Goldberg Segalla partner Evan D. Haggerty prevailed in the New Jersey Appellate Division, which on April 29, 2026, issued a published opinion in Tenenbaum v. Allstate Insurance Company and Cirelli v. Government Employees Insurance Company. In its decision, the court held that the trial court abused its discretion by refusing to sever and stay the plaintiff’s common law bad faith and statutory Insurance Fair Conduct Act claims while the underinsured motorist claim remained pending.

In Cirelli, the plaintiff alleged that she was involved in a motor vehicle accident with an underinsured driver and filed suit against her personal insurer, GEICO, seeking UIM benefits and asserting common law bad faith and IFCA claims. On January 18, 2022, the IFCA was signed into law, providing a private cause of action for first-party claimants to sue their insurance carriers for unreasonable delays or unreasonable denials of their Uninsured Motorist (UM) or UIM claims.

At the trial level, GEICO moved to sever and stay the bad faith and IFCA claims pending the resolution of the underlying UIM claim. Consistent with longstanding New Jersey case law, the trial court initially granted the motion to sever and stay. However, the trial court later reconsidered its order following the plaintiff’s argument that the IFCA justified claim handling discovery contemporaneous with discovery in the UIM claim. The Appellate Division granted GEICO’s motion for leave to file an interlocutory appeal and granted GEICO’s motion to stay discovery on the common law bad faith and IFCA claims, pending the result of the appeal.

The published opinion of the Appellate Division reaffirmed that bad faith claims against an insurer in the UM/UIM context must be severed and stayed pending resolution of underlying declaratory judgment or contractual claims against the insurer. On an issue of first impression, the Appellate Division held that the existence of the IFCA does not displace the necessary analysis supporting a severance and stay determination in the common law bad faith context. The Appellate Division endorsed severing and staying IFCA claims for the same reasons justifying the severance and stay of common law bad faith claims, namely notions of judicial economy, efficiency, and the prejudice underlying such highly fact-sensitive discretionary decisions.

The Appellate Division reasoned that similar to common law bad faith claims, severing and staying discovery in IFCA claims generally promotes judicial economy and efficiency by holding in abeyance “expensive, time-consuming, and potentially wasteful discovery that may be rendered moot by a favorable ruling for the insurer in the UM or UIM litigation.” The court noted the prejudicial and premature claim handling discovery demands served by the plaintiff, including deposition notices of two GEICO claim handlers, a deposition notice for GEICO’s CEO, demands for the complete claim file, and demands for reserves and “profit/loss” ratios.

The Appellate Division further noted that New Jersey courts regularly sever and stay bad faith claims in this context, and although this procedure may require parties to expend additional resources, engage in motion practice, and empanel a second jury after the UM/UIM claim is resolved, these events would not take much time when compared to the distraction and time attendant to proceeding with issues unrelated to the underlying UM/UIM claim.