Archive for the 'NJ – General Bad Faith and Litigation Issues' Category

BAD FAITH BLOG CELEBRATES 15TH ANNIVERSARY

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It has been 15 years since we started this blog, focusing on insurance bad faith law in Pennsylvania and New Jersey.  Our simple goal has been to report on court opinions as we locate them, and report on all the cases we find.

We rarely editorialize, with the notable exception concerning whether Pennsylvania permits a statutory bad faith claim to proceed where no benefit has been denied.

I have been the chief author of this blog since its inception, but wanted to give a special thanks to Jay Barry Harris for inspiring me to create the blog and pursue the effort for all these years.  As many of you know, Jay was a superb lawyer, and even better human being, who tragically passed away in 2016.  Rest in peace my friend.

Lee Applebaum,

Fineman, Krekstein & Harris, P.C.

TRIAL COURT ABUSED ITS DISCRETION IN ALLOWING INSURED TO AMEND AT TRIAL TO ADD A NEW JERSEY BAD FAITH CLAIM AFTER INSURER HAD CLOSED ITS CASE (Superior Court of Pennsylvania) (Non-precedential)

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At trial, the Pennsylvania court permitted plaintiff orally to amend her claims to add a count for bad faith under New Jersey law, after the insurer had closed its case.  The trial court had earlier dismissed a Pennsylvania statutory bad faith claim, without prejudice.  That claim was never re-asserted.

The Superior Court reversed.

After carefully reviewing the case history and trial proceedings, the appellate court found the trial court abused its discretion in permitting this late amendment in light of the prejudice to the insurer. “Prior to trial, [the insured] never amended her complaint to bring a bad faith claim under New Jersey law following the dismissal of her Pennsylvania bad faith claim. As a result, [the insurer] stipulated to certain damages and chose its trial strategy believing that the only claim it was defending against was for breach of contract.” The insured unfairly used this stipulation at trial by claiming that the insurer chose not to put on evidence regarding the reasonableness of its conduct. However, “it did not present evidence on reasonableness because its conduct was not at issue.”

“Given that [the insurer] based its trial strategy on defending against a breach-of-contract claim only, the trial court abused its discretion in allowing [the insured] to amend her complaint to add a bad faith claim under New Jersey law after [the insurer] had rested its case. Accordingly, we reverse the trial court’s decision to permit that amendment. Consequently, we also reverse the trial court’s award of punitive damages and attorney’s fees … which were based upon a finding of bad faith.

Date of Decision: February 22, 2021

Salmon v. The Philadelphia Contributionship Insurance Company, Superior Court of Pennsylvania No. 416 EDA 2020, 2021 WL 653030 (Pa. Super. Ct. Feb. 19, 2021) (Bender, Lazarus, Stephens, JJ.) (Non-precedential)

How has Covid-19 affected the number of bad faith opinions issued?

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From April through August 2020, we’ve posted 51 times on the Bad Faith Blog. Subtracting four posts during that time focusing solely on covid-19 issues without mentioning bad faith, there are 47 posts over this five month period.  During the same five month time-period in 2019, we had 49 posts.  In 2018 it was 54 posts, and in 2017 it was 55 posts.  In short, as of yet, we have not seen a significant decline in opinion writing on bad faith insurance claims during the Covid-19 pandemic.

We also note that the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog reached 1,700 posts this month, since our first post in June 2006.

NO DUTY TO ANNUALLY INFORM INSURED OF POLICY EXCLUSION ABSENT SPECIAL RELATIONSHIP (New Jersey Appellate Division)

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The insured’s home was damaged by a sump pump failure. The policy did not cover sump pump failures. Years before the loss, the carrier sent the insured notice that his policy did not cover sump pump failures and offered an endorsement for additional sump pump protection. The insured saw the notice, but took no action. The insurer did not send the same notice in the ensuing years.

The insured brought negligence and bad faith claims because the insurer did not send the notice for sump pump coverage every year.

The trial court granted summary judgment to the insurer, and the Appellate Division affirmed.

The Appellate Division observed that, absent a special relationship, “there is no common law duty of a carrier or its agents to advise an insured concerning the possible need for higher policy limits upon renewal of the policy.” Further, “to establish a special relationship creating a duty to advise about adequacy of insurance, ‘there must be a long-standing relationship between the parties, some type of interaction on the question of coverage, and reliance by the insured on representations of the insurance agent to the insured’s detriment….’”

In this case, the insured did not establish “a basis for finding a special relationship … that would give rise to a duty to inform him of the need to buy sump pump coverage, or to inform him annually of the option to do so.” Simply providing notice years earlier that there was no coverage and insureds needed to purchase an endorsement to obtain sump pump coverage did not create that relationship. Rather, the notice clearly told the insured that he had no coverage, and the policy itself unambiguously excluded coverage.

In sum, the insured put on no evidence that he could rightly “assume his policy included coverage in subsequent years without purchasing the endorsement.”

Date of Decision: June 22, 2020

Yew v. FMI Insurance Co., Superior Court of New Jersey Appellate Division DOCKET NO. A-4947-18T3, 2020 N.J. Super. Unpub. LEXIS 1200 (N.J. App. Div. June 22, 2020) (Messano, Ostrer, JJ.)

BAD FAITH BLOG REACHES 14TH ANNIVERSARY

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The Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog is celebrating its 14th anniversary.

We’ve posted nearly 1,700 case summaries since June of 2006, with hundreds of thousands of views.  We have taken a matter of fact approach, with our focus on presenting judges’ opinions as explained by the judges themselves, only occasionally with editorial comment.

Our view is that seeing and understanding what the courts are actually saying is vital not only for attorneys pursuing or defending bad faith actions, but essential for parties to understand how the courts will interpret their conduct.  This allows, e.g., for insurers to get a handle on the parameters of good faith claim management in Pennsylvania and New Jersey to avoid bad faith claims before they arise. It also provides an understanding to insureds that bad faith will not be measured solely from an insured’s viewpoint, which may be subject to the frustration, fear or anger naturally arising from a loss or being sued, but objectively from the totality of the circumstances, including the insurer’s perspective as well as the insured’s.

We certainly expect to see bad faith case law developing around Covid-19 coverage claims in the coming months and next few years, and will be reporting on those cases as they arise.

But most of all, we wish safety and good health for all of you.

Fineman, Krekstein & Harris

 

 

Courts Use of Telephones and Videoconferencing to Reduce Risk from the Covid-19 Virus

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The Business Courts Blog has provided an updated list of Courts across the United States directing or encouraging the use of remote teleconferencing and videoconferencing in lieu of appearing in-person for conferences and hearings, to limit health risks.  You can find that post here.

BAD FAITH BLOG REACHES 1,600 POST MILESTONE

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It has been over thirteen years since we started the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog.  This week we uploaded our 1600th post.

We believe that persistence in posting summaries of current opinions as they are issued has been a useful addition to the Pennsylvania and New Jersey insurance coverage and bad faith universe.

Though we often see repeat issues in bad faith decisions forming clear patterns over time, there is occasionally that new twist, or application of law to a new set of facts, that keeps things fresh. And for those not regularly living in the bad faith universe, discovering patterns in a daunting sea of bad faith case law may be quite a relief when trying to navigate a wise course.

We have set out tens of categories on the left hand side of our home page to easily organize cases by topic with a single click. You can also use the search box under the calendar, in the upper left side of the home page, to collate your own set of case summaries by search terms of interest.  For example, we list each judge and court issuing an opinion. The search function can organize summaries by judge or court, as well as by substantive or procedural search terms.

We have not noticed any significant change in the number of bad faith opinions issued each year.  For example, we posted on 122 days between October 16, 2018 and October 16, 2019, with multiple posts on a few of those days.  From October 16, 2017 through October 16, 2018, we posted on 124 days, again with a few multiple postings on individual days. From October 16, 2016 through October 16, 2017 we posted on 134 days.

That being said, in recent years we have posted more summaries of Pennsylvania Superior Court non-precedential decisions.

If you have a bad faith opinion from Pennsylvania or New Jersey you think would fit with this Blog, please feel free to email a copy to lapplebaum@finemanlawfirm.com, and we will certainly give you credit for alerting us to the case.

 

ARTICLE ON PROPOSED NEW JERSEY INSURANCE FAIR CONDUCT ACT

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Attached here is a link to an op-ed in the Newark Star-Ledger concerning New Jersey Senate Bill 2144, the “New Jersey Insurance Fair Conduct Act”, which we posted on in June 2018.

NOVEMBER 2018 BAD FAITH CASES: NEW JERSEY CFA CLAIM CAN PROCEED WHERE NO DENIAL OF AN INSURANCE BENEFIT ALLEGED (Third Circuit – New Jersey)

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In this New Jersey action, the plaintiff alleged that the insurer’s agent deceived and defrauded her into signing a release of claims against the insurer. Specifically, the insured alleged that she was injured in an auto accident, and the insurer’s agent showed up at her home with papers to sign. The agent allegedly represented the documents were necessary to process and advance payments on her claim. However, unknown to her, the documents actually included a broad release of all her claims.

Plaintiff initiated a class action under New Jersey’s Consumer Fraud Act (CFA). The District Court found the CFA inapplicable to this fact scenario, on the basis that the CFA does not address the denial of insurance benefits, and further found the CFA conflicts with the Insurance Trade Practices Act (ITPA) or Unfair Claims Settlement Practices (UCSPA) regulations under these circumstances.

The Third Circuit reversed.

The Third Circuit found that the alleged deceptive and fraudulent conduct against a consumer did not amount to the denial of an insurance benefit. It further found that there was no conflict between allowing a statutory CFA private claim to proceed, even if regulatory relief might also be proper under the ITPA or UCSPA.

Date of Decision: November 15, 2018

Alpizar-Fallas v. Favero, United States Court of Appeal for the Third Circuit, No. 17-3837 (3d Cir. Nov. 15, 2018) (Jordan, Rendell, Vanaskie, JJ.)

BAD FAITH BLOG UPGRADED FOR EASIER USE

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We have posted nearly 1,500 bad faith case summaries over the last 12 years. During October and November 2018, we significantly upgraded the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog and all of those posts, making them easier to search and read. Many hours and thousands of edits have gone into this process.

New Searchable Categories

We have added tens of new search categories, grouping cases by topic into distinct, searchable, subsets. These categories can be found on the far left of the home page, and are broken down into New Jersey (NJ) post categories, and Pennsylvania (PA) post categories.  You can click on the category to pull up the posts tagged under that category.

By way of only a few examples, we have identified case categories for: delays by insureds, claims handling delay, federal pleading adequacy and inadequacy, negligence distinguished from bad faith, removal, bifurcation (severance) and stays, who is an insurer for statutory bad faith purposes, when a finding of no duty under an insurance policy cuts off potential bad faith claims, the role state insurance statutes and regulations play in bad faith cases, and cases involving the insured’s own bad faith conduct. There are many more categories we invite you to explore.

General Searches and Opinion Links

You can also search using words you choose yourself. In the upper left of the home page, under the calendar, is a search box where users can enter search terms and get a set of posts with those terms.

We include the names of the judges making the decisions summarized in our posts so you can search posted case summaries by an individual judge’s name. We similarly include the court names in each summary’s caption so you can search by court name as well. (Our shorthand for courts names can be found here.)

We have added hundreds of links to the opinions themselves for many of the summaries that previously had no links (though we do not have an opinion link for all 1,500 posts).

Finally, some trends appear when organizing the cases by topic. Among other things, it is interesting to see where the balance falls between decisions finding claims handling reasonable or unreasonable, or between courts addressing whether bad faith can or cannot exist if there is no contractual duty to provide a benefit of indemnification or defense. And while it is not surprising that many cases originate in the uninsured/underinsured motorist context, it still leaps out that nearly 20% of our posts come from UM/UIM cases, indicating the impact this case type has in shaping bad faith law generally.

Again, we invite you to explore the site.

If you have a Pennsylvania or New Jersey bad faith judicial opinion or jury verdict of interest, please feel free to email us the case for posting. You can email us at lapplebaum@finemanlawfirm.com.