In Hurricane Sandy Coverage Dispute, New Jersey District Court Holds Attorney’s Fees Not Recoverable for Breach of Contract Absent Bad Faith

In a recent Hurricane Sandy action, the United States District Court for the District of New Jersey dismissed an insured’s request for attorney’s fees after finding that the insured merely alleged breach of contract and not bad faith. The insured originally submitted a claim to its insurer after the insured property suffered damage from Hurricane Sandy. The insurer offered partial payment, which the insurer alleged did not fully cover the losses sustained. The insured subsequently brought suit against the insurer, alleging one count for breach of contract and requesting attorney’s fees.

In dismissing the attorney’s fees claim without prejudice, the Court noted that attorney’s fees are only permitted in a first party claim against an insurer if the insured pleads a claim for bad faith. Here, the insured only set forth a claim for breach of contract, and at most contended that future discovery might show the insurer acted in bad faith. Thus, the Court ruled there was no basis for the recovery of attorney’s fees.

The case is 213-15 76th St. Condo Ass’n v. Scottsdale Ins. Co., Civil No. 14-7695 (NLH/JS),  2015 U.S. Dist. LEXIS 100212 (D.N.J. July 31, 2015) (Hillman, J.)