MAY 2014 BAD FAITH CASES: INJURED THIRD PARTY HAS NO DIRECT CLAIM AGAINST INSURERS OF TORTFEASOR FOR BAD FAITH PROCESSING OF CLAIM IN ABSENCE OF ASSIGNMENT (New Jersey Superior Court Appellate Division)

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In Ross v. Lowitz, New Jersey’s Appellate Division upheld the lower court’s dismissal of a third party’s claims directly against the insurers of the alleged tortfeasor for bad faith in the processing of the claim brought by them against the tortfeasor-insured. The lower court had found in a comprehensive written statement of reasons, that there was no basis as a matter of law to assert direct claims alleging breach of the covenant of good faith and fair dealing against the insurance companies, as there was no fiduciary duty or any special relationship between them.

The appellate court first noted that persons purportedly injured by the carriers’ insured are precluded from filing direct claims against the insurance companies absent an assignment of rights. In addition, these parties were not third-party beneficiaries to the contracts of insurance. Thus, the grant of summary judgment on this claim was upheld.

Date of Decision: March 18, 2014

Ross v. Lowitz, DOCKET NO. A-1024-12T4, 2014 N.J. Super. Unpub. LEXIS 568 (N.J. Super. Ct. App. Div. March 18, 2014) (Ashrafi, St. John, and Leone, JJ.)

This decision was affirmed by the Supreme Court.

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