Wacker-Ciocco v. Government Employees Insurance Company, 2015 N.J. Super. LEXIS 38 (N.J. Super. Ct. March 16, 2015)

Superior Court held that the trial court had erred in denying GEICO’s motion to sever and stay discovery as to the bad faith claim in this UIM/bad faith action

The Superior Court of New Jersey, Appellate Division reversed the orders of the trial court, which denied GEICO’s motion to sever and stay the bad faith claim and discovery related thereto, pending resolution of the underlying UIM claim. The plaintiff had an auto policy with GEICO, which provided for UM/UIM benefits. After the plaintiff was rear-ended by another motorist and incurred medical expenses that exceeded that motorist’s liability limits, she demanded $200,000 in UIM benefits from GEICO. The plaintiff subsequently filed suit against GEICO for UIM benefits and bad faith. With respect to the bad faith claim, the plaintiff alleged that GEICO had declined to participate in arbitration, failed to make a reasonable effort to settle the UIM claim, and demanded documents unrelated to the UIM claim. During pretrial discovery, the plaintiff sought to compel the depositions of GEICO’s UIM claim adjusters and documents related to the bad faith claim. GEICO filed motions to sever the bad faith claim and stay discovery related thereto until the UIM claim was resolved. The trial court denied GEICO’s motion and compelled the depositions of GEICO’s UIM adjusters. On appeal, the Superior Court reversed the trial court’s order, holding that the trial court had erred in concluding that the disclosure of some bad faith-related discovery resolved the issue of potential prejudice to the insured and paved the way for simultaneous discovery, without regard to whether the plaintiff had established that she was entitled to coverage as a matter of law. The court considered that proof that an insured is entitled to coverage as a matter of law is a necessary pre-requisite to pursuing discovery regarding a bad faith claim. This principle did not become inapplicable simply because some discovery relevant to the bad faith claim had already been produced.

Case Law Alerts, 3rd Quarter, July 2015

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