Archive for the 'NJ – Reverse Bad Faith' Category


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This case involves a fire damage claim to plaintiffs’ home.  This was the seventh fire in plaintiffs’ home.  The carrier denied coverage based on various theories, such as fraud in the application and during the investigation process, failure to cooperate, and alleged arson against plaintiffs.  Plaintiffs sued for breach of contract, violation of New Jersey’s Consumer Fraud Act (CFA) and bad faith.  The carrier moved for summary judgment on all claims.

Philadelphia Federal Judge Joel Slomsky was sitting by designation in this New Jersey Federal Action.  He denied summary judgment on the breach of contract claim, as disputes of fact remained for the jury on the above-referenced issues concerning the fire and insurance application; but he granted summary judgment on the CFA and bad faith claims.

Consumer Fraud Act Inapplicable

The CFA claim failed as a matter of law. Judge Slomsky observed, “New Jersey courts have consistently held that the Consumer Fraud Act does not apply to initial coverage.”  Here, the “case involves an initial coverage dispute based on Defendant’s denial of Plaintiffs’ fire loss claim. … Moreover, the record is devoid of any evidence of fraud by Defendant.”

Conduct in Coverage Denial and Claim Handling Fairly Debatable

New Jersey recognizes actionable insurance bad faith for both claim handling and coverage denial.  Coverage denial requires predicate proof that the claim denial was unreasonable.  Plaintiffs bad faith claims based on coverage denial and claim handling were fairly debatable as to their reasonableness, and thus bad faith could not exist.

Judge Slomsky observed, “if determining whether the insurer lacked a reasonable basis for denying a claim is ‘fairly debatable,’ then the insured cannot prevail on a bad faith claim. … In other words, if an insured cannot succeed on their substantive claim at summary judgment, then they cannot succeed on a bad faith claim premised on an insurer’s denial of coverage.”

The same “fairly debatable” standard applies to delays in claim handling.  “The insured must show that there was ‘no valid reason to delay and the insurance company knew or recklessly disregarded the fact that no valid reasons supported the delay.’ … But if the insured cannot succeed on summary judgment for its substantive claim, then it cannot prevail on a bad faith claim based on delay.”

Judge Slomsky already held that the breach of contract/coverage denial claim could not be decided on summary judgment because there were factual disputes.  “As a result, Plaintiffs “cannot establish as a matter of law a right to summary judgment” on their substantive claim, and ‘cannot succeed on [their] claim for bad faith[.]’”

Date of Decision:  August 9, 2021

Bui v. Mid-Century Insurance Company, U.S. District Court District of New Jersey No. CV 19-20053, 2021 WL 3486896 (D.N.J. Aug. 9, 2021) (Slomsky, J.)


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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.)


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The carrier sought to void a life insurance policy on the basis of material misrepresentation. The beneficiary brought counterclaims for breach of contract and bad faith, among others.

The court rescinds based on material misrepresentation in the application

The material misrepresentation argument was based on the insured claiming $180,000 in annual income for the family business, when its annual income was actually less than $2,000.

“Under New Jersey law, an insurer may rescind a policy for equitable fraud when false statements were made in the application which ‘materially affected either the acceptance of the risk or the hazard assumed by the insurer.’ N.J.S.A. § 17B:24-3(d). Equitable fraud does not require scienter for objective questions; the only inquiry is whether the misrepresentation is material. A misrepresentation is material if it ‘naturally and reasonably influenced the judgment of the underwriter in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premium.’”

“In reviewing alleged misrepresentations on life insurance applications, courts distinguish between objective and subjective questions.” Objective questions are based on the applicant’s actual knowledge. “If the question is objective, even an innocent misrepresentation warrants rescission.”

“In contrast, subjective questions inquire into the applicant’s state of mind. They are concerned with more ambiguous issues, such as what is the state of the applicant’s health.” (Internal quotation marks omitted). Courts show greater leniency on the subjective question inquiry, and “consider whether the answer accurately reflects the applicant’s state of mind even if otherwise inaccurate.” “Therefore, if a question is subjective, then the insurer must additionally establish the insured knew the answer was false.”

In this case, the question involved annual income, which constitutes an objective question. While the insurer’s agent did ask for an estimate, and the insured could not provide a fixed number, this did provide an excuse for the insured’s material misrepresentation to the carrier’s agent. She could have estimated annual income at $0-2,000, rather than the $200-1000 per day estimate provided to the insurer’s agent.

Thus, the court entered summary judgment rescinding the policy.

No bad faith where coverage position is fairly debatable

The court dismissed the beneficiary’s various counterclaims. As to the bad faith claim, the insured had to prove “the absence of a reasonable basis for denying benefits of the policy and the insurer’s ‘knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.’” A “fairly debatable” claim defeats bad faith allegations. “Here, the Court has already determined the policy was void, which itself establishes the coverage was debatable.” The facts further showed that the insured was not insurable under the carrier’s underwriting guidelines.

Date of Decision: June 3, 2021

Allstate Assurance Company v. Tawil, U.S. District Court District of New Jersey No. CV 18-8843, 2021 WL 2253544 (D.N.J. June 3, 2021) (Arleo, J.)



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The insureds were attorneys sued by an insurance carrier. The insured attorneys sought coverage from their own professional liability carrier, and the malpractice carrier asserted no coverage was due. The attorneys/insureds and the professional liability carrier each sought a declaration in their favor on coverage.

The insureds won an early summary judgment ruling form a magistrate judge that the professional liability carrier had a duty to defend. The magistrate judge denied the professional liability carrier reconsideration and permission to take an interlocutory appeal.  She did not rule on any indemnification responsibility, as the underlying suit against the attorneys remained pending.

The professional liability insurer still wanted to take an examination under oath, and the insured responded by seeking a protective order.  Initially, the magistrate judge administratively terminated the case, pending the outcome of the underlying action.

Issues arose concerning the insured’s cooperation in connection with defending the underlying suit.  The magistrate judge reopened the case, ruling that an examination under oath should go forward, that the insureds had a duty to cooperate under the professional liability policy, and that the insureds were not entitled to defense costs during periods of non-cooperation.

The present decision involves an appeal to the District Court from the magistrate judge’s order.

The magistrate judge found the insureds had failed to cooperate by delaying the examination under oath, failed to respond to the professional liability carrier’s offer of defense, and failed to respond to a request for information. She held that although the insureds did not act in bad faith, their actions did appreciably prejudice the malpractice carrier.

On appeal, the District Court agreed that there had been a failure to cooperate, but this failure was not the result of bad faith. The District Court reversed, however, on the issue of appreciable prejudice, finding none. Most important, the insurer had not “irretrievably lost the opportunity to take [an examination under oath]….” Nor was the carrier “precluded from discovering facts that may weigh against coverage under the Policy.”

The District Court agreed with the magistrate judge that there was no appreciable prejudice due to the insured’s refusal to respond concerning the carrier’s providing a defense, stating: “Irrespective of whether Plaintiffs accepted or rejected the defense offer before the [underlying] suit settlement, the only issue remaining post settlement pertains to indemnification. … Thus, there can be no appreciable prejudice … for its inability to defend the [underlying] suit before it settled. Any dispute regarding Plaintiffs’ alleged failure to provide information, including defense costs, may be addressed when the indemnification issue is decided. Accordingly, because [the professional liability carrier] failed to demonstrate appreciable prejudice, it cannot disclaim coverage for Plaintiffs’ noncooperation under the Policy.”

The District Court affirmed the magistrate’s ruling that there was no defect in the malpractice carrier’s reservation of rights.

Likewise, the District Court upheld the magistrate’s decision that the carrier was entitled to the examination under oath, and finding a failure to cooperate. First, the right to take the examination had not been waived. Nor was the request for the examination unreasonable or unfair: “For the reasons already stated, [the] ROR was proper after this Court determined that [the underlying] suit triggered a duty to defend and reserved on the issue of indemnification. It would defy logic to find that [the professional liability carrier] has a duty to defend and properly reserved its rights as to liability yet preclude an EUO to investigate the underlying claims pursuant to the Policy.”

Finally, simply settling the case did not end the insured’s obligations to cooperate under the policy, which expressly provided the insurer with the right to take an examination under oath.

Date of Decision:  September 23, 2020

Karzadi, v. Evanston Insurance Company, U.S. District Court District of New Jersey No. 17-5470 SDWCLW, 2020 WL 5652442 (D.N.J. Sept. 23, 2020) (Wigenton, J.)


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The insurer sued to void two life insurance policies on the basis they were obtained through fraudulent statements and omissions. It also sought relief under New Jersey’s Insurance Fraud Prevention Act (IFPA).

A Trust was both the policyholder and beneficiary. In its initial complaint, the carrier alleged the insured decedent made false statements and material omissions concerning serious medical conditions concealed from the insurer, including Hodgkin’s Lymphoma.

The carrier wanted to amend its complaint by adding claims against the Trustee and its insurance broker for their alleged knowing involvement in this fraudulent conduct. The Trustee and broker opposed the motion to amend. The court granted the motion.

The court rejected the argument that the IFPA only applied to misconduct during the course of an insurance claim. The court recognized the IFPA also applies to conduct in the application process.

In granting the motion, the court relied upon allegations that the broker “was untruthful when he filled out the agent’s statement….” The court found this could violate N.J. Stat. Ann. § 17:33A-4(a)(3), which addresses concealing or knowingly failing “to disclose the occurrence of an event which affects any person’s initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled.”

The court also looked to the allegation that both the broker and Trustee “knew of and conspired to conceal” the decedent’s medical visit to a longevity center and the results of that visit which referenced prior medical history. The court added that if the broker and Trustee “knew the Decedent was untruthful on the applications and failed to disclose that…, or actively participated in the Decedent’s alleged misconduct, it could demonstrate a violation of N.J. Stat. Ann. § 17:33A-4(a)(4) or (b).”

Section 17:33A-4(a)(4) addresses a person who “[p]repares or makes any written or oral statement, intended to be presented to any insurance company or producer for the purpose of obtaining: … (b) an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to an insurance application or contract….”

Section 17:33A(4)(b) encompasses a person who “knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of this act.”

Date of Decision: February 18, 2020

Symetra Life Ins. Co. v. Jjk 2016 Ins. Trust, U. S. District Court District of New Jersey Civil Action No. 18-12350 (MAS) (ZNQ), 2020 U.S. Dist. LEXIS 29291 (D.N.J. Feb. 18, 2020) (Quraishi, J.)


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In this case, New Jersey’s Appellate Division affirmed the dismissal and grant of summary judgment to the insurer on all claims, but reversed the trial court’s award of frivolous litigation sanctions against the insured because there was no finding the insured acted in bad faith in bringing the claims.

Factual Background

The insurer provided the eighth layer of excess insurance in this Superstorm Sandy case. The primary and lower layers provided $75 Million, and the eighth layer provided another $50 Million above that.

In 2012, the insured hired a contractor to do repair and restoration work. The contractor allocated $950,000 to specific building repair and restoration work. The excess carriers all determined repair and restoration work was not covered. In 2014, the insured reached a global settlement with all insurers for $93.5 Million. The eighth layer insurance contributed $16 Million. The insured executed a release for any and all claims and demands for Superstorm Sandy property damage and business income losses, discharging the eighth layer insurer.

In 2015, however, the insured asked the eighth layer insurer to reconsider paying the contractor’s repair and restoration costs, after another anticipated source for this loss did not pan out. The eighth layer carrier refused. The insured brought suit in 2015.

The Litigation

The insured alleged it relied on the advice of the excess insurers’ adjuster and experts in how the repair and restoration costs were allocated, which resulted in it obtaining no sum to settle that out-of-pocket payment. The insured alleges that it only agreed to the 2014 settlement based on this bad advice, and would otherwise have included these repair and replacement costs in its negotiations and settlement with the insured, beyond the sum actually paid.

The insured brought various claims against the adjusters and experts, and claimed the eighth layer insurance was liable for their acts and omissions on an agency theory. The insured also claimed the eighth layer insurer was liable for breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, and bad faith in denying the claim for the repair and restoration costs. Defendants moved to dismiss all claims, which the trial court granted in part, including the unjust enrichment claim and some of the agency theory claims. The remaining claims were later dismissed on summary judgment.

The eighth layer insurer filed a motion against the insured for frivolous litigation sanctions. The trial court granted that motion, and ruled the insurer was entitled to the attorney’s fees and costs.

The insured appealed the grant of summary judgment and the sanctions.

The Appellate Division Affirms for the Insurer on the Merits

First, the Appellate Division found no support in the record that the release was only executed as the result of fraud. The insured was well aware it was settling all Superstorm Sandy related claims, that the repair and restoration costs were not part of the settlement, and that the release would bar Superstorm Sandy related claims against all insurers. The insured was also aware that the repair and restoration costs were subject to recovery regarding another entity and its insurers, and that the settling excess insurance companies would not agree to make their settlement contingent on the outcome of that separate matter.

Next, the Appellate Division affirmed the trial court’s findings that there was no common law fraud or negligent misrepresentation by the agent or the insurer. It likewise affirmed judgment on the negligence claim on the basis that no expert testimony was proffered regarding the conduct of the independent insurance adjuster (which plaintiff was trying to bootstrap into a claim against the insurer as well).

The Appellate Division Reverses Sanctions Because there was no Finding of Bad Faith

The Appellate Division addressed the sanction award against the insured for frivolous litigation. [There were no sanctions against counsel.] The insurer’s attorneys had sent the insured’s counsel a letter stating the “complaint was frivolous because the release precluded … asserting any causes of action against [the eighth layer insurer].” The letter “also stated that [the] fraud claims were unsustainable because [the insured’s] representatives had acknowledged the [repair and restoration costs at issue] were not recoverable….” Despite this letter, the insured’s “counsel did not withdraw the complaint.”

A motion for attorneys’ fees and costs ensued. The insured and its counsel both asserted that they believed the claims had merit.

The trial judge found the claims frivolous on the basis that the insured’s claims had no reasonable basis in the law or equity, and there was no good faith argument for the extension, modification or reversal of existing law. Further, the trial judge found the insured knew that the repair and restoration costs would have to come from another source, and that the excess insurers would not make their settlement contingent on recovery of those costs from another source.

The Appellate Division reversed the frivolous litigation sanctions, finding the trial court relied upon the wrong standards. The frivolous litigation statute, N.J.S.A. 2A:15-59.1, which applies only to represented parties, requires a finding of bad faith on the plaintiff’s part. Here, there was no such finding. Thus, the claim failed.

The Appellate Division laid out these bad faith standards:

Where ‘a prevailing defendant’s allegation is based on the absence of a ‘reasonable basis in law or equity’ for the plaintiff’s claim and the plaintiff is represented by an attorney, an award cannot be sustained if the ‘plaintiff did not act in bad faith in asserting’ or pursuing the claim.” …. A finding of bad faith is essential because “clients generally rely on their attorneys ‘to evaluate the basis in law or equity of a claim or defenses,’ and ‘a client who relies in good faith on the advice of counsel cannot be found to have known that his or her claim or defense was baseless.’” …. Furthermore, under the FLS, the party seeking the imposition of sanctions “bears the burden of proving that the non-prevailing party acted in bad faith.” …. We have held that “a grant of a motion for summary judgment in favor of a [prevailing party], without more, does not support a finding that the [non-prevailing party] filed or pursued the claim in bad faith.”

The trial court did reference Rule 1:48, which only applies to attorneys and pro se parties, and thus had no application in this matter.

Date of Decision: October 4, 2019

Fedway Assocs. v. Engle Martin & Assocs., Superior Court of New Jersey Appellate Division DOCKET NO. A-0297-18T4, 2019 N.J. Super. Unpub. LEXIS 2048 (N.J. App. Div. Oct. 4, 2019) (Currier, Hoffman, Yannotti, JJ.) (Unpublished)


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This case focuses on procedural issues and burdens of proof at trial, concerning whether the insured’s alleged fraud during an investigation was grounds to void a policy. At trial, the insured put on her case, and the carrier moved for involuntary dismissal (directed verdict) at the end of plaintiff’s case. The trial court granted judgment to the insurer, and the Appellate Division reversed.

The insured’s claim revolved around a fire loss. In the years before that loss, the insured had a relatively small roof claim, and a large water damage claim. During her testimony at trial, the insured described a meeting with the carrier’s investigator during the fire loss claim. The investigator was not merely a claim adjuster, but was actually a fraud unit investigator – unknown to the insured.

The insured admitted she denied there was any prior damage claim on the water loss, knowing this was not true. She felt it was not the investigator’s business and had nothing to do with the fire loss. The investigator had the insured’s application, which did not include either prior loss. This was part of the investigation, again unknown to the insured. The application itself, however, was never introduced into evidence at trial.

This interview during the claim process was not taken under oath. At her subsequent examination under oath, the insured did admit the two prior loss claims.

Both courts’ focus was on the misleading statement to the investigator about the water damage claim, rather than on the application’s not including the two losses. The two key elements were misrepresentation and materiality. The trial court found a material misrepresentation and voided the policy after plaintiff put on her case.

The Appellate Division disagreed, looking closely at the procedural setting and burdens of proof, in finding that the materiality element was not proved. The court especially noted the different burdens placed on defendant when dismissal is sought at the end of plaintiff’s case, rather than at the end of all parties’ cases.

Plaintiff’s case-in-chief did not include the original application, and the Appellate Division found there was insufficient evidence within plaintiff’s case itself to demonstrate how the water loss was relevant to the fire loss claim, or important in determining the insurer’s course of action. Moreover, the misrepresentation claim was an affirmative defense, with the insurer bearing the burden of proof. As the court stated:

“Accordingly, regardless of whether the information in an application not introduced at trial came from plaintiff or someone else, there was no factual basis for the [trial] judge to find that [the insured] ‘clearly tried to mislead [the investigator] as to something that seemed to justify what looked like misstatements in the application.’ Without the original insurance application or testimony from anyone at [the insurer] as to the nature of the investigation, the trial court clearly erred when it involuntary dismissed [the] suit based on her willful misrepresentation of material facts following her fire loss.”

Finally, the court observed that even though its ruling was based on a fundamental failure to prove materiality in the procedural circumstances at trial below, the insured would not be precluded from arguing at re-trial “a fact-finder could also consider whether [she] corrected her misstatements promptly in her examination under oath in considering their materiality.” July 30, 2019

Pokhan v. State Farm Fire & Cas. Co., New Jersey Superior Court Appellate Division DOCKET NO. A-3336-17T3, 2019 N.J. Super. Unpub. LEXIS 1699, 2019 WL 3425917 (App. Div. July 30, 2019) (Accurso, Fuentes, JJ.)


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In this case, the New Jersey Appellate Division provides a detailed analysis of the notice requirements due from insured to insurer in UIM cases, where the underlying tortfeasor is seeking to settle the claim. The key is that notice must be given before the underlying claim has been settled and released, to protect the insurer’s subrogation options and rights. The court also cites generally principles governing an insured’s duty of candor.

The court was particularly concerned with the situation where the insured informs the insurer that a potential settlement is on the table, when the case is already settled and the insurer’s subrogation rights are actually compromised.

In this case, the insureds’ counsel had informed the UIM insurer that a settlement offer was pending, when in fact the case had already settled and potential claims against the tortfeasor were released. The UIM insurer refused to pay benefits in these circumstances, and the insureds sued for UIM benefits.

The court found the New Jersey Supreme Court’s 2018 decision in Ferrante v. New Jersey Manufacturers Insurance Company controlling. In Ferrante, the Supreme Court held that if “the insured, regardless of his state of mind, fails to give the UIM carrier any notice of the UIM claim until after the final resolution of the underlying tort action, thereby causing the irretrievable loss of the carrier’s rights to subrogation and intervention before the carrier has ever learned of the existence of the claim, coverage is forfeited.”

The Ferrante court made general observations about an insured’s duties and obligations. “Our case law has routinely emphasized the importance of candor by insureds and the obligation to act in a forthright, open, and honest manner with their carriers throughout the entire process of their claim.” The insured has a commitment “not to misrepresent material facts [that] extends beyond the inception of the policy to a post-loss investigation.” Insureds have been given incentive to tell the truth, and it “would dilute that incentive to allow an insured to gamble that a lie will turn out to be unimportant.” In the UIM context, these general rules mean that courts should “seek to avoid rewarding insureds for omitting key details in a UIM claim.”
Date of Decision: December 21, 2018

Iellimo v. Amica Mut. Ins. Co., Superior Court of New Jersey Appellate Division DOCKET NO. A-4975-16T1, 2018 N.J. Super. Unpub. LEXIS 2795, 2018 WL 6712251 (App. Div. Dec. 21, 2018) (DeAlmeida and O’Connor, JJ.) (Not Precedential)



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In this case, the court granted the insurer a judgment notwithstanding the verdict. The case involved misrepresentations in applying for insurance, specifically involving whether the insureds actually lived in the home they were seeking to insure.

The court recited a litany of evidence from the trial showing the homeowner wife knew that home for which she and her husband were seeking coverage had never actually been owner occupied, despite many representations to the contrary. Once the insurer discovered the misrepresentations, it issued a notice of cancellation. The home was destroyed by fire after the notice of cancellation, but before the cancellation effective date and the insureds sought coverage.

The carrier refused to pay, and rescinded the policy based on fraudulent representations. It did, however, pay $1.4 Million to the innocent mortgage company named on the policy. It took an assignment of the mortgage after payment.

The insured brought various claims, including bad faith, and the insurer counterclaimed for equitable fraud/rescission, unjust enrichment, and restitution as well as claims under the Insurance Fraud Prevention Act (IFPA). Prior to trial, the court granted the insurer summary judgment on the bad faith, consumer protection law, and attorney’s fee claims. At trial, the jury ruled for the insured on the breach of contract claim and against the insurer on all of its claims.

On the JNOV motion, the trial court concluded that the evidence, even taken in a light most favorable to the insureds, showed misrepresentations in obtaining the policy and during the fire investigation. It thus allowed for rescission and restitution.

On appeal, the Appellate Division observed that equitable rescission can be based on even innocent misrepresentations, as long as they are material misrepresentations. The appellate court agreed the representations made in obtaining the policy were both false and material. Though unnecessary to make the equitable fraud case, the court also found the record showed the misrepresentations were intentional. In sum, it upheld the judgment in favor of rescission and restitution.

Date of Decision: November 14, 2018

Sesztak v. Great N. Ins. Co., New Jersey Superior Court Appellate Division DOCKET NO. A-2846-15T4, 2018 N.J. Super. Unpub. LEXIS 2491 (N.J. Super. App. Div. Nov. 14, 2018) (DeAlmeida, Mawla, Yannotti, JJ.)


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This case involved New Jersey’s Commissioner of the Department of Banking and Insurance’s pursuit of a claim under the Insurance Fraud Prevention Act (IFPA). The trial court found that the insured falsely claimed she was injured while driving, and it imposed civil penalties, including counsel fees.

Before the commissioner’s action, the insured actually won $25,000 in arbitration against her carrier, but at the trial de novo the jury concluded that the accident never occurred and found for the insurer. After the jury verdict, the commissioner brought this IFPA action. The insured appealed on various procedural grounds, most of which were rejected. The appellate court did remand, however, as the special civil part judge did not provide the reasoning behind the civil penalties imposed.

Date of Decision: October 19, 2018

Badolato v. McMillan, Superior Court Appellate Division DOCKET NO. A-5474-16T1, 2018 N.J. Super. Unpub. LEXIS 2311, 2018 WL 5091799 (New Jersey Appellate Division Oct. 19, 2018) (Koblitz, Ostrer, JJ.)