Opinion ID: 2559133
Heading Depth: 1
Heading Rank: 3

Heading: The Declaratory Judgment Action: Wood v. New Jersey Manufacturers Insurance Co.

Text: Because there was a deficiency between the judgment returned against defendant's insureds Caruso and Critelli and the sum in fact paid on their behalf by defendant, plaintiff negotiated and entered into an assignment of Caruso's Rova Farms claim against defendant; in exchange, plaintiff agreed not to proceed personally against [Caruso] for the verdict in excess of [the] policy limits[.] [4] Armed with that assignment, and thereby asserting that she stood in the shoes of defendant's insured Caruso, plaintiff commenced a declaratory judgment action in the Law Division against defendantin respect of which plaintiff also demanded a jury trial [5] alleging that defendant in bad faith had failed to settle plaintiff's underlying claim within the policy limits, thereby wrongfully exposing defendant's insuredsof whom she was an assigneeto any excess. In that declaratory judgment action, plaintiff therefore sought to hold defendant liable for the entire judgment entered against defendant's insureds, without reference to the policy limits, plus post-judgment interest, counsel fees, statutory penalties (if applicable), and other relief. The declaratory judgment action was assigned to the same judge who had presided over the underlying personal injury jury trial that resulted in the verdict in plaintiff's favor. Before discovery had been completed, plaintiff moved for summary judgment. Defendant opposed that application on several grounds: it asserted that summary judgment was premature as discovery had not yet been completed; that plaintiff had failed to provide discovery as demanded; [6] and that the discovery period should be extended. [7] All of defendant's motions were denied, and plaintiff's motion for summary judgment was granted. In respect of the latter, the trial court explained: Under Rova Farms, an insurer has an affirmative duty to explore settlement possibilities. It has a positive fiduciary duty to take the initiative and attempt to negotiate a settlement within the policy coverage. It must do this in good faith which ... requires it to consider the interests of the insured as well as its own. In the instant case, the Court has considered the affidavits and exhibits submitted by [defendant]. Not once in any of those documents could the Court find any reference to [defendant]'s duty to protect its insured. All the certifications which the Court reviewedreviews in the most favorable light to [defendant] is that the insurer took the position that plaintiff's claim was questionable, that her experts were unreliable, and never deviated from that position, despite indications from numerous sources[,] which included the attorney handling the case for [defendant], the adjustor, the arbitrator, and [a prior judge]. There is no indication that [defendant] took any initiative to settle the case after the first and only offer. Commenting on the strength and merit of defendant's opposition to plaintiff's motion for summary judgment, the trial court emphasized that [a] proper analysis of this claim which kept in mind the interest of the insured would require something more specific than a generic statement that this claim was submitted to a committee who approved [the $300,000 settlement offer]. The trial court noted that defendant proceeded to trial without an expert witness as to economic loss[,] and that [t]here was no evidence adduced at trial that plaintiff's injuries were preexisting or that she had lied about them. Characterizing defendant's actions as cavalier, the trial court described defendant's settlement posture as a take-it-or-leave-it offer based on assumptions [defendant] never attempted to prove at trial. The trial court concluded that [t]he record reflects that there were numerous attempts to settle the case within the policy limits[,] which were rejected. In the final analysis, [defendant] gambled on a trial contrary to the interests of its insured. Invoking Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520, 540, 666 A. 2d 146 (1995), and finding that there are no issues of any material fact[,] the trial court entered summary judgment in plaintiff's favor and against defendant in the amount of $965,838.53, representing the excess of the judgment plaintiff had secured above the $500,000 policy limits previously paid by defendant. [8]