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Insurance claim barred because of once-and-for-all rule (US)

21 September 2017Patrick Bracher, Norton Rose Fulbright

A New Jersey appeals court held that a contractor’s lawsuit against the insurer demanding cover for a claim against the contractors arising from a construction defect was barred because the claim should have been brought in a previous lawsuit that had freed the insurer from any duty to defend the third party claim.

The original lawsuit was instituted in July 2008 against multiple defendants including the insurer and the contractor had also sued the insurer for a contribution to defence costs in 2010. The previous actions were unsuccessful.

In September 2014 a further action was instituted claiming that the insurer had a duty to defend and indemnify the insured.

The court applied what they call the ‘entire controversy doctrine’ that claimants cannot sue twice for the same event because the goal of the doctrine is not to overburden judicial administration nor to be unfair to litigants.

The doctrine recognises that it is neither fair nor efficient to fragment a single controversy into separate actions because such fragmentation can harass litigants, delay final adjudication and waste judicial resources. The claim was dismissed.

[The case is AJD Construction Company Inc. v Crum and Forster Specialty Insurance Company]

First published by Financial Institutions Legal Snapshot.

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