NJ Federal Court Denies Motion to Dismiss CFA Claim Contrary to Other Federal Courts.

Recently, in Beekman v. Excelsior Ins. Co., 2014 U.S. Dist. LEXIS 21864 (D.N.J. Feb. 21, 2014), the U.S. District Court for the District of New Jersey denied Defendants’ motion to dismiss a claim alleging a violation of the New Jersey Consumer Fraud Act (CFA) despite contrary holdings by other federal courts. In that case, Plaintiff owned an insurance policy issued by Defendants with respect to property damaged by Superstorm Sandy. Plaintiff alleges that Defendant improperly adjusted his claim due to an inadequate, biased, result-oriented investigation of the claim. The Plaintiff argued that the Defendants denied the claim without any reasonable basis. The Court relied on the Third Circuit’s opinion in Weiss v. First Unum Life Ins. Co., 482 F.3d 254 (3d Cir. 2007) which stated that “[w]e do not share the District Court’s conviction that the CFA and its treble damages provision are inapplicable to schemes to defraud insureds of their benefits”. Other courts have specifically denied CFA claims arising from denials of insurance benefits, stating that such a holding would allow insureds to convert a mere contractual claim into an extra-contractual one simply by alleging fraudulent conduct. See Capogrosso v. State Farm Ins. Co., 2009 U.S. Dist. LEXIS 119337.  The Court emphasized that creating a scheme to deny insurance benefits differentiated this case from others where the CFA claim was dismissed.