KURZ et al v. STATE FARM FIRE AND CASUALTY COMPANY

Filing 18

OPINION. Signed by Judge Renee Marie Bumb on 9/19/2017. (dmr)

[Dkt. No. 15]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

JOHN E. KURZ; MICHELLE M.
KURZ,
Plaintiffs,

Civil No. 16-8681(RMB/AMD)

v.
OPINION
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant.

BUMB, UNITED STATES DISTRICT JUDGE:
This matter comes before the Court upon the filing of a
Motion to Dismiss [Dkt. No. 15] by Defendant State Farm Fire and
Casualty Company (“State Farm” or “Defendant”). State Farm seeks
to dismiss Plaintiffs John E. Kurz and Michelle Kurz’s (the
“Plaintiffs”) Complaint pursuant to Fed. R. Civ. P. 12(b)(6).
I.

Factual and Procedural Background

The following facts are taken from Plaintiffs’ Complaint
and are accepted as true for the purposes of this review.
Plaintiffs own the real property located at 397 Friendship
Road (a/k/a 102 Harmony Road), Clarksboro, New Jersey (the
“Property”) and have resided there at all times relevant to this
case. (Compl. ¶ 1, 3, 8). On August 28, 2011, Hurricane Irene

hit New Jersey, resulting in high wind speeds that damaged the
Property. (Id. at ¶ 3). On October 29-30, 2012, just over a year
after Hurricane Irene hit New Jersey, Hurricane Sandy struck the
state. (Id. at ¶ 8). The winds from the Hurricane also caused
damage to the Property. (Id.)
At the time of each of these storms, Plaintiffs had a
homeowner’s insurance policy issued by Defendant, Policy Number
30-CD-3885-0 (the “Policy”). (Id. at ¶ 4, 9). The Policy was
effective as of March 19, 2011, and had a one-year policy period
subject to automatic annual renewal upon payment of the required
premiums. (Id. at ¶ 14). Plaintiffs made claims under this
policy after both Hurricane Irene (claim number 30-Y012-157) and
Hurricane Sandy (claim number 30-3K75-117). (Id. at ¶ 5, 10).
Defendant denied portions of both of these claims. (Id. at ¶ 5,
6, 11, 12).
On October 11, 2016, Plaintiffs filed a six-count Complaint
in the Superior Court of New Jersey, Law Division, Civil Part,
Gloucester County (Docket Number GLO-L-1232-16) seeking
declaratory judgments as to coverage for the damage to the
Property from Hurricane Irene (Count I) and Hurricane Sandy
(Count II), and alleging breach of contract (Count III), breach
of the covenant of good faith and fair dealing (Count IV),
unjust enrichment (Count V), and “any and all additional causes
of action as are permitted under the laws of the State of New

2

Jersey, its statutes and common law” (Count VI). Plaintiffs’
claims each boil down to the following contention: Defendant
wrongly refused to provide Plaintiffs with the coverage to which
they were entitled under the Policy.
On November 21, 2016, Defendant removed the case to this
Court pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332(a)(1).
Defendant filed this Motion to Dismiss on February 1, 2017,
seeking, under Fed. R. Civ. P. 12(b)(6), an Order dismissing
Plaintiffs’ Complaint in its entirety or, in the alternative,
dismissing Counts IV, V, and VI, along with Plaintiffs’ claims
for consequential damages and attorney’s fees. Plaintiffs filed
their opposition on February 21, 2017.
II.

Legal Standard

To withstand a motion to dismiss under Fed. R. Civ. P.
12(b)(6), “a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 662. “[A]n unadorned,
the defendant-unlawfully-harmed-me accusation” does not suffice
to survive a motion to dismiss. Id. at 678. “[A] plaintiff's

3

obligation to provide the ‘grounds' of his ‘entitle[ment] to
relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain,
478 U.S. 265, 286 (1986)).
In reviewing a plaintiff's allegations, the district court
“must accept as true all well-pled factual allegations as well
as all reasonable inferences that can be drawn from them, and
construe those allegations in the light most favorable to the
plaintiff.” Bistrian v. Levi, 696 F.3d 352 n.1 (3d Cir. 2012).
When undertaking this review, courts are limited to the
allegations found in the complaint, exhibits attached to the
complaint, matters of public record, and undisputedly authentic
documents that form the basis of a claim. See In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997);
Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998
F.2d 1192, 1196 (3d Cir. 1993).
Under New Jersey law, “determination of the proper coverage
of an insurance contract is a question of law.” Cnty. of
Gloucester v. Princeton Ins. Co., 317 Fed. Appx. 156, 159 (3d
Cir. 2008). “[T]he first step in examining an insurance contract
is to determine whether an ambiguity exists.” Pittston Co.
Ultramar America Ltd. v. Allianz Ins. Co., 124 F.3d 508, 520 (3d
Cir. 1997). An ambiguity exists when “the phrasing of the policy

4

is so confusing that the average policyholder cannot make out
the boundaries of coverage.” Weedo v. Stone–E–Brick, Inc., 81
N.J. 233, 247, 405 A.2d 788 (1979). In determining whether an
ambiguity exists, it is also important to remember that
insurance contracts are generally viewed as contracts of
adhesion, and accordingly, ambiguities in their language are
interpreted against the drafter. Cnty. of Gloucester, 317 Fed.
Appx. at 161.
“When the terms of an insurance contract are clear,
[however,] it is the function of a court to enforce it as
written and not make a better contract for either of the
parties.” Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161
A.2d 717 (1960) (internal citation omitted). Moreover, “[a]bsent
statutory [prohibitions], an insurance company has the right to
impose whatever conditions it desires prior to assuming its
obligations and such provisions should be construed in
accordance with the language used.” Id.
III. Analysis
In support of its Motion to Dismiss, Defendant raises the
following arguments:
(1)

Any claims with respect to coverage for damage caused by
Hurricane Irene (Counts I, III, IV, V) are time-barred by
the “Suit Against Us” provision in the Policy;

(2)

Any claims with respect to coverage for damage caused by
Hurricane Sandy (Counts II, III, IV, V) are barred under
the Policy because Plaintiffs failed to cooperate with

5

Defendant and provide all required information, as
mandated by the “Duties After Loss” and “Suit Against Us”
provisions;
(3)

Plaintiffs’ Complaint fails to set forth any facts to
support a claim for a breach of the covenant of good
faith and fair dealing (Count IV);

(4)

Because there was and is a valid, existing insurance
contract between Plaintiffs and Defendant, Plaintiffs, as
a matter of law, cannot invoke the quasi-contractual
remedy of unjust enrichment (Count V);

(5)

Count VI does not set forth any cause of action, and as
such must be dismissed; and

(6)

Plaintiffs’ demands for consequential damages and
attorneys’ fees in the Wherefore Clause of each count are
improper and should be dismissed.

(Def.’s Br. 1-3). The Court shall address these arguments in the
order presented.
A. Hurricane Irene Claims
Defendant seeks the dismissal of all of Plaintiffs’ claims
arising out of Hurricane Irene for failure to timely file suit.
In support of its motion, Defendant cites the “Suits Against Us”
provision of the Policy, at Section I – Conditions, ¶ 6, which
provides
No action shall be brought unless there has been
compliance with the policy provisions. The action must
be started within one year after the date of loss or
damage.

6

(Policy No. 30-CD-3885-0, Ex. A to Cert. of Lorrie Moses)
(emphasis added). 1 Specifically, Defendant argues that Plaintiffs
failed to file suit within one year of any loss caused by
Hurricane Irene, as required by the Policy. (Def.’s Br. 9).
According to the Complaint, filed on October 11, 2016, the
Property was damaged by Hurricane Irene on August 28, 2011.
(Compl. ¶ 3). Defendant argues that this five year gap was too
long, regardless of any tolling argument raised by Plaintiffs.
(Def.’s Br. 9).
Plaintiffs do not dispute the validity of the limitations
period in the Policy. (Pl.’s Br. 12). They argue, however, that
their claims are not time-barred because either (1) the
limitations period was extended under the doctrine of equitable
tolling or (2) Defendant waived any statute of limitations
defense it may have had. (Id. at 12-17). Specifically,

1

Defendant relies on the Certification of Lorrie Moses, a Claims
Specialist employed by Defendant, to clarify the dates upon
which any coverage denials occurred, and to establish that
Plaintiffs did not comply with the cooperation provisions of the
Policy. Attached to Ms. Moses’s Certification are several
exhibits: a copy of the Policy and multiple emails and letters
between the parties. Plaintiffs, in turn, offer exhibits of
their own. Other than the Policy, the Court will not consider
these exhibits at this stage. Nor will the Court exercise its
discretion to convert this Motion to a Motion for Summary
Judgment pursuant to Fed. R. Civ. P. 12(d), as requested by
Plaintiffs in their brief. The issues on which the parties
present this evidence can either be resolved by reference to the
Complaint and the Policy or require the benefit of discovery to
be properly decided, and can be raised at the summary judgment
stage.
7

Plaintiffs argue that Defendant lulled them into a false belief
regarding the likelihood that the claim would be settled without
the need for litigation, thereby causing Plaintiffs to delay
commencing their suit. (Id. at 14-16). Plaintiffs further argue
that Defendant waived any potential limitations defense by
continuing to communicate with Plaintiffs regarding the
Hurricane Irene claims after the limitations period had passed.
(Id. at 17).
Under New Jersey law, insurance actions are generally
governed by the statute of limitations applicable to contracts.
See Breen v. New Jersey Mfrs. Indemn. Ins. Co., 252 A.2d 49, 53
(Law Div. 1969), aff'd, 263 A.2d 802 (App. Div. 1970). The
statute of limitations for “recovery upon a contractual claim or
liability, express or implied,” is six years. N.J.S.A. 2A:14-1.
This rule, however, applies in the “[a]bsen[ce] [of] a provision
in the insurance policy or an express statute to the contrary,”
and the parties are free to shorten this period by agreement.
Walkowitz v. Royal Globe Ins. Co., 374 A.2d 40, 43 (App. Div.
1977), certif. dismissed, 384 A.2d 815 (1977); Gahnney v. State
Farm Ins. Co., 56 F. Supp. 2d 491, 495 (D.N.J. 1999) (citing
James v. Federal Ins. Co., 73 A.2d 720, 721 (N.J. 1950)(“[t]he
law will not make a better contract for parties than they
themselves have seen fit to enter into, or alter it for the
benefit of one party and to the detriment of the other. The

8

judicial function of a court of law is to enforce a contract as
it is written.”)(citation omitted)).
In this case, the “Suits Against Us” provision
unambiguously provides that the statute of limitations for legal
actions concerning the policy is “one year [from] the date of
loss or damage.” Plaintiffs do not take issue with the
enforceability of this shortened time period. As mentioned,
however, they do contend that the one-year period has been
tolled. Plaintiffs are correct that the limitations period in an
insurance policy may be subject to tolling. See Peloso v.
Hartford Fire Insurance Co., 267 A.2d 498 (N.J. 1970). In Peloso
v. Hartford Fire Insurance Co., the New Jersey Supreme Court
interpreted policy language substantially similar to that at
issue here 2 and held that the limitations period begins running
on the date of the loss, but is tolled from the date an insured
provides notice of the loss to the insurer (the “notice date”)
until liability is formally denied (the “denial date”). Peloso,
267 A.2d at 501. To effectively end the tolling and continue the
running of the limitations period, the insurer must

2

The language at issue in Peloso was borrowed from N.J.S.A.
17:36-5.20 and provided “No suit or action on this policy for
the recovery of any claim shall be sustainable in any court of
law or equity . . . unless commenced within twelve months next
after inception of the loss.” Peloso, 267 A.2d at 517. The
“Suits Against Us” provision in the Policy is “consistent with
N.J.S.A. 17:36-5.20.” (Def.’s Br. 8 n.3).
9

unequivocally deny the claim. See Biegalski v. Am. Bankers Ins.
Co. of Florida, No. 14-6197, 2016 WL 1718101, at *4-5 (D.N.J.
Apr. 29, 2016) (discussing Azze v. Hanover Insurance Co., 336
N.J. Super. 630 (App. Div. 2001) (holding that tolling period
had not ended where denial was insufficiently unequivocal)).
Moreover, as a general rule, “[t]ime limitations analogous
to a statute of limitations[,]” like the limitations provision
here, “are subject to equitable modifications such as tolling.”
Miller v. N.J. State Dep't of Corr., 145 F.3d 616, 617 (3d Cir.
1998) (citing Oshiver v. Levin, Fishbein, Sedran & Berman, 38
F.3d 1380, 1387 (3d Cir.1994)). Equitable tolling is typically
applied in three scenarios: “(1) [where] the defendant has
actively misled the plaintiff, (2) [where] the plaintiff has in
some extraordinary way been prevented from asserting his rights,
or (3) [where] the plaintiff has timely asserted his rights
mistakenly in the wrong forum.” Heyert v. Taddese, 431 N.J.
Super. 388, 436 (App. Div. 2013) (quoting F.H.U. v. A.C.U., 427
N.J. Super. 354, 379 (App. Div. 2012)). “Absent a showing of
intentional inducement or trickery by a defendant, the doctrine
. . . should be applied sparingly and only in the rare situation
where it is demanded by sound legal principles and in the
interest of justice.” Binder v. Price Waterhouse & Co., L.L.P.,
923 A.2d 293, 298 (N.J. Super. Ct. App. Div. 2007) (citation
omitted). Equitable tolling “affords relief from inflexible,

10

harsh or unfair application of a statute of limitations,” but
“does not excuse claimants from exercising the reasonable
insight and diligence required to pursue their claims.” Freeman
v. State, 788 A.2d 867, 880 (N.J. Super. Ct. App. Div. 2002)
(quoting Villalobos v. Fava, 775 A.2d 700, 708 (App. Div.
2001)).
Relevant to this case, a complaint may be dismissed under
Rule 12(b)(6) on statute of limitations grounds where “the time
alleged in the statement of a claim shows that the cause of
action has not been brought within the statute of limitations”
and the plaintiff has not demonstrated that a recognized tolling
doctrine might reasonably apply. Bethel v. Jendoco Const. Corp.,
570 F.2d 1168, 1174 (3d Cir. 1978); Yang v. Odom, 392 F.3d 97,
101 (3d Cir. 2004); see also Robinson v. Johnson, 313 F.3d 128,
135 (3d Cir. 2002); Oshiver, 38 F.3d at 1384 n.1; R.K. v.
Y.A.L.E. Sch., Inc., 621 F. Supp. 2d 188, 202 (D.N.J. 2008). The
Plaintiffs bear the burden of “plead[ing] the applicability of
the doctrine.” In re Cmty. Bank of N. Virginia, 622 F.3d 275,
301 (3d Cir. 2010), as amended (Oct. 20, 2010) (citing Oshiver,
38 F.3d at 1391–92). In other words, “the face of the complaint
must set forth ‘sufficient factual matter’ to allow the court
‘to draw the reasonable inference’ that discovery will show that
the [P]laintiff[s’] untimely claim is entitled to tolling.”
Menichino v. Citibank, N.A., No. CIV.A. 12-0058, 2013 WL

11

3802451, at *7 (W.D. Pa. July 19, 2013) (quoting Iqbal, 556 U.S.
at 678).
From the face of Plaintiffs’ Complaint, it appears that
Plaintiffs have not timely filed their claims related to
Hurricane Irene. Plaintiffs allege that “[o]n August 28, 2011,
as a result of the wind speeds of Hurricane Irene, the
Plaintiffs suffered property damage,” that they made a claim,
that the damage was covered under the Policy, and that the claim
was not properly paid, in breach of the Policy. (Compl. ¶ 3-7).
Importantly, Plaintiffs have pled no facts relative to either
the post-notice, pre-denial tolling provided for by Peloso or
equitable tolling. “[I]t is what the Plaintiffs knew or should
have known, and what they did or reasonably should have done in
response, that lies at the core” of these issues. Menichino,
2013 WL 3802451, at *6. “The Plaintiffs do not need to take
discovery from themselves to flesh out these facts in the
Complaint.” Id. Similarly, whether or not the parties dispute
the denial date – it appears from their briefs that they do –
the Plaintiffs possess the information necessary to plead an
alleged date.
Although Plaintiffs make a number of allegations in their
brief concerning tolling, they have not plead these facts.
Accordingly, because Plaintiffs’ Hurricane Irene claims are
facially untimely, and Plaintiffs have not pled any facts

12

suggesting that tolling applies, their claims regarding
Hurricane Irene are dismissed, without prejudice. Plaintiffs,
however, will be afforded the opportunity to amend the Complaint
to add allegations that may set forth an entitlement to
equitable tolling.
B. Hurricane Sandy Claims
With regard to Plaintiffs’ claims arising out of the denial
of coverage for damage sustained during Hurricane Sandy,
Defendant contends that Plaintiffs failed to cooperate with
Defendant’s requests for information, thereby forfeiting both
coverage and their right to bring suit. (Def.’s Br. 11-15).
Plaintiffs deny that they failed to cooperate, arguing that they
provided Defendant with “all the documentation in their
possession at the time [it was requested].” They further aver
that Defendant failed to establish the Plaintiffs’ alleged
failure to cooperate resulted in “appreciable prejudice” to
Defendant. At a minimum, Plaintiffs argue, discovery is required
on this issue, and dismissal at this stage would be premature.
(Pl.’s Br. 18-25).
To support its argument, Defendant cites to the “Your
Duties After Loss” provision of the Policy, Section 1 –
Conditions, ¶ 2, which requires Plaintiffs, among other things,
to “provide [State Farm] with records and documents [it]
request[s] . . . as often as [State Farm] reasonably

13

require[s].” Defendant argues that in an effort to confirm that
the damage claimed by Plaintiffs as a result of Hurricane Sandy
was different from that sustained during Hurricane Irene, it
made several requests to Plaintiffs for documentation, which
Plaintiffs ignored or failed to properly comply with. (Def.’s
Br. 11-12). According to Defendant, not only does this failure
to cooperate breach the Policy and preclude coverage, but it
further operates to preclude suit, as the “Suits Against Us”
provision in the Policy provides that “[n]o action shall be
brought unless there has been compliance with the policy
provisions.”
While it is true that an insured’s failure to adhere to a
“cooperation clause” in an insurance policy, at least under
certain circumstances, may operate to preclude coverage under
said policy, see Haardt v. Farmer’s Mut. Fire Ins. Co., 796 F.
Supp. 804, 809 (D.N.J. 1992) (collecting cases), the parties
here dispute whether such a failure to cooperate on the part of
an insured operates to forfeit coverage in the absence of proof
of “appreciable prejudice” to the insurer. See (Pl.’s Br. 21-23;
Def.’s Rep. Br. 8-9). At this stage, the Court will not resolve
this issue given the parties’ factual disputes. See Mariani v.
Bender, 205 A.2d 323, 328 (N.J. App. Div. 1964) (Providing that
“ [o]rdinarily,” the showing of deliberate material breach

14

required to relieve an insurer from its liability is an issue of
fact) (citation omitted).
Dismissal under Fed. R. Civ. P. 12(b)(6) is therefore not
appropriate. Defendant may again raise this issue once the facts
necessary to its resolution have been developed.
C. Count IV – Breach of the Covenant of Good Faith and
Fair Dealing
Defendant next contends that Count IV of the Complaint,
which seeks relief for a breach of the covenant of good faith
and fair dealing (“bad faith” claim), should be dismissed
because there is no factual support for such a claim set forth
in the Complaint. (Def.’s Br. 16). In response, Plaintiffs argue
that they should either be granted limited discovery on this
claim or, in the alternative, leave to amend the Complaint. 3
In order to establish a claim for bad faith denial of
insurance benefits, a plaintiff must show “(1) the insurer
lacked a ‘fairly debatable’ reason for its failure to pay a
claim, and (2) the insurer knew or recklessly disregarded the
lack of a reasonable basis for denying the claim.” Johnson v.
Liberty Mut. Ins. Co., No. 10-494, 2010 WL 2560489, at *2

3

Plaintiffs also allege, for the first time, a series of facts
that they believe support this claim. (Pl.’s Br. 30-31). The
Court will not consider these facts in its analysis because they
were not alleged in the Complaint.
15

(D.N.J. June 24, 2010) (quoting Ketzner v. John Hancock Mut.
Life Ins. Co., 118 Fed. Appx. 594, 599 (3d Cir.2004).
Plaintiffs do not allege that Defendant knowingly or with
reckless disregard denied their claim without a “fairly
debatable reason” for doing so. All Plaintiffs allege is that
they suffered damage to the Property from both Hurricanes Irene
and Sandy (Compl. ¶ 3, 8), and that their claims to recover for
this damage were denied in breach of the Policy (Id. ¶ 6-7, 1112) and in breach of the covenant of good faith and fair dealing
(Id. ¶ 38). These conclusory allegations are not enough to
survive a motion to dismiss. See Twombly, 550 U.S. at 556;
Iqbal, 556 U.S. at 678-89 (“Rule 8 . . . does not unlock the
doors of discovery for a plaintiff armed with nothing more than
conclusions.”). Accordingly, Plaintiffs’ claims for bad faith
denial of benefits with regard to both Hurricanes Irene and
Sandy are dismissed without prejudice. Plaintiffs, however, will
be afforded the opportunity to amend the Complaint to properly
allege such claims if they have a basis for doing so.
D. Count V – Unjust Enrichment
Defendant moves to dismiss Plaintiffs’ unjust enrichment
claim, not on the basis of insufficient pleading, but rather
because Plaintiffs allege the existence of a written contract
between the parties. (Def.’s Br. 18). Plaintiffs do not dispute
the proposition, set forth by Defendant, that unjust enrichment

16

is unavailable where there is a valid, express contract between
the parties that covers the same subject matter as the claim of
unjust enrichment. See St. Matthew's Baptist Church v. Wachovia
Bank Nat'l Assoc., No. 04–4540, 2005 WL 1199045, *7 (D.N.J. May
18, 2005) (“[w]here there is an express contract covering the
identical subject matter of [an unjust enrichment] claim, [a]
plaintiff cannot pursue a quasi-contractual claim for unjust
enrichment”) (citing Winslow v. Corporate Express, Inc., 834
A.2d 1037, 1046 (N.J. Super. App. Div. 2003). Plaintiffs do
argue, however, that because Fed. R. Civ. P. 8(d)(2) permits a
party to plead alternative – and even inconsistent – claims,
“unless and until it is determined that the contract between the
Plaintiffs and Defendant is fully enforceable, dismissing
Plaintiffs quasicontractual claim . . . [would be] premature.”
(Pl.’s Br. 33).
The Court agrees with Plaintiffs that they are entitled,
under Fed. R. Civ. P. 8(d), to plead inconsistent alternative
claims. See MK Strategies, LLC v. Ann Taylor Stores Corp., 567
F. Supp. 2d 729, 736 (D.N.J. 2008) (collecting cases).
Accordingly, the Court will deny Defendant’s motion to dismiss
Count V of Plaintiffs’ Complaint without prejudice. The Court
notes, however, that in the event the Policy is found to be
valid, Plaintiffs are expected to dismiss this claim.

17

E. Count VI – All other Causes of Action
In Count VI of the Complaint, titled “Other Relief,”
Plaintiffs “assert any and all additional causes of action as
are permitted under the laws of the State of New Jersey, its
statutes and common law against Defendant.” Defendant seeks the
dismissal of this claim, arguing that it “blatantly fails to
satisfy the pleading requirements under the Federal Rules of
Civil Procedure as it does not set forth the legal elements of
any particular claim and, furthermore, fails to put forth a
specific factual basis with respect to any particular or
specific claim.” (Compl. 19). The Court agrees. Count VI of the
Complaint fails to state a claim and will be dismissed.
F. Consequential Damages and Attorneys’ Fees
Finally, in the “Wherefore Clause” of each count,
Plaintiffs request consequential damages and attorney’s fees.
Defendant argues that Plaintiffs’ claims do not entitle them to
either of these forms of relief, and that all claims for
attorney’s fees and consequential damages should be dismissed.
First, with regard to consequential damages, Defendant
argues that, except in the context of a bad faith claim,
insurers are only liable up to the policy limits. (Def.’s Br.
21-22). Plaintiffs do not quarrel with Defendant’s premise, but
rather now argue facts that they believe support a bad faith
claim. (Pl.’s Br. 34). The problem, however, is that such facts

18

are not contained in Count IV of the Complaint. If Plaintiffs
properly re-plead bad faith in their amended complaint, they may
be entitled to consequential damages for those claims. See
Pickett v. Lloyd's, 621 A.2d 445, 454 (N.J. 1993). At this
juncture, however, all claims for consequential damages must be
dismissed. See Polizzi Meats, Inc. v. Aetna Life & Cas. Co., 931
F. Supp. 328, 334 (D.N.J. 1996).
Second, with regard to attorney’s fees, Defendant contends
that attorney’s fees cannot be awarded in a first party property
claim. (Id. at 22-23). In response, Plaintiffs point to Counts I
and II, seeking declaratory judgments as to coverage, and argue
that in actions for declaratory judgment, attorney’s fees are
available to the prevailing party. (Pl.’s Br. 36). The Court
need not rule on this issue at this stage. The decision to award
attorney's fees falls “within the sound discretion of the trial
court,” Shore Orthopedic Group, LLC v. Equitable Life Assurance
Society of the United States, 938 A.2d 962, 968 (N.J. Super.
App. Div. 2008), and there are multiple scenarios in which an
award of attorney’s fees could be warranted. It is therefore
unnecessary at this stage in the litigation for the Court
exercise its discretion to foreclose the possibility of such an
award.

19

IV.

Conclusion

For the foregoing reasons, Defendant’s Motion to Dismiss is
granted, in part, and denied, in part. An Order consistent with
this Opinion shall follow.
s/ Renee Marie Bumb
RENÉE MARIE BUMB
United States District Judge

DATED: September 19, 2017

20