United States District Court, D. New Jersey
JOSEPH H. RODRIGUEZ U.S.D. JUDGE.
matter is before the Court on Defendants' motion to
dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). The
Court has considered the submissions of the parties and heard
oral argument on May 16, 2018. For the reasons placed on the
record that day, as well as those articulated below, the
motion will be granted.
breach of contract action, Plaintiffs Charles and Elizabeth
Hobbs filed a Complaint on May 23, 2017 claiming that
Defendants' refusal to properly adjust a homeowners'
insurance policy constitutes a breach of contract and bad
U.S. Coastal Insurance Company is administered by Defendant
Cabrillo Coastal General Insurance Agency, LLC. U.S. Coastal
issued a policy of insurance (“the Policy”)
covering Plaintiffs' second home at 116 Cedarville
Avenue, Villas, New Jersey (“the Property”).
about September 29, 2016, Plaintiffs discovered that a leaky
valve on the hot water heater caused extensive water damage
and mold growth in the crawlspace of the Property. On or
about October 11, 2016, a third-party adjuster estimated that
the Property had sustained $8, 654 in damage as a result of
the water leak and an additional $66, 415 in damage as a
result of the mold growth. U.S. Coastal paid Plaintiffs $8,
654 for the water damage but only $10, 000 for the mold
damage, citing the “Limited Mold Coverage”
provision of the Policy.
complain that Defendants breached their contract and acted in
bad faith by failing to pay benefits due and owing under the
Policy because the mold was a consequence of water damage
caused by the water heater's failure. Defendants seek
dismissal of the Complaint, arguing that the $10, 000 Mold
Sublimit in the Policy applies to the mold damage at the
to Dismiss Standard
Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
“for failure to state a claim upon which relief can be
granted[.]” For a complaint to survive dismissal under
Rule 12(b)(6), it must contain sufficient factual matter to
state a claim that is plausible on its face. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. Further, a plaintiff must
“allege sufficient facts to raise a reasonable
expectation that discovery will uncover proof of her
claims.” Connelly v. Lane Const. Corp., 809
F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency
of a complaint, district courts must separate the factual and
legal elements. Fowler v. UFMC Shadyside, 578 F.3d
203, 210-11 (3d Cir. 2009) (“Iqbal ...
provides the final nail-in-the-coffin for the ‘no set
of facts' standard that applied to federal complaints
before Twombly.”). The Court “must
accept all of the complaint's well-pleaded facts as
true.” Fowler, 578 F.3d at 210. Restatements
of the elements of a claim, however, are legal conclusions
and, therefore, not entitled to a presumption of truth.
Bztrtch v. Mutberg Factors, Inc., 662 F.3d 212, 224
(3d Cir. 2011).
New Jersey law, a breach of contract claim requires the
following: “(1) a contract between the parties; (2) a
breach of that contract; (3) damages flowing therefrom; and
(4) that the party stating the claim performed its own
contractual obligations.” Frederico v. Home
Depot, 507 F.3d 188, 203 (3d Cir. 2007).
New Jersey law establishes a general duty of good faith and
fair dealing in every contract as well as duties specific to
insurers. “[A]n insurance company owes a duty of good
faith to its insured in processing a first-party claim,
” but no liability arises if a decision concerning a
claim is “fairly debatable.” Pickett v.
Lloyd's, 621 A.2d 445, 450, 453-54 (N.J. 1993)
(internal quotation marks omitted). A claimant who cannot
establish a substantive claim that the policy was breached,
however, cannot prevail on a claim for an insurer's
alleged bad faith refusal to pay the claim. Id. at
Jersey has well-settled principles of insurance contract
The principles of insurance contract interpretation are well
settled: (1) the interpretation of an insurance contract is a
question of law, (2) when interpreting an insurance contract,
the basic rule is to determine the intention of the parties
from the language of the policy, giving effect to all parts
so as to give a reasonable meaning to the terms, (3) when the
terms of the contract are clear and ambiguous, the court must
enforce the contract as it is written, and the court cannot
make a better contract for the parties than the one that they
themselves agreed to, (4) where an ambiguity exists, it must
be resolved against the insurer, (5) if the controlling
language of the policy will support two meanings, one
favorable to the insurer and one favorable to the insured,
the interpretation supporting coverage will be applied, but
(6) an insurance policy is not ambiguous merely because two