NO BAD FAITH POSSIBLE WHERE NO COVERAGE DUE IN THIS COVID-19 CASE (New Jersey Federal)

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New Jersey Federal Judge Wolfson denied plaintiff coverage in this Covid-19 business loss case.  Judge Wolfson found the policy’s virus exclusion unambiguously applied, denied the insured’s motion for summary judgment, and granted the carrier judgment on the pleadings.

[For those interested in the detailed reasoning behind this Covid-19 coverage decision, a copy of Judge Wolfson’s opinion can be found here.  We are only focusing on the bad faith claim.]

In a closing footnote, Judge Wolfson observed:

Neither party includes in its briefing any argument with respect to Plaintiff’s bad faith claim. Nevertheless, it is well-established that under New Jersey law, “a claimant must be able to establish a right to summary judgment, as a matter of law, for coverage before asserting a bad faith claim against an insurer for their refusal to pay a claim.” Mitra v. Principal Ins. Co., No. 15-1259, 2015 WL 4139015, at *3 (D.N.J. July 7, 2015) (citing Polizzi Meats v. Aetna Life & Cas. Co., 931 F. Supp. 328, 339 (D.N.J. 1996). In other words, where the plaintiff cannot “establish a right to summary judgment, the bad faith claim fails.” Id. Accordingly, because Plaintiff has not established a right to summary judgment on its coverage claim, its bad faith claim must also be dismissed.

Date of Decision:  July 29, 2021

Metuchen Center, Inc. v. Liberty Mutual Insurance Company, U.S. District Court District of New Jersey No. CV2012584FLWTJB, 2021 WL 3206827 (D.N.J. July 29, 2021) (Wolfson, C.J.)

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