.

Legal Updates for Insurance Services

New Jersey Auto Insurers, Get Ready for First-Party Bad Faith!!!

Legal Update for Insurance Services - February 1, 2021

February 1, 2021

by David D. Blake

New Jersey is poised to pass its first-party bad faith statute. After passing the Senate on Friday 21-9, it only needs to pass the Assembly. If approved by the Assembly, New Jersey insurers should be prepared to defend their claims handling or face the award of attorney’s fees, interest and costs. Of importance, unlike earlier versions, the Bill only applies to UM and UIM claims and creates a separate cause of action for the following conduct:

  1. Unreasonable denial or delay;
  2. Any violation of the Unfair Insurance Practices Act without having to establish a pattern or practice of the violation.

If a violation is found, the Bill sets forth the following recoverable damages:

  1. Actual damages;
  2. Prejudgment interest, reasonable attorney’s fees and all reasonable litigation expenses.

 What is especially troubling about the Bill as drafted is that the award of extra-contractual damages is not left to the discretion of the court, but sets forth that the insured “shall be entitled to” extra-contractual damages upon violation of the Unfair Insurance Practices Act. As drafted, if a violation of the Unfair Insurance Practices Act is found—an Act designed only to regulate general business practices and not small violations on individual claims files—the insured “shall” be entitled to extra-contractual damages. So, under the Bill, a small violation, without proof of “general business practices,” will result in extra-contractual damages.

Accordingly, if passed into law, the Act would cause a sea-change in UM/UIM litigation in New Jersey, as far as an increase in filings and the size of verdicts/settlements. We will monitor this situation closely and keep our clients advised of all developments.

Click here to find a link to the Bill and here for a link to the New Jersey Unfair Claims Practices Act.

 

Legal Update for Insurance Services - February 1, 2021, has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note to tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved.

Firm Highlights

Thought Leadership

Appellate Division Affirms Dismissal of Legal Malpractice Counterclaim Against Martin Law Firm

In Martin v. Loury, 2026 N.J. Super. Unpub. LEXIS 1617 (App. Div. July 15, 2026), Martin Law Firm represented Kirk Loury in an employment matter Mr. Loury filed against his former employer, Concord Equity Group Advisors LLC (“Concord”). The allegations included, among other things, that Loury was not fairly compensated for his employment with Concord. After a bench trial finding in Loury’s favor, the Appellate Division remanded this matter in February 2016 for a second trial. During the second trial, Concord CEO, Lee Argush, testified to lower compensation estimate than first trial. On remand, the second trial judge awarded Mr. Loury the same damages as the first judge, finding Mr. Argush not credible. After the findings during the second trial, Martin Law Firm filed an action against Mr. Loury to recover legal fees and costs of representing Mr. Loury in a second bench trial and Mr. Loury filed a counterclaim against Martin Law Firm for legal malpractice, alleging he should have received an even higher award in the second bench trial. In this allegation, Mr. Loury, through his expert, claimed that Martin Law Firm should have recalled Mr. Loury to the stand to rebut Mr. Argush’s testimony to allege an alternative theory of damages. Mr. Loury’s expert admitted that the second judge already rejected Mr. Argush's theory and accepted Loury's damages theory. The trial court barred Mr. Loury’s expert and dismissed Loury's counterclaim with prejudice before convening the collection trial, and the jury ruled in Martin Law Firm’s favor. Mr. Loury appealed the trial court's pretrial rulings barring his liability expert from testifying in support of his legal malpractice counterclaim, denying his motion for summary judgment on that counterclaim, and denying his motion to amend his counterclaim by adding attorney Joseph A. Martin as a codefendant. In affirming the trial court’s decision, the Appellate Division held that the trial court properly excluded Loury’s expert testimony in the counterclaim against Martin Law Firm because the expert could not explain how calling Loury as a rebuttal witness would have increased damages when the second judge already rejected Mr. Argush's testimony and accepted Loury's damages theory, making the expert’s causation opinion speculative. The Appellate Division also held that the trial court properly denied Mr. Loury's summary judgment motion on his malpractice counterclaim because reasonable minds could differ on whether Mr. Martin's alleged failures would have changed the second judge's damages award, given the judge already found Mr. Argush not credible, creating genuine factual disputes precluding summary judgment. Also, the Appellate Division held that the trial court properly denied Loury's May 2023 motion to add Joseph Martin individually because the statute of limitations expired in February 2022, six years after the 2016 appellate remand when Mr. Loury incurred new legal costs, and relation back did not apply because Mr. Loury knew Mr. Martin's identity throughout and strategically chose to sue only Martin Law Firm in his 2019 counterclaim.

Thought Leadership

Delaware Superior Court Clarifies Pleading Standard for Legal Malpractice Claims

In the matter of Edelstein v. Kirschner, No. N25C-09-018 FJJ, 2026 Del. Super. LEXIS 45, at *1 (Super. Ct. Jan. 29, 2026), the plaintiff law firm sued its former client for unpaid legal fees in the amount of $4,399.35. The former client asserted a counterclaim alleging legal malpractice. More, specifically, the former client claimed that his lawyer committed malpractice be recommending that he settle an underlying lawsuit by entering into a stipulated judgment for an excessive amount with interest that was accruing at “an outlandish” interest rate. The law firm moved to dismiss the counterclaim on the basis that its former client had not alleged facts reflecting that he could prove the case within the case. That is, facts reflecting that his attorneys caused him to lose the underlying case. The Superior Court held that while a legal malpractice plaintiff in cases arising from underlying litigation must prove the case within the case to survive a summary judgment motion, he does not need to plead facts reflecting as much in order to survive a motion to dismiss. While this case addresses the pleading requirements of a legal malpractice case in Delaware, it also serves as reminder that chasing unpaid legal fees from a former client can often give rise to a legal malpractice counterclaim. Attorneys seeking to collect unpaid legal fees should ensure that the fees they seek are for a significant amount, which would be recoverable if a judgment is obtained. Otherwise, the effort could backfire.

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial

Jason Banonis Holds PDI Attorney of the Year Award with the PDI President

News

Jason Banonis Named Attorney of the Year by the Pennsylvania Defense Institute

Thought Leadership

Fla. Workers' Comp Physician Dispensing Ruling Could Produce New Legislative Fight

In a significant decision issued on February 25, 2026, the First District Court of Appeal (DCA) ruled in Publix Super Markets, Inc., et al. v. Department of Financial Services, et al., 430 So. 3d 252 (Fla. 1st DCA 2026), that while injured workers have an absolute right to choose their own pharmacy or pharmacist, that right does not extend to physicians who dispense medications directly to their patients.  Read Blake's article in Insurance Journal: https://www.insurancejournal.com/news/southeast/2026/08/05/880229.htm. 

Portrait of Carolyn Schweizer, with text below: Philadelphia Office Managing Attorney

News

Marshall Dennehey Names Carolyn Schweizer New Philadelphia Office Managing Attorney

empty courtroom photo

Result

Summary Judgment Secured for Life Insurance Agent

Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

News

Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

Event

Pennsylvania Appellate Update 2025-2026

On August 21, 2026, Casey will serve as a panelist for the program, “Pennsylvania Appellate Update 2025-2026” presented by the Appellate Advocacy Committee of the Pennsylvania Bar Association and Pennsylvania Bar Institute. The program is divided into three parts—Criminal, Civil, and Administrative. Casey will serve as a panelist for the Civil portion, along with Christina McKinley of Blank Rome, Ben Baer of Injury Law Partners, John Masslon of Keller Postman, Jonathan Bruno of Bruno Litigation LLC, and moderator, Ezza Ahmed of Buchanan Ingersoll.  Registration and more information: https://www.pbi.org/product/pennsylvania-appellate-update-2025-2026/

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.