UNDER NEW JERSEY LAW, NO COVERAGE DUE = NO BAD FAITH (Third Circuit) (New Jersey Law)
This Third Circuit decision addresses New Jersey bad faith law. The appellant argued that the trial court “erred in ruling that it could not maintain bad faith claims against the insurers absent a finding of coverage.” The District Court’s decision, including case background, is summarized here.
The Third Circuit, however, disagreed and affirmed the District Court, stating:
Under New Jersey law, “a claimant who could not have established as a matter of law a right to summary judgment on the substantive [coverage] claim would not be entitled to assert a claim for an insurer’s bad-faith refusal to pay the claim.” Likewise for bad faith claims premised on alleged processing delays, “the test appears to be essentially the same.” Such bad faith claims are viable when the substantive claim for coverage is “valid” and “uncontested.” Here, however, [the insured] could not establish a right to coverage. Additionally, [the insured’s] citation to the New Jersey Unfair Claim Settlement Practices Act is unavailing, because that statute does not create a private right of action. We conclude that the District Court did not err in granting summary judgment to the insurers on [the] bad faith claims.
