United States District Court, D. New Jersey
MEMORANDUM OPINION AND ORDER
an insurance coverage action arising from damage inflicted on
Port Liberte by Superstorm Sandy. Port Liberte, a condominium
complex in Jersey City, sues its property insurer, Lexington
Insurance Company, which paid out nearly $6 million on its
claim but declined to reimburse it for items totaling
approximately $3.3 million. The Complaint (ECF no. 1) is in
four counts: (1) Breach of Contract; (2) Breach of the
Implied Covenant of Good Faith and Fair Dealing; (3) Breach
of Fiduciary Duty; and (4) Declaratory Judgment.
before the court is Lexington's motion (ECF no. 12) to
dismiss Counts 2 and 3 of the Complaint or, in the
alternative, to stay those two Counts pending resolution of
Counts 1 and 4. For the reasons stated herein, I will grant
the requested alternative relief and stay Counts 2 and 3.
Complaint alleges that Lexington wrongly classified certain
items as "Outdoor Property, " which had the effect
of subjecting those items to a contractual sublimit. (Cplt.
¶¶ 35-70) Lexington allegedly misclassified certain
damage items as "Debris Removal, " and some
disposal costs as "Decontamination Costs, "
categories which also are subject to a contractual sublimit.
(Cplt. ¶¶ 51-69) Lexington allegedly wrongfully
denied Port Liberte's claims for consequential loss of
monthly docking fees. (Cplt. ¶ ¶ 70-76)
1 and 4 straightforwardly allege that Lexington has thereby
breached the contract of insurance between the parties. They
seek reimbursement of the listed items and a declaration that
they are covered. Counts 2 and 3 allege that the same conduct
constituted bad-faith conduct- i.e., a breach of the
implied covenant of good faith and fair dealing, or a breach
of a fiduciary duty.
Motion to Dismiss
first moves to dismiss Counts 2 and 3 for failure to state a
claim upon which relief may be granted. See Fed. R.
Civ. P. 12(b)(6). For the purposes of a motion to dismiss,
the facts alleged in the complaint are accepted as true and
all reasonable inferences are drawn in favor of the
plaintiff. New Jersey Carpenters & the Trustees
Thereof v. Tishman Const Corp. of New Jersey, 760 F.3d
297, 302 (3d Cir. 2014). The factual allegations must be
sufficient to raise a plaintiffs right to relief above a
speculative level, such that it is "plausible on its
face." BellAtl. Corp. v. Twombly, 550 U.S. 544,
570 (2007).See id. at 570; see also West Run
Student Housing Assocs., LLC v. Huntington Nat. Bank,
712 F.3d 165, 169 (3d Cir. 2013). While "[t]he
plausibility standard is not akin to a 'probability
requirement'... it asks for more than a sheer
possibility." Ashcroft v. Iqbal, 556 U.S. 662,
does not seem to be any disagreement as to the essentials of
these causes of action. Breach of the covenant of good faith
and fair dealing, in the context of an insurance claim,
requires "the absence of a reasonable basis for denying
benefits of the policy and the defendant's knowledge or
reckless disregard of the lack of a reasonable basis for
denying the claim." Pickett v. Lloyd's, 131
N.J. 457, 473 (1993). Thus no liability will arise if the
claim is "fairly debatable." Id. Breach of
fiduciary duty requires "(1) the existence of a
fiduciary relationship between the parties; (2) the breach of
the duty imposed by that relationship; and (3) damages or
harm to the plaintiff caused by said breach."
SalandStacy Corp. v. Freeney, No. 11-3439 (JLL),
2012 U.S. Dist. LEXIS 38141, *36 (D.N.J. Mar. 21, 2012).
points out, with some justice, that Counts 2 and 3 do not
allege many specific facts that would elevate this coverage
dispute to the level of bad faith or a fiduciary breach. The
partial denial of coverage is characterized as heinous,
largely through the medium of the piling on of adjectives.
Nor does the Complaint seem to allege any particular facts
that would support an inference that this ordinary
insured/insurer relationship was a fiduciary one.
possible to debate whether the plaintiff should be put to the
burden of amending these claims. I have determined, however,
that it is neither necessary nor desirable to consider these
issues now. A stay of these two counts in favor of Counts 1
and 4 will ensure a more orderly procedure and will also
place any future rulings about Counts 1 and 3 on a firmer
Severance and Stay
Court has the discretionary authority to sever and stay
claims, for purposes of pretrial proceedings, see
Fed.R.Civ.P. 26(d)(2), or for trial, see Fed.R.Civ.P. 42(b),
in the interests of justice and efficiency. I find that a
severance and ...