NJ Department of Banking and Insurance Advises that Hurricane Deductibles are Not to Be Applied

The New Jersey Department of Banking and Insurance (“NJDOBI”) is advising insurance companies that they are not to apply the Hurricane deductible contained in their homeowners’ policies to claims made in connection with damage arising from Irene.  Generally, under homeowner policies, the deductible for damage caused by a hurricane is greater than the normal deductible contained in the policy.  NJDOBI bases this determination on the fact that Irene did not have sustained hurricane force winds (74 mph or greater) when the storm’s winds were recorded in New Jersey.  Accordingly, under applicable administrative requirements, Hurricane deductibles should not be applied for property damage claims made under homeowners’ insurance policies.

You can read NJDOBI’s Bulletin here…http://www.state.nj.us/dobi/bulletins/blt11_16.pdf

3rd Circuit Court of Appeals Upholds Conviction of Sen. Wayne Bryant

The Third Circuit Court of Appeals has upheld the criminal conviction of Senator Wayne Bryant for corruption.  As a result of his conviction, Bryant was sentenced to four years in prison.

As reported in the CourierPostOnline.com:

PHILADELPHIA — A federal appeals court on Thursday upheld the conviction of Wayne Bryant, a former South Jersey legislator now serving a four-year prison term for corruption.

The unanimous ruling also said Bryant, a former state senator from Lawnside, and co-defendant R. Michael Gallagher of Haddonfield remain responsible for joint restitution of $113,000. The unanimous ruling also upheld Gallagher’s conviction.

The two men were convicted of fraud and other charges in November 2008. A jury found Bryant had taken a low-show, pension-padding job at a Stratford medical school, then steered state aid to the institution.

Bryant, once among the most powerful members of Camden County’s Democratic machine, headed the Senate’s Appropriations Committee during most of the time the scheme took place.

Prosecutors said he directed some $10 million in aid over three years to the School of Osteopathic Medicine of the University of Medicine and Dentistry of New Jersey.

Attorneys for the two men expressed disappointment at the ruling.

“Nobody’s happy about it,” said Carl Poplar, a Cherry Hill attorney representing Bryant.

But a lawyer for Gallagher, Jeremy Frey, saw one positive in the 44-page decision. “We are heartened by the (appellate) court’s disapproval of certain of the government’s grand-jury practices,” said Frey.

The defendants’ appeal had argued that prosecutors improperly placed notices on subpoenas to grand-jury witnesses that acted as gag orders. The notices told grand-jury witnesses that “disclosure of the nature and existence of this subpoena could obstruct and impede a criminal investigation (and the U.S. Attorney) requests that you do not disclose the existence of this subpoena.”

Defense attorneys argued that interfered with their access to witnesses during the pretrial period.

The three-judge panel disagreed, saying prosecutors had “requested, but never required witnesses not to disclose the subpoena or the grand jury proceedings.” It noted no witnesses were presented “who claim they would have spoken to the defense but were deterred (by) the government’s nondisclosure requests.”

But the appellate judges also said the nondisclosure notices were “not a good policy and (we) discourage that practice in the future.”

A representative for the U.S. Attorney’s Office for New Jersey could not be reached for comment.

Gallagher has completed his 18-month prison sentence, but Bryant’s term extends until February 2013.

Bryant awaits another trial on charges that he took $192,000 in phony legal fees to help advance controversial redevelopment plans in Camden, Pennsauken and North Jersey’s Meadowlands between 2004 and 2006. A Bergen County attorney, Eric Wisler, is accused of paying that money on behalf of a redeveloper.

Prosecutors have said they want jurors in the upcoming trial to hear about Bryant’s crimes at the Stratford medical school, contending his “prior bad conduct is relevant to show his corrupt and knowing intent.”

Bryant and Wisler have denied wrongdoing. The trial is expected to start in December.

Defense Verdict for Doctor Who Amputated Man’s Penis

A Kentucky jury rendered a verdict in favor of a doctor who amputated a part of the penis of a man without first obtaining his consent.  Originally, the plaintiff was to undergo a circumcision.  However, during the procedure, plaintiff’s doctor claimed to have discovered cancer.  Due to the nature of the cancer found, the doctor felt he had no option but to perform the amputation immediately.  Plaintiff filed suit against the doctor.

As reported at the courier-journal.com:

SHELBYVILLE, Ky. — A jury has rejected a truck driver’s claim for $16 million in damages after a doctor amputated part of his penis without his knowledge.

The six-man, six-woman jury in Shelby County Circuit Court said that Phillip Seaton, 64, of Waddy, should get no money in the lawsuit.

The jury was given the case just before lunchtime Wednesday,and returned with its verdict about 1:45 p.m..

In final testimony during the third day of the civil trial, a Kentucky urologist said if Dr. John Patterson had taken the time to consult with Phillip and Deborah Seaton about his surprising discovery of lethal penile cancer, the cancer would have had more time to spread.

But a doctor who testified on behalf of the Seatons on Tuesday said the situation was not an emergency and removing a man’s penis is the “most psychologically debilitating” procedure.

Phillip Seaton testified on the first day that he wanted to flee the hospital after learning the news.

11 Year Old Sinks Hockey Shot Worth $50k, Will the Insurance Company Pay?

During an intermission of a hockey game, Nate Smith, an 11 year old from Minnesota, shot a 3 inch hockey puck 89 feet through a 3 1/2 inch opening in front of a goal.  The prize for sinking this shot was $50,000.  The only problem, Nick Smith, Nate’s twin brother was randomly selected to take the shot.  He did not, and the rest has created an insurance coverage issue.  As reported by Eric Gilkey of propertycasualty360.com:

Hockey specialty events insurers beware: there is an 11-year-old ringer ready to cash in on the promotional policy you underwrote—and he may have a score to settle.

According to reports, last Thursday during a charity ice hockey game in the small town of Faribault, Minn., Nick Smith’s name was randomly drawn to compete for a $50,000 prize during an intermission.

The contest, which was underwritten by the company Odds On Promotions, is described as the company’s “most popular promotion.” The company says it consists of “randomly selecting a contestant from the crowd to take his or her best shot from the red line (minimum 87 feet). A template will require a near-perfect shot, yet a great prize will reward the future NHL star!”

When the shot was taken from 89 feet away, the three-inch-wide puck slipped right through the three-and-a-half-inch-wide opening in front of the goal.

The only problem? Nick’s twin brother Nate was the one who took the improbable shot. (See video above.)

Reports note that while Nick was outside the arena, his name was selected. Rather than waste the opportunity, Nick’s father reportedly sent down his other twin son, Nate. Nate lined up a perfect shot and the puck went in. However, the boys’ father came clean to promoters the next day, citing, “honesty as the best policy.”

According to Odds On Promotion’s web site, premiums for such a contest start at $500, although it’s unknown at this point how much the planning organization, the Faribault Hockey Association (FHA), paid for the policy.

When asked about the exact wording of the policy, Vance Vinar, Jr., the fundraising chair for FHA, seemed to indicate that policy language would preclude payment, although he would not state with certainty.

“What if the policy said in black and white that the person whose name was drawn must be the one taking the shot? Would the insurer have to pay?” asked Vinar when questioned about the specific policy language. All other questions were referred to the organization’s attorney.

Odds On Promotions responded to a tweet for more policy information by saying, “[The] policy is confidential between the client and insurer. Claims department is still investigating this matter.”

If what Vinar states is true, odds are low the claim will be paid, says coverage specialist Diana Reitz, editorial director for FC&S, a service that provides insurance coverage guidance.

“Insurance policies are contracts, and coverage is triggered based on how the contract is written,” she says. “We may believe—or perhaps even hope—that Odds On Promotions will pay the twins because it just seems like the right thing to do. But the reality is that, if the policy is written so that the person whose name is drawn must take the shot, any payment would be an accommodation by Odds On Promotions. And what are the odds of that?”

Given how much publicity was generated from the event and the statements by the parents that it would go towards their kids’ education as well as toward helping their current school, it’s going to be a difficult decision to make.

The insurers for this event have indicated it will take up to three weeks to determine whether to pay on this claim.

The New Jersey Supreme Court holds that the right to trial by jury attaches to a Rova Farms bad faith claim.

WOOD v. NEW JERSEY MANUFACTURERS INSURANCE

The NJ Supreme Court recognized in Rova Farms Resort, Inc. v. Investors Insurance Co. of America, 65 N.J. 474 (1974) a “bad faith” cause of action against an insurer.  In that decision, the Court noted where:  “there is a settlement demand within the policy limits, the insurer in bad faith refuses to settle the claim, and a verdict above the policy limits is returned…the carrier’s bad faith failure to settle the claim within the policy limits may render the carrier liable for the entire judgment, including the excess above the policy limits.”

Personal Injury Claim—- Wood v. Caruso

On March 1, 2001, the plaintiff, Karen Wood was delivering mail at a condominium complex when she was attacked by a dog owned by John Critelli and kept by Alfonzia Caruso, Critelli’s grandmother.  The plaintiff sustained injuries requiring two separate spinal surgeries.  Karen Wood filed suit against Critelli, Caruso and the condo association where Caruso’s unit was located.  Caruso, maintained a $500,000 liability policy with defendant New Jersey Manufacturers Insurance Company (NJM).  NJM provided a defense to Caruso and her grandson.

The parties submitted the matter to nonbinding arbitration.  The arbitrator found gross damages of $600,000 and apportioned liability as 90% ($540,000) to Caruso and 10% ($60,000) to the condo association. The defendants filed a trial de novo.  Prior to the jury trial, NJM conducted an internal evaluation of the plaintiff’s claims.  Counsel representing Caruso recommended that NJM authorize him to settle the case for the full $500,000 policy limit.  NJM’s claims adjuster advised that the value of the plaintiff’s claim would be near the policy limits.  NJM’s Major Claims Committee concluded the claim would not exceed the value of the policy and authorized a $300,000 settlement offer.  Before the jury began its deliberations, the plaintiff’s advised that they would settle for $450,000. This demand was rejected.  The jury returned a verdict allocating fault as: 51% to Caruso, 49% to the condo association.  The jury awarded gross damages of $2,422,000.  The court molded the verdict to enter judgment against Caruso in the amount of $1,408,320.03.  Caruso filed a motion for new trial which was denied.  NJM then tendered the full policy to the plaintiff.

Declaratory Judgment Action—–Wood v. New Jersey Manufacturers Insurance

The plaintiff entered into an assignment with Caruso for his Rova Farms claim against NJM.  Plaintiff then commenced a declaratory judgment action against NJM alleging that NJM failed to settle plaintiff’s claim within the policy limit thereby wrongfully exposing its insured to an excess verdict. Plaintiff demanded a jury trial.  However, NJM did not demand a jury trial. Before discovery was completed, the plaintiff filed for summary judgment against NJM.  The court granted the plaintiff’s motion.  The court found that NJM’s actions were cavalier and that “in the final analysis, [NJM] gambled on a trial contrary to the interest of its insured.”  NJM appealed.  The Appellate Division reversed the entry of summary judgment and remanded.  The Appellate Division noted that there were fact sensitive determinations that needed to be made about NJM’s reasonableness in handling settlement negotiations.  The court noted, “prudence dictates that these pivotal questions of reasonableness and bad faith be decided in this case after a full blown evidentiary presentation before the factfinder.”  The Appellate panel let the trial court determine whether the proceeding should be before a jury or the court.

The plaintiff sought certification as to the limited issue of whether the insured’s claims of bad faith against its insurer under Rova Farms are to be decided by a judge or jury.  The plaintiff asserted that the right to a trial by jury does not attach to a Rova Farms claim (despite having demanded a jury trial).  The plaintiff argued that the claim against NJM concerned the fiduciary obligation imposed by an insurer to negotiate a settlement within the policy limits.  Accordingly, the fiduciary duty is primarily equitable in nature and that there is no right to a trial by jury on equitable claims.  The plaintiff also cautioned that submitting a Rova Farms bad faith claim for determination by a jury would “essentially require a second full trial.”

NJM asserted that the relationship between an insurer and its insured is one based in contract and an insured’s bad faith claim under an insurance policy is nothing more than a species of contract claim arising under the implied covenant of good faith and fair dealing.  NJM argued that disputes between insurers and insureds concerning their respective rights and obligations under the insurance policy are commonlaw, breach of contract actions for which legal remedies provide the primary form of relief into which the right of a jury trial attaches.

The NJ Supreme Court noted that declaratory judgment actions were unknown in common law and that in NJ, the Uniform Declaratory Judgments Act, N.J.S.A. 2A:16-50 to -62 governs the right to declaratory relief.  The court stated that the Act provides that factual issues “may be tried and determined in the same manner as issues of facts are tried and determined in other civil actions.  Thus, depending on the issue, a declaratory judgment can be either legal or equitable, and thus, the filing of a declaratory judgment action for insurance coverage, does not necessarily engender the right to a jury trial.  In sum, in a declaratory judgment action, the right to a jury trial depends on whether the action is the counterpart to one in equity or in law.”

In reviewing bad faith claims, the Court must looked at the basis for the cause of action and the requested relief.  In the plaintiff’s complaint, as assignee of Caruso’s rights under Caruso’s insurance policy, she alleged that NJM violated its fiduciary duty by failing to negotiate the claim in good faith.  Further, that NJM refused to pay the excess judgment of $1,408,320.23.  Thus, the plaintiff sought both a degree of specific performance, ordering the defendant to pay the total judgment , as well as a declaration to the effect that the defendant was responsible therefor.  The Court wrote, “No matter how plaintiff has couched her claim against NJM, it is undisputed that her Rova Farms bad faith claim is a garden variety action at law that requires that she prove that defendants breached its insurance contract by its failure in bad faith to settle plaintiff’s original personal injury suit against NJM’s insured.”  The court continued, “It is beyond question that a breach of contract claim was at common law and remains today an action triable to a jury.”   Finally, the Court stated that “Determining that the right to trial by jury attaching to a Rova Farms bad faith claim does not mean that every Rova Farms bad faith suit may only be tried through a jury.  As with all other civil cases, any party to a civil action at law may demand trial by jury.  Likewise, even if a jury trial is allowable as of right and, in fact, has been demanded, the parties nevertheless retain the right to consent to trial by the court without a jury.”