Almost forty years ago, the Supreme Court of New Jersey recognized a cause of action for Bad Faith in Settlement by Liability Insurers in Rova Farms Resort, Inc. v. Insurance Co. of America, 65 N.J. 474, 323 A.2d 495 (1974).
Two days ago as this post is written, the Supreme Court of New Jersey unanimously held that the cause of action is in Contract and carries with it the right to a Trial by Jury:
We conclude that a Rova Farms claim that an insurer in bad faith failed to settle a claim within the policy limits, thereby in fact exposing its insured to liability for any excess, represents a traditional contract claim that the insurer breached the implied covenant of good faith and fair dealing and to which the right to trial by jury attaches.
Download Wood v. New Jersey Manufacturers Insurance Co. (New Jersey Opinion Filed June 14, 2011. CLERKS SYLLABUS.SYNOPSIS OF COURTS OPINION) PUBLIC ACCESS, also published as 2011 WL 2314954 *1 (N.J. June 14, 2011).
The general acceptance of the Rova Farms precedent in this country, not just in New Jersey, will likely bring general acceptance of the holding in Wood v. New Jersey Manufacturers Insurance too.
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