By Jonathan P. Holtz, Esq.

The New Jersey Insurance Fair Conduct Act (NJIFCA or “the Act”), which became law on  January 18, 2022, has set off a wave of contentious motion practice. 

Unfortunately, anecdotal experience from shared opinions amongst New Jersey Association for Justice members shows decisions on these motions vary from county to county. Indeed, there are even variations within each county and changes over time. However, general trends on the collective judgment of the judiciary are emerging supporting survival of these claims.

The first wave of motion practice involved motions to amend to assert NJIFCA claims.  These motions  were largely granted based on the liberal standard to amend under Rule  4:9-1.  However, most of the rulings included granting the alternative relief of severing and staying any bad faith claims pursuant to Rule  4:38 and the Appellate Division in Taddei v. State Farm Indemnity Co. Most rulings expressly noted the decision did not address the merit of the claim which could be addressed in a motion to dismiss.

The second wave of motion practice involved motions to dismiss under Rule 4:6-2(e) which were largely repackaged opposition briefs from the motions to amend. This wave saw the most divergent opinions largely because individual judges were opining on the main defense argument that the NJIFCA did not apply retroactively. The decisions can largely be divided into three categories:

• The most conservative opinions held that the NJIFCA did not apply retroactively, and only applied to accidents occurring after to the passage of the Act, completely foreclosing any potential NJIFCA claim arising from accidents prior to the passage of the Act;
   
•  A group of decisions held that while the NJIFCA did not apply retroactively, it was triggered by the date of the bad faith, not the date of the accident; thus, a plaintiff could properly plead that there was continuing violation if any bad faith occurred after passage of the Act; and
   
•   The most liberal opinions held that the NJIFCA did apply retroactively, most holding it supplemented, and was curative of, the existing New Jersey Insurance Trade Practices Act which prohibited the same conduct but did not provide a private cause of action. Arguments by carriers that there was no evidence of bad faith because they were merely properly evaluating and defending the claims were largely unavailing in the motion to dismiss setting.

The third wave of motion practice is starting with motions for summary judgment. These again are largely repackaged versions of the motion to dismiss arguments which now include evidence of timing, damages, and settlement negotiations to argue no reasonable jury could find the carrier’s actions to date constitute bad faith. These are largely either denied on the liberal standard for a motion for summary judgment, or granted without prejudice to be refiled when the plaintiff has more evidence of bad faith.

However, importantly, in July 2022, many NJAJ members began citing a transcript of New Jersey Senate President Nicholas P. Scutari, a prime sponsor of the  NJIFCA, when he appeared before the Assembly Financial Institutions and Insurance Committee and  rejected the argument that the NJIFCA apply only prospectively. “We want people to be treated fairly,” Scutari said. “We want that to start right away. I don’t know why we would let people that already have claims that are pending to be able to be dealt with unfairly and then people who have new claims, they get to be treated fairly.” 

This transcript is critical because the defense position that the NJIFCA did not apply retroactively was largely based on arguments of legislative interpretation in the absence of any evidence of legislative intent. Thus, this evidence of legislative intent called into question any prior opinion decided without the benefit of the transcript.

Additionally, at least one decision granting a motion for leave to amend to assert a NJIFCA claim is currently the subject of an interlocutory appeal. That decision held the NJIFCA applied retroactively.

Overall, armed with Senator Scutari’s transcript and the collective judgment of the New Jersey Judiciary, your client’s NJIFCA claims should be permitted to be plead, and should not be dismissed because evidence of legislative intent shows the NJIFCA applies retroactively, or at a minimum, applies to continuing violations after passage of the Act. The Appellate Division may be providing more guidance soon. 

Jonathan P. Holtz, Esq., is Certified by the New Jersey Supreme Court as a Civil Trial Attorney and practices at Bramnick, Rodriguez, Grabas, Arnold & Mangan, LLC in Scotch Plains, NJ where he handles personal injury cases. He can be reached at jholtz@bramnicklaw.com or at 908-322-7000.