Co., for the proposition that the “’fairly debatable’ question was one for the jury, in circumstances “where the insurer relied on a report by a non-engineer that acknowledged the merit of the insured’s claim….” [In that case, the jury found bad faith].

The court concluded: “Examining the record in the light most favorable to Plaintiffs, Defendant rubber-stamped the conclusions of [the insurer’s engineers] and ignored contrary evidence. But the fact that these two engineers arrived at conclusions consistent with Defendant’s decision to deny Plaintiffs’ claim demonstrates that that decision was fairly debatable. Summary judgment must therefore be granted in favor of Defendant on the Second Count.”

Bad Faith Claims Allowed To Proceed On Retaliation Threat Claim

The “insurer acts in bad faith when it acts without a reasonable basis, and when the insurer knows or is reckless in not knowing that its action lacks a reasonable basis.” In its second bad faith count, the insured alleged the carrier’s “decision to retroactively seek reimbursement was made in retaliation for Plaintiffs’ filing a new claim.” The insurer argued that it actually sought reimbursement because of a fraudulent misrepresentation, resulting in erroneous payment. The court found it lacked “sufficient information to rule on this Count as a matter of law,” and denied summary judgment.

Date of Decision: October 9, 2018

Orban v. Liberty Mutual Fire Ins. Co., U. S. District Court District of New Jersey Civ. No. 16-3050, 2018 U.S. Dist. LEXIS 173212 (D.N.J. Oct. 9, 2018) (Thompson, J.)

Should the New Jersey Senate’s proposed Insurance Fair Conduct Act become law in the future, this could very likely change the standards discussed in this case.

JULY 2018 BAD FAITH CASES: NO BAD FAITH WHERE (1) DENIAL WAS REASONABLE AND (2) THERE WAS NO DELAY IN MAKING DECISION TO DENY; COURT ALSO EXPLAINS DUTY TO REIMBURSE VS. DUTY TO DEFEND (New Jersey Appellate Division)

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The central discussion in this case focused on the duty to defend as distinguished from the duty to reimburse. Where there is coverage on the face of the complaint a defense must be provided, with two exceptions. If there are covered and uncovered claims, or the coverage issue is of a kind that cannot be determined through the underlying action against the insured, then the obligation to defend becomes an obligation to reimburse defense costs if it is later determined coverage was due. Thus, an insurer can reserve its rights and dispute coverage, which can turn the duty to defend into a duty to reimburse.

In this case, there was a policy exclusion with anti-concurrent and anti-sequential language, when compared to the allegations in the complaint, made it premature “to order [the insurer] to assume responsibility for the defense since it was unclear, based on the anti-concurrent and anti-sequential language in the exclusion, whether any claims would be covered.” Thus, the duty to defend became a duty to reimburse.

The insured settled the claim, and sought recovery under the Griggs rule. Under Griggs: “Where an insurer wrongfully refused coverage and a defense to its insured, so that the insured is obliged to defend himself in an action later held to be covered by the policy, the insurer is liable for the amount of the judgment obtained against the insured or of the settlement made by him. The only qualifications to this rule are that the amount paid in settlement be reasonable and that the payment be made in good faith.” The Court refused to apply Griggs to this case where a duty to deny a defense and coverage was made in good faith.

Further, the insurer did not breach its duty of good faith in the steps taken to deny the claim. There was no unreasonable delay in denying the claim, and no purported to prejudice the insured.

This opinion provides a good overview of New Jersey law on policy interpretation and coverage disputes, coverage disputes involving exclusions, and anti-concurrent/anti-sequential clauses.

Date of Decision: July 20, 2018

Wear v. Selective Insurance Co., New Jersey Superior Court Appellate Division, DOCKET NO. A-5526-15T1 A-0033-16T1, 2018 N.J. Super. LEXIS 108 (App. Div. July 20, 2018) (Koblitz, Manahan, Suter, JJ.)

APRIL 2018 BAD FAITH CASES: NO BAD FAITH WHERE FIRST PARTY CLAIM HANDLING CONDUCT WAS REASONABLY DEBATABLE, WITH COURT ADDRESSING CLAIM HANDLING, ALLEGED PAYMENT DELAY, RHETORICAL ARGUMENTS, AND ALLEGED CLAIM HANDLER INCOMPENTENCE (New Jersey Federal)

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This is a bad faith case arising out of Superstorm Sandy damage to the insured’s home. Coverage for the full loss was denied, and breach of contract and bad faith claims followed. This opinion involves the insurer’s summary judgment motion on the bad faith claim. Judgment was entered on the bad faith claim for the insurer.

Bad Faith Standards

New Jersey recognizes bad faith claims for “both bad faith in denial of benefits and bad faith in delay of processing of claims.” A bad faith claim might exist where payment was intentionally and unreasonably delayed on an undisputed claim. The test is whether a claim is “fairly debatable”. If the insured cannot establish “as a matter of law a right to summary judgment on the substantive claim [e.g., the breach of the insurance contract]” there is no actionable bad faith claim. The plaintiff has to show the “absence of a reasonable basis for denying benefits of the policy and the defendant’s knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.”

In the first party context, under New Jersey law: “Although a fairly debatable claim is a necessary condition to avoid liability for bad faith, it is not always a sufficient condition. Rather, we are satisfied that the appropriate inquiry is whether there is sufficient evidence from which reasonable minds could conclude that in the investigation, evaluation, and processing of the claim, the insurer acted unreasonably and either knew or was conscious of the fact that its conduct was unreasonable.” In this case, the “principal issue presented is whether Plaintiff has adduced factual evidence from which a reasonable jury could find that [the insurer] lacked a fairly debatable reason for denying the disputed portion of the claim. Because in this summary judgment motion [the insurer] has set forth the factual basis for its determinations of coverage and loss, and because Plaintiff has not come forward with evidence that Plaintiff’s entitlement to recover for these losses was so clear that it was not fairly debatable, Plaintiff will be unable to prove its bad faith claim in Count 2 and summary judgment will be granted….”

No bad faith conduct on the record in claims handling

Specifically, the court observed that the insured did not seek summary judgment on the breach of contract claim, and the court itself was not going to find it undisputed that the contract was breached. This alone would appear to be fatal to the insured’s opposition under the reasonably debatable standard. Further, the court observed that the insurer considered the opinions and advice of expert consultants in the claims handling process. The court also listed a variety of “plausible” steps the insurer took to adjust the claim.

No bad faith delay

The court further rejected the insured’s delay argument. It found the insurer promptly investigated the damages, retained experts and a licensed contractor to evaluate the claims, and shared its findings with the insured throughout the process. The insured failed to submit responsible estimates during the process with supporting documentation, and was unresponsive for many months at a time, included a delay in submitting a sworn statement in proof of loss.

Rhetorical assertions without support unsuccessful

The court addressed “Plaintiff’s rhetorical assertions that bad faith is demonstrable from assigning incompetent and inattentive claims adjusters who were ‘repeatedly told … to sit back and wait for the statute of limitations to run out in the hopes that the Plaintiff would miss the filing deadline’….” There was no support for this assertion and, to the contrary, the insured’s large loss director instructed the claim adjuster “to remind Plaintiff’s representatives in writing that the policy contained a two-year suit limitation condition” and the adjuster did so by writing a letter calling “attention to the suit limitation in advance of the approaching deadline.”

Alleged incompetent adjusting did not affect this claim

Early in the claims handling process an adjuster was criticized by his superior for not documenting the file. That adjuster was replaced. However, that this adjuster “temporarily failed to address the potential claim does not give rise to a material factual dispute, as it is undisputed that proper investigation was undertaken, results were shared and explained to Plaintiff and Plaintiff’s agent, and the claim file was put squarely on track as directed by the management. That there remains an area of disputed claims, as alleged in Count One, does not imply that those disputes were caused by [the insurer’s] deliberate indifference to a proper investigation and claims adjustment process.”

Attorney’s fees not recoverable

The court previously ruled that attorney’s fees could only be recoverable as consequential damages on a bad faith claim, and not for a direct suit to enforce casualty or other direct coverage. Since the bad faith claim was dismissed, no attorney’s fees were recoverable.

Date of Decision: March 29, 2018

Breitman v. National Surety Corp., Civil Action No. 14-7843 (JBS/AMD), 2018 U.S. Dist. LEXIS 52496 (D.N.J. Mar. 29, 2018) (Simandle, J.)

FEBRUARY 2017 BAD FAITH CASES: NO BAD FAITH WHERE INSURER DID NOT SECRETLY CONCEDE COVERAGE, NOR RELY UPON A CLEAR ERROR IN ITS DENIAL LETTER (New Jersey Federal)

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The New Jersey federal court had to apply the “reasonably debatable” standard to the bad faith denial claim in this matter. The insured had two theories of bad faith liability.

The first was that the insurer’s adjuster sent an internal email conceding coverage. However, what the email actually stated was that while the damage claims may have fallen within one policy definition, it also referenced potentially applicable exclusions. “Thus, the critical email fails to support [the insured’s] repeated allegation that the email unequivocally reflects that [the insurer] believed that [its insured] had coverage. Instead, the email itself states that exclusions may apply which would negate coverage.”

Second, the insurer’s denial letter included an erroneous interpretation of the policy, affecting the exclusion. The insurer admitted it made this error. There was no bad faith, however, because the insurer never pressed forward on this position, and it “took the same position regarding denial of coverage without reference to either limitation.”

By contrast: “If the facts were different, for example if [the insured] had evidence that [the insurer] denied the claims believing that they were in fact covered, but attempted to pull a sleight of hand by pointing to irrelevant policy provisions, the Court’s decision concerning bad faith could be different.” This was not the case, and summary judgment was granted to the insurer on the bad faith claim.

Date of Decision: December 30, 2016

National Manufacturing Co. v. Citizens Ins. Co. of Am., No. 13-314, 2016 U.S. Dist. LEXIS 180145 (D.N.J. Dec. 30, 2016) (Vazquez, J.)

FEBRUARY 2016 BAD FAITH CASES: NO BAD FAITH WHERE INSURER MAKES PAYMENT TO PLAINTIFF’S BANK WHICH WAS LISTED AS THE NAMED INSURED IN THE POLICY (New Jersey Federal)

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In Hossain v. American Security Insurance Company, the court rejected the notion that an insurance payment to the plaintiff’s bank was made in bad faith.  Under the relationship between the insured and the bank, the insured’s policy listed the bank as the named insured, and the insured as the borrower. “The insurance policy … explains that loss payments ‘will be made payable to the named insured and the borrower as their interests appear.’” Thus, there was no violation by the insurer making payment directly to the bank.

Date of Decision:   February 8, 2016

Hossain v. Am. Sec. Ins. Co., Civil Action No. 15-8138, 2016 U.S. Dist. LEXIS 14871 (D.N.J. Feb. 8, 2016) (Simandle, J.)

SEPTEMBER 2014 BAD FAITH CASES: NO BAD FAITH UNDER PENNSYLVANIA LAW WHERE INSURED FAILED TO DISCLOSE FACTS TO DISABILITY INSURER; NO BREACH OF FIDUCIARY DUTY UNDER NEW JERSEY LAW FOR SAME REASON (Philadelphia Federal)

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In Hayes v. American International Group, a case involving a disability insurance claim, the Magistrate Judge concluded in her Report and Recommendation that there could be no statutory bad faith under Pennsylvania law where the carrier paid total disability benefits for over four years until it learned that the insured had been working over the entire period.

Further, a subsequent investigation of the insured, his work-related activities and his earned income, as well as his failure to provide relevant financial information, led to the insurer’s decision to terminate benefits.

The insured did not present sufficient evidence to support that the insurer lacked a reasonable basis for denying total or residual disability benefits, or that the insurer disregarded a lack of a reasonable basis for doing so.

The insured also brought a claim for breach of fiduciary duty. The court observed that there was a difference in Pennsylvania and New Jersey law, with Pennsylvania law recognizing only a very limited fiduciary duty in insurers, and New Jersey law recognizing a broader fiduciary duty from insurers to insureds in the processing of first party claims.

The court did a conflict of laws analysis, setting out, however, that both parties to the insurance contract owe a fiduciary duty to the other under New Jersey law. In light of that, New Jersey law was not contrary to Pennsylvania’s governmental interests, the conflict was false, and New Jersey law applied.

For the reasons set out above, there could be no breach of fiduciary duty. The insured had repeatedly and consistently reported his lack of income and inability to perform anything but sedentary activities to the insurer. Thus, the court stated that “it cannot be said that [the insurer] exercised bad faith in discontinuing benefits when confronted by evidence that Plaintiff was earning more from his private practice than he was earning before he allegedly became disabled.”

Date of Decision: July 29, 2014

Hayes v. Am. Int’l Group, CIVIL ACTION NO. 09-2874, 2014 U.S. Dist. LEXIS 103564 (E.D.Pa. July 29, 2014) (Hey, U.S.M.J.) (Report and Recommendation)

Adopted by District Court on September 11, 2014.

MARCH 2014 BAD FAITH CASES: THIRD CIRCUIT APPLIES RESTATEMENT TO DETERMINE APPLICABLE STATE’S LAW ON POLICY INTERPRETATION WHERE PENNSYLVANIA AND NEW JERSEY CONFLICTED ON SCOPE OF “EMPLOYER’S EXCLUSION”; NO BAD FAITH WHERE INSURED SUPPLIED INSURER WITH WRONG DOCUMENTS AS BASIS FOR COVERAGE, AND WHERE THERE WAS A DISPUTE OF LAW ON APPLICABILITY OF EMPLOYER’S EXCLUSION AND TRIAL COURT HAD FOUND NEW JERSEY LAW TO REACH A SIMILAR CONCLUSION AS PENNSYLVANIA LAW (Third Circuit)

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In Arcelormittal Plate, LLC v. Joule Tech. Servs., the issue involved yet another case on the effect of an employer’s exclusion upon an insured that did not itself employ the injured plaintiff-employee. The injured employee was an employee of a the named insured, who brought a claim against an additional insured.

The case hinged on a choice-of-law analysis as Pennsylvania law would apply the exclusion to all insureds, while New Jersey law would apply it solely to the insured employing the plaintiff-employee, under the policy language at issue.  If resolved in favor of New Jersey law on the key exclusion issue, then the court would have to address the arguments of late notice, and that there was no written contract in place at the time of the injury giving the additional insured, additional insured status at the relevant time.

The policy language at issue involved the employee of “the insured” language, as opposed to the employee of “any insured” language.  It contained a provision alternately known as an “employer’s liability exclusion,” an “employer’s exclusion,” or an “employee exclusion.” The exclusion stated as follows: “[t]his insurance does not apply to . . . ‘[b]odily injury’ to (1) [a]n ’employee’ of the insured arising out of and in the course of (a) [e]mployment by the insured; or (b) [p]erforming duties related to the conduct of the insured’s business[.]” Insured was defined as “any person or organization qualifying as such under SECTION II [entitled “WHO IS AN INSURED”].”

An endorsement to the policy amended Section II to “include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract.”

The policy also contained a severability clause, sometimes known as a “separation of insureds” clause, stating that “[t]his insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or ‘suit’ is brought.” The policy provided that Liberty had “the right and duty to defend the insured against any ‘suit’ seeking [bodily injury] damages.”

The court found a conflict of laws, and determined New Jersey law should apply under Pennsylvania’s choice-of-law rules, which followed the Restatement (Second) of Conflicts of Laws. In conducting this analysis, it made clear that: “The authors of the Restatement expressed a preference ‘that only one set of laws govern a given insurance contract, and . . . disapproval of the possibility that the laws of different jurisdictions might apply to different risks under the policy.'”

Applying Pennsylvania choice-of-law rules, the court had to determine which state had the greater interest in the application of its law, which involved weighing the parties’ contacts and relationships with each state on a qualitative scale according to their relation to the policies and interests underlying the particular issue.

The Restatement (Second) of Conflict of Laws, in an official comment, explains that in an insurance dispute, a court should generally give the location of the insured risk “greater weight than any other single contact.” Nonetheless, if the policy covers “a group of risks that are scattered throughout two or more states,” the location of the risk has “less significance” to the choice-of-law determination.

In that case, because the Policy covered all of named insured’s operations, and because the named insured dispatches its employees to several states, the “location of the insured risk” is scattered among jurisdictions.

The court was thus obligated to consider a number of other factors, under Restatement section 188(2): “(1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation and place of business of the parties.”

Considering these factors on a “qualitative scale,” the court concluded that New Jersey had a greater interest in the application of its law than Pennsylvania. The contract itself was made in New Jersey, involved a New Jersey primary insured, and covered the diverse risks associated with the activities of that company across several states. This conclusion also renders less likely the possibility that the insurer and the insured will face varying obligations under the same policy depending on the locus of the underlying tort.

Specifically, the place of contracting was New Jersey, which is where the insurance company delivered the insurance contract to the insured.

Second, the insurer did not rebut the additional insured’s assertion that at least some of the negotiations took place in New Jersey.

Third, the place of performance, and fourth, the location of the contract’s subject matter, both extend into the several jurisdictions where the insured sends its employees.

Last, the parties are diverse. The insurer is a Massachusetts corporation with its principal place of business in Massachusetts. The primary insured is a New Jersey corporation with its principal place of business in New Jersey. And the additional insured is subject to several layers of corporate ownership such that its principals are considered citizens of Nova Scotia, Quebec, and Luxembourg.

After finding coverage, the court next considered the bad faith claims under New Jersey law on the basis of there being no contract creating additional insured status, and late notice.

The New Jersey Supreme Court has described the standards applicable to a claim for bad faith denial of insurance benefits as follows: “To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendant’s knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. It is apparent, then, that the tort of bad faith is an intentional one. . . . [I]mplicit in that test is our conclusion that the knowledge of the lack of a reasonable basis may be inferred and imputed to an insurance company where there is a reckless . . . indifference to facts or to proofs submitted by the insured.” A plaintiff must prove that “no debatable reasons existed for denial of the benefits.”

The insurer adduced expert testimony from a claims handling expert, who concluded that under applicable law and industry standards, the insurer had performed an “intelligent, honest, fair and reasonable review and investigation” into the additional insured’s demand for coverage, based on three justifications:

(1) the additional insured’s initial demand letter did not cite the contract that the named the additional insureds, and which the additional insureds eventually acknowledged governed this dispute; but instead asserted coverage based on purchase orders which the insurer reasonably determined did not establish a right to coverage; and the insurer did not get the applicable contract for over a year;

(2) the insurer was justified in denying coverage because that contract did not entitle the additional insured to coverage for bodily injury to the named insured’s employee resulting from the additional insured’s own negligence; and

(3) the insurer was justified in denying coverage because of unduly late notice regarding the underlying lawsuit, which the expert believed irreparably prejudiced the insurer’s ability to defend the claim.

The additional insured claimed that the carrier had the relevant contract in its possession at an earlier date, and suggested that the carrier had “an action plan” to deny coverage on a meritless ground. The court found the “action plan” language innocuous when taken in context, and that it went back to the issue of relying on the wrong documents to make a claim for coverage.

The District Court had dismissed the bad faith claim for two reasons: (1) its finding that the employee exclusion barred the claim and (2) the fact that additional insured initially predicated its claim on the incorrect documents.

The Third Circuit concluded that in light of the District Court’s ruling and the Pennsylvania Supreme Court’s taking a different position than New Jersey courts on the same language, whether the employee exclusion barred the claims presented a legal issue that was at least “fairly debatable.”

Moreover, the additional insured’s misplaced reliance on certain irrelevant documents throughout much of the dispute, including up to and beyond the start of the instant litigation, was uncontested. In sum, because the insurer denied coverage based on factual and legal grounds that were at least plausible at the time of its decision, the insurer was entitled to summary judgment on the bad faith denial of coverage.

Date of Decision:  February 18, 2014

Arcelormittal Plate, LLC v. Joule Tech. Servs., No. 13-1212, 2014 U.S. App. LEXIS 2905, (3d Cir. Feb. 18, 2014) (Vanaskie, J.).

MAY 2013 BAD FAITH CASES: COURT GRANTS CARRIER’S SUMMARY JUDGMENT MOTION BECAUSE INSURED FAILED TO ALLEGE A CLAIM FOR BAD FAITH (Philadelphia Federal)

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In Quinn v. Liberty Mut. Group, the carrier filed for summary judgment on a claim for bad faith brought by the representative of an insured decedent’s estate (see this post). The decedent sustained serious injuries as the result of a car accident with an uninsured motorist. The carrier refused to pay an arbitration award and the representative filed suit for bad faith.

The carrier claimed that it acted with the reasonable belief that New Jersey law applied, which would permit them to properly reject the arbitration award and demand a trial.

The court granted the carrier’s motion, reasoning that it did not need to decide whether Pennsylvania or New Jersey law applied because the claimant’s allegations were insufficient to sustain a finding of bad faith.

Date of Decision: March 7, 2013

Quinn v. Liberty Mut. Group, No. 11-5364, 2013 U.S. Dist. LEXIS 31194, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. Mar. 7, 2013) (Bartle, J.)