Kwabena Wadeer v. New Jersey Manufacturers Insurance Company (072010)
110 A.3d 19
| N.J. | 2015Background
- In 2003 Kwabena Wadeer (insured) was injured in a crash caused by an unidentified ("phantom") vehicle; he sought uninsured motorist (UM) benefits under a $100,000 NJM policy.
- NJM made no settlement offers, rejected a private arbitration award within policy limits ($87,500) and a later mandatory arbitration award in excess of limits, and elected trial twice.
- Wadeer filed a UM suit (no explicit bad-faith pleading). During litigation he served an Offer of Judgment for $95,000 and repeatedly warned NJM that its conduct appeared to be bad faith.
- A jury awarded in excess of policy limits; the trial court molded the verdict to the $100,000 policy cap, denied finding bad faith, but initially awarded fees under Rule 4:58-2 (later reversed by Appellate Division).
- After final judgment Wadeer filed a separate action alleging NJM’s bad faith in refusing to settle; NJM moved for summary judgment asserting the entire controversy doctrine and res judicata. The trial court and Appellate Division barred the second suit; the Supreme Court affirmed on res judicata grounds but addressed other procedural issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wadeer's post-judgment bad-faith suit is barred by the entire controversy doctrine | Bad-faith acts often continue through trial; claim did not fully accrue until verdict, so fairness bars preclusion | Plaintiff had notice of alleged bad faith long before verdict and could have litigated it in the first action | Court agreed the doctrine can be problematic in UM context but did not rely on it to dispose of this case (separately referred Rule 4:30A for review) |
| Whether res judicata bars relitigation of the bad-faith claim | Bad-faith claim is distinct and arose later; thus not precluded | Bad-faith issue was raised and litigated in the first trial (oral argument and trial-court ruling) | Held: res judicata bars the claim — plaintiff raised the issue during the first trial and the trial court adjudicated it |
| Whether bad-faith claims require independent pleading and discovery before dismissal on summary judgment | Wadeer contended dismissal occurred without adequate discovery and was procedurally unfair | NJM: plaintiff had opportunity and warning to plead/raise claim earlier; preclusion doctrines apply | Court rejected special exemption for bad-faith suits from motion practice; plaintiff was not entitled to relitigate what was fairly litigated |
| Whether Rule 4:58-2 (Offer of Judgment Rule) and fee rules properly apply where judgment is molded to policy limits | Wadeer argued Offer of Judgment sanctions and fee rules should account for full jury verdict when molding reduces recovery | NJM argued molded judgment controls the measure for Rule 4:58-2 and fees | Court identified ambiguity in applying Rule 4:58-2 and Rule 4:42-9(a)(6) in UM context, and referred both rules to the Civil Practice Committee for recommended amendments |
Key Cases Cited
- Pickett v. Lloyd’s, 131 N.J. 457 (1993) (establishes first-party bad-faith standard: absence of reasonable basis and knowledge or reckless disregard)
- DiTrolio v. Antiles, 142 N.J. 253 (1995) (explains entire controversy doctrine: core set of facts links claims; no requirement of common legal issues)
- Culver v. Ins. Co. of N. Am., 115 N.J. 451 (1989) (res judicata applied where same acts, evidence, theory, and relief were litigated previously)
- Highland Lakes Country Club & Cmty. Ass’n v. Nicastro, 201 N.J. 123 (2010) (summarizes purpose of entire controversy doctrine)
- Wood v. N.J. Mfrs. Ins. Co., 206 N.J. 562 (2011) (reiterates implied covenant of good faith and fair dealing in insurance contracts)