STATE NATIONAL INSURANCE COMPANY v. THE COUNTY OF CAMDEN

Filing 655

OPINION. Signed by Judge Noel L. Hillman on 3/31/2014. (tf, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
STATE NATIONAL INSURANCE
COMPANY,
Plaintiff,
v.

CIV. NO. 08-5128(NLH)(AMD)
OPINION

THE COUNTY OF CAMDEN,
Defendant/Counterclaimant.

APPEARANCES:
ROBERT J. MORROW
HUNTON & WILLIAMS LLP
200 PARK AVENUE
NEW YORK, NY 10166
WALTER J. ANDREWS
MICHAEL S. LEVINE
HUNTON & WILLIAMS LLP
1751 PINNACLE DRIVE
SUITE 1700
MCLEAN, VA 22102
On behalf of State National Insurance Company
WILLIAM M. TAMBUSSI
JOSEPH T. CARNEY
WILLIAM F. COOK
BROWN & CONNERY, LLP
360 HADDON AVENUE
P.O. BOX 539
WESTMONT, NJ 08108
On behalf of the County of Camden
HILLMAN, District Judge
Presently before the Court are the motions of State National
Insurance Company (“State National”) for summary judgment on three
issues:

(1) the adequacy of the County of Camden’s (“County”)

defense and investigation of the underlying Anderson lawsuit [543];
(2) whether the insurance contract entered into between the County
and State National required State National to defend and
investigate the Anderson litigation [544]; and (3) whether State
National acted in bad faith or breached any duty of good faith and
fair dealing owed to the County [545].1

For the reasons expressed

below, all three motions will be denied.
BACKGROUND
On October 20, 2008, State National filed a declaratory
judgment action against the County asking this Court to declare
that it is not liable to provide insurance coverage for a multimillion dollar state court judgment in favor of Nicholas Anderson.
Anderson sued the County for injuries he sustained when he drove
off the road and into a guardrail owned and maintained by the
County.

Briefly summarized, State National contends in its

1

Also pending is State National’s motion to strike the
County’s Local Civ. R. 56.1 response and counter-statement of
material facts, and for sanctions. (Docket No. 617.) State
National argues that because the undisputed facts show that no
dispute remains as to its three summary judgment motions, the
County has improperly included undisputed and immaterial
statements of fact to frustrate the summary judgment process.
Even accepting as true State National’s representation that some
of the County’s counter-statements are not relevant to the
pending motions or are not actually in dispute -- a contention
that the County vehemently denies -- it is clear that sufficient
disputed facts, as related in the rest of the County’s counterstatement, remain to go to the jury on the three issues presented
by State National’s motions. Accordingly, the County’s Local
Civ. R. 56.1 response and counter-statement of material facts
will not be stricken, and no sanctions will be imposed.
2

complaint that the County’s delay in notifying it of the lawsuit,
its repeated representation that the case was within the County’s
$300,000 self-insured retention, its errors in investigating and
defending the case, and its re-valuation of the case four days into
trial, breached the insurance contract’s notice provision and the
adequate investigation and defense condition to coverage.
The state court case reached its final resolution on November
5, 2010, with Anderson and the County reaching a settlement.2

Over

the course of the past five years, State National’s declaratory
judgment action spawned numerous counterclaims, third-party and
fourth-party complaints, and an intervening plaintiff complaint.
At this point, all the claims between all the parties have been
resolved, through motion practice or settlement, except for the
certain claims between State National and the County.
State National’s claims against the County include (1) a claim
seeking declaratory judgment that there is no coverage for the
underlying Anderson claim under State National’s insurance policy

2

The jury in the Anderson matter returned a verdict on
October 17, 2008 in the amount of $31,295,007.57, but as a result
of post-trial motions, the court entered an Order on March 10,
2009 remitting the award to $19,374,424.30. The matter was
ultimately appealed to the New Jersey Superior Court, Appellate
Division, which dismissed the appeal because the matter was
settled while the appeal was pending. Under the settlement, the
County agreed to pay $15 million to Anderson plus twenty percent
(20%) of any monetary recovery in this declaratory judgment
action up to $15 million. If the County recovers in excess of
$15 million in the declaratory judgment action, the County shall
pay twenty-five percent (25%) of any monetary recovery over $15
million. (See Docket No. 609 at 7.)
3

with the County; (2) a claim for breach of the duty of good faith
based on the County’s alleged failure to settle the Anderson claim
within the County’s self-insured retention of $300,000; and (3) a
claim for breach of the duty of good faith for the County’s alleged
failure to tender the self-insured retention.
The County’s counterclaims against State National include (1)
a claim for breach of contract of the State National Policy; (2) a
claim for a declaratory judgment that there is coverage for the
underlying Anderson claim under the State National Policy; and (3)
a claim that State National committed bad faith with respect to its
handling of the Anderson matter, thereby exposing the County to a
verdict of over $20 million in excess of the State National Policy
limits.
The claims between State National and the County are trialready, with numerous pre-trial motions pending regarding
bifurcation and the adequacy and admissibility of experts and
evidence.

Prior to deciding those trial-related motions and

proceeding to trial, however, the Court must resolve State
National’s motions for summary judgment on three issues.3

State

National seeks summary judgment on (1) whether the insurance
contract entered between the County and State National required

3

Pursuant to its request, State National was granted leave
by this Court to file one final round of summary judgment motions
because it claimed that the motions would help to streamline the
triable issues in this case. (See Docket No. 520.)
4

State National to defend and investigate the Anderson litigation;
(2) the adequacy of the County’s defense and investigation of the
underlying Anderson lawsuit; and (3) whether State National acted
in bad faith or breached any duty of good faith and fair dealing
owed to the County.

The County has opposed the motions.

Each will

be addressed in turn.
DISCUSSION
A.

Subject matter jurisdiction

This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds $75,000.
State National is incorporated under the laws of the State of Texas
with its principal place of business in Fort Worth, Texas, and the
County of Camden is a governmental entity existing under the laws
of the State of New Jersey.
B.

Summary judgment standard

Summary judgment is appropriate where the Court is satisfied
that the materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations, admissions, or interrogatory answers, demonstrate
that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.

Celotex

Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).
An issue is “genuine” if it is supported by evidence such that
5

a reasonable jury could return a verdict in the nonmoving party’s
favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A fact is “material” if, under the governing substantive law, a
dispute about the fact might affect the outcome of the suit.

Id.

In considering a motion for summary judgment, a district court may
not make credibility determinations or engage in any weighing of
the evidence; instead, the non-moving party's evidence “is to be
believed and all justifiable inferences are to be drawn in his
favor.”

Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d

Cir. 2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of demonstrating
the absence of a genuine issue of material fact.
Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp. v.

Once the moving party has met

this burden, the nonmoving party must identify, by affidavits or
otherwise, specific facts showing that there is a genuine issue for
trial.

Id.

Thus, to withstand a properly supported motion for

summary judgment, the nonmoving party must identify specific facts
and affirmative evidence that contradict those offered by the
moving party.

Anderson, 477 U.S. at 256-57.

A party opposing

summary judgment must do more than just rest upon mere allegations,
general denials, or vague statements.
F.3d 228, 232 (3d Cir. 2001).

6

Saldana v. Kmart Corp., 260

C.

Analysis
1.

State National’s motion on the duty to defend and
investigate (Docket No. 544)

One of the County’s pending counterclaims against State
National is that State National breached the parties’ insurance
contract.

The County claims that one element of that breach was

State National’s failure to provide a defense to the County in the
underlying Anderson litigation, as well as State National’s failure
to investigate Anderson’s claims.

To refute the County’s position,

State National contends that the language of the policy is clear
and unambiguous: under the Self-Insured Retention (“SIR”)
Endorsement to the Commercial General Liability Coverage Form (“CGL
Form”) governing the $10 million policy, the County was obligated
to defend itself against, and independently investigate, all claims
brought against the County that implicated the insurance policy.
Because the Anderson litigation triggered the policy, it was the
County’s sole obligation under the SIR endorsement to investigate
Anderson’s claims and provide a defense to those claims.
Accordingly, State National argues that it cannot be held to have
breached the investigation and defense terms of the insurance
contract.
To specifically support its position, State National points to
the County’s general duties under the CGL Form, as well as the
County’s duties under the SIR endorsement.

Under the CGL Form,

State National covenants that it “will pay those sums that the
7

insured becomes legally obligated to pay as damages because of
‘bodily injury’ . . . to which this insurance applies. [State
National] will have the right and duty to defend any ‘suit’ seeking
those damages. . . . [State National’s] right and duty to defend
ends when we have used up the applicable limit of insurance in the
payment of judgments or settlements” under the policy.
606-1 at 14.)

(Docket No.

In the event of any “occurrence, claim or suit,” the

County’s relevant duties under the CGL Form are as follows:

(1)

the County must see to it that State National is notified as soon
as practicable of an “occurrence,” or an offense which may result
in a claim, or a claim is made or “suit” brought against the
County; (2) the County must cooperate with State National in the
investigation, settlement, or defense of the claim or “suit”; and
(3) the County will not, except at its own cost, voluntarily make a
payment, assume any obligation, or incur any expense, other than
for first aid, without State National’s consent.

(Docket No. 606-1

at 20-21.)
The SIR endorsement modifies the CGL Form.
at 49.)
1.

(Docket No. 606-1

The SIR endorsement provides:
In consideration of the premium charged and as a
condition to the issuance and continuation of the
Policy, it is agreed that the NAMED INSURED shall
retain, as a self-insured retention, per occurrence
and as respects combined insured damages and insured
allocated costs and expenses of investigation,
defense, negotiation and settlement applicable to
such damages, the sum of [$300,000.] The company’s
limit of liability, as stated elsewhere in the
Policy, shall apply solely in excess of the NAMED
8

INSURED’S self-insured retention. . . .
2.

In the event that any combined insured damages and
insured allocated costs and expenses, as
aforementioned, exceed, per occurrence, the NAMED
INSURED’S self-insured retention and involve the
liability of the company, then, solely as respects
each such occurrence, the company will pay, in
addition to its otherwise applicable limit of
liability [$10,000,000.00], all supplementary
payments . . . .

4.

In the event of any occurrence which, in the opinion
of the INSURED, is likely to give rise to liability
under this Policy, no costs or expenses, other than
for immediate first aid to others, shall be incurred
by any INSURED, except at his or her own cost, peril
and expense, without the written consent of the
company. The NAMED INSURED shall be obligated to
A.
B.

provide an adequate defense and investigation
of any action for or notice of any actual,
potential or alleged damages, and
accept any reasonable offer or settlement
within the NAMED INSURED’S self-insured
retention,

and, in the event of any NAMED INSURED’S failure to
comply with any part of this paragraph, the company
shall not be liable for any damages or costs or
expenses resulting from any such occurrence.
(Id.)
State National contends that the SIR endorsement modifies the
CGL Form such that the SIR endorsement trumps any obligation State
National otherwise had under the CGL Form to investigate and
provide a defense for any occurrence, claim or suit.

Moreover,

State National contends that the SIR endorsement changed the $10
million policy to an excess insurance policy to the $300,000 SIR.
Consequently, State National argues that the County cannot maintain

9

any claim that State National breached the insurance contract by
not providing it with a defense since the County acted as a primary
insurer.
In opposition, the County first argues that the issue is moot,
because State National cannot be compelled to provide a defense to
an action that has already concluded.

Aside from that point, the

County argues that the SIR endorsement does not cause the State
National policy to be “excess” to its $300,000 SIR, and that the
SIR acts, in essence, as a deductible under the $10 million policy.
The County also contests that the SIR endorsement modifies State
National’s duties under the CGL Form to provide a defense and
investigation to the extent that it completely eliminates any
obligation of State National to provide and pay for a defense.
The principles of insurance contract interpretation are wellsettled: (1) the interpretation of an insurance contract is a
question of law, (2) when interpreting an insurance contract, the
basic rule is to determine the intention of the parties from the
language of the policy, giving effect to all parts so as to give a
reasonable meaning to the terms, (3) when the terms of the contract
are clear and unambiguous, the court must enforce the contract as
it is written, and the court cannot make a better contract for
parties than the one that they themselves agreed to, (4) where an
ambiguity exists, it must be resolved against the insurer, (5) if
the controlling language of the policy will support two meanings,

10

one favorable to the insurer and one favorable to the insured, the
interpretation supporting coverage will be applied, but (6) an
insurance policy is not ambiguous merely because two conflicting
interpretations have been offered by the litigants, and a genuine
ambiguity exists when the “phrasing of the policy is so confusing
that the average policyholder cannot make out the boundaries of
coverage.”

Simonetti v. Selective Ins. Co., 859 A.2d 694, 698

(N.J. Super. Ct. App. Div. 2004) (citations and other quotations
omitted).
In this case, State National seeks to interpret the SIR
endorsement to be a “primary” insurance policy provided by the
County to itself, which completely eliminates any of State
National’s obligations to provide a defense to the County under
State National’s “excess” policy.

In contrast, the County views

the SIR as more like an insurance policy deductible that does not
vitiate State National’s concurrent duty to provide a defense as it
contracted to under the CGL Form.

The Court finds that the

analysis of the language of CGL Form and the SIR endorsement, when
read together, results in an interpretation that falls between the
parties’ two arguments.
As a primary matter, the Court finds it immaterial to the
contract interpretation analysis the determination of whether the
State National policy should be deemed an “excess” policy, as that

11

term is defined under New Jersey law,4 or whether the SIR should be
treated like a insurance policy deductible that simply changes the
limit of liability under the policy by an additional $300,000.

The

terminology advocated by State National and the County has no
effect on the interpretation of the plain language of the insurance
contract.5
A focus on the language of the SIR endorsement, in tandem with
the CGL policy it is endorsing, shows that the County is obligated
to investigate and defend any claim or suit against it, so long as
the value of that claim or suit is $300,000 or under.

State

National does not appear to contest that interpretation: “Where, as
here, an insurance policy contains a self-insured retention, the

4

To support its position that the CGL policy is “excess”
insurance, State National points to the section on “Other
Insurance,” that provides, “This insurance is excess over any of
the other insurance, whether primary, excess, contingent, or on
any other basis: (1) That is Fire, Extended Coverage, Builder’s
Risk, Installation Risk or similar coverage for ‘your work;’ (2)
That is Fire insurance for premises rented to you; or (3) If the
loss arises out of the maintenance or use of aircraft, ‘autos,’
or watercraft to the extent not subject to Exclusion g. of
Coverage A.” (Docket No. 606-1, at 21.) Although the Court will
not analyze the terminology to describe the SIR endorsement
advocated by the parties, this provision in the CGL form clearly
does not support State National’s contention that the $10 million
policy can be considered “excess insurance.”
5

Accordingly, the Court will not address the parties’
dispute over the persuasiveness and relevance of case law from
other jurisdictions that have analyzed similar, but not
identical, SIR endorsements in different contexts. Moreover, the
Court will not address the parties’ dispute over the County’s
purported motivation in agreeing to the addition of the SIR
endorsement.
12

policyholder is obligated to defend itself until the retention is
fully exhausted.” (State National Br., Docket No. 544-1 at 19.)
State National, however, extends that proposition to mean that the
SIR endorsement eliminates any duty by State National to
investigate and defend any claim or suit brought against the
County.

State National’s position is not supported by the SIR

endorsement.
The SIR endorsement provides that “as a condition to the
issuance and continuation of the Policy,” the County is responsible
for the “combined insured damages and insured allocated costs and
expenses of investigation, defense, negotiation and settlement
applicable to such damages” up to $300,000 per claim or suit.
(Docket No. 606-1 at 49.)

The SIR endorsement also provides that

if the County is of the opinion that a claim or suit is “likely to
give rise to liability under this Policy,” no costs or expense are
to be incurred by the County.

(Id.)

Plainly interpreted, this

language implicates the CGL policy, and the respective duties and
obligations of State National and the County under the CGL policy,
including State National’s “right and duty to defend any suit” up
to $10 million.

(Docket No. 606-1 at 14.)

If the SIR endorsement

were meant to modify or eliminate State National’s investigation
and defense obligations under the CGL policy, then the SIR
endorsement should not only have explicitly stated that
modification, but it would also not refer to the CGL policy beyond

13

the County’s SIR.
State National appears to hang its hat on the language in the
latter part of paragraph four in the SIR endorsement.
4.

In the event of any occurrence which, in the opinion
of the INSURED, is likely to give rise to liability
under this Policy, no costs or expenses, other than
for immediate first aid to others, shall be incurred
by any INSURED, except at his or her own cost, peril
and expense, without the written consent of the
company. The NAMED INSURED shall be obligated to
A.
B.

provide an adequate defense and investigation
of any action for or notice of any actual,
potential or alleged damages, and
accept any reasonable offer or settlement
within the NAMED INSURED’S self-insured
retention,

and, in the event of any NAMED INSURED’S
failure to comply with any part of this
paragraph, the company shall not be liable for
any damages or costs or expenses resulting from
any such occurrence.
(Docket No. 606-1 at 49, emphasis added.)

State National argues

that regardless of the implication of the CGL policy beyond the
County’s $300,000 SIR, this provision places on the County the sole
responsibility for the investigation and defense of any and all
suits.6

In isolation, this provision could be interpreted as State

National advocates.

But, when it is read in conjunction with the

preceding sentence, as well as the other provisions in the SIR
endorsement that refer to the CGL policy, State National’s
6

How this argument relates to State National’s position on
the adequacy of the County’s investigation and defense is
discussed in the next section.
14

interpretation is unavailing.
The SIR endorsement directs, clearly and unambiguously, that
the County is responsible for adequately investigating and
defending any occurrence, claim or suit involving bodily injury or
property damage that implicates the $10 million dollar policy, but
only up to $300,000 for the combined damages and allocated costs
and expenses of investigation, defense, negotiation and settlement.
Within that $300,000 range, the County must provide an “adequate”
investigation and defense, and accept any reasonable settlement.7
If any occurrence, claim or suit is, in the County’s opinion,
likely to exceed $300,000 in combined damages and costs, the CGL
policy terms are implicated, including State National’s duty to
provide a defense to the claim or suit.

This language in the SIR

appears to strike a balance between the County managing claims
below $300,000, with State National protecting its interests in
claims that exceed $300,000 and could rise to $10 million.
The application of this procedure under the SIR endorsement is
simple for claims whose combined values for damages and costs are
concretely maxed out below $300,000.

In those instances, the

County assumes all responsibilities for the defense and
investigation.

For claims whose combined values for damages and

7

Presumably this provision was included to prevent the
County from purposefully bungling an investigation or defense, or
rejecting settlement offers below $300,000, so that the $10
million policy would be implicated, and the County would not have
to pay any share, thus effectively eliminating the SIR.
15

costs concretely exceed $300,000 from the outset, the County is
responsible for the investigation and defense up to $300,000, but
because the $10 million policy is implicated immediately,
presumably State National would wish to control the investigation
and defense from the beginning.

Regardless of its decision on when

to step in on the $300,000-plus claims, nothing in the SIR
endorsement precludes State National from providing the
investigation and defense from the beginning, even if the $300,000
is not fully realized in the end.
This case presents the not-so-simple application of the
investigation and defense procedure set forth in the SIR
endorsement.

The County allegedly valued the Anderson case below

$300,000, but at some point it realized that the Anderson case
would well exceed $300,000.

The determination of the tipping point

between the County’s and State National’s obligation to provide an
investigation and defense to the Anderson case is rife with
disputed facts.

State National claims that it was not aware that

the Anderson case would exceed $300,000 until it was too late for
it to take charge, and that the County did not fulfill its various
obligations under the policy, including providing an “adequate”
defense.8

In contrast, the County maintains that its actions were

8

When the insured’s delay in providing relevant information
prevents the insurer from assuming control of the defense, the
insurance company is liable only for that portion of the defense
costs arising after it was informed of the facts triggering the
duty to defend. SL Industries, Inc. v. American Motorists Ins.
16

more than adequate, State National was aware of the case from the
beginning, and it was State National, through its claims
administrator Meadowbrook, that refused to perform its duties to
the County by settling the Anderson case with the policy limits,
and instead fabricated a claim to deny coverage.
These disputed facts, discussed in more detail below with
regard to State National’s motion for summary judgment as to the
adequacy of the County’s defense, preclude the entry of summary
judgment on the issue of which party is liable for the defense
costs of the Anderson litigation.9

With regard to State National’s

argument that, as a matter of law, it cannot be held liable for the

Co., 607 A.2d 1266, 1273 (N.J. 1992). The duty to defend is
broader then the duty to indemnify. Rosario ex rel. Rosario v.
Haywood, 799 A.2d 32, 40 (N.J. Super. Ct. App. Div. 2002)
(citation omitted).
9

The issue of whether State National must actually defend
the Anderson litigation is obviously moot due to the final
conclusion of the Anderson case. Relatedly, despite State
National’s contention otherwise, the Court’s denial of the
County’s January 20, 2009 emergency motion to compel State
National to defend the County in post-trial proceedings in the
Anderson litigation cannot serve as stare decisis on the
interpretation of the insurance policy terms and which entity is
liable for defense costs. See Bowers v. National Collegiate
Athletic Ass'n, 9 F. Supp. 2d 460, 466 (D.N.J. 1998) (citing
University of Texas v. Camenisch, 451 U.S. 390, 395 (1981))
(conclusions of law entered in connection with the injunction are
not considered the law of the case); Commodity Futures Trading
Com'n v. American Metals Exchange Corp., 991 F.2d 71, 80 (3d Cir.
1993) (finding that the district court, in considering whether
there were genuine issues of material fact in connection with the
motions for summary judgment, could not rely on credibility
findings it made in connection with granting the preliminary
injunction).
17

defense costs, the Court concludes that the terms of the CGL policy
and the SIR endorsement are not ambiguous, and that the plain
language evidences the parties’ intent that (1) the County is to
handle the investigation and defense of claims valued under
$300,000, (2) State National is to handle the investigation and
defense of claims valued over $300,000, and (3) regardless of the
value of the claim, State National can step in any time to handle
the investigation and defense of any claim if it will implicate the
$10 million policy.

Any other interpretation would render

meaningless the provisions in the CGL policy regarding State
National’s duty to investigate and defend, and the County’s
reciprocal duties to cooperate.
Consequently, State National’s motion for summary judgment on
the duty to defend must be denied.
2.

State National’s motion as to the adequacy of the
defense of the Anderson litigation (Docket No. 543)

State National argues that no disputed material facts exist as
to the adequacy of the County’s defense of the Anderson litigation.
State National contends that it is entitled to judgment in its
favor that the County’s defense was not adequate, as required by
the SIR endorsement, and therefore, no coverage should be afford to
the County under the $10 million policy.
The County contests that it did not provide an adequate
defense to the Anderson litigation, and argues that numerous
disputed material facts on the adequacy of its defense preclude the
18

entry of summary judgment.

The County also argues that State

National’s position that State National does not have to prove
prejudice or harm caused by the County’s actions in defending the
Anderson litigation is not supported by New Jersey law.
Noted above, paragraph 4 of the SIR endorsement contains the
provision regarding the County’s duty to provide an adequate
defense to a claim that may implicate the $10 million policy:
4.
In the event of any occurrence which, in the opinion
of the INSURED, is likely to give rise to liability under
this Policy, no costs or expenses, other than for
immediate first aid to others, shall be incurred by any
INSURED, except at his or her own cost, peril and
expense, without the written consent of the company. The
NAMED INSURED shall be obligated to
A. provide an adequate defense and investigation of
any action for or notice of any actual, potential or
alleged damages, and
B. accept any reasonable offer or settlement within
the NAMED INSURED’S self-insured retention,
and, in the event of any NAMED INSURED’S failure to comply
with any part of this paragraph, the company shall not be
liable for any damages or costs or expenses resulting from any
such occurrence.
(Docket No. 606-1 at 49, emphasis added.)
As also discussed above, the County’s obligation to provide an
“adequate defense” ends once a claim exceeds the SIR.

The Court

has denied summary judgment on the issue of if or when the
obligation to provide a defense flipped from the County to State
National.

Thus, the issues that must be decided by State

National’s motion with regard to the adequacy of the County’s
19

defense are (1) whether no disputed facts remain that the County’s
defense was inadequate during the time it was responsible for
providing a defense, and (2) regardless of whether the first issue
goes to a jury or is decided on summary judgment, if it is
determined that the County’s defense was not adequate, whether
State National must show that it suffered prejudice as a result of
the County’s inadequate defense.
With regard to whether any disputed facts remain regarding
adequacy of the defense the County provided in the Anderson
litigation, the Court cannot find as a matter of law that there is
no genuine issue regarding the adequacy of County’s defense.10
Previously, in the context of deciding the issue of which party
must first produce its expert reports, the Court found that the
“adequate defense and investigation” provision in the SIR
endorsement is a condition to coverage, and the County has the
burden of proving that it complied with that condition.
No. 494 at 6-7.)

(Docket

State National contends that now that discovery

has concluded, the undisputed evidence shows that the County cannot
meet its burden of demonstrating its compliance with the adequate
defense condition to coverage.
Among the allegedly undisputed inadequacies argued by State

10

The Court denied State National’s previous motion for
summary judgment on the same issue. (Docket No. 393 at 3 n.1.)
This motion, and the Court’s decision, were issued prior the
undertaking of expert discovery, which has now concluded.
20

National are (1) the County’s failure to assign a lawyer to
investigate Anderson’s accident and tort claim during the statutory
pre-suit notice period; (2) the County’s waiver of statutory design
immunity in a case that turned on the County’s alleged failure to
maintain a County road and guide rail; (3) the County’s failure to
depose Anderson’s causation expert, thereby subjecting the County
to uncontrolled, unforeseen, and harmful testimony at trial; (4)
the County’s failure to designate a causation expert, commission an
accident reconstruction analysis, or commission a speed analysis to
develop any affirmative evidence or to rebut the opinions of
Anderson’s expert; and (4) the County’s express waiver of the right
to question Anderson about speeding before the crash, or to
introduce evidence of his racing history and aspirations, in a case
where excessive speed was the County’s primary defense theory.
(State National Br., Docket No. 543 at 9.)

State National contends

that these undisputed errors, among other undisputed actions by the
County, show that the County’s defense of the Anderson litigation
was plainly and obviously inadequate, and no jury could find in the
County’s favor that it provided an adequate defense.
Not surprisingly, the County proffers numerous proofs to
dispute State National’s contention that the County’s actions were
plainly and obviously inadequate.

One category of evidence that

supports the County’s position that its defense met the insurance
policy condition that it be “adequate” is the parties’ expert

21

discovery.

The County outlines how its expert’s view of the

County’s defense counters State National’s expert’s view of the
defense.

(See County Br., Docket No. 607 at 18.)

These dueling

experts alone preclude the entry of summary judgment.

See

Kannankeril v. Terminix Intern., Inc., 128 F.3d 802, 809 (3d Cir.
1997) (admonishing that it is for the trier of fact to determine
what weight to give expert opinions, and that the trial judge must
be careful not to mistake credibility questions for admissibility
questions)(citing U.S. v. Velasquez, 64 F.3d 844, 848 (3d Cir.
1995) (“The axiom is well recognized: the reliability of evidence
goes ‘more to the weight than to the admissibility of the
evidence.’”).

The Court cannot independently weigh the County’s

actions in its defense and investigation of the Anderson case to
determine whether they were “adequate” under the SIR endorsement,
particularly because the insurance contract does not define what an
“adequate defense” entails.

That determination is for the jury.11

11

State National contends that the term “adequate” must be
given its plain and ordinary meaning, which, according to Black’s
Law Dictionary, is “what is needed” and “of moderately good
quality,” and is “legally sufficient.” State National further
contends that the Court previously found that the County must
prove more than that it did not commit legal malpractice in order
to demonstrate its compliance with the “adequate defense”
condition in the SIR endorsement. (State National Reply, Docket
No. 613 at 6.) The Court did not make such a specific finding,
and instead observed that the “adequate defense and investigation
provision does not require the County to generally opine on the
adequacy of its abilities to defend and investigate all law suits
against it in order to meet the condition for coverage[;] the
policy requires that the County demonstrate that in handling the
Anderson lawsuit, it took certain steps and made certain
22

The Court can decide, however, the issue of whether State
National must demonstrate it was prejudiced or harmed by the
County’s actions.

It is clear that as a condition to coverage, the

County has the burden of showing that it provided an adequate
defense in the Anderson litigation.12

If a jury determines that

decisions, and that conduct was ‘adequate.’” The Court also
noted, “even if the County can prove that its in-house counsel
did not commit legal malpractice, it still must prove that its
defense and investigation, although not considered malpractice,
were adequate. Stated differently, the condition precedent still
applies even if the elements of legal malpractice cannot be met.”
(Docket No. 474 at 8, 8 n.1.) What is an “adequate defense” as
required by an insurance policy condition to coverage can be more
burdensome than proving legal malpractice, or less burdensome, or
the same. The Court did not decide that distinction, and, in
denying State National’s prior motion for summary judgment on the
adequacy of the County’s defense, the Court suggested that “in
order to prove that the County’s conduct was negligent such that
it caused the breach of the insurance contract provisions, the
aid of expert testimony is ordinarily required.” (Docket No. 393
at 3 n.1.) The Court leaves it to the parties’ proofs, expert or
otherwise, to support their respective positions on what
constitutes an “adequate defense” under the insurance policy
endorsement.
12

Although the County has the burden of production to
demonstrate its fulfillment of a condition precedent to coverage,
State National maintains the ultimate burden of persuasion that
the County should not be entitled to coverage at all. See Cooper
v. Government Emp. Ins. Co., 237 A.2d 870, 874 n.3 (N.J. 1967)
(“Since in substance we are dealing with forfeitures, we believe
the ultimate burden of persuasion should rest with the carrier.
The burden of adducing evidence is another matter, and as to this
the carrier of course does not have to speculate upon and rebut
hypothetical possibilities when the insured alone is in a
position to make an affirmative showing of the material facts.
Thus although the carrier can offer evidence that it received no
notice or the date upon which notice was first received, the
insured has the burden of getting into the record whatever facts
he relies upon to excuse or explain away what on the surface
would appear to be a failure to comply with the policy provision.
But the ultimate burden of persuasion on the total record remains
23

the County did not provide an adequate defense, the next question
is whether that finding immediately cuts-off the County’s coverage
under the $10 million policy, or whether the burden then shifts to
State National to prove that it was prejudiced by the County’s
inadequate defense in order to disclaim coverage.13
The County analogizes the “adequate defense and investigation”
provision with other insurance policy conditions, such as the
requirement for an insured to timely notify the insurer of an
occurrence or suit.

Under New Jersey law, even if it is found that

an insured did not give timely notice of a suit to an insurer, the
insurer can only disclaim coverage if it can show it was harmed by
the late notice.

The County contends that the same principle --

that State National must show appreciable prejudice for the
County’s failure to comply with a policy condition before coverage
can be denied -- should apply to the “adequate defense and
investigation” condition.
The Court agrees.

The principle of “appreciable prejudice”

were first enunciated by the New Jersey Supreme Court in Cooper v.
Government Emp. Ins. Co., 237 A.2d 870 (N.J. 1967).

In Cooper, an

insured instituted a declaratory judgment action against his

with the carrier.”).
13

The Court also notes that it may be determined by the jury
that State National was obligated to provide a defense at some
point during the litigation of the Anderson case, and if it did,
the fall-out from any inadequacies of the County’s defense cannot
be shouldered solely by the County.
24

insurer to establish GEICO’s liability to provide coverage under
the policy.

The insured was involved in an automobile accident,

but GEICO was not notified of the accident for almost two years
because the insured believed that no claim would emerge.

GEICO

disclaimed coverage because of the insured’s failure to comply with
the notice provision, which was considered a condition precedent to
coverage.

Cooper, 237 A.2d at 872 (the policy providing that “no

action shall lie against the company unless ‘as a condition
precedent’ the insured shall have fully complied with all the terms
of the policy, of which the notice provision is one”).

In holding

that GEICO must provide coverage to the insured, the New Jersey
Supreme Court found that in order for an insurance company to
escape liability, there must be proof that not only was the notice
provision of its policy breached, but also that the insurer was
appreciably prejudiced by that breach.

Id. at 874.

The court

explained,
[A]lthough the policy may speak of the notice provision
in terms of ‘condition precedent,’ . . . nonetheless what
is involved is a forfeiture, for the carrier seeks, on
account of a breach of that provision, to deny the
insured the very thing paid for. This is not to belittle
the need for notice of an accident, but rather to put the
subject in perspective. Thus viewed, it becomes
unreasonable to read the provision unrealistically or to
find that the carrier may forfeit the coverage, even
though there is no likelihood that it was prejudiced by
the breach. To do so would be unfair to insureds. It
would also disserve the public interest, for insurance is
an instrument of a social policy that the victims of
negligence be compensated.
Id. at 873-74.
25

This rationale has been applied repeatedly since the Cooper
decision in 1967.

See, e.g., Pfizer, Inc. v. Employers Ins. of

Wausau, 712 A.2d 634, 643-44 644 (N.J. 1998) (“[U]nder traditional
contract-law principles, breach of such a contractual condition
would excuse the aggrieved parties’ performance only if a party was
actually prejudiced by the delay. . . .

The reason for the New

Jersey rule is to protect the interests of policyholders because
insurance contracts are contracts of adhesion and policyholders
should not lose the benefits of coverage unless the delay has
prejudiced the insurance company.”); British Ins. Co. of Cayman v.
Safety Nat. Cas., 335 F.3d 205, 213 (3d Cir. 2003) (“The New Jersey
Supreme Court clearly frowns upon literal interpretation of notice
provisions in situations where it results in the insured forfeiting
coverage it has already paid for absent some countervailing
consideration (such as prejudice) on the part of the insurer that
has accepted premiums in return for offering coverage.”).
Moreover, even though insurance policy notice provisions are the
most-often litigated conditions precedent to coverage, the
appreciable prejudice standard is applied to other conditions in
insurance policies.

See, e.g., Gazis v. Miller, 874 A.2d 591, 596

(N.J. Super. Ct. App. Div. 2005) (“New Jersey courts have applied
the Cooper prejudice rule in various other contexts,” including in
cases “involving both excess insurance and reinsurance despite the
fact that reinsurance agreements are not contracts of adhesion.”).

26

The Cooper decision rejected prior case law that did not
require that an insurer show appreciable prejudice when an insured
breached a condition precedent to insurance coverage.

Cf.

Whittle v. Associated Indem. Corp., 33 A.2d 866, 868 (N.J. Err. &
App. 1943) (finding the insurance policy notice and cooperation
provisions to be conditions precedent to coverage, and that the
insured breach of those provisions permitted the insurer to
disclaim coverage); Ebert v. Balter, 181 A.2d 532, 535 (N.J. Super.
Ct. App. Div. 1962) (holding that an insured’s compliance with a
condition precedent “is not tested by the presence or absence of
prejudice to the insurer but only by whether the condition has been
fulfilled by the insured under all the circumstances”).
State National argues that the County’s inability to
demonstrate that it provided an adequate defense to the Anderson
litigation -- in other words, that the County failed to comply with
a condition precedent to coverage -- permits it to disclaim
coverage without further inquiry.

Putting aside the finding that

the adequacy of the County’s defense is a question for the jury, as
well as putting aside the issue of whether State National became
responsible for the defense during the course of the Anderson
litigation,14 State National’s position is akin to pre-Cooper

14

If State National’s duty to defend under the CGL policy was
implicated at some point during the Anderson litigation (as the
County claims it was by its notice to State National’s
administrator, Meadowbrook), and State National failed to step in
and take control of the defense, the County’s inability to meet
27

cases, like Whittle v. Associated Indem. Corp., 33 A.2d 866, 868
(N.J. Err. & App. 1943), that were expressly rejected by Cooper and
its progeny.

The Court cannot find any support in the case law for

the application of the pre-Cooper cases here with regard to the
adequate defense and investigation condition precedent in the SIR
endorsement.

See Jackson v. New Jersey Indem. Ins. Co., 2011 WL

2848586, *2 (N.J. Super. App. Div. 2011) (citing Pfizer) (“New
Jersey has long required a showing of prejudice before a contract
of insurance may be avoided.”).
The burden of proof of such prejudice rests on the carrier,
Cooper, 237 A.2d at 872, and in determining whether appreciable
prejudice exists, each case must turn on its own facts, Allstate
Ins. Co. v. Grillon, 251 A.2d 777 (N.J. Super. Ct. App. Div. 1969).
Thus, should a jury determine that the County did not meet the
condition precedent under the policy that it provided an adequate
defense to the Anderson litigation, State National must then
demonstrate to the jury how it was appreciably prejudiced by the
County’s actions in order to disclaim coverage.15

its obligation on one insurance policy provision cannot absolve
State National’s breach of a concurrent policy provision.
15

In the context of late notice, the courts have fashioned
two variables relevant to the determination of whether there has
been appreciable prejudice: (1) whether substantial rights have
been “irretrievably lost,” and (2) whether the insurer can
demonstrate that it would have had a meritorious defense had
there been timely notification. Continental Ins. Co. v. Beecham,
Inc., 836 F. Supp. 1027, 1048 (D.N.J. 1993) (citing Morales v.
National Grange Mutual Ins. Co., 423 A.2d 325, 327-38 (N.J.
28

3.

State National’s motion as to the County’s claim
that State National acted in bad faith (Docket No.
545)

The County claims that State National acted in bad faith in
refusing to settle the Anderson case when it knew that the County
was likely to suffer an excess verdict and that the case could have
been resolved within the policy limits.

More specifically, the

County contends that Meadowbrook,16 State National’s administrator,
never issued a coverage denial, it never performed an independent
coverage evaluation, it refused to engage in settlement
discussions, and it failed to protect the County from an excessive
verdict even though it knew the matter could be settled within the
policy limits.
State National has moved for summary judgment on the County’s
bad faith counterclaim, and its affirmative defenses based on State
National’s alleged bad faith.

On the same construction of facts to

support its other two motions, State National argues that no

Super. Law Div. 1980)). Presumably, if it is found that the
County did not meet the policy condition of providing an adequate
defense, State National’s burden of demonstrating appreciable
prejudice under a similar framework is not onerous.
16

Although the County’s policy is with State National, under
a general agency agreement between Star Insurance Company and
Meadowbrook Insurance Group, State National issued a public
entity insurance policy on its “paper,” but it assumed no risk
under the policy. Under the agreement, Star assumed all risk and
Meadowbrook administered the claims. All communications relating
to coverage under the policy were between the County and
Meadowbrook. Star will pay any judgment in this action entered
against State National. (See County Opp. Br., Docket No. 609 at
8-9.)
29

disputed facts exist to refute that State National did not act in
bad faith, and that it was the County who misled State National and
did not live up to its bargain under the insurance policy.

The

County conveys a completely different version of events leading up
to the Anderson verdict, including its communications with
Meadowbrook, and Meadowbrook’s actions and inactions relating to
the Anderson claim and trial.

The Court does not need to recite in

detail the parties’ extensive recitation of facts to conclude that
the County’s properly supported opposition to State National’s
summary judgment motion demonstrates the existence of material
disputed facts on the issue of bad faith.

Consequently, the Court

cannot enter judgment in State National’s favor on this claim.
State National’s motion, however, raises an issue of law that
the Court must decide.

State National argues that its actions

should be viewed under the “fairly debatable” standard, which
requires a finding that the insurer had no debatable basis to deny
coverage, and that the insurer acted with reckless disregard to the
facts and proof submitted by the insured.
621 A.2d 445, 454 (N.J. 1993).

See Pickett v. Lloyd's,

The County counters that the

“fairly debatable” standard does not apply to this case because
that standard is employed in cases involving first-party claims -that is, in cases where an insured claims that the insurer acted in
bad faith in paying a claim out to the insured.

The County

contends that the “fairly debatable” standards is inapplicable to

30

cases such as this one, where the insured claims that the insurer
acted in bad faith in its duties to settle a third-party claim.
See Rova Farms Resort, Inc. v. Investors Ins. Co. of America, 323
A.2d 495, 497-98 (N.J. 1974).
The Court finds that the “fairly debatable” standard does not
apply to the analysis of the County’s bad faith claim in this case.
Even though no bright-line rule has been established in the case
law as to whether the “fairly debatable” standard only applies to
first-party claims, and there is no specific case that precludes
the application of that standard here,17 the Court finds that the

17

State National cites to this Court’s decision in Evanston
Ins. Co. v. Crocilla, 2012 WL 6707754 (D.N.J. 2012) to support
the proposition that the “fairly debatable” standard is
applicable in cases involving the insured’s claim that the
insurer acted in bad faith in settling a third-party claim. In
Evanston, the insurance company instituted a declaratory judgment
action seeking a declaration that it did not have a duty to
defend or indemnify the insured. The insured cross-claimed for
bad faith, claiming that the insurer’s refusal to accept her
tender in a state court action and the denial of her claim for
defense and indemnification were done in bad faith. After
finding that the insurance policy did not afford the insured any
coverage for the claims advanced against her in the underlying
state court proceeding, this Court then briefly addressed the
insured’s bad faith claim. This Court cited a Third Circuit
case, which cited Pickett v. Lloyd's, 621 A.2d 445, 454
(N.J.1993), for the basic standard under New Jersey law for
determining whether an insurer has acted in bad faith, without
marking any distinction between first-party or third-party
claims. This Court did not specifically analyze the insured’s
claim under the bad faith standard cited, but instead summarily
denied the insured’s bad faith claim because of the Court’s
finding that she was not entitled to a defense or investigation
under the policy. The Court does not find its decision in
Evanston to substantively support State National’s position that
the “fairly debatable” standard is definitively applied in the
third-party context. Cf. Pickett, 621 A.2d at 454 (citation
31

rationale of Rova Farms is more applicable to this action than the
rationale of Pickett.
In Pickett, the New Jersey Supreme Court began its opinion by
explaining Rova Farms:
In Rova Farms Resort, Inc. v. Investors Insurance
Co., 65 N.J. 474, 323 A.2d 495 (1974), this Court held
that an insured may recover more than the policy limit
for a liability insurer's bad-faith refusal to settle a
third-party claim against its insured within that limit,
when the refusal results in the third party obtaining a
judgment against the insured that exceeds the policy
limit. The Court emphasized that by virtue of the terms
of a liability policy that prevented the insured from
settling on its own behalf except at its own expense, the
carrier had made itself the agent of the insured in this
respect. “Thus the relationship of the company to its
insured regarding settlement is one of inherent fiduciary
obligation.” A necessary corollary of that fiduciary
duty to act on behalf of the insured is that a decision
not to settle within the policy limits must be an honest
one. It must result from a weighing of probabilities in
a fair manner. To be a good faith decision, it must be
an honest and intelligent one in the light of the
company's expertise in the field. Where reasonable and
probable cause appears for rejecting a settlement offer
and for defending the damage action, the good faith of
the insurer will be vindicated.
Pickett v. Lloyd's, 621 A.2d 445, 449-50 (N.J. 1993) (internal
citations omitted).18

omitted) (“Under the ‘fairly debatable’ standard, a claimant who
could not have established as a matter of law a right to summary
judgment on the substantive claim would not be entitled to assert
a claim for an insurer's bad-faith refusal to pay the claim.”).
18

See also Wood v. New Jersey Mfrs. Ins. Co., 21 A.3d 1131,
1139-40 (N.J. 2011) (explaining that a Rova Farms bad faith claim
is a “simple breach of contract claim”--a “cause of action
against an insurer in those instances where certain circumstances
coalesce: where there is a settlement demand within the policy
32

The Pickett court then noted, “This case involves what is
called a ‘first-party’ claim against an insurance company: a suit
by an insured against his insurance company because of its failure
to settle his claim, as opposed to a suit based on the insurer's
failure to settle a third party tort claim for a reasonable sum.”
Id. at 450 (quotations and citation omitted).

The court

concluded, “We are satisfied that there is a sufficient basis in
law to find that an insurance company owes a duty of good faith to
its insured in processing a first-party claim.”

Id.

To analyze a

bad faith claim in this context, the court adopted the “balanced
approach” from Rhode Island:

“To show a claim for bad faith, a

plaintiff must show the absence of a reasonable basis for denying
benefits of the policy and the defendant's knowledge or reckless
disregard of the lack of a reasonable basis for denying the claim.”
Id.
The Third Circuit has also noted the distinction between
Pickett cases and Rova Farms cases.

In American Hardware Mut. Ins.

Co. v. Harley Davidson of Trenton, Inc., 124 Fed. Appx. 107, 112
(3d Cir. 2005), the court upheld the district court’s application
of Rova Farms to an insured’s claim that the insurer did not settle
a tort claim against the insured in good faith.

In rejecting the

limits, the insurer in bad faith refuses to settle the claim, and
the verdict above the policy limits is returned. In that defined
setting, 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”).
33

insurance company’s argument that the district court should have
employed the Pickett “fairly debatable” standard, the court found
that although the issue of whether the insured would be held liable
for the third-party plaintiff’s injuries was “fairly debatable,”
in the context of a third-party claim with a possibility
of an excess verdict, Pickett supplies only part of the
equation. The ‘fairly debatable’ standard is analogous
to the probability liability will attach in a third-party
claim, but it does not consider the likelihood of an
excess verdict. A third-party claim that may exceed the
policy limit creates a conflict of interest in that the
limit can embolden the insurer to contest liability while
the insured is indifferent to any settlement within the
limit. This conflict is not implicated when the insured
is a first-party beneficiary, where the claimant and the
insurer are in an adversarial posture and the possibility
of an excess verdict is absent. Rova Farms, not Pickett,
protects insureds who are relegated to the sidelines in
third-party litigation from the danger that insurers will
not internalize the full expected value of a claim due to
a policy cap.
American Hardware, 124 Fed. Appx. at 112.
According to the County, Meadowbrook refused to perform an
independent analysis of the Anderson case or participate in
preparing for trial, and after the trial was underway, it refused
to participate in settlement talks with Anderson’s counsel, even
though Anderson’s demand was $10 million, and the trial judge had
recommended settlement in the $6 million - $8 million range, both
within policy limits.

Additionally, the County points out that an

attorney hired by Meadowbrook to observe the second-to-last day of
trial reported that a jury verdict potential was in the $10 million
to $15 million range, that a reasonable settlement value was $4

34

million, and that there was a small window to settle the case the
next day before the jury returned its verdict.

The County contends

that despite knowing this, Meadowbrook instead focused on
supporting its case to disclaim coverage under the policy based on
the County’s alleged breach of the adequate defense provision.
To refute that these claims warrant the Rova Farms analysis,
State National argues that because (1) the County maintained full
control over the defense of the Anderson litigation, (2) State
National was relegated to the sidelines, (3) State National denied
coverage on the last day of trial just before the jury returned its
verdict, and (4) the County had the ability to settle the case
itself, Pickett is applicable.
If this case fit without dispute into that description, then
perhaps Pickett would apply.

As articulated above, however,

dispute remains as to State National’s duty to provide a defense to
the Anderson litigation, and as to whether the County’s “full
control” of the litigation was by virtue of its choice or necessity
due to Meadowbrook’s alleged refusal to get involved.

Dispute also

remains as to the County’s ability to settle the matter on its own
without input from State National, particularly when any proposed
settlement would exceed the County’s SIR and implicate duties and
obligations in the CGL policy.
Viewing the evidence of Meadowbrook’s actions during the
pendency of the Anderson claim and trial in the light most

35

favorable to the non-moving party, the County, it could be found by
a jury that Meadowbrook did not “diligently seek a possible
settlement to protect the larger interest of its insured,” Rova
Farms, 323 A.2d at 505, and instead focused on its own interest in
its attempt to pay nothing by disclaiming coverage instead of the
$10 million policy limit.

Thus, this case is different from the

Pickett determination of whether State National had a reasonable
basis for denying the County’s claim for defense and coverage under
the $10 million policy, and it is instead more analogous to the
Rova Farms analysis.
Under the Rova Farms standard, it is the County’s burden to
establish bad faith on the part of the State National.19
19

Rova Farms sets forth the standards for evaluating whether
the insurer acted in good faith:
“[A] decision not to settle must be a thoroughly
honest, intelligent and objective one. It must be a
realistic one when tested by the necessarily assumed
expertise of the [insurance] company.” This expertise
must be applied, in a given case, to a consideration of
all the factors bearing upon the advisability of a
settlement for the protection of the insured. While the
view of the carrier or its attorney as to liability is
one important factor, a good faith evaluation requires
more. It includes consideration of the anticipated
range of a verdict, should it be adverse; the strengths
and weaknesses of all of the evidence to be presented
on either side so far as known; the history of the
particular geographic area in cases of similar nature;
and the relative appearance, persuasiveness, and likely
appeal of the claimant, the insured, and the witnesses
at trial.
Courvoisier v. Harley Davidson of Trenton, Inc., 742 A.2d 542,
548 (N.J. 1999) (quoting Rova Farms).
36

Courvoisier v. Harley Davidson of Trenton, Inc., 742 A.2d 542, 548
(N.J. 1999).

In its opposition to State National’s motion on its

bad faith claim, the County has presented sufficient evidence to
show that a genuine issue remains as to State National’s actions
relating to its involvement in the Anderson matter.

Consequently,

State National’s motion for summary judgment on the County’s bad
faith counterclaim must be denied.
CONCLUSION
State National’s three motions for summary judgment, as well
as its motion to strike the County’s Local Civil Rule 56.1
statement, are denied.

The conclusions of law determined herein

relating to the interpretation of the insurance policy and the
County’s bad faith counterclaim shall govern the claims going
forward.

The case shall be set for trial, with pre-trial hearings

scheduled accordingly to address the parties’ pending trial-related
motions.

An appropriate Order will be entered.

Date:
03/31/14
At Camden, New Jersey

S/NLH
NOEL L. HILLMAN, U.S.D.J.

37