In Senft v. Fireman’s Fund Insurance Company, the Court granted in part and denied in part an insurer’s motion to dismiss claims brought by its insureds based on denial of coverage, after the insureds’ home suffered damages as a result of Hurricane Sandy. The insureds had previously purchased a “Prestige Home Premier Policy” on the representations of the insurer and its brokers that the policy would provide coverage in the event of a hurricane. The insureds further contended that they paid premiums as high as almost $10,000 per year from 1996 through 2012, which included a 2% hurricane deductible because of the property’s close proximity to the ocean. After Hurricane Sandy struck, the insureds claimed that the insurer rejected their claim in its entirety without visiting or inspecting the property. After the insureds protested, the insurer sent a representative to inspect the property, who cited the subsequent storm surge as the sole cause of the devastation and denied coverage.
The insureds subsequently filed a declaratory judgment action seeking entitlement to coverage under the policy, and asserting claims for bad faith, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment. The Court found that the claim for breach of the implied covenant was duplicative of the bad faith claim, and disagreed with the insureds’ argument that the claims were not duplicative because the implied covenant claim was “much more expansive and all encompassing.” Thus, the Court dismissed the claim for breach of the implied covenant of good faith and fair dealing and held that it saw no reason why the insureds “cannot recover under their bad faith claim for any conduct which they believe underlies their claim for breach of the implied covenant.”
However, the Court found that the insureds adequately stated a claim for breach of fiduciary duty. Based on the representations that the insurer and its brokers made, the Court found that it was plausible for the insureds to believe that they would be provided coverage for hurricane-related damages. As for the unjust enrichment claim, the Court stated that to state such a claim under New Jersey law, the insureds “must plead that [the insurer] was enriched in a manner not governed by any enforceable contract.” Because the parties’ rights and obligations were governed by their insurance contract, and the insureds did not allege that they conferred any benefit on the insurer other than paying their policy premiums, the Court dismissed the unjust enrichment claim.