NOVEMBER 2012 BAD FAITH CASES: COURT AFFIRMS TRIAL COURTS RULING THAT PREJUDICE TO CARRIER WARRANTED FORFEITURE OF COVERAGE BY INSURED (New Jersey Appellate Division)
In Demasi v. Lexington Ins. Co., an insured appealed the trial court’s grant of summary judgment to its carrier in a coverage and bad faith suit brought by the insurer. The dispute stemmed from a fire at a property owned by the insured. After discovering the fire, the insured made a claim for benefits under a homeowner’s policy purchased from the carrier. During the litigation, the insured was required to provide a variety of documents to the carrier, but it failed to oblige the request. The carrier had requested specific documents because it suspected that arson had occurred at the insured property.
The insured’s failure to produce the requested documents resulted in a breach of a policy provision requiring him to cooperate with the carrier. As such, the trial court granted the carrier’s summary judgment motion because the insured failed to comply in good faith with the discovery requests. The appellate court affirmed the trial court’s findings, reasoning that the carrier had suffered an “appreciable prejudice,” warranting a forfeiture of coverage by the insured.
Date of Decision: July 23, 2010
Demasi v. Lexington Ins. Co., NO. A-3206-08T3, 2010 N.J. Super. Unpub. LEXIS 1762, New Jersey Superior Court – Appellate Division (App.Div. July 23, 2010) (Axelrad and Espinosa, JJ.)