Jared Stolz, insurance attorney in New Jersey

Additional Information

Jared Stolz is an attorney in New Jersey, focusing on insurance law and litigation. Jared E. Stolz is the managing partner of Stolz and Associates.


Jared Elliot Stolz received his undergraduate education at Drew University in Madison, New Jersey and graduated with honors from Seton Hall University School of Law. Jared E. Stolz has been the managing partner of Stolz and Associates since 2004, specializing in providing individual and customized attention to insurance carriers needs on substantial coverage disputes. Mr. Stolz has nearly two decades of experience in the insurance industry and strives to offer the clients a combination of tried and true legal analysis along with tactic, brought to it by today’s technology, with a focused eye on expenses. Mr. Stolz has represented prominent clients in numerous noteworthy cases with published opinions and has published and given seminar on insurance law topics.


Contact


Lilly Shebey, Administrative Assistant
Stolz & Associates, LLC
203 Main Street, Ste. 395
Flemington, NJ  08822
Tel. (908) 371-1350
Fax (908) 271-6500
Email: info@stolzlaw.com
Website: http://www.stolzlaw.com


References


Bio on law firm website: http://www.stolzlaw.com/about-us/about-the-founder/

LinkedIn Profile: https://www.linkedin.com/in/jared-stolz-18088012

Blog: https://jaredstolz.law.blog/

New: https://hype.news/jared-stolz-esq

Videos:

https://www.youtube.com/channel/UC4JMr8Lydcx0FqRit17cBWg
https://www.youtube.com/watch?v=HOF3bolshC8
https://www.youtube.com/watch?v=n7yA3fUImhc

Jared Elliott Stolz is an attorney in New Jersey, focusing on insurance law and litigation.

Jared Elliott Stolz is an attorney in New Jersey, focusing on insurance law and litigation.

Seminar taught by Jared E. Stolz, Esq.

TO DEFEND OR NOT TO DEFEND

Dealing with mixed allegations of covered and uncovered causes of actions

   

HANDLING CASES ASSERTING COVERED AND UNCOVERED CLAIMS/ALLEGATIONS


I. Insurers’ Obligations

A. Complaint

(1) Scope of duty to defend

(a) Danek v. Hommer  rule- mirror image rule: lay complaint alongside policy.

(b) A denial may be appropriate even if the allegations of the complaint trigger coverage. Burd v. Sussex. The duty to defend may turn into a duty to reimburse.

 (2) Types of cases

(a) Assault (negligent and intentional)

(b) Contractor’s negligence (work product and consequential loss)

(c) Employment discrimination (violation of civil rights/emotional distress with physical manifestations)

(3) Investigation

(a) No duty to investigate, but cannot ignore what you find out.

B. Alternatives

(1) Deny all counts.

(2) Defend all counts under a reservation of rights.

(3) Defend covered counts only.

(4) Declaratory Judgment Action.

(1) Deny all counts

(a) Dangers.

(1) Done at carrier’s peril.

(2) Exposure for Griggs v. Bertram type settlement.

(3) No ability to control the outcome of the liability suit or costs and counsel fees. 

(b) Only utilized in rarest cases where coverage issue most favors carrier and indemnity exposure is minimal.

(c) Even in these instances, the denial should be followed by a declaratory judgment action to place some finality on the issue.

(2) Defend all counts

(a) This is the other end of the spectrum. Here injuries are most severe and coverage issues most clearly favor insured 

(b) Carrier maintains control of the liability suit, and there is no exposure for a claim of counsel fees under the court rule permitting an award of counsel fees to a successful claimant under a liability or indemnity policy. 

(c) Carrier should make sure there is a proper reservation of rights or non-waiver, especially for punitive damages and counsel fees as sought as damages in the underlying liability suit.

(d) Form of reservation of rights.

(e) Disadvantages: in all likelihood, the coverage issues become moot. Once a carrier takes control of the liability case, it is extremely difficult to have a court seriously consider a declaratory judgment action that may follow.

(f) Institute declaratory judgment action at  same time.

(3) Defend some counts and not others

(a) Enter a limited defense when allegations of both negligence and intentional conduct. See Morgan, Lewis & Bockius v. Hanover Ins. Co. Grand Cove II v. Ginsberg. 

(b) S&L Industries v. American Motorist and Preferred Mutual v. Voorhees  approved the allocation of defense costs between covered and uncovered claims. 

(c) What happens if the insured defaults on uncovered claims? Does the default judgment relieve the carrier of the duty to defend covered claims if a judgment on the excluded claims would be inconsistent with a judgment on the covered claims?

(d) Advantages of entering a limited   defense.

(1) Maintain some control of liability   case.

(2) Danger of an award of counsel   fees is limited.

(3) No danger of a Griggs v. Bertram   settlement.

(e) However, when a limited defense is entered a case may be difficult to settle due to no indemnity for certain counts of the complaint. May be able to settle only covered counts of complaint.

(f) The insured has the right to decide whether personal counsel tries the liability case, or counsel retained by the carrier tries the case, if no agreement between carrier and insured, assignment judge decides. Dunne v. Fireman’s Fund. 

II. APPORTIONMENT- FEES & COSTS 

(1) Courts may apportion attorney’s fees between covered and uncovered claims. This would occur in the case where coverage was denied in its entirety at the outset and the insured filed a Declaratory Judgment (DJ) action, and that at the end of the DJ action the Court found that some counts were covered and others were not. In this instance the Court would make a determination of whether the attorney’s fees and costs can be apportioned. To make this determination of apportionment the Court will determine whether the defense strategy or the allegations in the complaint are co-mingled or so similar that the costs cannot be apportioned. Schmidt v. Smith, 155 N.J. 44 (1998). In the event that costs cannot be apportioned the Court requires the insurer to incur all costs.

(2) New Jersey Courts assume that costs can be apportioned and favors apportionment in most cases. The Courts do not require “scientific certainty” when determining the insured and insurer’s respective shares of the costs. SL Industries, Inc. v. American Motorist Ins. Co., 128 N.J. 188.

  

INTENTIONAL ACTS WITH ACCIDENTAL RESULTS - UNINTENDED RESULTS OF AN INTENTIONAL ACT


I. DETERMINING COVERAGE:

A. Look to policy language.


EXCLUSIONS THAT APPLY TO LIABILITY COVERAGES

"We" do not pay for "bodily injury" or "property damage" resulting from one or more of the following excluded "occurrences", regardless of other causes or "occurrences" that contribute to or aggravate the "bodily injury" or "property damage", whether such causes or "occurrences" act to produce the "bodily injury" or "property damage" before, at the same time as, or after the excluded "occurrence".


1. Exclusions That Apply To Coverages L and M -- This policy does not apply to:

* * *

i. "bodily injury" or "property damage":

1) which is expected by, directed by, or in-tended by an "insured"; 

2) that is the result of a criminal act of an "insured"; or

3) that is the result of an intentional and malicious act by or at the direction of an "insured".

This exclusion applies even if:

1) the "bodily injury" or "property damage" that occurs is different than what was expected by, directed by, or intended by the "insured"; or

2) the "bodily injury" or "property damage" is suffered by someone other than the person or persons expected by, directed by, or intended by the "insured".

However, this exclusion does not apply to "bodily injury" or "property damage" that arises out of the use of reasonable force to protect people or property.

B. Competing doctrines.

1. Courts have long held that public policy prohibits insurance coverage for the civil consequences of intentional wrongdoing. Ruvolo v.  American Casualty Co., 39, 496 (1963).

2. Courts have also recognized and emphasized the desire to compensate innocent tort victims with insurance proceeds to the extent that such compensation will not encourage intentional wrongful conduct. Ambassador Insurance Co. v. Montes, 76 N.J. 477, 483, (1978). 


II. "SUBJECTIVE INTENT" TEST:

A. Unless "reprehensible conduct" is involved, or the conduct is so exceptional as to objectively prove intent to harm, "subjective intent" test is used. 

1. PARTICULARLY REPREHENSIBLE ACTS. 

(a) Willful and conscious dumping of contaminants over a long period of time. Morton International Inc. v. General Accident Insurance, 134 N.J. 1 (1993).

(b) Sexual abuse of a child is reprehensible conduct. There is no concern with whether the insured contemplated the resulting damage. A subjective test, suggesting that it is possible to molest a child and not cause some kind of injury, is an unacceptable consideration. Atlantic Employers v. Tot & Toddlers, 239 N.J. Super. 276, 283 (App. Div. 1990) cert. den. 122 N.J. 147 (1990). But see Shelby, Priest.

(c) Violation of an attorney trust fund is reprehensible conduct. In Re Wilson, 81 N.J. 451 (1979). 

(d) Years of harassing phone calls made by the insured is reprehensible conduct. Mroz v. Smith, 261 N.J. Super. 133 (App. Div. 1992). 

(e) Distinguishable, the question of insured's subjective intent to harm a student sexually rather than merely to discipline him was a factual issue requiring resolution by a trier of fact. Atlantic Employers Insurance Co. v. Chartwell Manor School, 280 N.J. Super. 487 (App. Div. 1995).

(f) Intent to injure is presumed where husband assaults his wife. Spousal abuse constitutes intentional conduct and there will be no coverage because proving coverage would contravene public policy and the Prevention of Domestic Abuse Act. Merrimack Mut. Fire Ins. Co. v. Coppola, 299 N.J. Super. 219 (App. Div. 1997).

   

(g) But distinguish, Cumberland Mut. Fire Ins. Co. v. Beeby, 327 N.J. Super. 394 (App. Div. 2000), ( Exhibit Q) a factual issue exists whether insured’s conduct rises to the level of domestic violence when no prior history of abuse or restraining orders and no adjudication of domestic violence in Municipal Court since complaint was dismissed. Jury must decide whether facts constitute domestic violence when facts are not as clear cut as they were in Merrimack v. Coppola.

   

 2. NOT REPREHENSIBLE.

(a) Firing warning shots into air although ultimately having the bullet strike a person. Lyons v. Hartford Insurance Group, 125 N.J. Super. 239 (App. Div. 1973) cert. den. 64 N.J. 322 (1974). 

(b) Assault and battery cases. Prudential Property & Casualty Insurance Co. v. Karlinski, 251 N.J. Super. 457 (App. Div. 1991) ; Oakes v. State Farm, 137 N.J. Super. 365 (App. Div. 1975). 

3. SUBJECTIVE INTENT TO INJURE - TWO PART TEST.

(a) Absent reprehensible conduct, one looks to insured's subjective intent, unless subjective intent to injure = duty to defend. Voorhees v. Preferred Mutual Insurance Co., 128 N.J. 165 (1992); S&L Industries v. American Motorist Insurance Co., 128 N.J. 188 (1992).

(b) If determined that resulting injury was a probable consequence of the intentional action = no coverage.

(c) If it was not a probable outcome, must determine whether insured subjectively intended to cause actual injuries. 

  

"Where the intentional act does not have an inherent probability of causing the degree of injury actually inflicted, a factual inquiry into actual intent of the actor to cause that injury is essential." Prudential Property & Casualty Insurance Co. v. Karlinski, 251 N.J. Super. 457 (App. Div. 1991).


4. TEST OF "ACCIDENT" IS WHETHER THE HARM WAS

INTENDED. Voorhees v. Preferred Mutual Ins. Co., 128 N.J. 165 (1992).

5. WHO GET COVERAGE:

Severability clause contained in policy did not render ambiguous the intentional acts exclusion clause. Villa v. Short, 195 N.J. 15, (2008)


III CASE STUDIES  

(a) Humenik v. Gray v. Allstate

(b) Harleysville v. Garritta 

(c) Aquino v. State Farm & Travelers 

(d) NJM v. Vizcaino

(e) Villa v. Short

Jared E. Stolz has been the managing partner of Stolz and Associates since 2004.

Jared E. Stolz has been the managing partner of Stolz and Associates since 2004.

Seminar taught by Jared E. Stolz, Esq.

WHAT IS “ROVA FARMS” AND WHY DO WE CARE?

I. When is there a potential for an excess verdict?

A. Bodily Injury

B. Personal Injury

C. Property Damage

II. Rova Farms Resort, Inc. v Investors Insurance Company of America, 65 N.J.474 (1974)

A. Facts of case

a. McLaughlin was a business invitee at the RF Resort. On July 25, 1965 Mr. McLaughlin dove from a “diving platform” into 3 or 4 feet of murky water. He struck his head on the bottom of the lake, sustained fractures of the fourth and fifth cervical vertebrae and damaged his spinal cord. He was paralyzed, almost a total quadriplegic.

b. Suit was initiated and Investors hired an “experienced trial attorney” to defend Rova under a liability policy with a $50,000 limit. Because of allegations by plaintiff of intention conduct, ROR sent and Rova had personal counsel. This attorney, while not participating in trial, “pointedly and repeatedly” suggested the vulnerability of Rova to excess liability loss in view of the grave injuries. He also constantly inquired as to Investors willingness to off its policy limits and urged it to do so.

c. McLaughlin, 27 at the time, was present the first day of trial only, strapped to a wheelchair. Investors’ offered $12,500. Never an increase in offer.

d. A Passaic County jury awarded $225,000.

e. Appellate division remanded, as intention allegations should not have gone forward.

f. Assigned counsel wrote a requested opinion letter on liability and damages. Counsel wrote “the issue of bad faith in dealing with settlement should be of concern to it since, in the event of an adverse verdict, the potential exposure in this case involved severe personal injuries could be up to $500,000.

g. Investors’ claim committee, comprised in major part of experienced lawyers, did not flinch at this dismal prospect.

h. No retrial, and Investors paid their $50,000. Rova, which had a relationship with church-social groups along with mortgaging the property raised $175,000 and paid plaintiff. They sued Investors.

B. Decision:

a.         We note that substantial evidence before the court revealed a multitude of circumstances which should have impelled Investors to energize a clearly attainable settlement of the McLaughlin claim. 

b. Settlement at trial could have been arranged for $75,000, an amount which plaintiffs' attorney was authorized by his clients to accept, as was made known to the McLaughlin trial judge, to Liebowitz, to Roth and, through Liebowitz, to Investors. During those somewhat hectic trial days there were raised many storm signals of potential financial disaster in the face of which Investors maintained a singular imperturbability, never increasing its first-day offer of $12,500. The mere appearance at the trial of a 27 year old man, visibly and unquestionably shattered for life, was a factor which might have been expected to inspire concern to a seasoned trial attorney (as no doubt it did) and to his client, an experienced insurance company.

c. During the customary 'settlement' conferences the trial judge, aware of the grave physical aspect of the case and the unpredictability of jury results, suggested that Investors might be well advised to pay its policy limit and this was promptly reported by Liebowitz to Investors. Liebowitz added his own recommendation to Investors that it pay $50,000 'if that would settle the case.' Investors remained unmoved. The McLaughlins' attorney stated he would recommend acceptance of $50,000 to his clients, if it were offered, and asserted that although he would not try to coerce them to accept it, he had 'fairly good control' of them (a way of saying that they respected his advice). Rova had instructed Roth previously that, if Investors put up its $50,000, he was authorized to add $25,000, which Rova somehow would raise and pay. Roth never disclosed this to Liebowitz because he feared, in view of the adamant stance of Investors, unmoved by the exhortations not only of the court but of its own attorney, that he would be exposing his client to share in the payment of an amount contractually the obligation of Investors to pay, I.e., the policy limit. For this reason he dissembled, asserting that his client had no money, which was literally true, but begged the question of its non-liquid property potential (not beyond the scrutiny of Investors had it cared to look) which was eventually used to raise money by mortgage to pay the bulk of the obligation cast upon it by this unhappy debacle of honest communication.

d. And Roth's fears were not unfounded, for in response to his pleas to Liebowitz to offer Investors' policy limit Liebowitz kept exhorting Roth to announce his client's willingness to contribute something, and this (in view of the apparent 'stonewall' nature of Investors' $12,500 offer), was in itself suggestive of bad faith. 3 Liebowitz never told either plaintiffs'[323 A.2d 502] attorney, Mr. Rapuano, or Roth that he had recommended to his company that it pay $50,000, nor did he make any further effort to settle the case. Had he done so, and had some belated accident of logic persuaded Investors that it had a problem on its hands, settlement would clearly have been attainable. Investors' unresponsiveness persisted despite the fact that Liebowitz from beginning to end had been concerned about the bad faith danger to his client and had even warned it by letter of the language of our case of Bowers v. Camden Fire Ins. Assoc., Supra. 4 The Claims Committee, apparently the architect of Investors' decisions, also had given thought to its obligation to act in good faith and was concerned about the spectre of 'bad faith' at the very meeting at which it set its apparently inflexible settlement figure of $12,500.

e. This sciential grasp of its legal duty, however, did not interrupt the even tenor of Investors' policy of containment at the level of $12,500 although it never had any illusion, nor had its attorney, that its insured could escape the risk of jury confrontation on the issue of fault vis-a-vis the grave injury involved. Mr. Liebowitz not only realized, but reported to the insurance company that a potential verdict could exceed $50,000, that the McLaughlins could produce a prima facie case of negligence, that he, Liebowitz, '* * * could not see getting out of this case on a motion,' and that he '* * * could never have seen Judge Rosenberg or any other judge not permitting this case to go to the jury.' Hence, from the time of first view of this unfortunate plaintiff in the courtroom, Investors had ample opportunity to understand that its fate (and that of its exposed insured) would rest in the hands of a jury and it would not be rescued by control of the issue by the court as a legal matter.

f. Even after the chastening effect of the $225,000 verdict (as ameliorated by appellate reversal and direction of a new trial) and Liebowitz' advice to Investors that it should think about the brooding issue of 'bad faith' in the context of a possible $500,000 verdict, Investors maintained its strange aplomb. Perhaps this was responsive to the recommendation of its Claims Manager who urged the Claims Committee, though indeed it was conscious of its 'good faith' obligation, to have nevertheless '* * * the courage of their convictions.' It may not be too cynical to observe that by this time it was apparent that a large proportion of the cost of exhibiting such courage might have to be paid by other than Investors, namely, one to whom it had promised coverage and good faith in providing the same.

g. It must be a realistic one when tested by the necessarily assumed expertise of the company.' This expertise must be applied, in a given case, to a consideration of All the factors bearing upon the advisability of a settlement for the protection of the insured. While the view of the carrier or its attorney as to liability is one important factor, a good faith evaluation requires more. It includes consideration of the anticipated range of a verdict, should it be adverse; the strengths and weaknesses of all of the evidence to be presented on either side so far as known; the history of [323 A.2d 504] the particular geographic area in cases of similar nature; and the relative appearance, persuasiveness, and likely appeal of the claimant, the insured, and the witnesses at trial. Garner v. Am. Mut. Liab. Ins. Co., 31 Cal.App.3d 843, 107 Cal.Rptr. 604, 607--608 (1973). In this connection we observe that no one associated with the McLaughlin case ever doubted that in the event of an adverse verdict, the damages awarded could greatly exceed the limits of coverage; and as to liability, the question is not whether the carrier, its attorney, or the insured considers a defendant liable but that the jury could be justified in finding from the evidence available and adduced. Cf. Board of Education v. Lumbermens Mut. Cas. Co., 293 F.Supp. 541, 547 (D.N.J.1968), aff'd 419 F.2d 837 (3rd Cir. 1969).

h. The appellant insurer would argue that, as a matter of law, it had no obligation to offer its policy limit in settlement without a firm, authorized and explicit demand within that figure on the part of McLaughlins' attorney. It points out that in each of the four major New Jersey cases 6 involving the question of the carrier's liability for an excess judgment, the claimant had formally offered to settle the action for a sum not exceeding the coverage of the insured. Since in the present instance no such demand was ever presented, the insurer maintains that no conflict between its interests and those of the insured ever emerged and, consequently, it cannot be held to have exercised less than good faith in not settling the claim for the face amount of the coverage.

i. We must here reiterate our observation in Bowers, supra, that '(g)ood faith is a broad concept.' And that where under the policy the insurer reserves full control of the settlement of claims against the insured, prohibiting him from effecting any compromise except at his own expense, that reservation--viewed in the light of the carrier's obligation to pay on behalf of the insured all sums up to the policy limit which he shall become obligated to pay--imposes upon the insurer the duty to exercise good faith in settling claims. We pointed out, as we had before (Radio Taxi, supra), that the purpose of this type of insurance is to protect the insured from liability within the limits of the contract, and that, therefore, the courts cannot allow the insurer to frustrate that purpose by a selfish decision as to settlement which exposes the insured to a judgment beyond the specific monetary protection which his premium has purchased.

j. Thus the relationship of the company to its insured regarding settlement is one of inherent fiduciary obligation.

k. When an opportunity for settlement approximates the limit of coverage, it may be tempting for the insurance company to gamble on the outcome of a trial, its exposure not being considerably affected by a verdict in excess of coverage. Recognizing that such temptations on the part of the carrier are directly in conflict with the interest of the insured in settling within the limits of coverage and thereby avoiding the prospect of excess judgment, this Court declared that where, as in the present case, any adverse verdict at trial is likely to exceed the policy limit, the boundaries of good faith become more compressed in favor of the insured, and the carrier can justly serve its interests and those of its insured only by treating the claim as if it alone might be liable for any verdict which may be recovered. Bowers, supra; Board of Education, supra.

l. Despite the fact that the holdings in Bowers and the other main New Jersey cases cited involved firm claimant offers, it would be unrealistic to believe that such an offer is a prerequisite for finding the insurer to have acted other than in good faith. 

m. The better view is that the insurer has an affirmative duty to explore settlement possibilities. At most, the absence of a formal request to settle within the policy is merely one factor to be considered in light of the surrounding circumstances, on the issue of good faith.

n.  The proposition that an insurer cannot be found liable for an excess judgment except where a firm and binding offer has been made and refused, was rejected by a federal court in Fidelity & Cas. Co. v. Robb, 267 F.2d 473, 475--476 (5th Cir. 1959).

o. Yet however much the carrier considers the interests of its insured in pondering the decision as to settlement, the moment it decides not to settle, it in effect, however reasonably, sacrifices the interests of the insured in order to promote its own. It is always to the benefit of the insured to settle and thereby avoid the danger of an excess verdict. Since an insurer serves only its own interests by declining to compromise within the insurance coverage, a decision not to settle is perforce a selfish one. In attempting to save some of its own money on the policy, the company necessarily and automatically exposes the insured to the risk of an excess judgment. This is particularly significant when any settlement opportunity approximates the policy limit. If the insurer, having chosen to go to trial wins the litigation it pays nothing except expenses; should it be unsuccessful where the carrier chooses not to offer the pay in settlement, since any excess is placed upon the shoulders of the only true loser, the insured. alone profits from the opposite result of to escape liability for excess unless its decision to go to trial is marred by dishonesty, bad faith or negligence creates an anomalous situation for insureds. Where a settlement opportunity exists, the more faultless the client seems to have been the more feasibly he may be subjected by the company to a trial of the case and all the dangers it entails. In the case of an obviously blameworthy client, the carrier would normally take advantage of a settlement opportunity within policy limits since any other disposition would be unduly optimistic. The least blameworthy insured, however, may more readily be delivered to face the risk of excess judgment, since a refusal to compromise a case thought to be a 'no liability' case would not be regarded as unreasonable. Thus, in those cases where a compromise may be effected within policy limits the more innocent an insured appears to be, the worse position he is in and the more he is exposed to loss.

p. Additionally, even the rule requiring the carrier to form its judgment as though it alone were liable for the entire risk may be polluted by institutional considerations, which ignore the interests of the specific insured involved.

q. In view of such expectation an insurer should not be permitted to further its own interests by rejecting opportunities to settle within the policy limits unless it is also willing to absorb losses which may result from its failure to settle.

III. Radio Taxi Services, Inc. v Lincoln Mutual Insurance, 31 NJ 299 (1959)

A. Taxi cab and Ms. Myers collide. Myers sues Taxi Service. Lincoln has a $5000 policy. Carrier defends, jury verdict $13,500

B. Cause of action:

a. Failure to exercise due care in investigating the accident- rejected by court

b. Breach of an obligation to settle the claim within the policy limits.

C. Working premises:

a. In considering cases such as this, and even though the fact does not affect the insurer's duty, it is not amiss to have in mind that the insured has purchased a specified amount of coverage for an agreed premium and that more substantial monetary limits were available for relatively smaller additional premiums.

b. The company, by the contract, reserved the right to control the settlement of claims. Such right is a necessary incident of the operation of its business. Because the insured is prohibited from interfering with this right, however, manifestly its exercise must be accompanied by considerations of good faith. A decision not to settle must be an honest one. It must result from a weighing of probabilities in a fair manner. To be a good faith decision, it must be an honest and intelligent one in the light of the company's expertise in the field. Where reasonable and probable cause appears for rejecting a settlement offer and for defending the damage action, the good faith of the insurer will be vindicated.

c. The administration of the good faith test is not easy for either party to the insurance contract. Many elements, both objective and subjective, enter into the fashioning of an honest decision to proceed to trial. 

i. Considerations of experience, expertise and judgment are particularly important and significant. 

ii. The problem of proof of bad faith is not an inconsequential one for the insured. But in these days of liberal pretrial discovery, the burden has been considerably lightened. 

iii. On the other hand, from a practical standpoint if a mere mistake of honest judgment (based upon a post-verdict appraisal) were said to create a jury question, the obvious danger cannot be ignored that a jury in the policy suit in order to impose liability upon the carrier for the excess, would require little more proof than the fact of rejection of an offer to settle within the policy limit, and a verdict at the trial in excess thereof. This troublesome problem has led to a proposal for the adoption of a rule 

d. Look at facts of case

i. How the loss occurred (auto accident)

ii. Contributory negligence of plaintiff

iii. Statements of witnesses

iv. Out of pocket expenses

v. Injuries

vi. Proximate cause of injuries

e. Gather information

i. Attorney handling case

ii. Claims handler

iii. Claims supervisor

iv. Claims committee

v. Outside counsel specializing in area

D. Mere failure to settle within the policy limit when there was an opportunity to do so before or during trial is not evidence of bad faith. The fact that the policy limit was exceeded by the verdict, in the light of hindsight may indicate a mistake of judgment. But such a mistake when resulting from a decision made with good faith regard for its own and the insured's interests does not confer a cause of action on the insured for the excess.

E. Issue of Bad Faith claims handling is an issue for a fact finder, not an issue of law for a judge. That fact finder is either a Judge or a Jury.

IV.WOOD V NJ MANUFACTURERS INSURANCE, (2010)

A. Facts:

a. Woods a letter carrier was chased by “Max”, a dog owned by Cruso, NJM insured. Max jumped up on Woods and she fell by the fence. Not a dog “bite” case

b. Woods claimed significant back injuries and subsequently had lumbar spinal surgery

c. Workers Comp. Lien $280,281.17 ($79,612.31 meds)

d. NJM’s policy for Caruso was $500,000

e. Significant dispute of causation of injuries

f. Arb. $600,000, net to Caruso of $540,000

B. Evaluation at NJM

a. Defense attorney assigned by NJM- recommended policy limit authority

b. NJM claims adjuster- verdict in range of NJM policy

c. NJM internal “Major Claims Committee”-optimistic about defense and containing case below policy limit-authorized $300,000

i. Wood had be untruthful in rog answers and at dep

ii. Prior neck injuries

iii. Contrary medical documentation showing that Wood had previously treated for neck injuries

iv. WC doctor reversed his opinion on caual linkage between dog attack and cervical condition

v. The association (condo association) knew of this dogs propensity for attacking people and took no action making them more liable than owner.

d. $300,000 offered and rejected by pa. Wood offered to settle for policy limit and sent a “Rova Farms” letter.

e. Caruso’s personal attorney sent NJM a letter demanding that the carrier negotiate in good faith and use its best efforts to settle the claim within $500,000 limit.

f. Day of trial, demand dropped to $450,000, no offer from NJM

g. During trial several adverse rulings against Caruso

h. Jury awarded $2,422,000 ( $1,408,320.33 for Caruso)

i. Wood took assignment from Caruso to go after NJM

j. Same trial judge granted summary judgment to Wood finding NJM was “cavalier” in its handling, who made a take it or leave-it offer and that NJM gambled on the trial contrary to the interests of its insured.

C. Decision:

a.     In analyzing the insurer's duty to its insured in Radio Taxi, the Supreme Court acknowledged that the basic purpose of a policy of liability insurance is "to protect the insured from liability within the limits of the coverage." Id. at 304. The Court further acknowledged that an insurer should not "frustrate that purpose by a selfish decision as to settlement which exposes the insured to and results in a judgment beyond the specific monetary protection which his premium has purchased."

b. The insurer's decision not to settle must be an honest one. It must result from a weighing of probabilities in a fair manner. To be a good faith decision, it must be an honest and intelligent one in the light of the company's expertise in the field. Where reasonable and probable cause appears for rejecting a settlement offer and for defending the damage action the good faith of the insurer will be vindicated.

c. Instead, the insurer's obligation to bear the excess amount is to be based upon a fact-specific assessment of the reasonableness and good faith of the insurer's conduct in dealing with offers of settlement. In that context, the Court recognized that evaluating the value of a litigated claim for settlement purposes is often an imprecise and difficult task: 

i. The law does not expect an insurer to be gifted with powers of divination or of accurate prophecy. The requirement is due care in investigation and good faith in dealing with offers of settlement. The ultimate question is not whether a verdict in excess of the policy limits should have been anticipated but whether the insurer lacked good faith in deciding not to meet the settlement demand.

d. Mere failure to settle within the policy limit when there was an opportunity to do so before or during trial is not evidence of bad faith. The fact that the policy limit was exceeded by the verdict, in the light of hindsight may indicate a mistake of judgment. But such a mistake when resulting from a decision made with good faith regard for its own and the insured's interests does not confer a cause of action on the insured for the excess.

e. "'[a] decision not to settle must be a thoroughly honest, intelligent and objective one. It must be a realistic one when tested by the necessarily assumed expertise of the company.

f. [t]his expertise must be applied, in a given case, to a consideration of all the factors bearing upon the advisability of a settlement for the protection of the insured. While the view of the carrier or its attorney as to liability is one important factor, a good faith evaluation requires more. It includes consideration of the anticipated range of a verdict, should it be adverse; the strengths and weaknesses of all of the evidence to be presented on either side so far as known; the history of the particular geographic area in cases of similar nature; and the relative appearance, 

persuasiveness, and likely appeal of the claimant, the insured and 

the witnesses at trial.

g. The insurer's obligation is not a passive one, , the insurer "has a positive fiduciary duty to take the initiative and attempt to negotiate a settlement within the policy coverage.". Even so, the Court specified that an insurer will not be held liable under these bad faith principles unless its exercise of judgment is found to be "actually dishonest, unreasonably optimistic or otherwise in bad faith, or infected with negligence such as to impede the reaching, or having the capacity to reach, a 'good faith' decision.

h. Hindsight, after all, is always perfect. Instead, the bad faith examination must employ the multi-faceted analysis described by the Supreme Court in Rova Farms, including the consideration of such factors as the range of anticipated verdicts, the strengths and weaknesses of the expected proofs, the patterns of prior verdicts in similar cases, and the relative credibility and personal appeal of the parties and witnesses.

D. Primary insurer owes same duty of good faith and fair dealing to an excess insurer, as if the excess insurer stood in the shoes of the insured.

Jared Elliott Stolz is an attorney in New Jersey, focusing on insurance law and litigation.

Jared Elliott Stolz is an attorney in New Jersey, focusing on insurance law and litigation.

News about Jared Stolz, Esq.

Jared Stolz is an attorney in New Jersey, focusing on insurance law and litigation.

Tere Villamil and Villa Componetes, Inc. case

Additional Information

The dispute centers on whether the flood damage exclusion language in the policy supports the denial of claim for damage caused as a result of a storm.


Insurance lawyer Jared Elliott Stolz has published a case comment on the Teru Villamil matter, which will be available in full length on his Blog.


Mr. Stolz first outlines the basic facts and issues. The case centers on whether the flood damage exclusion language in the policy supports the denial of claim for damage caused as a result of a storm. The Plaintiff operated a beauty salon named La Jolie in Princeton, New Jersey. “[O]n July 30, 2016, a severe thunderstorm, estimated to constitute a two hundred to five hundred year storm, resulted in approximately five to seven inches of rain within a two-hour period. As a consequence, water pooled at the bottom of the stairwell which is next to La Jolie’s lower floor entrance, and subsequently, the water leaked through the building’s glass door entrance, causing the building to sustain damages.” (internal citation omitted). 


The policy at issue provided coverage for sewer and drain back up, but specifically excluded flood related damage as follows: “We will not pay for water or other materials that back up from any sewer or drain when it is caused by any flood. This applies regardless of the proximity of the flood to Covered Property. Flood includes the accumulation of surface water, waves, tides, tidal waves, overflow of steams or other bodies of water, or their spray, all whether driven by wind or not that enters the sewer drain system.”


Insurer’s denial of claim was based on the conclusion that the damage was a result of flood water entering the lower level due to historically heavy rain. The plaintiff asserted that “water accumulated on the building’s roof and, in turn, entered the building’s drain system. The high volume of water which entered the building’s drain system created an ‘over-pressurization’ and, as a consequence, that water ‘ejected through the Salon’s numerous sinks and through the [Salon’s] toilets,’ and drains. According to Plaintiffs, that water also, as opposed to the flood water from the street, accumulated at the bottom of the salon’s stairwell, entered the premises, and caused the damage.” (internal citations omitted). 


The Court noted that the insured bears the burden of proving that the claimed harm falls within the scope of the policy. The Court also noted that the policy in question only covered water damage if such loss resulted solely from water that backs up from a sewer or drain. Although the Plaintiff presented expert opinion evidence, the Court concluded that “the expert opinions do not refute that the water which accumulated at the bottom of the stairwell, at a minimum, included surface water which subsequently entered the premises through the salon’s glass door.” Therefore, because the Plaintiff could not prove that the water damage was caused solely by sewer or drain backup, Defendant’s motion for summary judgment was granted.


The case is Tere Villamil and Villa Componetes, Inc v. Sentinel Insurance Co., Civil Action No. 17-1566 (FLW) (D.N.J. Dec. 21, 2018). 

  

About J. Elliot Stolz, Esq.


Jared Stolz is an attorney in New Jersey, focusing on insurance law and litigation. Jared E. Stolz is the managing partner of Stolz and Associates.


Jared Elliot Stolz received his undergraduate education at Drew University in Madison, New Jersey and graduated with honors from Seton Hall University School of Law. Jared E. Stolz has been the managing partner of Stolz and Associates since 2004, specializing in providing individual and customized attention to insurance carriers needs on substantial coverage disputes. Mr. Stolz has nearly two decades of experience in the insurance industry and strives to offer the clients a combination of tried and true legal analysis along with tactic, brought to it by today’s technology, with a focused eye on expenses. Mr. Stolz has represented prominent clients in numerous noteworthy cases with published opinions and has published and given seminar on insurance law topics.


Contact


Lilly Shebey, Administrative Assistant
Stolz & Associates, LLC
203 Main Street, Ste. 395
Flemington, NJ  08822
Tel. (908) 371-1350
Fax (908) 271-6500
Email: info@stolzlaw.com
Website: http://www.stolzlaw.com


References


Bio on law firm website: http://www.stolzlaw.com/about-us/about-the-founder/

LinkedIn Profile: https://www.linkedin.com/in/jared-stolz-18088012

Blog: https://jaredstolz.law.blog/

New: https://hype.news/jared-stolz-esq

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https://www.youtube.com/channel/UC4JMr8Lydcx0FqRit17cBWg
https://www.youtube.com/watch?v=HOF3bolshC8
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