COVERAGE WAS “FAIRLY DEBATABLE” SO BAD FAITH CLAIM COULD NOT PROCEED (New Jersey Federal)

In this case, the court provides a concise and clear analysis of New Jersey’s “fairly debatable” standard in bad faith cases. If an insured cannot win summary judgment on coverage, then the claim is fairly debatable and there can be no bad faith as a matter of law.

In this disability case, medical and vocational experts disputed each other on critical points. This created issues of material fact as to whether the insured could perform in any gainful occupation; a dispute that could only be decided by a jury. Thus, the court denied the insured summary judgment on coverage.

This necessarily made the claim “fairly debatable” for bad faith purposes, and the court granted summary judgment to the insurer on the bad faith claim.

Date of Decision: April 29, 2019

Bell v. Crown Life Insurance Co., U. S. District Court District of New Jersey Civil Action No. 3:16-cv-8006-BRM-DEA, 2019 U.S. Dist. LEXIS 79013 (D.N.J. April 29, 2019) (Martinotti, J.)