Plaintiffs Alfio and Jennifer Leone filed a lawsuit against Lantana Insurance Ltd., relating to their claims for coverage under their Homeowners Insurance policy. They claimed that Lantana wrongfully denied their claim for wind damage to their home incurred during Hurricane Sandy. In Leone v. Lantana Insurance Ltd., 2014 U.S. Dist. LEXIS 121873 (D.Ct. Sept. 2, 2014), they brought suit in federal court for claims of breach of contract, breach of the duty of good faith and fair dealing, and a declaratory judgment. They sought attorneys fees for each count.
The District Court noted that this lawsuit was subject to the American Rule in which “the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys fee from the loser.” There are 3 exceptions to the rule: (1) where counsel fees are permitted by court rule or statute; (2) pursuant to a contract; and (3) where counsel fees are a traditional element of damages in a particular cause of action.
There is a New Jersey court rule, R. 4:42-9(1)(6), which does permit the award of attorneys fees in an action upon a liability or indemnity policy of insurance in favor of a successful claimant. However, the District Court found that New Jersey case law is clear in that this rule does not extend to permit counsel fees to an insured on a direct suit against the insurer to enforce a casualty or other first-party direct coverage.
Here, this lawsuit was based upon a first party property damage claim under their policy. Thus, the rule does not permit the award of attorneys fees. Because the plaintiffs provided no other grounds of statutory authorization, agreement, or other established exception for which they could receive counsel fees, the court dismissed all claims for attorneys fees.
