December 2016 Bad Faith Cases: No Bad Faith Where Evidence Failed to Show Lack of Reasonable Evaluation or Investigation; No Private Action Under Unfair Claims Settlement Act (New Jersey Federal Court)

In this Superstorm Sandy property damage case, the insured alleged bad faith, among other claims. The court found the insured could not overcome the “fairly debatable” standard, and make a case for an unreasonable denial that was reckless or intentional in nature.

The insured only provided invoices, an itemized bill for the repair work performed, and corresponding proofs of payment in support of its claim; but none of those documents provided evidence that the property damage at issue occurred as a result of water backup and sump overflow as opposed to flooding. Nor did these documents do anything to contradict the results of the insurer’s investigation and inspection to determine the cause of the reported damages. There was “nothing evidential to suggest that Defendant lacked a reasonable basis for denying Plaintiff’s claim or that Defendant had knowledge of or showed a reckless disregard of the lack of a reasonable basis for denying the claim.” Summary judgment was entered for the insurer.

In addition, the insured had alleged a violation of the Unfair Claims Settlement Practices Act, apparently claiming bad faith; however, there is no private cause of action under that statute. Thus, summary judgment was granted on that issue as well.

Date of Decision: November 15, 2016

Carevel, LLC v. Aspen Am. Ins. Co., No. 13-7581, 2016 U.S. Dist. LEXIS 157919 (D.N.J. Nov. 15, 2016) (Walls, J.)