Archive for the 'NJ – Limitations Period' Category

OCTOBER 2015 BAD FAITH CASES: STATUTE OF LIMITATIONS DID NOT BEGIN TO RUN AT THE TIME OF THE INSURER’S ALLEGED DECLINATION LETTER, BECAUSE THE LANGUAGE IN THAT LETTER WAS AMBIGUOUS ON DENIAL (New Jersey Federal)

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In Liguori v. Certain Underwriters at Lloyds London, the court held that the statute of limitations had not run on the insured’s claim for breach of the implied covenant of good faith and fair dealing, because the insurer’s declination letter was ambiguous as to whether or not the claim would be covered.

Date of Decision:  July 17, 2015

Liguori v. Certain Underwriters at Lloyds London, Civil No. 14-5898, 2015 U.S. Dist. LEXIS 93090 (D.N.J. July 17, 2015) (Kugler, J.)

OCTOBER 2013 BAD FAITH CASES: COURT OF EQUITY TOLLS STATUTE ON PIP CLAIM DESPITE PLAINTIFF’S FAILURE TO DETERMINE APPROPRIATE INSURER (New Jersey Appellate Divison)

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The court was asked to determine whether the statute of limitations applicable to claims for personal injury protection (PIP) benefits expires two years after the date of the accident even where the claimant is unaware of the identity of the insurance carrier.

In this case, plaintiff was injured while driving a car owned by a friend and insured by GEICO (“the insurer”) in December of 2009. Plaintiff submitted an affidavit of no insurance along with a claim for benefits to the insurer, in which she provided her address and stated she lived at the address with her husband.

However, three years later at her deposition, plaintiff testified she had lived at the address with her husband in 2007 and 2008, but that after separating from her husband in 2009, only plaintiff was listed on the lease and that her sister was the only person living with her at the address.

After this deposition, it came to light plaintiff’s sister’s insurer, the defendant, was the primary insurer under N.J.S.A. 39:6A-4.2 because plaintiff was a resident relative in the insured’s household who was not a named insured under an automobile insurance policy of her own.

On November 16, 2011, plaintiff filed a claim with defendant. On December 12, 2011, defendant issued a Reservation of Rights letter, pending its investigation of the claim. On Februrary 22, 2012, defendant issued an official claim denial, informing plaintiff the statute of limitations on her claim tolled as of December 1, 2011.

The trial court ordered defendant to provide coverage to plaintiff, finding the balance of equity compelled the tolling of the statute.  On appeal, the Appellate Division determined plaintiff promptly pursued her claim, despite her mistake concerning which insurer was truly responsible for covering her claim.

Furthermore, once she learned defendant was the correct insurer, she immediately filed a claim with defendant. There was limited evidence as to the prejudice defendant would suffer from being forced to defend against a stale claim, and defendant’s continued investigation of the claim after the statute of limitations had passed led plaintiff to believe the claim had been timely filed.

Based on these findings, the court determined plaintiff was not dilatory in filing her claim, plaintiff had been lulled into a false sense of security concerning defendant’s willingness to pay her claim, and that the statute of limitations should be tolled, requiring defendant to provide PIP coverage.

Date of Decision July 15, 2013

Raviv v. Farmer’s Ins. Group, No. A-5074-11T2, 2013 N.J. Super. Unpub. LEXIS 1744 (July 15, 2013 N.J. Super Ct. App. Div.) (Alvarez, J. and St. John, J.)

MAY 2013 BAD FAITH CASES: COURT AFFIRMS SUMMARY JUDGMENT BECAUSE INSURED FILED SUIT AFTER THE ONE-YEAR SUIT LIMITATION PERIOD EXPIRED (New Jersey Appellate Division)

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In Zaun v. Franklin Mut. Ins. Co., the court heard an insured’s appeal from the trial court’s summary judgment to a homeowner’s insurance carrier. The suit arose after the carrier denied coverage over water damage to the insured’s home. The carrier denied coverage because the premises had been vacant for more than 60-days, triggering an exclusion in the policy. The insured sought review with the carrier’s internal appeals panel, but coverage was again denied. After filing suit for bad faith and breach of contract, the carrier filed for summary judgment, which the court granted on the basis of a one-year suit limitation clause in the insurance contract.

On appeal, the insured argued that the carrier waived the one-year suit limitation clause because it permitted the insured to file for an internal appeal after the permitted 30-day request period. The court rejected this argument, reasoning that the carrier made an accommodation for the insured with the internal review, something that does not waive the one-year suit limitation clause. As such, summary judgment was affirmed and the insured’s bad faith suit was terminated.

Date of Decision: March 19, 2013

Zaun v. Franklin Mut. Ins. Co., No. A-5193-11T2, 2013 N.J. Super. Unpub. LEXIS 608, New Jersey Superior Court Appellate Division (App.Div. Mar. 19, 2013) (Fisher, J., Alvarez, J.)

MARCH 2013 BAD FAITH CASES: COURT DENIES CLASS CERTIFICATION ON INSURER DECEPTION AND BAD FAITH CLAIMS, BUT PERMITS CLAIMS OF TWO PROPOSED PLAINTIFFS TO CONTINUE (New Jersey Federal)

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In Clark v. The Prudential Ins. Co. of America, plaintiffs filed a putative class action complaint alleging fraudulent misrepresentation, fraudulent omissions, breach of the duty of good faith and fair dealing and violation of California’s Unfair Competition Law. The claims arose out of the carrier’s stoppage of the sale of Coordinated Health Insurance Program (“CHIP”) insurance plans.

In their complaint, plaintiffs argued that the carrier stopped selling CHIP policies to new customers in December 1981 (referred to as “closing the block”), despite its awareness that an exorbitant increase in premium rates would result. The insureds alleged the carrier intentionally concealed this information from its insureds and apprised policyholders that premiums would only increase as the result of an insured’s age and rising medical costs.

After examining the individual circumstances of each named plaintiff, the court denied the plaintiffs’ motion for class certification due to a lack of commonality and predominance. The court also partially granted the carrier’s motion for summary judgment based on a statute of limitations defense and dismissed four of the six plaintiffs. With respect to the remaining two named plaintiffs, the court denied the carrier’s motion, reasoning that a determination of the tolling of their claims involved genuine issues of material fact inappropriate for summary judgment.

Date of Decision: February 5, 2013

Clark v. Prudential Ins. Co. of Am., No. 08-6197, 2013 U.S. Dist. LEXIS 15571, U.S. District Court for the District of New Jersey (D.N.J. Feb. 5, 2013) (Debevoise, J.)