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This newsletter contains summaries of New York and New
Jersey insurance coverage decisions entered during the previous
month. If you see a topic that interests you, click the link to read
more and obtain a full copy of the case.
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For further information, please contact the Newsletter
Editors,
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CONNELL FOLEY LLP
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Roseland
85 Livingston Avenue
Roseland, NJ 07068
973.535.0500
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New York
888 Seventh Avenue
9th Floor
New York, NY 10106
212.307.3700
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Philadelphia
1500 Market Street
12th floor, East Tower
Philadelphia, PA 19101
215.246.3403
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Jersey City
Harborside Financial Center
2510 Plaza Five
Jersey City, NJ 07311
201.521.1000
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Cherry
Hill
Liberty View Building
457 Haddonfield Road
Suite 230
Cherry Hill, NJ 08002
856-317-7100
Jersey City
Port Liberte
23 Chapel Avenue
Jersey City, NJ 07305
201.521.0200
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Bad Faith
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New Jersey Supreme Court Holds
Doctrine of Res Judicata Bars Plaintiff's Subsequent Claim for Bad
Faith
Wadeer v. New Jersey Manufacturers Insurance Company,
2015 N.J. LEXIS 132 (Feb.18, 2015)
The New Jersey Supreme Court holds that where an insured's bad faith
claim was raised, fairly litigated, and determined by the trial court
in the underlying litigation, the insured is barred by the doctrine of
res judicata from asserting the bad faith claim in a separate,
subsequent action.
The claim arose when the insured suffered injuries in a motor vehicle
accident that occurred when the insured attempted to avoid an
unidentified vehicle. The insured notified his insurer of his uninsured
motorist (UM) claim, and demanded payment of his policy limits of
$100,000.00. The insurer declined to do so, and the matter
proceeded to arbitration. The panel determined that the insured was 30%
liable for the accident and that the phantom vehicle was 70% liable,
and that the insured was entitled to a net award of $87,500.00. The
insurer rejected the award and demanded a trial. Counsel for the
insured wrote to the insurer expressing his belief that the insurer's
actions constituted bad faith.
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Bad Faith
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Supreme Court Finds No Bad Faith
When Relying Upon Unpublished Appellate Division Decision and Plain
Reading of Policy Language
Badiali v. New Jersey
Manufacturers Insurance Company,
2015 N.J. LEXIS 133 (Feb. 18,
2015)
The New Jersey Supreme Court ruled that an
insurer's decision to reject an arbitration award was "fairly
debatable" and supported by a reasonable interpretation of the
policy as well as a prior, unpublished Appellate Division opinion, so
as to preclude an award of counsel fees and other consequential damages
to the insured under a theory of bad faith.
The claim arose when the insured
was struck in the rear by an uninsured motorist. The insured maintained
uninsured motorist (UM) coverage with his insurer, and was also covered
under his employer's policy. The insured filed a UM claim, which
proceeded to arbitration and resulted in an award of $29,148.62 in
favor of the insured. Both the insurer and the employer's carrier were
contractually and statutorily obligation to share the award equally, in
the amount of $14,574.31. The employer's carrier paid its half and the
insurer rejected the award, relying on language in the policy that
permitted either party to reject an award in which the total amount
exceeded $15,000.00, and demanded a trial.
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Declaratory Judgment - Remand
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Federal Court Remands Insurance
Coverage Action Back to State Forum
Kane Builders, Inc. v. Cont'l Cas.
Co., 2014 U.S.
Dist. LEXIS 172591 (D.N.J. Dec. 12, 2014)
New Jersey District Court judge
remanded back to New Jersey Superior Court a declaratory judgment
action that had previously been removed by the defendant insurer.
Considerations of judicial economy mandated that the state court hear
both the pending underlying suit and the insurance coverage suit, as
they featured interconnected parties and issues.
Various entities brought suit in New Jersey
Superior Court against the insured, a builder who allegedly bore
responsibility for defective construction of a structure. The entities'
suit included a count against the builder's insurer for a judgment
declaring that the insurer was obligated to defend and indemnify the
builder in the action. Meanwhile, the insured brought a separate New
Jersey state court action against the insurer. This second complaint --
like the foregoing one -- sought a judgment declaring that the insurer
was obligated to defend and indemnify the insured in the underlying
construction action. The insurer removed this second claim to federal
court.
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