Pickett v. Lloyd's (A Syndicate of Underwriting Members)

Pickett v. Lloyd's (A Syndicate of Underwriting Members)

Opinion

 [*461]  [**447]   The question in this case is whether an insurance carrier's bad-faith failure to pay collision damage benefits to an insured over-the-road trucker for a tractor-trailer truck that was totally destroyed can be the basis of an action for damages in excess of the policy benefits for the value of the truck. We hold that our law does recognize such a cause of action when the [***2]  failure to pay the policy results from a denial or a withholding of benefits for reasons that are not even debatably valid and the economic losses sustained by the policyholder are clearly within the contemplation of the insurance company.

Were it not for the economic consequences to all parties, this case would be thought to arise from an almost comic mixup in the handling of an insurance claim that everyone involved has described as presenting "nothing unusual." Plaintiff, Burton Pickett, of Branchville, New Jersey lost his 1983 Mack tractor-trailer truck in a highway accident on Interstate 70 in Ohio on January 13, 1987. Another truck had stopped across the lanes of the highway, and Pickett's truck collided with it. As an "owner/operator" who had been hauling freight for Superior Carriers, Inc. (Superior) out of Kenvil, New Jersey for thirty-seven years, Pickett's seniority entitled him to "choice or refusal  [*462]  of the day's work" and thus to the more desirable and lucrative assignments. In case of an accident, Superior usually allows owner/operators a sixty-day grace period in which to replace their damaged vehicles and resume work without losing their seniority status.  [***3]  In Pickett's case, it extended that period for an additional thirty days -- to April 13, 1987.

At the time of the accident, Pickett had a $ 30,000 physical-damage policy for his truck with defendant Lloyd's, an under-writing syndicate. The insurance policy had been placed by his and Superior's agent, Robert K. Kast Associates (Kast), through defendant Peerless Insurance  [**448]  Agency, Inc. (Peerless), an agent of Lloyd's. The policy provided in part:

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.