DECEMBER 2012 BAD FAITH CASES: COURT AFFIRMS SUMMARY JUDGMENT OF NO BAD FAITH AS CARRIER’S POSITION BASED ON PRIOR APPELLATE DECISION WAS REASONABLY DEBATABLE (New Jersey Appellate Division)
In Badiali v. New Jersey Mfrs. Ins. Group, the court ruled that a carrier did not act in bad faith by refusing to pay its share of an arbitration award that it was later deemed responsible to pay.
In a prior appeal in this case, an appellate panel ruled that the uninsured motorist carrier, which was barred from rejecting an arbitration award of $15,000, was not entitled to reject a $29,148.62 award for its insured when that carrier was only liable to pay half.
On the appeal on the bad faith, however, the court reasoned that the carrier had properly relied upon the case of Geiger v. New Jersey Mfrs. Ins. Co. In that case, the court held that a carrier was entitled to reject an arbitration award and seek trial de novo. As the appellate division had previously endorsed this argument, the present Panel affirmed the grant of summary judgment to the carrier on the insured’s bad faith claim because the carrier’s position was reasonably debatable.