MAY 2013 BAD FAITH CASES: COURT AFFIRMS SUMMARY JUDGMENT BECAUSE INSURED FILED SUIT AFTER THE ONE-YEAR SUIT LIMITATION PERIOD EXPIRED (New Jersey Appellate Division)

In Zaun v. Franklin Mut. Ins. Co., the court heard an insured’s appeal from the trial court’s summary judgment to a homeowner’s insurance carrier. The suit arose after the carrier denied coverage over water damage to the insured’s home. The carrier denied coverage because the premises had been vacant for more than 60-days, triggering an exclusion in the policy. The insured sought review with the carrier’s internal appeals panel, but coverage was again denied. After filing suit for bad faith and breach of contract, the carrier filed for summary judgment, which the court granted on the basis of a one-year suit limitation clause in the insurance contract.
On appeal, the insured argued that the carrier waived the one-year suit limitation clause because it permitted the insured to file for an internal appeal after the permitted 30-day request period. The court rejected this argument, reasoning that the carrier made an accommodation for the insured with the internal review, something that does not waive the one-year suit limitation clause. As such, summary judgment was affirmed and the insured’s bad faith suit was terminated.
Date of Decision: March 19, 2013
Zaun v. Franklin Mut. Ins. Co., No. A-5193-11T2, 2013 N.J. Super. Unpub. LEXIS 608, New Jersey Superior Court Appellate Division (App.Div. Mar. 19, 2013) (Fisher, J., Alvarez, J.)