On Halloween, the Third Circuit Court of Appeals affirmed a Rule 12(b)(6) dismissal of claims including bad faith claims in Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379 (3d Cir. October 31, 2016).
The Third Circuit also took jurisdiction to decide on appeal the District Court's grant of summary judgment to the insurance carrier on the last remaining count of the policyholder's complaint in this case.
The policyholder claimed that among other things the carrier breached its duty of good faith and fair dealing under New Jersey law. The appellate court quoted her allegations in her lawyers' own words:
Ensey alleges that GEICO breached the implied covenant of good faith and fair dealing in four ways: (i) when it “failed to offer insureds ... the option of higher available UM/UIM coverage limits when insureds increased their BIL coverage limits,” (ii) when it used “unlicensed agents to sell such increased BIL coverage limits so the agents would be unaware of their obligation to so advise insureds,” (iii) when it failed “to provide CSFs [coverage selection forms] and Buyer's guides after insureds purchased increased liability limits,” and (iv) when it denied “UM/UIM claims thereafter based on the reduced limits purportedly ‘chosen by the insureds.’ ”
Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379, at *3 (3d Cir. October 31, 2016).
The policyholder apparently argued her insurance bad faith claim in terms of New Jersey's law of the covenant of good faith and fair dealing which is implied in all contracts. At any rate, that is how the Third Circuit addressed her fact allegations about UM/UIM coverage options which, it said, were legally insufficient to support a claim of bad faith here.
She argued that the implied covenant is breached when the defendant either acted in bad faith or demonstrated some other kind of inequitable conduct in the course of performing a contractual obligation. The Third Circuit agreed with this statement of New Jersey law, but held that the policyholder's fact allegations were legally insufficient to meet that legal standard. Accordingly, the Third Circuit affirmed the dismissal of her bad faith claims against the carrier in this case. Ensey v. Government Emp's Ins. Co., No. 15-1933, 2016 WL 6407379, at *3-*4 (3d Cir. October 31, 2016).
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