SteveK June 15th, 2011

On June 14, 2011 the New Jersey Supreme Court ruled that a claim for bad faith against an insurer for failure to settle a case within the limits of an insurance policy is to be decided by a jury.  Wood v. New Jersey Manufacturers Insurance Co. involved a claim by Karen Wood who was bitten by a dog when delivering mail in a condominium complex. New Jersey Manufacturers (NJM) insured the owner of the dog and defended the case under the policy. Prior to trial an arbitrator assessed the damages as $600,000, and apportioned the award 90% to the owner of the dog and 10% to the condominium association.  The arbitration award was rejected by the defendant’s insurer and the matter proceeded to trial. Prior to trial NJM offered to settle the case for $300,000; however, the offer was rejected. The plaintiff did agree to settle the case at or near the policy limits of $500,000. Prior to trial both defense counsel and NJM’s claims handler recommended payment of the policy limits, but NJM’s claims committee refused to increase the offer. In accordance with the Rova Farms decision, the plaintiff placed NJM on notice that the offer was in bad faith.  The matter went to trial and  the jury awared the plaintiff damages  in the amount of $2,422,000. The jury also assessed 51% of the liability to the dog owner. The trial court molded the verdict so that the dog owner was responsible for $1,408,320.33 of the judgment. NJM paid the $500,000 policy limits. The defendant assigned her claim for bad faith against NJM to the plaintiff so that plaintiff could pursue NJM for the judgment in excess of the policy limits. Plaintiff filed a motion for summary judgment which was granted. On appeal, the defendant, NJM, argued that summary judgment was improper for a variety of reasons, including that the matter should have been decided by a jury.  The Appellate Division remanded to the trial court for more specific findings of fact and for the trial court to determine if the matter should be decided by a jury. The N.J. Supreme Court granted certification on the sole issue of whether such claims should be decided by a jury. The Supreme Court decided that this was not an issue of whether or not there is coverage under the policy as is typically contained in a declaratory judgment action, but is a “garden variety” contract action based upon the covenant of good faith and fair dealing which is contained in all contracts.  The Court determined that the claim was legal in nature, not equitable, and was, therefore, to be decided by a jury. The Court was careful to note that not every Rova Farms-bad faith case must be tried to a jury, as the parties may elect to waive the jury either by not demanding it in the first instance, or where the parties agree that a bench trial would be more fitting.

Once a jury trial is demanded in a pleading in New Jersey, both parties must consent to waive the jury demand unless there is no right to a jury for the claims. It is interesting to note that only the plaintiff demanded a jury trial in the pleadings of this case, but that it was NJM that insisted on the jury trial. NJM’s position was joined by the amici curiae Insurance Council of New Jersey, and the Property Casualty Insurers Association of America.  Whether the decision to assert the jury right was a strategic maneuver to avoid an adverse decision and keep the matter open for further negotiation, or was truly an assertion of a substantive right, the decision reveals the importance of assessing whether a jury demand should be included in the initial complaint or answer as the demand may be a significant factor in the overall handling and final trial of a case.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in insurance coverage. For additional information about the matters in this bulletin or in the firm’s insurance practice, please contact Steven A. Kunzman, Esq. who heads our Insurance Coverage Department.

Tags: Insurance, insurance law new jersey, insurance law NJ, New Jersey insurance law, NJ insurance law

• Defense Litigation , Insurance Law
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SteveK June 1st, 2011

As a follow up to the recent post on the trial court in NJDEP v. Saint-Gobain, the New Jersey Appellate Division has taken a contrary view, which now governs the issue in New Jersey. In a published opinion in the ongoing litigation regarding Exxon Mobil’s Bayway and Bayonne facilities, New Jersey Dep’t of Env. Protection v. Exxon Mobil Corp, the court held that the State’s common law strict liability claims for NRDs were not barred by the general ten-year statute of limitations applicable to actions commenced by the State. N.J.S.A. 2A:14-1.2. The court, reversing the trial court, held that an exception to the ten-year statute, specific to environmental laws, known as the Extension Statute, N.J.S.A. 58:10B-17.1, applies not only to statutory environmental laws, but also to common law causes of action implementing environmental programs
The Extension Statute provides:
b. (1) Except where a limitations provision expressly and specifically applies to actions commenced by the State or where a longer limitations period would otherwise apply, and subject to any statutory provisions or common law rules extending limitations periods, any civil action concerning the payment of compensation for damage to, or loss of, natural resources due to the discharge of a hazardous substance, commenced by the State pursuant to the State’s environmental laws, shall be commenced within five years and six months next after the cause of action shall have accrued.
Exxon argued in that the Extension Statute’s use of the term “environmental laws” after a listing of 9 prior statutes limited the extension to statutory causes of action. The App. Div, however, looked to legislative history and concluded that the legislature intended to expand the scope of the authority of the DEP, not to limit it. As a result, NJDEP has the ability to pursue common law causes of action, along with the strict liability provision of Spill Act, in matters involving NRDs; neither of which will be constrained by the general ten-year statute. This decision maybe important as common law remedies and damages may be broader and may permit the State to seek to present their case before a jury as there is some question whether there is a right to a jury trial under the Spill Act.

In a separate decision the Appellate Court also ruled on the State’s claim for an interlocutory payment by Exxon Mobil for natural resource damage assessment costs of approximately $1 million.  The costs represent the invoices of five experts that prepared reports for DEP regarding the claimed natural resource damages under the Spill Act. The Court affirmed the trial court’s denial of the interim payment since there is a significant dispute as to the reasonableness of the costs and whether they are duplicative of defendant’s efforts. The panel concluded that the award of such costs is best reserved until resolution of the factual issues at trial.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department

Tags: Contamination, Environmental Law, Groundwater, Natural Resource Damages, NJ Spill Act, NRD, Statute of Limitations

• Environmental Law , Natural Resource Damages , NJ Spill Act
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