Wood v. New Jersey Manufacturers Insurance
206 N.J. 562
| N.J. | 2011Background
- Plaintiff Karen Wood was attacked by a dog while delivering mail at a condominium complex.
- Defendants Caruso (dog owner) and Critelli were insured by NJM with a $500,000 liability policy; arbitration awarded $600,000 total, allocated 90% to Caruso and 10% to the condo association.
- NJM paid the policy limits of $500,000 on behalf of its insureds, leaving an excess judgment against Caruso and Critelli.
- Plaintiff assigned Caruso's Rova Farms bad-faith claim against NJM and filed a declaratory judgment action seeking recovery of the excess judgment plus interest and fees.
- Trial court granted summary judgment for plaintiff on the excess, finding bad-faith failure to settle; Appellate Division reversed and remanded, raising jury-vs-bench trial questions.
- Supreme Court held that a Rova Farms bad-faith claim is an action at law and subject to a jury trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Rova Farms bad-faith claims entitle a jury trial? | Wood: fiduciary duty claims are equitable and bench-triable. | NJM: bad-faith claims are contract-based and bench-triable. | Yes; jury trial attachment. |
| Is a Rova Farms bad-faith claim triable by jury when framed via declaratory relief? | Labeling as declaratory relief should not deny jury trial where evidence shows contract breach and legal relief. | Declaratory actions can be equitable; jury trial not guaranteed. | Jury trial available where relief is legal (breach of contract). |
| Does the implied covenant of good faith and fair dealing in insurance contracts preclude a jury trial? | Implied covenant supports equity; no jury right. | Covenant is part of contract; jury right exists for contract actions. | The presence of the implied covenant does not negate a jury-right for this breach-of-contract claim. |
Key Cases Cited
- Rova Farms Resort, Inc. v. Investors Insurance Co. of America, 65 N.J. 474 (N.J. 1974) (recognized Rova Farms bad-faith claim theory and jury-right questions)
- Fireman's Fund Ins. Co. v. Sec. Ins. Co., 72 N.J. 63 (N.J. 1976) (discusses limits of bad-faith liability concepts)
- Kalogerias v. 239 Broad Ave., L.L.C., 202 N.J. 349 (N.J. 2010) (implied covenant of good faith in contracts)
- Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210 (N.J. 2004) (implied covenant applies to contracting parties)
- Steiner v. Stein, 2 N.J. 367 (N.J. 1949) (breach-of-contract actions entitle jury trial)
- Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519 (N.J. 2005) (insurance contracts contain implied covenant of good faith)
- In re Environmental Insurance Declaratory Judgment Actions, 149 N.J. 278 (N.J. 1997) (right to jury in declaratory judgments depends on law vs equity)
- Weinisch v. Sawyer, 123 N.J. 333 (N.J. 1991) (principles for determining jury rights in mixed actions)
- Shaner v. Horizon Bancorp., 116 N.J. 433 (N.J. 1989) (tests for determining whether action is legal or equitable)