May 2013 Bad Faith Cases: Court Rules Third-Party Defendant Is Required To Indemnify Defendant and Pay Legal Fees, Despite Indemnitor’s Failure To Purchase Insurance and the Absence of Bad Faith (New Jersey Appellate Division)

In Choinski v. Dendrite Int’l, the appellate court reviewed the validity of an indemnification clause entered into by the defendant and third-party in a personal injury action. A jury found that the defendant was not negligent in the underlying suit and the court ordered the third-party defendant to reimburse the primary defendant for (1) a $20,000 settlement paid for the personal injury complaint and (2) $25,500 of legal fees. The defendant then brought a claim to enforce the third-party defendant’s obligation to provide general liability insurance for the underlying personal injury action. The trial court granted summary judgment in favor of the primary defendant and the third-party defendant appealed. The appellate court remanded for a determination of whether the third-party defendant was in breach of contract for failing to obtain the required liability insurance. The trial court granted the primary defendant’s motion and the third-party defendant indemnitor brought the instant appeal.
The appellate court upheld the trial court’s ruling, finding that the indemnification clause was valid. The court also ruled that the primary defendant is entitled to the full protection provided by coverage, as it would have been if the indemnitor had purchased the required coverage. The court noted that a showing of bad faith is not required for an insurer, or in this case, the indemnifying party, to require the payment of attorney fees.
Date of Decision: April 25, 2013
Choinski v. Dendrite Int’l, NO. A-0780-11T1, 2013 N.J. Super. Unpub. LEXIS 952, New Jersey Appellate Division (App.Div. Apr. 25, 2013) (Alvarez, J., St. John, J.)