Archive for the 'NJ – Federal Pleading Adequate' Category

TWO BAD FAITH OPINIONS BY NEW JERSEY DISTRICT JUDGE HILLMAN: (CASE 1) CLAIM ADEQUATELY PLEADED, MOTION TO SEVER AND STAY DENIED (CASE 2) NO COVID-19 COVERAGE DUE = NO BAD FAITH (New Jersey Federal)

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This post summarizes two bad faith opinions issued by New Jersey District Judge Hillman in September.

CASE 1 – FIRST PARTY PROPERTY BAD FAITH CLAIM CAN PROCEED

In this first party property damage case, the insurer offered one-ninth of what the insured claim was due.  The insured brought breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith claims.  The insurer moved to dismiss the latter two claims, and if unsuccessful, moved to sever and stay the bad faith claim.

Breach of implied contractual covenant good faith and fair dealing subsumed in bad faith claim

Judge Hillman first found that the bad faith claim and breach of the implied covenant of good faith and fair dealing claim were redundant.  “[T] requirement to act in ‘good faith’ in processing a claim under an insurance contract is simply the flip-side of the requirement that an insurer may not act in ‘bad faith; in processing that claim. As such, Plaintiff’s claim for the breach of the implied covenant of good faith and fair dealing contained in both of Plaintiff’s counts is redundant of, and subsumed by, Plaintiff’s bad faith claim and must be dismissed as a stand-alone claim, if Plaintiff had intended it to be as such.”

Bad faith claim adequately pleaded

Judge Hillman then found the insured adequately pleaded its bad faith claim.  “[A]n insurance company may be liable to a policyholder for bad faith in the context of paying benefits under a policy. The scope of that duty is not to be equated with simple negligence. In the case of denial of benefits, bad faith is established by showing that no debatable reasons existed for denial of the benefits.”

To meet this standard:

  1. “[A] plaintiff must show the absence of a reasonable basis for denying benefits of the policy.”

  2. “If a plaintiff demonstrates the absence of a reasonable basis, he must then prove that the defendant knew or recklessly disregarded the lack of a reasonable basis for denying the claim.”

  3. In other words, an insurance company does not act in bad faith if a plaintiff’s insurance claim was “reasonably debatable.”

  4. A claim is “reasonably debatable” if a plaintiff cannot establish as a matter of law a right to summary judgment on the underlying breach of contract claim.

The court agreed some of the plaintiff’s complaint made conclusory allegations, but sufficient facts were pleaded to make out a plausible bad faith claim.  These include factual allegations that the insurer:

  • made misrepresentations concerning the lack of documentation for “abatement and appraisal,”

  • failed to indicate what ongoing investigation was being pursued in violation of the New Jersey Unfair Claims Settlement Practices,

  • determined that Plaintiff was improperly claiming damage for a pre-existing loss of 2013 in the absence of any evidence that there was pre-existing damage in the building from a loss in 2013,

  • made false statements concerning the extent of damage to [building] units 403, 407, 300 and 301,

  • threatened [the insured] with prosecution for “concealment, misrepresentation or fraud” when it knew that the only misrepresentation and fraud committed in connection with this claim had been committed by Great American, and

  • did all these things with the intentional purpose to deny its $267,429.73 claim, which is supported by the estimate of an actual building contractor, and not by a company … that provides services as “independent adjusters” for numerous insurance companies including Great American, and instead pay a fraction of that claim.

Motion to Sever and Stay Denied Without Prejudice

The court applied the four factor test for apply Federal Rule of Civil Procedure 21.  These four factors include:

“(1) whether the issues sought to be tried separately are significantly different from one another,

(2) whether the separable issues require the testimony of different witnesses and different documentary proof,

(3) whether the party opposing the severance will be prejudiced if it is granted, and (4) whether the party requesting severance will be prejudiced if it is not granted.”

Judge Hillman observed the tension at issue: “As a general principle it makes sense to hold off discovery on an insurer’s alleged bad faith when such claim is premised on the insured’s success in proving its breach of contract claim. If it is determined that the insurance company did not breach the parties’ contract, then it cannot be found that it acted in bad faith, and, thus, discovery on a claim that may never be considered would tend to be a wasteful expenditure of the parties’ and the Court’s resources. At the same time, however … if an insured is successful on its breach of contract claim and discovery on the insured’s bad faith had been stayed, parties and witnesses may need to be re-deposed and documents re-scanned for relevancy, privilege and other concerns, which would also tend to be wasteful.”

He then observed: “These competing concerns are the reason why the four-factor test is employed to determine whether severance and stay is proper in the particular circumstances of an individual case. In this case, [the insurer] has failed to demonstrate how the general principles of severance and stay of a bad faith claim are specifically applicable here. Unlike [the situation] where the plaintiff had propounded extensive interrogatories relating to the production of voluminous documents not directly related to the plaintiff’s individual dispute, [the insurer] has not indicated that Plaintiff has demanded documents and other information separate from what Plaintiff would demand for its breach of contract claim. Thus, even accepting that the first factor has been met, at this time the Court cannot assess the second factor regarding “whether the separable issues require the testimony of different witnesses and different documentary proof,” and the subsequent third and fourth factors of the Rule 21 test.”

Thus, Judge Hillman denied the request to sever the insured’s bad faith claim and stay discovery on that claim, without prejudice. He added, however, that the insurer could “renew its motion, if appropriate, before the magistrate judge after discovery has commenced.”

Date of Decision:  September 1, 2021

801 Asbury Avenue, LLC v. Great American Insurance Company, U.S. District Court District of New Jersey No. 1:20CV16522NLHAMD, 2021 WL 3910147 (D.N.J. Sept. 1, 2021) (Hillman, J.)

CASE 2 – NO COVID-19 COVERAGE DUE = NO BAD FAITH

This Covid-19 business loss coverage case follows the logic in the Pennsylvania and New Jersey decisions summarized in yesterday’s (September 27, 2021) posts; and in an earlier August 2021 ruling by Judge Hillman.  Like those decisions, Judge Hillman first finds no coverage due for Covid-19 business closure losses. As to bad faith, he then states:

“Here, Plaintiff’s bad faith claim is based on Defendant’s denial of coverage, but as detailed above, that denial of coverage was proper as a matter of law. Accordingly, a bad faith claim based on these facts would not survive dismissal.”

Judge Hillman cited his own August 2021 Covid-19 decision in  Z Business Prototypes LLC v. Twin City Fire Insurance Co., summarized here, “dismissing with prejudice plaintiff’s bad faith claim based on denial of coverage where the virus exclusion applied and barred coverage….”

Date of Decision: September 21, 2021

ABC Children’s Dentistry, LLC v. The Hartford Insurance Company, U.S. District Court District of New Jersey No. CV 20-10044, 2021 WL 4272767 (D.N.J. Sept. 21, 2021) (Hillman, J.)

BAD FAITH CLAIMS STATED FOR (1) INVESTIGATION NOT WARRANTING COVERAGE DENIAL AND (2) REPORTING INSURED TO COUNTY PROSECUTORS UNDER INSURANCE FRAUD PREVENTION ACT (New Jersey Federal)

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The carrier denied long-term health benefits to the insured, based on its investigation that revealed two facts indicating the insured was not as incapacitated as claimed.  The carrier additionally pursued insurance fraud claims with county prosecutors, who presented those fraud claims to a grand jury.  The grand jury dismissed the bill the same day the claims were presented.  The insured sued for coverage, bad faith, and violation of the Consumer Fraud Act (CFA).

The carrier moved to dismiss all claims.

First, the court found a breach of contract claim pleaded. The court then addressed bad faith, and allowed those claims to proceed.

Plaintiff argued two bases for bad faith: (1) knowing or reckless coverage denial after an improper investigation; and (2) reporting the insured to the county prosecutor for alleged violation of New Jersey’s Insurance Fraud Prevention Act (IFPA).

As to the bad faith investigation claim, the court emphasized it was bound by the pleadings at the motion to dismiss stage. While conceptually possible to rule on bad faith at that stage, the “fairly debatable” standard for bad faith often precludes granting a motion to dismiss because it must be determined whether there are disputes of material facts making the coverage denial fairly debatable.  This is more suited to determination at the summary judgment stage.

Here, the court looked at the facts alleged, and found that the insurer relied on two facts in denying coverage.  These two facts, however, did not create a fairly debatable reason for denying coverage.  Rather, standing alone, the denial on these facts alone could support a finding of bad faith.  Moreover, that the county prosecutor decided to bring those facts to a grand jury in pursuing an insurance fraud criminal claim did not create a fairly debatable basis to deny coverage; especially when the grand jury rejected those charges the same day they were presented.

The court likewise found a bad faith claim stated for the act of bringing the alleged IFPA violation to the county prosecutors. Having already held that plaintiffs adequately alleged the insurer did not have a good faith basis to deny benefits, this necessarily lead to the conclusion that the insurer “similarly did not have a good faith basis to report Plaintiffs for insurance fraud based on that claim.”

Finally, the court did dismiss plaintiffs’ Consumer Fraud Act claim based upon denial of insurance coverage, as beyond the CFA’s scope.  However, the court did permit the CFA claim to proceed for the insurer’s making an insurance fraud claim to the county prosecutors.

Date of Decision:  June 21, 2021

Spina v. Metropolitan Life Insurance Company, U. S. District Court District of New Jersey No. 1:20CV14129NLHKMW, 2021 WL 2525713 (D.N.J. June 21, 2021) (Hillman, J.)

BAD FAITH CLAIM SURVIVES WHERE INSUREDS ALLEGE CARRIER MISINTERPRETED THE POLICY, FAILED TO INQUIRE WITH THEIR OWN UNDERWRITERS ABOUT THE POLICY, AND FAILED TO ASSESS THE POLICY LANGUAGE IN ACCORDANCE WITH ESTABLISHED LEGAL PRINCIPLES (New Jersey Federal)

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Self-insured public entities sued their excess insurer for breach of contract and bad faith, claiming sums due for attorney’s fees and damages in sexual abuse suits.  The excess insurer claimed nothing was due, under its interpretation of the policy language applied to the facts at issue. The self-insureds survived a motion to dismiss the breach of contract claim and bad faith claims.

First, the court found coverage might be due, and the excess insurers could be liable to reimburse the self-insureds for sizable legal fees and for indemnification under the excess policies on the sexual abuse claims.

Next, the court observed that “[u]nder New Jersey law, in order to bring a successful bad faith claim against an insurer, an insured must show: ‘(1) the insurer lacked a ‘fairly debatable’ reason for its failure to pay a claim, and (2) the insurer knew or recklessly disregarded the lack of a reasonable basis for denying the claim.’”

In this case, the self-insureds alleged the excess carrier “failed to ‘act in good faith in their assessment of the terms and conditions of [the Policies]’ and failed to reasonably ‘assess communications exchanged during the course of negotiations between representatives of the parties, assess the statements of their own underwriters, assess the underwriting documentation, or assess principles of law and accepted construction of the terms of art within the [Policies].” The court found these allegations sufficiently factual in nature to allow the bad faith claim to proceed.

Date of Decision:  January 26, 2021

SCHOOL EXCESS LIABILITY JOINT INSURANCE FUND v. ILLINOIS UNION INSURANCE COMPANY, U.S. District Court District of New Jersey No. CV 20-4951(SDW)(LDW), 2021 WL 248860 (D.N.J. Jan. 26, 2021) (Wigenton, J.)

(1) BAD FAITH CLAIM SURVIVES MOTION TO DISMISS WHERE CLAIM “HAS BEEN PRESENTED” IN THE COMPLAINT; (2) MOTION TO SEVER AND STAY DENIED WITH LEAVE TO SEEK LATER CASE MANAGEMENT ON DISCOVERY TIMING (New Jersey Federal)

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The defendant excess insurer was not notified of the claim and suit until after a jury verdict had been rendered. It denied coverage. The insured’s primary insurer paid the full verdict, and, as subrogee and assignee, brought breach of contract and bad faith claims against the excess insurer. (The complaint also brings breach of fiduciary duty claims against the insured’s broker, which are not addressed below.)

The excess insurer moved to dismiss the bad faith claim, arguing it could not be liable for bad faith because it had a reasonable basis to deny coverage. The court disagreed. It drew a distinction between adequately pleading a claim sufficient to survive a motion to dismiss, vs. adducing sufficient facts to defeat summary judgment. On a motion to dismiss, the issue is whether a “claim has been presented.” (Emphasis in original). Here, a claim had been presented in the pleadings.

The excess insurer alternatively moved to sever and stay the bad faith count. The court rejected this argument as well.

Judge Shipp ruled the bad faith claim was “not so ‘significantly different’ from the other claims … that it must be severed.” He added that the relief [the insurer] seeks—avoiding discovery into the bad faith claim—if appropriate, can be accomplished by staged discovery without severing the claim entirely.” Thus, while not severed or stayed, the insurer could raise discovery related requested to the assigned magistrate judge at the proper time.

Date of Decision: March 31, 2020

Mercury Indemnity Co. of America v. Great Northern Insurance Co., U.S. District Court District of New Jersey Civil Action No. 19-14278 (MAS) (LUG), 2020 U.S. Dist. LEXIS 56396 (D.N.J. Mar. 31, 2020) (Shipp, J.)

OCTOBER 2017 BAD FAITH CASES: COMPLAINT STATES PLAUSIBLE BAD FAITH CLAIM BASED ON CLAIMS HANDLING; COURT SEVERS AND STAYS BAD FAITH CLAIM (New Jersey Federal)

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The insured alleged that she suffered serious bodily injuries after a rear-end collision. The vehicle at fault only had $25,000 in available coverage, and the insured’s UIM policy contained limits of $100,000 per person and $300,000 per accident. Alleging injuries amounting to $75,000 in value, the insured filed a UIM claim with the insurer. The insured allegedly forwarded all documentation supporting her injuries to the insurer’s claims adjuster, but the insurer ignored her documentation or acted with reckless indifference to the documentation provided. She filed a claim against the insurer for breach of the implied duty of good faith and fair dealing.

The insured moved to dismiss this claim, arguing that (1) the Court lacked federal subject matter jurisdiction because the insured’s claim does not exceed $75,000; and (2) that the insured failed to state a claim upon which relief can be granted. The insured also moved to sever and stay the insured’s bad faith claim, pending the disposition of the insured’s claim for breach of contract.

(1) The Court denied insurer’s motion to remand, reasoning that “[the insured’s] bad faith claim, if successful, includes the potential for an award of consequential damages and punitive damages . . .” that would exceed the jurisdictional threshold of $75,000.

(2) The Court denied the insured’s motion to dismiss, reasoning that the complaint “sets forth numerous examples of bad faith conduct that sufficiently allege[s] a ‘reckless disregard’ for [the insured’s] rights.” These allegations included delay tactics, conducting an improper investigation, and failing to evaluate medical records in a reasonable manner.

(3) Finally, the Court granted the insurer’s motion to sever and stay the bad faith claim from the insured’s breach of contract claim, citing judicial economy and avoiding prejudice to the insurer.

Date of Decision: September 12, 2017

Gussman v. Government Employees Insurance Company, No. 16-8563, 2017 U.S. Dist. LEXIS 146995 (D. N.J. Sept. 12, 2017) (Rodriguez, J.)

MARCH 2017 BAD FAITH CASES: AMENDED BAD FAITH CLAIM ADEQUATE TO MEET TWOMBLY/IQBAL ON KNOWING OR RECKLESS DISREGARD (New Jersey Federal)

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The court previously allowed the insured to amend its inadequately pleaded bad faith claim, based on a refusal to defend and indemnify it for settlement of a trademark infringement action, which the insured litigated unsuccessfully at trial and had up on appeal at the time of settlement.

Under New Jersey law, the bad faith plaintiff must show (1) an absence of a reasonable basis for denying benefits under the policy, and (2) the insurer’s knowledge or reckless disregard of the lack of a reasonable basis in denying the claim. The court originally ruled that the insured adequately pleaded there was no reasonable basis to deny benefits, and the judge saw “no reason to now disturb that finding that is now law of the case.”

The amended allegations went to the test’s second prong, and the court found the new allegations in the amended bad faith claim adequate.

The insured alleged that the insurers had “independently investigated [the insured’s] claim for coverage in the [Underlying] Action; that the Insurers’ counsel confirmed that coverage was due under the policy; that the Insurers were aware that proceedings in the [Underlying] Action were costly and rapidly progressing, and aware of the status of the case; that [the insured’s] counsel explained in correspondence that the Insurers owed a duty to defend under New Jersey law; and that the Insurers ‘have delayed the processing of the claim knowingly or in reckless disregard of the fact that they had no valid reason for doing so.’” These allegations went beyond mere legal conclusions and met the Twombly/Iqbal standards.

Date of Decision: February 14, 2017

Product Source International, LLC v. Foremost Signature Ins. Co., No. 15-8704, 2017 U.S. Dist. LEXIS 21460 (D.N.J. Feb. 15, 2017) (Simandle, J.)

APRIL 2016 BAD FAITH CASES: (1) PLAUSIBLE BAD FAITH CLAIM PLEADED BASED ON INSURER’S IME RESULTS, BUT (2) BAD FAITH CLAIM IS SEVERED AND STAYED (New Jersey Federal)

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In Abiona v. Geico Indemnity Company, the insurer sought to dismiss the underinsured motorist bad faith claim, and if not dismissed, then to sever and stay the bad faith claims.  The claim was not dismissed, but the court did agree to sever and stay the bad faith claim.

The insured alleged that the insurer completely denied UIM benefits, declined to participate in non-mandatory find arbitration, and failed to present any good faith settlement offer, despite the insured’s submitting extensive medical records to support the claim of severe and permanent injury.  This documentation allegedly included the insurer’s own IME report, which opined that “the insured is a surgical candidate from the injuries sustained by this accident if the epidural injection therapy does not resolve the significant pain from the herniated lumbar disc caused by this accident.”

In refusing to dismiss the bad faith claim, the court found that the insurer’s medical opinion that surgery could be required “nudges” the allegation of reckless disregard of the lack of a reasonable basis to deny the claim “across the line from conceivable to plausible.”

Next the court found it had jurisdiction to hear the case, when looking at the contract damages, and potential consequential and punitive damages permitted under New Jersey’s bad faith law.

On the issue of severance and stay, the court observed: “The prevailing practice in both state and federal court is to sever breach of insurance contract claims from bad faith claims, and to proceed with the contract claim before turning to the bad faith claim (if still necessary after adjudicating the contract claim).”  The court added that:  “Severance of a bad faith claim will often be desirable because, as courts have recognized, there is real potential for prejudice to the insurer should it ‘be required to produce its claim file prematurely.’”

The court accepted the insurer’s assertion that it would suffer prejudice without severance, and described the insured as “merely” arguing that judicial economy weighs against severance – a position contrary to the above-stated principles and numerous cases following those principles. It quoted from an earlier state court decision: “The toll on judicial economy by allowing full-disclosure up front . . . is obvious. Requiring simultaneous discovery on both claims will result in a significant expenditure of time and money, generally rendered needless if the insurer prevails on plaintiff’s UM or UIM claim.”  Thus, it granted the motion to stay and sever in the interests of judicial economy and to avoid prejudice to the insurer.

Date of Decision:  March 16, 2016

Abiona v. Geico Indem. Co., 2016 U.S. Dist. LEXIS 34179 (D.N.J. Mar. 16, 2016) (Hillman, J.)

OCTOBER 2015 BAD FAITH CASES: COURT DOES NOT DISMISS CLAIMS FOR ATTORNEY’S FEES IN BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING CLAIM AS POTENTIALLY BEING A FORM OF CONSEQUENTIAL DAMAGES (New Jersey Federal)

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In Breitman v. National Surety Corporation, the court was faced with the question of whether an insured could request attorney’s fees as part of consequential damages to a claim of bad faith.

The case arose out of a Hurricane Sandy coverage dispute in which the insurer originally denied the insured’s claim for loss and damage to the insured’s property caused by flood, not wind, as a result of Hurricane Sandy. The insured alleged that the insurer “conducted an improper adjustment, wrongfully denied his claim, and delayed payment.” The insured filed suit and set forth claims for breach of contract, breach of the duty of good faith and fair dealing/bad faith, and violations of the New Jersey Consumer Fraud Act. The insurer moved to strike the request for attorney’s fees from the bad faith claim.

In refusing to strike the insured’s request for attorney’s fees as part of his claim for breach of the duty of good faith, the court noted that under New Jersey law, “attorney’s fees are recoverable where provided for under a court rule or statute, pursuant to a contract, or where counsel feels are a traditional element of damages in a particular cause of action.” The court acknowledged that New Jersey law does not allow for an insured to recover attorney’s fees in a direct suit against his insurer for coverage, but explained that fees may be recoverable on a bad faith claim because “consequential economic damages are part of the damages award in a cause of action for bad faith.”

While the insurer urged the court to hold otherwise, the court stated that it was not necessary to conclusively decide this issue at such an early stage in the litigation. As the insured was able to plausibly show that fees may be part of the consequential damages on a claim of bad faith, the court permitted the request to remain, and reasoned that the issue of damages would be revisited if the insured later proved his claim against the insurer.

Date of Decision:  September 29, 2015

Breitman v. Nat’l Sur. Corp., CIVIL ACTION NO. 14-7843, 2015 U.S. Dist. LEXIS 130744 (D.N.J. September 29, 2015) (Simandle, J.)

MARCH 2015 BAD FAITH CASES: MOTION TO DISMISS NOT SUITABLE MEANS TO ADDRESS WHETHER INSURER’S POSITION WAS FAIRLY DEBATABLE, IN THIS ACTION, AND WAS THEREFORE DENIED (New Jersey Federal)

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In Zodda v. National Union Fire Insurance Company, the insured pleaded bad faith, among other claims, for denial of benefits on a disability policy.  The insured brought claims against multiple insurers, alleging an elaborate scheme in marketing the disability insurance at issue, and in denying benefits.  As to the insurance bad faith claim, the insurers brought motions to dismiss under Twombly/Iqbal.

Defendants attempted to introduce a letter concerning the insured’s medical condition to show that coverage was at least fairly debatable, and thus not subject to a bad faith claim.  The court rejected this effort at the motion to dismiss stage. The medical records relied upon were both outside the complaint, and contradicted by the allegations in the complaint.  Further, the motion was premature because “[a] factual issue that appears debatable at the motion to dismiss stage may prove immaterial following discovery.” Thus, whether or not the material facts were fairly debatable would be best addressed at the summary judgment stage, after discovery.

The court did dismiss the claim against one insurer, however, because that insurer had sold its business, prior to the relevant time period, and no request was made to that insurer to pay the benefits at issue. “Under these circumstances, [that insurer] cannot be liable for a bad faith insurance claim when it had no connection to the policy at the point when the claim was denied.”

Date of Decision:  March 4, 2015

Zodda v. National Union Fire Insurance Company, Civil Case No. 13-7738, 2015 U.S. Dist. LEXIS 26206 (D.N.J. March 4, 2015) (Hochberg, J.)

OCTOBER 2014 BAD FAITH CASES: NEW JERSEY FEDERAL JUDGE ELUCIDATES HOW INSUREDS ADEQUATELY PLED BAD FAITH UNDER TWOMBLY TO AVOID DISMISSAL UNDER “FAIRLY DEBATABLE” STANDARD (New Jersey Federal)

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Laing v. American Strategic Insurance Corporation is a Hurricane Sandy case, alleging that the insurer failed to properly adjust the claim and underpaid under the terms of the policy. The insureds alleged that the insurer both misrepresented the scope of the insurance policy and made false representations regarding scope of the damage to their home. Among other claims, the insureds sought relief for breach of the implied covenant of good faith and fair dealing and for bad faith.

The court found that New Jersey’s Supreme Court has held these two putative causes of action amount to the same claim, with the cause of action now being seen as rooted in contract rather than tort.  In interpreting the breach of the implied contractual covenant of good faith and fair dealing in the first party context, an insured must prove (1) the absence of a reasonable basis to deny benefits; and (2) that the insurer knew or recklessly disregarded the lack of a reasonable basis for denying the claim.

There is no bad faith if an insurance claim is “fairly debatable”.  The presence of a “fairly debatable” claim is found where the insured “cannot establish ‘as a matter of law a right to summary judgment on the substantive claim,’ i.e., the underlying contract claim.”

In this case, the insurer moved to dismiss the breach of good faith claims under Twombly/Iqbal in federal court; however, the court found that the pleadings were sufficient to make out a bad faith claim.

The court cited with approval the following allegations being sufficient to support plaintiffs’ case at the pleading stage:  the insurer “refused to pay [Plaintiffs’ claim] in full, despite there being no basis whatsoever on which a reasonable insurance company would have relied to deny the full payment”: the insurer “knew or should have known that it was reasonably clear that the claim was covered”; the insureds “hav[ing] complied with all policy provisions and hav[ing] cooperated fully with the investigation of this claim,” “[the insurer] and/or its agents improperly adjusted the Plaintiffs’ claim”;  the “adjuster misrepresented the cause of, scope of, and cost to repair”; and the insurer “denied at least a portion of the claims without an honest investigation.”

Assuming these allegations to be true as it must under Rule 12(b)(6), this did not make out a fairly debatable case for the insurer at this stage of the litigation. Thus, the court refused to dismiss the claims.

Date of Decision:  October 1, 2014

Laing v. Am. Strategic Ins. Corp., Civil Action No. 14-1103 (MAS) (TJB),  2014 U.S. Dist. LEXIS 139739 (D.N.J. Oct. 01, 2014) (Shipp, J.)