United States District Court, D. New Jersey, Camden Vicinage
Gregory J. Giordano, Esq. Lenox, Socey, Wilgus, Formidoni,
Brown, Giordano & Casey, LLC Attorney for Plaintiff New
Jersey Schools Insurance Group.
Michael P. Luongo, Esq. Goldberg Segalla LLP Attorney for
Defendants Brokers Risk Insurance Company, Lloyds of London,
Certain Underwriter at Lloyds, London.
RENÉE MARIE BUMB UNITED STATES DISTRICT JUDGE.
matter is before the Court upon a motion by Defendant Certain
Underwriters at Lloyds, London (“Underwriters”)
to dismiss Counts II and V of the Second Amended Complaint
filed by Plaintiff New Jersey Schools Insurance Group
(“NJSIG”). For the reasons set forth herein, the
motion will be granted.
following facts are taken from the Second Amended Complaint.
(Compl. [ECF No. 26]). On June 1, 2011, Luis Rodriguez was
struck by a school bus owned and operated by Jersey City
Public Schools (“Jersey City”), resulting in
personal injuries to Mr. Rodriguez. Mr. Rodriguez filed a
personal injury action against Jersey City in the New Jersey
Superior Court, Law Division, Union County (the
City was insured by Plaintiff NJSIG for the claims in the
Rodriguez Action under a policy with a coverage limit of
$500, 000. Munich Insurance Company provided indemnity
coverage for an additional $500, 000. Defendant Star
Insurance Company insured Jersey City under an Excess
Liability policy with coverage in excess of the $1 million
provided by NJSIG and Munich Insurance Company. Underwriters
insured NJSIG under a Trustees Errors and Omissions Liability
Insurance for Self Insured Funds policy bearing number
LTEO-0006976 (the “Policy”).
Rodriguez Action settled at mediation on July 21, 2004. The
settlement resulted in a General Release in which all claims
by Mr. Rodriguez against Jersey City, NJSIG, and others were
released in exchange for the settlement payment of $1.9
million. On September 29, 2014, over two months after the
settlement, NJSIG notified Star and Meadowbrook of the
settlement and requested payment of $900, 000 under the Star
policy. On October 24, 2014, Meadowbrook denied
coverage under the Star policy on the basis that it did not
receive notice that the claim against Jersey City would
exceed the $1 million attachment point of the Star policy and
that it had not provided consent to the settlement within its
policy limits. Prior to receiving Meadowbrook's denial,
however, (and “[w]ithout waiving the position that Star
was notified that the claim exceeded $1 million), (Compl.
¶ 28), NJSIG notified Underwriters on October 7, 2014,
through its representative, Brokers' Risk Placement
Service, Inc. (“Brokers' Risk”), of a claim
under the Policy. NJSIG alleges that its notice to
Underwriters made clear that NJSIG had committed an error by
failing to notify Star of the settlement and that the
settlement payment needed to be issued. Moreover, NJSIG
alleges that it was under threat of litigation by Rodriguez
to enforce the settlement if payment of the settlement amount
was not forthcoming.
November 7, 2014, Brokers' Risk, on Underwriters'
behalf, denied coverage to NJSIG under the Policy. In
pertinent part, Underwriters denied coverage because no claim
had been made against NJSIG as required under the Policy.
Plaintiff alleges the denial was “based on a narrowly
circumscribed and distorted interpretation of
‘claim' that purportedly required litigation
against NJSIG in order to trigger coverage under the . . .
Policy.” (Compl. ¶ 33). NJSIG also alleges that
the denial was made without conducting any investigation and
that Brokers' Risk/Underwriters had no debatable reason
to deny coverage under the Policy.
contends that Counts II and V fail to state a claim because
Underwriters had a legally permissible basis to deny coverage
to NJSIG or, at a minimum, Underwriters' denial of
coverage was debatable. See, e.g., Badiali v. New Jersey
Mfrs. Ins. Grp., 220 N.J. 544, 554 (2015) (“[T]o
establish a first-party bad faith claim for denial of
benefits in New Jersey, a plaintiff must show that no
debatable reasons existed for denial of the benefits.”
(internal citations omitted)). The Court agrees.
12(b)(6) motion to dismiss for failure to state a claim upon
which relief may be granted must be denied if the
plaintiff's factual allegations are “enough to
raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are
true, (even if doubtful in fact).” Bell Atlantic Corp.
v. Twombly, 127 S.Ct. 1955, 1965 (2007)(internal citations
omitted). Moreover, “[w]hile a complaint attacked by a
Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, . . . a plaintiff's obligation to
provide the ‘grounds' of his ‘entitle[ment]
to relief requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do." Id. at 1965 (internal citations
district court must accept any and all reasonable inferences
derived from those facts. Unger v. Nat'l Residents
Matching Program, 928 F.2d 1392 (3d Cir. 1991); Glenside West
Corp. v. Exxon Co., U.S.A., 761 F.Supp. 1100, 1107 (D.N.J.
1991); Gutman v. Howard Sav. Bank, 748 F.Supp. 254, 260
(D.N.J. 1990). Further, the court must view all allegations
in the complaint in the light most favorable to the
plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974);
Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d
1250, 1261 (3d Cir. 1994).
in deciding a motion to dismiss, a court should look to the
face of the complaint and decide whether, taking all of the
allegations of fact as true and construing them in a light
most favorable to the non-movant, the plaintiff has alleged
“enough facts to state a claim for relief that is
plausible on its face.” Twombly, 127 S.Ct. at 1974.
Only the allegations in the complaint, matters of public
record, orders, and exhibits attached to the complaint are
taken into consideration. Chester County Intermediate Unit v.
Pennsylvania Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990).
II alleges a breach of the implied covenant of good faith and
fair dealing. Specifically, NJSIG alleges that Underwriters
“breached the duty of good faith and fair dealing in
its determination as to the liabilities due to NJSIG under
[the Policy].” Count V alleges bad faith. Specifically,
Plaintiff alleges that Underwriters “lacked any
reasonable basis for denying ...