In consolidated appeals, the court addressed whether trial courts must sever and stay discovery on unreasonable delay claims under the Insurance Fair Conduct Act (IFCA), N.J.S.A. 17:29BB-1 to -3, pending resolution of underlying uninsured/underinsured motorist (UM/UIM) coverage disputes. In Tenenbaum v. Allstate Insurance Co. (A-0742-25), the court dismissed the appeal as moot after the parties resolved the UIM claim. In Cirelli v. GEICO (A-0988-25), the court reversed the trial court's order permitting simultaneous discovery of common law bad faith and IFCA claims with the UIM claim, holding that, given the circumstances, such claims should be severed and stayed.
The court reasoned that, although the IFCA creates a statutory cause of action distinct from a common law bad faith cause of action, the practical and policy considerations supporting severing and staying such claims, such as judicial economy, avoiding premature and potentially privileged discovery, and discouraging abusive pleading practices, apply equally to IFCA claims. The court emphasized that allowing discovery under the IFCA to proceed before coverage is established, like its common law bad faith analog, risks unnecessary litigation and prejudice to insurers, and that the trial court misapplied its discretion in denying a stay.