FEBRUARY 2013 BAD FAIH CASES: COURT REJECTS INSURED’S OBJECTION TO MAGISTRATE JUDGE’S DENIAL OF LEAVE TO AMEND SECOND MOTION FOR SUMMARY JUDGMENT (New Jersey Federal)
In Sperry Assocs. Fed. Credit Union v. Cumis Ins. Soc’y., Inc., an insured credit union filed an objection to a magistrate judge’s denial of its motion for leave to amend a second motion for summary judgment against an insurance carrier with whom the insured was litigating a breach of contract and bad faith suit. The insured filed suit after the carrier filed an action in Wisconsin state court seeking a declaration that it had no duty to indemnify any of 26 insured credit unions impacted by a mortgage fraud scheme, despite a tolling and standstill agreement between the two parties that required a delay of the carrier’s investigation into the insured’s loss until a future date.
The court had previously granted the insured’s summary judgment motion for declaratory relief, but denied the insured’s summary judgment motion for bad faith and breach of contract.
This motion sought review of a ruling by the magistrate judge, which denied the insured’s request for leave to amend its second summary judgment motion. The district court judge denied the insured’s motion and deferred to the ongoing discovery proceedings on the bad faith claim.