UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW JERSEY 

COURTNEY FUSCELLARO, : Hon. Joseph H. Rodriguez

:

 Plaintiff, : Civil Action No. 11-723

:

: 

: OPINION 

 v. : 

:

COMBINED INSURANCE GROUP, LTD., : 

PERSONAL SERVICE INSURANCE :

COMPANY, INC., and :

AMERICAN INDEPENDENT :

INSURANCE COMPANY, INC. :

:

 Defendants. :

This matter comes before the Court on a Motion to Dismiss by Defendants

Personal Service Insurance Company and American Independent Insurance Company

pursuant to Fed. R. Civ. P. 12(b)(2) and Fed. R. Civ. P. 12(b)(6). Subsequent to

Defendants’ Motion, Plaintiff voluntarily dismissed this action as to Defendant

American Independent Insurance Company, Inc. Therefore, the Court addresses

Defendants’ Motion as to Personal Service Insurance Company. The Court has reviewed

the written submissions of the parties. For the reasons stated below, Defendants’ motion

will be GRANTED.

Background

This action arises out of an insurance claim that Plaintiff Courtney Fuscellaro

filed pursuant to an automobile insurance policy seeking coverage for damages

sustained in an automobile accident. Defendants Combined Insurance Group (“CIG”)

and Personal Service Insurance Company (“PSI”) denied Plaintiff’s claim alleging lack of

coverage. Based on Defendants’ denial of coverage, Plaintiff filed this Complaint alleging

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breach of contract, fraud, and bad faith. The facts as stated in Plaintiff’s Amended

Complaint are as follows. 

On or about November 22, 2010, Plaintiff purchased a 2006 BMW automobile

from Best Buy Motors, Inc. by way of a retail installment contract and security

agreement. (Am. Compl. at ¶ 7.) Best Buy Motors transferred the agreement to Westlake

Financial Services, which required proof of insurance with comprehensive coverage. (Id.

at ¶ 9.) Plaintiff then sought to update her existing insurance policy with Defendant CIG

to include her new vehicle. (Id. at ¶ 10.) CIG agreed to provide Plaintiff with coverage,

including full comprehensive and collision insurance, and, through Defendant PSI,

provided a declaration page confirming collision and comprehensive coverage effective

as of November 23, 2010. (Id. at ¶¶ 13, 14.) Relying on the coverage produced by CIG,

Plaintiff took delivery of the automobile. (Id. at ¶ 15.)

Shortly thereafter, on December 9, 2010, Plaintiff’s BMW was involved in a

collision and sustained serious damage. (Id. at ¶ 18.) The following day, Plaintiff

reported the accident to PSI and American Independent Insurance Company (“AIIC”).

(Am. Compl. at ¶ 19.) After reporting the accident, Plaintiff received numerous

declaration pages and letters, including some documents that were dated prior to the

date of the accident but post-marked after that date. (Id. at ¶ 20.) In a letter from a PSI

claims adjuster dated December 14, 2010, PSI informed Plaintiff that Plaintiff’s BMW

did not have “collision/comprehensive” coverage and that AIIC would not pay the claim.

(Am. Compl. at ¶23; Ex. “D.”) On December 16, 2010, the adjuster called and told

Plaintiff that there was never collision or comprehensive coverage on the vehicle. (Am.

Compl. at ¶25.) Plaintiff believed this to be a mistake, given that the information on the

declaration page indicated that she had coverage, and the adjuster advised Plaintiff to

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contact CIG. (Id. at ¶26.)

When Plaintiff contacted CIG, CIG informed her that the collision and

comprehensive coverage had been canceled because Plaintiff had not taken the car in for

a required photo inspection. (Id. at ¶ 27.) Plaintiff contended that at no time had anyone

from CIG informed her of the photo inspection requirement, to which CIG’s agent

responded, “too bad have your lawyer call us.” (Id. at ¶ 28.) Plaintiff then received

several letters from CIG. Plaintiff received two identical letters from an agent of CIG

dated December 15, 2010, in which the agent stated that he had been attempting to call

Plaintiff to remind her that her comprehensive/collision coverage had been cancelled

due to Plaintiff’s failure have the photo inspection completed. (Am. Compl. at ¶ 29; Ex.

“E.”) On or about December 15, 2010, Plaintiff also received another letter from CIG that

was identical to the December 15 letters, but dated November 16, 2010, which was th 1

prior to the date on which Plaintiff purchased the vehicle. (Am. Compl. at ¶ 30; Ex. “F.”)

Prior to the date of the accident, however, the only correspondence Plaintiff received

from the Defendants in any form was PSI’s delivery of insurance identification cards

representing the policy number listed on the declaration pages which PSI initially

provided to Plaintiff. (Am. Compl. at ¶¶ 16, 17.) 

Plaintiff also subsequently received correspondence from AIIC and PSI in the

form of three declaration pages sent between December 16 and December 23, 2010. (Id.

at ¶ 31.) Two of the three declaration pages, with effective dates of December 1, 2010,

and December 7, 2010, respectively, indicate no comprehensive or collision coverage.

(Am. Compl. ¶¶ 32, 33; Ex.’s “G,” “H.”) The third declaration page, also indicating an

 The date in the letter is printed as “11/16/2010.” (Ex. “F.”) 1

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effective date of December 7, 2010, indicates both comprehensive and collision

coverage. (Am. Compl. ¶34; Ex. “I.”)

Plaintiff filed an Amended Complaint in this matter on March 1, 2011, alleging

breach of contract (Count I), common law fraud (Count II), bad faith (Count III), and

consumer fraud (Count IV) against all Defendants. The Amended Complaint seeks

specific performance under the insurance policy and injunctive relief, as well as actual

and punitive damages. On March 31, 2011, Defendants PSI and AIIC filed the present

motion to dismiss for lack of jurisdiction as to AIIC pursuant to 12(b)(2) and failure to

state a claim pursuant to 12(b)(6) as to both Defendants. Plaintiff dismissed this action

as to AIIC on April 19, 2011, and filed a reply to Defendants’ motion on April 25, 2011.

As such, AIIC’s motion will be dismissed as moot. Remaining at issue is Defendants’

motion to dismiss Counts II, III, and IV of the Amended Complaint as to PSI pursuant

to 12(b)(6). To date, CIG has not made an appearance in this matter. The Court has

jurisdiction over this action pursuant to 28 U.S.C. § 1332.

Discussion

I. Standard of Review Under Rule 12(b)(6)

A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts,

taken as true, fail to state a claim. Fed. R. Civ. P. 12(b)(6). When deciding a motion to

dismiss pursuant to Rule 12(b)(6), ordinarily only the allegations in the complaint,

matters of public record, orders, and exhibits attached to the complaint, are taken into

consideration. See Chester County Intermediate Unit v. Pa. Blue Shield, 896 F.2d 808, 2

“Although a district court may not consider matters extraneous to the pleadings, 2

a document integral to or explicitly relied upon in the complaint may be considered

without converting the motion to dismiss into one for summary judgment.” U.S.

Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002) (internal quotation

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812 (3d Cir. 1990). It is not necessary for the plaintiff to plead evidence. Bogosian v.

Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). The question before the Court is not

whether the plaintiff will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144,

150 (2007). Instead, the Court simply asks whether the plaintiff has articulated “enough

facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007). 

“A claim has facial plausibility when the plaintiff pleads factual content that 3

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. - - - , 129 S. Ct. 1937, 1949 (2009)

(citing Twombly, 550 U.S. at 556). “Where there are well-pleaded factual allegations, a

court should assume their veracity and then determine whether they plausibly give rise

to an entitlement to relief.” Iqbal, 129 S. Ct. at 1950. 

The Court need not accept “‘unsupported conclusions and unwarranted

inferences,’” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citation omitted),

however, and “[l]egal conclusions made in the guise of factual allegations . . . are given

no presumption of truthfulness.” Wyeth v. Ranbaxy Labs., Ltd., 448 F. Supp. 2d 607,

609 (D.N.J. 2006) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Kanter

v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347,

351 (3d Cir. 2005) (“[A] court need not credit either ‘bald assertions’ or ‘legal

conclusions’ in a complaint when deciding a motion to dismiss.”)). Accord Iqbal, 129 S.

marks and citations omitted) (emphasis deleted).

This plausibility standard requires more than a mere possibility that unlawful

3

conduct has occurred. “When a complaint pleads facts that are ‘merely consistent with’

a defendant’s liability, it ‘stops short of the line between possibility and plausibility of

‘entitlement to relief.’’” Id. 

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Ct. at 1950 (finding that pleadings that are no more than conclusions are not entitled to

the assumption of truth).

Further, although “detailed factual allegations” are not necessary, “a plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels

and conclusions, and a formulaic recitation of a cause of action’s elements will not do.” 

Twombly, 550 U.S. at 555 (internal citations omitted). See also Iqbal, 129 S. Ct. at 1949 

(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.”). 

Thus, a motion to dismiss should be granted unless the plaintiff’s factual

allegations are “enough to raise a right to relief above the speculative level on the

assumption that all of the complaint’s allegations are true (even if doubtful in fact).” 

Twombly, 550 U.S. at 556 (internal citations omitted). “[W]here the well-pleaded facts

do not permit the court to infer more than the mere possibility of misconduct, the

complaint has alleged-but it has not ‘shown’-‘that the pleader is entitled to relief.’” 

Iqbal, 129 S. Ct. at 1950 (quoting Fed. R. Civ. P. 8(a)(2)). 

II. Analysis

Defendants argue that the Amended Complaint fails to plead fraud with

particularity as required by Fed. R. Civ. P. 9(b), and that Plaintiff fails to state claims for

bad faith and consumer fraud under New Jersey law. Defendants also argue that

Plaintiff fails to plead a cause of action for punitive damages. The Court addresses each

argument in turn.

A. Plaintiff’s Common Law Fraud Claim

In order to state a claim for fraud under New Jersey law, a plaintiff must allege

(1) a material misrepresentation of fact; (2) knowledge or belief by the defendant of its

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falsity; (3) intention that the other person rely on it; (4) reasonable reliance thereon by

the other person; and (5) resulting damage. Frederico v. Home Depot, 507 F.3d 188,

200 (3d Cir. 2007) (citing Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367-368

(N.J. 1997). Misrepresentation and reliance are the hallmarks of any fraud claim. Banco

Popular North America v. Gandi, 876 A.2d 253, 261 (N.J. 2005). Without reasonable

reliance on a material misrepresentation, an action in fraud must fail. Triffin v.

Automatic Data Processing, Inc., 926 A.2d 362, 369 (N.J. Super. Ct. App. Div. 2007).

A plaintiff alleging fraud “must state with particularity the circumstances

constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The facts alleged must “place the

defendant on notice of the ‘precise misconduct with which [it is] charged.’” Frederico,

507 F.3d at 200 (quoting Lum v. Bank of Am., 361 F.3d 217, 223-24 (3d Cir. 2004)). A

plaintiff can satisfy the requirements of Rule 9(b) by “pleading the ‘date, place or time’

of the fraud, or through ‘alternative means of injecting precision and some measure of

substantiation into their allegations of fraud.’” Lum, 361 F.3d at 224 (quoting Seville

Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984)). A

plaintiff must also “allege who made a representation to whom and the general content

of the misrepresentation.” Id. 

In the instant case, Plaintiff fails to plead fraud with facts sufficient to meet the

particularity requirements of Rule 9(b). In Count II of Plaintiff’s Amended Complaint,

Plaintiff states a conclusory allegation that the actions of “the Defendant” described in

the complaint constitute fraud and then proceeds to list the elements of fraud. (Am.

Compl. at ¶ 41.) No where in the Amended Complaint does Plaintiff allege that PSI made

a false representation, when such representation may have been made, the content of

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any such representation, or any other facts that would place PSI on notice of the “precise

misconduct with which [it is] charged.” Lum, 361 F.3d at 224.

In addition to the deficiencies of Plaintiff’s pleadings under Rule 9(b), the

Amended Complaint’s allegations against PSI are not sufficient to make out a prima

facie case of fraud under New Jersey law and fail to satisfy the standards of Rule

12(b)(6). Plaintiff alleges, with respect to PSI, only that: (1) PSI sent her a letter stating

that she had no collision or comprehensive coverage on her vehicle; (2) PSI called

Plaintiff and told her there was “never” collision and comprehensive on the vehicle; and

(3) Plaintiff received three different declaration pages from AIIC and PSI in the days

following the accident with varying dates and indications of coverage. When PSI told

Plaintiff that she “never” had collision and comprehensive coverage, Plaintiff explained

that “it must be a mistake,” and PSI advised Plaintiff to contact CIG. (Compl. at ¶ 26.)

Plaintiff does not allege that PSI knowingly made any false representations and, notably,

does not allege that she relied on any such representations. In short, “the well-pleaded

facts do not permit the [C]ourt to infer more than the mere possibility” of fraud on the

part of PSI. Iqbal, 129 S. Ct. at 1950. For these reasons, Count II of Plaintiff’s Amended

Complaint will be dismissed as to PSI.

B. Plaintiff’s Bad Faith Claim

The New Jersey Supreme Court recognized a cause of action and established the

governing standard for an insurance company’s bad faith refusal to pay a claim in

Pickett v. Lloyd's, 621 A.2d 445 (N.J.1993). Under the Pickett standard, a plaintiff must

satisfy two elements in order to state a claim for bad faith in the insurance benefits

context. The plaintiff must show that (1) the insurer lacked a "fairly debatable" reason

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for its refusal to pay a claim, and (2) the insurer knew or recklessly disregarded the lack

of a reasonable basis for denying the claim. Id. at 454. In order to meet the “fairly

debatable” standard, a plaintiff must establish as a matter of law a right to summary

judgment on the substantive claim; a plaintiff who cannot do so would not be entitled to

assert a claim for bad faith. Id. In other words, if there are material issues of disputed

fact as to the underlying benefits claim, an insured cannot maintain a cause of action for

bad faith. Id.; Tarsio v. Provident Ins. Co., 108 F. Supp. 2d 397, 400-01 (D.N.J. 2000);

Polizzi Meats v. Aetna Life & Cas. Co., 931 F. Supp. 328, 335 (D.N.J. 1996).

Plaintiff’s Amended Complaint neither shows nor adequately alleges that PSI

lacked a fairly debatable reason for refusing payment on Plaintiff’s claim. Plaintiff

alleges that PSI’s adjuster informed Plaintiff that AIIC would not make payment because

Plaintiff’s vehicle did not have collision/comprehensive coverage. (Am. Compl. at ¶ 23.)

PSI referred Plaintiff to CIG, which informed Plaintiff that full comprehensive and

collision coverage had been cancelled because Plaintiff had not obtained the required

photo inspection of the vehicle. Plaintiff does not allege that the photo inspection was

not in fact required; rather, Plaintiff avers that CIG did not inform her of the

requirement prior to the accident.4

At base, Plaintiff alleges a contract dispute as to whether or not collision and

comprehensive coverage remained a part of her policy given CIG’s failure to inform her

of the inspection required to maintain coverage. PSI’s reason for refusing to pay–lack of

 Defendant points to provisions of New Jersey law which require vehicle 4

inspections in connection with the issuance of insurance policies providing coverage for

physical damage, including provisions for the suspension of coverage if such inspections

are not made. (Def.’s Br. at 15; N.J.S.A. 17:33B-33 et seq; N.J.A.C. 11:3-36.1 et seq.). 

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coverage, as alleged in the Amended Complaint–presents disputed issues of material

fact as to Plaintiff’s underlying claim. When Plaintiff disputed PSI’s assertion that she

did not have full coverage, PSI advised Plaintiff to consult CIG. Plaintiff has therefore

failed to show that PSI either lacked a fairly debatable reason for denying Plaintiff’s

claim, or that PSI knowingly or recklessly disregarded the lack of a reasonable basis for

denying the claim. Picket, 621 A.2d at 454. Plaintiff’s assertion in ¶ 45 of the Amended

Complaint that “[t]he denial and withholding of benefits for the reasons set forth above

are not even debatably valid” is no more than a legal conclusion made in the guise of a

factual allegation, and cannot support a claim for relief for bad faith. Accordingly, Count

III of the Amended Complaint will be dismissed as to PSI. 

C. Plaintiff’s Claim Under the New Jersey Consumer Fraud Act

New Jersey courts have consistently held that the payment of insurance benefits

is not subject to the Consumer Fraud Act (“CFA”), N.J.S.A. § 56:8-2. Van Holt v. Liberty

Mut. Fire Ins. Co., 163 F.3d 161, 168 (3d Cir. 1998); See Kuhnel v. CNA Ins. Companies,

731 A.2d 564, 572 (N.J. Super. Ct. App. Div. 1999) certif. denied, 746 A.2d 458, cert.

denied, 531 U.S. 819 (2000); Pierzga v. Ohio Cas. Group of Ins. Companies, 504 A.2d

1200, 1204 (N.J. Super. App. Div. 1986). A claim for failure to pay benefits is a claim for

breach of contract, and the breach of an enforceable contract does not constitute a

violation of the CFA. Daloisio v. Liberty Mut. Fire Ins. Co., 754 F. Supp. 2d 707, 710

(D.N.J. 2010) (citing Richardson v. Standard Guar. Ins. Co., 853 A.2d 955, 968 (N.J.

Super. Ct. App. Div. 2004)). “The mere denial of insurance benefits to which the

plaintiffs believed they were entitled does not comprise an unconscionable commercial 

practice.” Van Holt, 163 F.3d at 168.

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Plaintiff’s claims arise out of Defendants denial of insurance benefits and amount

to allegations of breach of contract. As such, Plaintiff’s claim against PSI is not covered

by the CFA and is accordingly dismissed.

D. Plaintiff’s Demand for Punitive Damages

In New Jersey, breaches of contract do not give rise to punitive damages unless

the defendant also violates a separate and independent duty beyond the contract.

Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1194 (3d Cir. 1993). See also, Sandler v.

Lawn-A-Mat Chemical & Equipment Corp., 358 A.2d 805, 812 (N.J. Super. App. Div.

1976) (“Where the essence of a cause of action is limited to a breach of such a contract,

punitive damages are not appropriate regardless of the nature of the conduct

constituting the breach”); Pickett v. Lloyd’s, 621 A.2d at 455 (“absent egregious

circumstances, no right to recover for . . . punitive damages exists for an insurer's

allegedly wrongful refusal to pay a first-party claim”). 

Due to the dismissal of Plaintiff’s claims for fraud and bad faith, the only

remaining claim against PSI is for breach of contract. Accordingly, Plaintiff is not

entitled to punitive damages.

Conclusion

For the reasons stated above, AIIC’s motion will be dismissed as moot, and PSI’s

motion will be granted as to Counts II, III, and IV. The appropriate orders shall issue.

Dated: September 29, 2011

__/s/ Joseph H. Rodriguez______

Hon. Joseph H. Rodriguez,

United States District Judge

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