Partners Robert Laurie and Mark Shifton Obtain Dismissal of Action Based on Economic Loss Doctrine
In a multi-party property damage dispute pending in the Superior Court of New Jersey, Partners Robert Laurie and Mark Shifton obtained the dismissal, with prejudice, of a negligent misrepresentation claim asserted against an insurance company client.
The claim arose out of an accident in which a freight truck collided with a commercial warehouse resulting in significant structural damage. The plaintiff/owner of the building initially sought coverage under a policy issued by the insurance company, but that claim was denied because the accident occurred outside of the policy term. The plaintiff, nevertheless, commenced an action against the insurance company (along with the owner of the truck and others) based on a claim that the insurance company’s claim representative negligently instructed the plaintiff to commence repairs on the building, which purportedly prejudiced the plaintiff’s ability to obtain insurance coverage under a subsequent policy issued by a different carrier. The plaintiff’s theory of liability was that the insurance company client had a duty to inform it not to proceed with repairs to the building as doing so could jeopardize its claim once the proper insurer was identified.
Robert and Mark filed a motion to dismiss, arguing that the plaintiff’s claim of negligent misrepresentation was barred by the economic loss doctrine which precludes claims sounding in tort when the parties’ relationship is governed by a contract. In the motion, they argued that under New Jersey law an insurer’s conduct is governed by contract and the New Jersey Unfair Claims Settlement Act, neither of which impose a duty that would support a claim for negligent misrepresentation. The Court agreed, ruling that the economic loss doctrine applied and that the plaintiff failed to demonstrate that its claim fell within any exceptions to the doctrine. The Court dismissed the claim with prejudice because, in its motion papers, the plaintiff relied upon facts outside of its complaint compelling the Court to turn the motion into a motion for summary judgment.
A copy of the decision may be obtained here.