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Insurance Coverage Update - September 2015

Covered in this post: 

  • New Jersey Appellate Division Rejects Bad Faith Claim When Insurer Settles Less Than All Underlying Claims for Policy Limit
  • New Jersey District Court Rejects Policyholder's Attempt to Amend Complaint to Add Bad Faith Claim
  • New Jersey Appellate Division Allows Assignment of Rights under Occurrence-Based Policy
  • New Jersey Supreme Court Finds Third Party Lacks Standing to Bring Bad Faith Claim

NEW JERSEY


Bad Faith

Covered in this post: 

  • New Jersey Appellate Division Rejects Bad Faith Claim When Insurer Settles Less Than All Underlying Claims for Policy Limit
  • New Jersey District Court Rejects Policyholder's Attempt to Amend Complaint to Add Bad Faith Claim
  • New Jersey Appellate Division Allows Assignment of Rights under Occurrence-Based Policy
  • New Jersey Supreme Court Finds Third Party Lacks Standing to Bring Bad Faith Claim

NEW JERSEY


Bad Faith

New Jersey Appellate Division Rejects Bad Faith Claim When Insurer Settles Less Than All Underlying Claims for Policy Limit

Masgay-Doitch v. Khatri, 2015 N.J. Super. Unpub. LEXIS 2134 (App. Div. Sept. 3, 2015)

The New Jersey Appellate Division upheld the trial court's ruling in favor of the insurer finding the insurer did not act in bad faith by paying to settle multiple claims arising from a single accident within the policy limit. The appellate panel found that the underlying settlement was favorable to the policyholders and that the policyholders knew when they authorized the settlement that any claims not subject to the global settlement would not thereby be resolved.

Read the full summary...


Insurer Bad Faith
New Jersey District Court Rejects Policyholder's Attempt to Amend Complaint to Add Bad Faith Claim

Mitra v. Principal Ins. Co., 2015 U.S. Dist. LEXIS 89532 (D.N.J. July 7, 2015)

New Jersey Magistrate Judge denies policyholder's motion for leave to file an amended complaint to add a bad faith cause of action. The Court classified the additional claim as "futile" because the bad faith claim would not have survived a motion to dismiss.

The policyholder's psychiatric medical license was revoked on July 10, 2014 by the New Jersey Board of Medical Examiners after the policyholder was found to have improperly prescribe medication for his patients. His medical license had previously been temporarily suspended on September 30, 2013. On February 3, 2014, the policyholder submitted a Disability Claim Notice to the insurer, claiming total disability and inability to perform in his specialty as a physician, beginning October 9, 2013, as a result of depression.

Read the full summary...


Policy Assignment
New Jersey Appellate Division Allows Assignment of Rights under Occurrence-Based Policy

Givaudan Fragrances Corp. v. Aetna Cas. & Sur. Co., 2015 N.J. Super. LEXIS 131 (App. Div. Aug. 12, 2015)

The New Jersey Appellate Division finds that a policyholder may assign to a third party its rights under an occurrence-based insurance policy after the subject loss has occurred. 

The opinion began by detailing the policyholder's complicated corporate history. This overview explained that the policyholder had originally been incorporated in 1924 and was renamed in 1965. In the 1990's, a series of complex corporate mergers, transfers and reformations resulted in the formation, in 1997, of a new corporation that was split into 1998 into two separate affiliated corporations under the same parent corporation. One affiliated corporation included the Policyholder's "Fragrances" business; the other affiliated corporation was comprised of the Policyholder's "Flavors" business. The Fragrances business assumed its predecessors' environmental liability but did not inherit insurance policies previously issued by the Defendant Insurers.

Read the full summary...


Bad Faith
New Jersey Supreme Court Finds Third Party Lacks Standing to Bring Bad Faith Claim

Ross v. Lowitz, 2015 N.J. LEXIS 819 (N.J. Aug. 6, 2015)

New Jersey Supreme Court finds that a third party married couple may not bring bad faith action against insurers who issued homeowners' coverage to their neighbor, even when the insurers were responsible for the remediation of contamination that had leaked off the policyholder's land onto plaintiffs' property.

The policyholder bought a home from a third party and confirmed that the storage tank buried under the property displayed no leakage. But when the policyholder sold the property, leakage was discovered from the tank. The policyholder notified his insurers of the leak, and the insurers arranged and paid for the remediation of the leaked oil on the policyholder's property. Later, another third party purchased a home close to the property with the leaking tank. That third party eventually discovered that oil from the policyholder's property had migrated to his property. The contamination prevented the third party's deal to sell his house from proceeding, and he brought the present suit along with his wife.

Read the full summary...

  • Associate

    Edmund Caulfield is an experienced litigator with a successful track record in a wide variety of civil litigation in New Jersey and New York state and federal courts. Edmund routinely handles civil disputes in subject areas as ...

  • Partner

    Jon McHenry is the Chair of Connell Foley's nationally recognized Insurance Coverage Practice Group. Since joining the firm more than two decades ago, Jon has continually achieved groundbreaking results for the firm’s domestic ...

  • Partner

    Neil Mody represents insurance companies in complex insurance coverage matters, devoting personal attention to his clients' needs and the unique circumstances of each exposure to achieve favorable results. His clients include ...

  • Partner

    William Deveau is a versatile practitioner who focuses his practice in the areas of commercial litigation and insurance coverage law. He counsels and represents insurers on complex insurance coverage issues including bad faith ...

  • Partner

    William Krauss is a seasoned commercial litigator with a strong track record of positive outcomes. Working primarily with large national insurers, Bill litigates complex insurance disputes, including appeals, in state and ...

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