Badiali v. N.J. Mfrs. Ins. Grp.
| Decision Date | 18 February 2015 |
| Citation | 220 N.J. 544,107 A.3d 1281 |
| Parties | Augustine W. BADIALI, Plaintiff–Appellant, v. NEW JERSEY MANUFACTURERS INSURANCE GROUP, Defendant–Respondent. |
| Court | New Jersey Supreme Court |
220 N.J. 544
107 A.3d 1281
Augustine W. BADIALI, Plaintiff–Appellant
v.
NEW JERSEY MANUFACTURERS INSURANCE GROUP, Defendant–Respondent.
Supreme Court of New Jersey.
Argued Sept. 9, 2014.
Decided Feb. 18, 2015.
Richard J. Hollawell argued the cause for appellant (Console & Hollawell, Marlton, attorneys).
Richard J. Williams, Jr. argued the cause for respondent (McElroy, Deutsch, Mulvaney & Carpenter, attorneys; Mr. Williams and Joseph G. Fuoco, Morristown, on the briefs).
Amos Gern argued the cause for amicus curiae New Jersey Association for Justice (Starr, Gern, Davison & Rubin, attorneys; John J. Ratkowitz, Roseland, on the brief).
Carl A. Salisbury argued the cause for amicus curiae United Policyholders (Kilpatrick Townsend & Stockton, attorneys).
Opinion
Justice FERNANDEZ–VINA delivered the opinion of the Court.
The issue this Court must decide on appeal is whether an insurer's rejection of an arbitration award in an uninsured motorist (UM) claim was “fairly debatable,” thereby barring an insured from recovering
counsel fees and other consequential damages under a theory of bad faith.
Plaintiff, Augustine W. Badiali, was injured when his motor vehicle was rear-ended by an uninsured motorist. Plaintiff filed a UM claim, which proceeded to arbitration and resulted in an award in plaintiff's favor. Plaintiff filed suit against his insurer,
defendant New Jersey Manufacturers Insurance Group (“NJM”), after NJM rejected the arbitration award and refused to pay its share. The trial court confirmed the arbitration award in a summary action and found NJM liable for its share of the award. In a subsequent action, plaintiff asserted that NJM litigated in bad faith by advocating that its policy language allowed for a rejection of the arbitration award at issue. The trial court granted summary judgment in favor of NJM. The court agreed that the case was ripe for summary judgment although discovery had not been completed. The court was further persuaded that NJM's position was “fairly debatable” based on its policy language and on the existence of an unpublished Appellate Division decision involving nearly identical facts, in which NJM was also a party.
The Appellate Division affirmed, holding that NJM's position was “fairly debatable” under Pickett v. Lloyd's, 131 N.J. 457, 621 A. 2d 445 (1993), because it was supported by a prior, unpublished opinion of the court. Plaintiff was thereby barred from recovering counsel fees or any other consequential damages.
For the reasons set forth in this opinion, we affirm the judgment of the Appellate Division.
I.
On August 1, 2006, plaintiff was injured when his motor vehicle was rear-ended by an uninsured motorist. Plaintiff was insured for UM coverage under his personal policy with defendant, NJM, and also under his employer's insurance carrier, Harleysville Insurance Company (“Harleysville”). Plaintiff filed a UM claim, which proceeded to arbitration and resulted in an award of $29,148.62 in plaintiff's favor. NJM and Harleysville were contractually and statutorily obligated to share this award equally. See N.J.S.A. 17:28–1.1(c). Harleysville paid its half, $14,574.31. However NJM rejected the award and demanded a trial de novo. NJM asserted that the language of its personal auto policy allowed either party to dispute an arbitration award in which the total
amount exceeded $15,000. Plaintiff filed suit against NJM to enforce the award.
In a summary action pursuant to N.J.S.A. 2A:24–7, on April 16, 2010, the trial court confirmed the arbitration award and found NJM liable for $14,574.31, notwithstanding the fact that the total arbitration award was in excess of the $15,000 threshold provided for in its personal auto policy as grounds to reject the award. The Appellate Division in an unpublished opinion affirmed (Badiali I ), relying on its holding in D'Antonio v. State Farm Mut. Auto. Ins. Co., 262 N.J.Super. 247, 249–50, 620 A. 2d 1060 (App.Div.1993), that “ ‘the extent of the carrier's [underinsured motorist] liability ... not the tortfeasor's liability ... should determine whether the case is of sufficient magnitude to justify a trial.’ ” NJM thereafter paid the arbitration award in full.
On March 29, 2011, plaintiff commenced a second action against NJM, asserting claims for breach of contract, bad faith, and consumer fraud. Regarding bad faith, plaintiff argued that NJM expended more than $28,000 to avoid paying its portion of
the arbitration award in Badiali I. Plaintiff further asserted that NJM caused him to incur substantial expense, years of delay, and undue aggravation as a result of its handling of his UM claim, which entitled him to treble and punitive damages, as well as attorney's fees and costs.
NJM moved for summary judgment, maintaining that there was no genuine issue of material fact whether its actions in Badiali I constitutes bad faith. In arguing that it did not act in bad faith, NJM relied on a 2004 unpublished decision in which the Appellate Division held, under essentially the same circumstances, that the insurer (also NJM) was entitled to reject the arbitration award at issue and demand a trial de novo. Geiger v. N.J. Mfrs. Ins. Co., No. A–5135–02 (App.Div. Mar. 22, 2004)1 . Although NJM conceded that Geiger lacked any precedential authority, it asserted
that its mere existence proved that NJM's conduct was reasonable, fair, and honest, and that it had “fairly debatable” reasons to reject the arbitration award at issue and seek a trial de novo as a result. Put differently, NJM maintained that its position and reasoning in rejecting the arbitration award in Badiali I were identical to its position and reasoning in rejecting the arbitration award in Geiger. Thus, because the Appellate Division expressly vindicated that position and reasoning in Geiger, NJM asserted that it would be inconsistent and illogical to find that they acted in bad faith under nearly identical circumstances in Badiali I.
The trial court heard oral argument on January 20, 2012, and subsequently granted summary judgment in favor of NJM on all counts, despite the fact that discovery had not yet been completed. The trial court found that plaintiff failed to demonstrate how further discovery would supply the missing elements of his cause of action, or change the material facts or outcome of his case. As such, the court deemed the case ripe for summary judgment.
Plaintiff appealed and the Appellate Division affirmed. Badiali v. N.J. Mfrs. Ins. Grp., 429 N.J.Super. 121, 57 A. 3d 37 (App.Div.2012) [hereinafter “Badiali II ”]. The panel held that, as a matter of law, the mere existence of unpublished case law supporting NJM's rejection of the arbitration award precluded a finding of bad faith against NJM, regardless of whether NJM relied on or was aware of that unpublished case. Id. at 126, 57 A. 3d 37. The Appellate Division declined, however, to address whether it was improper for the trial court to grant summary judgment prior to the completion of discovery. The panel found “it does not matter whether NJM actually based its position in Badiali I on [Geiger ], it also does not matter that plaintiff was deprived of the opportunity to explore the formulation of NJM's strategy in the prior suit in pretrial discovery in this suit.” Id. at n. 5.
This Court granted plaintiff's petition for certification. Badiali v. N.J. Mfrs. Ins. Grp., 213 N.J. 387, 63 A. 3d 227 (2013). Thereafter the Court granted leave to appear as amici curiae to New
Jersey Association for Justice (“NJAJ”) and to United Policyholders (“United”).
II.
Plaintiff asserts three arguments. Plaintiff first argues that the trial and
appellate courts erroneously concluded that NJM had “fairly debatable” reasons to reject the arbitration award at issue, based upon the existence of the unpublished Geiger opinion. Plaintiff contends that NJM failed to establish that it actually relied on Geiger at the time it rejected the arbitration award at issue, and that NJM's decision was contrary to other published legal authority in D'Antonio, which was binding on plaintiff.
Plaintiff additionally argues that the appellate court erroneously upheld the trial court's grant of summary judgment when discovery had not yet been completed. He contends that when certain facts are solely within the knowledge of the moving party, such as the information relied upon by an insurer when making its decisions, it is especially inappropriate to grant summary judgment without allowing the completion of all scheduled depositions or requested written discovery.
Finally, plaintiff contends that he is statutorily entitled to all counsel fees incurred...
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