New Jersey Federal Judge Reinstates Sandy Case after finding that Insured’s Prior Counsel Failed to Properly Prosecute the Case

In Gallagher v. Farm Family Insurance Company, the court granted the insured’s motion to vacate the court’s previous order dismissing the action and reinstate the insured’s complaint. The insured originally filed suit against his insurer, asserting claims for breach of contract and breach of the common-law duty of good faith and fair dealing and seeking benefits allegedly due after the insured’s home suffered damage from Hurricane Sandy. The insurer removed the matter to federal court on the grounds of diversity jurisdiction and both parties were ordered to submit an amount in controversy. Despite multiple orders by judges to do so, however, the insured failed to submit an amount in controversy, and the complaint was dismissed. The insured hired new counsel and filed the instant motion, which the insurer opposed.

In support of his motion, the insured argued that hundreds of lawsuits filed by the law firm formerly representing him were dismissed on procedural grounds, and that the insured was only able to speak with his attorney one time during handling of the litigation. Additionally, the insured claimed that he did not learn that his complaint was dismissed until March 2015 when he hired new counsel, even though the complaint was dismissed in October 2014. The insured asserted that his prior counsel never provided him with any of the court’s orders, nor was he updated on requirements necessary to move the case forward. The insurer argued that the motion was untimely filed and that the insurer would be prejudiced since the insured’s claims arose out of events that occurred more than three years ago.

In granting the insured’s motion, the court found that the motion was properly filed under Rule 60(b)(6), and thus was not subject to a one-year filing requirement. Additionally, the court reasoned that any delay in filing the motion was through no fault of the insured and was not unreasonable. Finally, the court held that extraordinary circumstances existed to vacate the order dismissing the complaint, particularly that the insured’s prior counsel failed to prosecute numerous Sandy claims and all but abandoned the litigation it initiated on behalf of the insured. Accordingly, the court reasoned that the insured was effectively unrepresented prior to dismissal, and that the insured should be given an opportunity to have his claims adjudicated on the merits.

The case is Gallagher v. Farm Family Insurance Co., No. 14-2533 (D.N.J. January 12, 2016) (Linares, U.S.D.J.) (non-precedential)