Many know that I previously worked for a major national insurer in their staff counsel office. Now, I am fortunate to practice law at the Merlin Law Group. One of the best parts about practicing law in this environment is that I am surrounded by the best minds in policyholder advocacy. Recently, my colleagues Larry Bache and Ashley Smith posted about Hunt v. State Farm Florida Insurance Company, a Florida case that held a favorable appraisal award satisfies a statutory condition precedent to a bad faith claim. That begged the question, how would New Jersey law treat an appraisal award in a bad faith context?
In a relatively recent unpublished opinion, the New Jersey Appellate Division addressed this very issue. In Bello v. Merrimak Mutual Fire Insurance Company,1 the policyholder suffered a windstorm loss that damaged his roof and retaining wall. There was a dispute over the cause of damage to the retaining wall. The carrier demanded appraisal, but the policyholder instead filed suit on several grounds but did not include a bad faith count. The policyholder sought over $400,000 for repairs to the retaining wall and another $200,000 for landscape repairs. The carrier offered a settlement of approximately $62,000. upon the insurer’s motion, the Court compelled appraisal, resulting in a $100,750 appraisal award for the policyholder, which the carrier paid. “Thereafter, on motion, all contract claims against [the adjuster] were dismissed. And, by an order dated October 10, 2010, the trial judge allowed plaintiff to amend his complaint to add a claim alleging defendant’s bad faith in delaying the resolution of his claim.”
The matter ultimately went to trial with a verdict exceeding $850,000 for the policyholder. That amount included almost $225,000 in attorneys’ fees and costs. The New Jersey Supreme Court denied certification on December 12, 2012,2 ending this case and cementing the fact that a favorable appraisal award will not bar a subsequent bad faith action in New Jersey.