AUGUST 2015 BAD FAITH CASES: IN FIRST PARTY ACTION, UNDER NEW JERSEY LAW, ATTORNEY’S FEES ONLY RECOVERABLE FOR BAD FAITH, NOT FOR SIMPLE BREACH OF CONTRACT (New Jersey Federal)
In 213-15 76th Street Condominium Association v. Scottsdale Insurance Company, the insured sought attorney’s fees for a first party claim against its insurer. Attorneys’ fees are only permitted in such circumstances, if the insured pleads a claim for bad faith. However, where the claim is only for breach of the insurance contract, attorney’s fee awards are prohibited. In this case, the plaintiff did not set out a bad faith claim, but at most asserted that future discovery may elucidate such a claim exists. Thus, there was no basis for attorney’s fees, though the court dismissed the attorney’s fee claim without prejudice.