JANUARY 2013 BAD FAITH CASES: COURT RULES THAT INSURED WAIVED RIGHT TO ARBITRATE BAD FAITH AND COVERAGE ISSUES BECAUSE IT BROUGHT SUIT ON THE SAME POLICY (New Jersey Federal)

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The JPMorgan Chase Bank, N.A. v. Republic Mortg. Ins. Co. (see also this blog) case arises from the insured’s coverage, negligence and bad faith actions, initially filed when the carrier rescinded 200 policies covering the insured’s mortgage loans. The court first heard the carrier’s motion to dismiss, which did not address the insured’s bad faith allegations, and dismissed the insured’s negligence claim.

In its second opinion, hyperlinked below, the court examined the carrier’s argument that the insured waived its ability to arbitrate the remaining coverage and bad faith issues when it filed claims arising under the same policy in federal court. Reasoning that the same contractual issues would be present in both arbitration and litigation, the court held that it would be unfair to allow the insured to escape the effect of its waiver by restyling its claim and presenting it for arbitration. As such, the court enjoined the insured from pursuing its arbitration claim.

Date of Decisions: November 30, 2012

JPMorgan Chase Bank, N.A. v. Republic Mortg. Ins. Co., No. 10-6141, 2012 U.S. Dist. LEXIS 170325, 2012 U.S. Dist. LEXIS 170327 (D.N.J. Nov. 30, 2012) (Martini, J.)

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