and breach of contract claims, New York courts analyze such claims independently for choice of law purposes. Thus, the London Defendants conclude that the Court must apply a tort choice of law analysis to Plaintiff's claims. This argument evidences a misunderstanding by the London Defendants. The Court did not apply a contract choice of law analysis to a tort claim. Rather, the Court first addressed whether Plaintiff's bad faith and punitive damages claims are considered tort or contract claims.
Different jurisdictions disagree as to the appropriate classification of these claims. See generally Pickett v. Lloyd's, 131 N.J. 457, 469-70, 621 A.2d 445 (1993). In New Jersey, a bad faith claim is "best understood as one that sounds in contract." Id. at 470. A plaintiff who is successful in proving bad faith is entitled to compensatory damages while punitive damages are recoverable where defendant's conduct is wantonly reckless or malicious. Id. at 475-76.
In New York, the London Defendants' duty to act in good faith is controlled by the implied covenant of good faith and fair dealing found in every contract. See New York University v. Continental Ins. Co., 87 N.Y.2d 308, 662 N.E.2d 763, 1995 WL 761955, at *4-5 (N.Y. Dec. 27, 1995) (dismissing insured's claim that insurer recklessly and vindictively failed to adequately investigate and failed to pay the claim as duplicative of breach of contract claim). Plaintiff may recover punitive damages for breach of the insurance contracts under the standards set forth in Rocanova v. Equitable Life Assurance Soc. of U.S., 83 N.Y.2d 603, 613, 612 N.Y.S.2d 339, 634 N.E.2d 940 (1994).
Thus, under New York law, Plaintiff's claim is best characterized as seeking an exemplary remedy for breach of contract.
See New York University, 1995 WL 761955, at *2.
Both New York and New Jersey law support the conclusion that the bad faith and punitive damages claims must be considered together with the breach of contract claim for choice of law purposes. Accordingly, the Court did not apply New York's choice of law rule for tort actions. The London Defendants cite no controlling decisions to the contrary.
D. Application of Forum's Choice of Law Rule
New York's choice of law rule governing insurance agreements is to apply "'the local law of the state which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the transaction and the parties.'"
Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 312, 318, 618 N.Y.S.2d 609, 642 N.E.2d 1065 (1994) (quoting Restatement (Second) of Conflict of Laws § 193 (1971)).
The London Defendants claim that the Court overlooked several controlling factual submissions when it decided that the principal location of the insured risk was New Jersey. The London Defendants make seven factual assertions, see Lon. Mem. at 14, all of which were originally considered by the Court. The London Defendants also submit a new affidavit from Robert Felzenberg. Upon a motion to reargue, a party may not file affidavits unless directed to do so by the court. See Local Rule 3(j). As the Court has not directed the filing of this affidavit, it will be disregarded.
The London Defendants request certification of this issue for appeal pursuant to 28 U.S.C. § 1292 in the event that the Court denies their motion for reargument. The London Defendants present no discussion of why certification is appropriate.
Certification may be granted in the discretion of the district court where an order involves "a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. 1292(b) (1993). Certification is only justified in exceptional circumstances. See Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir. 1990). A question of law is controlling if reversal of the district court's order would terminate the action. See id. at 24. This is not the case here. A question of law may also be controlling if it substantially affects a large number of cases. See Genentech, Inc. v. Novo Nordisk A/S, 907 F. Supp. 97 (S.D.N.Y. 1995). There is, however, no evidence before the Court which suggests that this issue will have such an effect. Furthermore, as the breach of contract claims will continue regardless of the disposition of this issue, certification would not materially advance the termination of this litigation. Accordingly, the London Defendants request is denied.
For the reasons stated above, the London Defendants' motion is denied in its entirety.
Shira A. Scheindlin
Dated: New York, New York
April 3, 1996