JOHNNY CULVER v. FIRST JERSEY INSURANCE AGENCY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0750-04T50750-04T5

JOHNNY CULVER,

Plaintiff-Appellant,

v.

FIRST JERSEY INSURANCE AGENCY,

Defendant,

and

GUARANTEE TRUST LIFE INSURANCE

COMPANY,

Defendant-Respondent.

______________________________________________

 

Submitted September 26, 2005 - Decided

Before Judges A.A. Rodr guez, Alley and C.S. Fisher.

On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. UNN-L-2051-03.

Christopher C. Roberts, attorney for appel-lant.

McElroy, Deutsch, Mulvaney & Carpenter, attorneys for respondent (Steven P. Del Mauro, of counsel; Mr. Del Mauro and Joshua A. Zielinski, on the brief).

PER CURIAM

I

On March 25, 2002, Patricia Culver, then suffering from a host of serious physical ailments, applied for a $100,000 life insurance policy through an independent broker, Arthur Goldman. At that time, and during at least the preceding five years, Patricia: received dialysis treatments three times a week for end stage renal failure; was oxygen dependent due to chronic obstructive pulmonary disease; suffered from high blood pressure; and was treated with radiation for a vocal cord tumor.

The insurance application then prepared required that Patricia truthfully answer whether she "had been diagnosed as having, been advised to seek treatment for, or been treated by a medical practitioner" for any of the listed conditions during the preceding ten years. The listed conditions included, among others, "chronic obstructive lung disease, or other diseases of the respiratory system," "high blood pressure," and "disease of the . . . kidney." The completed insurance application denied that Patricia had suffered from or been treated for any of those conditions for the preceding ten years. By signing the application, Patricia acknowledged that "the statements contained in the application concerning past and present health are complete, true, and correct." In reliance upon the truth of the application, Guarantee Trust Life Insurance Company issued an insurance policy on April 10, 2002 that would pay, upon Patricia's death, $100,000 to her beneficiary.

Patricia died on August 14, 2002. The attending physician listed chronic obstructive pulmonary disease, renal failure, and vocal cord carcinoma as the causes of death.

Patricia's husband, plaintiff Johnny Culver, was the policy's named beneficiary. Eight days after Patricia's death, plaintiff delivered to Guarantee Trust his claim for the payment of death benefits. Guarantee Trust investigated the matter, soon learned for the first time that many of the application's material representations were false, and denied plaintiff's claim.

II

On May 30, 2003, plaintiff filed suit. His complaint asserted an assortment of claims including breach of contract, consumer fraud, and negligent misrepresentation, and sought relief from Guarantee Trust and defendant First Jersey Insurance Agency. Plaintiff claimed that Goldman was told of Patricia's ailments, but nevertheless filled out the form in the false manner described above. Plaintiff theorized that because Goldman was aware of the truth of the matter, his knowledge was to be imputed to First Jersey because Goldman was an "agent, representative and/or employee" of First Jersey, and that First Jersey's constructive knowledge should be imputed to Guarantee Trust because First Jersey acted as an agent of Guarantee Trust.

After a period of discovery, Guarantee Trust and First Jersey filed motions for summary judgment.

In a written opinion, the trial judge correctly viewed the factual contentions in the light most favorable to plaintiff, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), and described plaintiff's contentions in the following way:

Arthur Goldman made several phone calls to Patricia . . . about purchasing a life insurance policy. Eventually Goldman and decedent scheduled a meeting at [Patricia's] home to discuss life insurance. Plaintiff . . . was present at the meeting.

At the meeting, [Patricia] informed Goldman that she had serious health issues, including kidney problems that required dialysis three times a week. Goldman informed her that, despite her health condition, issuing a policy to her would be no problem. Goldman further indicated that it would not be necessary for [Patricia] to get a physical even after she requested one. Goldman filled out the application and [Patricia] simply signed it.

The trial judge also recognized that the parties did not dispute the fact that the insurance application "omitted important and material information regarding decedent's health." Indeed, plaintiff acknowledged that Patricia suffered from several salient health problems that were not disclosed on the insurance application. In his answers to interrogatories, plaintiff admitted that Patricia was diagnosed with hypertension in 1996, that hypertension caused the kidney damage diagnosed in either 1996 or 1997, that Patricia "was recommended to undergo a kidney transplant and she was on the waiting list for a kidney transplant," that he was aware Patricia was receiving dialysis three times a week, and that she was diagnosed with a vocal cord tumor that was treated with radiation. In light of these concessions, the trial judge focused on the only remaining obstacle to the rescission of the insurance policy, i.e., whether Goldman was the agent of either First Jersey or Guarantee Trust.

After closely examining the scant evidence offered to suggest that Goldman had an agency or employment relationship with either of these entities, the trial judge concluded that no such relationship existed and granted summary judgment in favor of Guarantee Trust and First Jersey. Plaintiff's later motion for reconsideration was denied.

III

Plaintiff appealed, asserting the following arguments for our consideration:

I. PURSUANT TO RULE 4:46 OF THE RULES GOVERNING THE COURTS OF NEW JERSEY, NO OTHER PAPERS MAY BE FILED SUBSEQUENT TO THE REPLY BRIEF WITHOUT LEAVE OF COURT; THEREFORE, PLAINTIFF WAS DENIED A FORMAL OPPORTUNITY TO ADDRESS DEFENDANT GUARANTEE TRUST LIFE INSURANCE'S REPLY ARGUMENT THAT AGENT GOLDMAN WAS AN [INSURANCE] BROKER AND NOT AN AGENT.

II. A MOTION FOR RECONSIDERATION IS APPLICABLE WHEN THE COURT FAILED TO CONSIDER EVIDENCE OR THERE [IS] GOOD REASON FOR IT TO RECONSIDER NEW INFORMATION.

III. THE SUFFICIENCY OF PLAINTIFF'S EVIDENCE OF AN AGENCY RELATIONSHIP BETWEEN AGENT GOLDMAN AND THE DEFENDANTS SUPPORTS A REMAND TO THE TRIAL COURT WHEREAS THE DEFENDANTS PROVIDED NO EVIDENCE OF AN INSURANCE BROKER-CLIENT RELATIONSHIP.

IV. AFTER A DE NOVO REVIEW, DEFENDANTS' MOTION FOR SUMMARY JUDGMENT SHOULD BE DENIED AS TO PLAINTIFF'S CLAIMS BECAUSE ISSUES OF MATERIAL FACTS AND [CREDIBILITY] ISSUES EXIST.

V. THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT SHOULD BE DENIED BECAUSE WHEN AN INSURANCE AGENT FILLS IN FALSE ANSWERS TO THE APPLICATION THE INSURER CANNOT RELY UPON THE FALSITY OF SUCH ANSWERS IN SEEKING TO AVOID LIABILITY.

VI. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT SHOULD BE DENIED BECAUSE DECEDENT MADE ORAL REPRESENTATIONS OF HER HEALTH PROBLEMS TO THE INSURANCE AGENT DURING THE APPLICATION PROCESS.

VII. AN AGENCY RELATIONSHIP EXISTED AMONG THE DEFENDANTS AND WITH AGENT GOLDMAN AT THE TIME OF THE APPLICATION PROCESS THEREFORE KNOWLEDGE CAN BE IMPUTED TO DEFENDANT GTL.

While plaintiff has divided his contentions into these seven points, these arguments may be fairly grouped into two central points: (a) the summary judgment process was flawed because plaintiff was deprived of an opportunity to submit papers to rebut defendants' contention that Goldman was not an agent or employee and also because plaintiff was wrongfully deprived of the opportunity to present oral argument on the motions' return date, and (b) there was sufficient evidence in the record to raise a genuine factual dispute about whether Goldman was an agent or employee of First Jersey.

A

In challenging the procedures that produced summary judgment in this case, plaintiff argues that "[t]he only time defendants ever raised the argument that . . . Goldman was an independent broker and not an insurance agent was in . . . Guarantee Trust['s] reply brief to plaintiff's opposition brief to defendants' summary judgment motion." He further contends that the effect of this deprivation was compounded by the judge's refusal to allow oral argument.

While it is true that the trial judge mistakenly denied plaintiff the opportunity to present oral argument without explaining why this right was withheld, Raspantini v. Arocho, 364 N.J. Super. 528, 531-32 (App. Div. 2003), we find that error to be harmless. Indeed, in so arguing, plaintiff misapprehends the scope of oral argument. He appears to erroneously believe that oral argument can be a substitute for the submission of evidential material not contained in the moving, opposing or reply papers. Since oral argument must be confined to matters found within the motion papers, the deprivation of oral argument, at least in this circumstance, while erroneous was harmless.

Of greater importance is the question of whether plaintiff had an opportunity to address, in his papers, Goldman's relationship to either Guarantee Trust or First Jersey. We conclude that plaintiff did have this opportunity and, thus, reject his criticism of the procedures utilized in this case.

Plaintiff's argument is based upon two faulty premises. First, plaintiff labors under the mistaken belief that Guarantee Trust's motion failed to fairly place him on notice that his factual contention about the alleged First Jersey-Goldman relationship was relevant. And second, plaintiff also erroneously appears to presuppose that defendants filed a single motion for summary judgment. Neither of these premises is factually accurate, and because they are inaccurate, there is no substance to plaintiff's argument.

Guarantee Trust filed a motion for summary judgment that asserted the false representations contained in the insurance application and the legal basis for voiding the policy. It is true that Guarantee Trust did not affirmatively disavow Goldman as its or First Jersey's employee or agent in its moving papers. However, the filing of the motion presented plaintiff with the opportunity to assert Goldman's alleged employment or agency relationship; indeed, as will be seen, that slim reed -- considering the rampant material misrepresentations within the insurance application -- is all that stood between plaintiff and the dismissal of his complaint. See Heake v. Atlantic Cas. Ins. Co., 15 N.J. 475, 482-83 (1954).

In other words, there can be no dispute that Guarantee Trust argued in its initial motions papers that, by signing the insurance application, Patricia certified to the truth of its content, and that the application was riddled with material misrepresentations. As a matter of law, no insurer could be obligated, in those circumstances, to pay the death benefits unless it could be shown that its agent or employee knew that the application was false. Ibid. The filing of Guarantee Trust's motion for summary judgment, regardless of whether it expressly asserted that Goldman was not its or First Jersey's agent or employee, obligated plaintiff to present any evidential information that would be germane to Guarantee Trust's argument that the policy was void ab initio. Since plaintiff believed that the circumstances brought the matter within the Supreme Court's holding in Heake, in order to attempt to defeat the motion (assuming plaintiff could provide factual support for his Heake argument) he was obligated to present those factual and legal contentions in his opposition to the motion.

Moreover, plaintiff's argument ignores the fact that Guarantee Trust and First Jersey filed separate motions for summary judgment. While it is true that Guarantee Trust did not expressly deal with the relationship between or among it, First Jersey and Goldman in its moving papers, as we have observed, First Jersey filed its own motion for summary judgment that did directly present this contention in its initial papers.

As part of its motion, which was filed the day after Guarantee Trust's, First Jersey submitted the certification of Frank Reilly, its president, as well as the affidavit of Goldman. Reilly asserted that First Jersey was the servicing agent for Guarantee Trust and, in accordance with its contract with Guarantee Trust, routinely received and forwarded to Guarantee Trust applications from independent agents. Reilly also unequivocally stated that First Jersey "did not, nor has it ever, employed Arthur Goldman, who is the independent insurance agent who sold these policies." Goldman's affidavit similarly states that he was not then nor had he ever been an employee or agent of First Jersey.

Even if we were to assume, as plaintiff argues, that Guarantee Trust's motion did not provide him with notice that would suggest he should present evidential material regarding Goldman's alleged relationship to either Guarantee Trust or First Jersey, certainly First Jersey's motion for summary judgment did serve such notice. First Jersey's motion presented direct evidence of the lack of an employment or agency relationship between it and Goldman, and trumpeted the absence of that information as the basis for a dismissal of plaintiff's claims. Thus, there is no doubt but that plaintiff had a full and fair opportunity to submit evidential material in opposition to that motion. We thus conclude that the trial judge rightfully rejected plaintiff's arguments that the procedures were flawed as a basis for reconsidering the summary judgment previously entered.

B

We also reject plaintiff's contention that there was evidence in the record that required the denial of Guarantee Trust's motion for summary judgment. In considering the significance of the evidence relating to the alleged relationships between or among Guarantee Trust, First Jersey and Goldman, it is important to recognize that an insurer cannot rely on the falsity of answers in an application when the insured has given truthful answers but the insurer's agent fills in false answers on the application. Heake, supra, 15 N.J. at 482-83. In seeking to convince the judge that the proofs in this matter fell within the scope of that holding, plaintiff attempted to demonstrate that Goldman was the agent or employee of First Jersey, and that First Jersey was the agent of Guarantee Trust. The trial judge examined the record and correctly determined that there was evidence to support the contention that First Jersey was the agent of Guarantee Trust. Accordingly, if it was assumed that a First Jersey agent was provided with truthful answers by the insured but filled in false answers on the application, Heake would suggest that Guarantee Trust would not be able to rely on the falsity of the answers as a basis for avoiding coverage. This conclusion could only be reached, however, if it could be shown that there was evidence in the record to suggest a genuine dispute about whether Goldman was First Jersey's agent or employee. Thus, the trial judge's focus correctly narrowed to a consideration of Goldman's relationship with First Jersey.

In sifting through the assertions relating to the First Jersey-Goldman relationship, the trial judge observed:

[P]laintiff has failed to establish that Goldman was defendants' agent or had apparent authority to act on defendants' behalf. In support of his claim that Goldman had apparent authority, plaintiff relies on [a] letter dated May 3, 2002 from First Jersey to [Patricia]. This letter, even when viewed with great liberality, fails to establish that Goldman had apparent authority to act on defendants' behalf. Notably, the letter is dated May 3, 2002 and the application for insurance is dated March 25, 2002. In view of these dates, the letter could not have caused [Patricia] to believe that Goldman had apparent authority when the application was completed and signed by [Patricia]. There is nothing in the record other than the letter tending to establish an agency relationship or apparent authority between Goldman and defendants.

We agree with the trial judge's analysis of the scant information provided by plaintiff in opposition to summary judgment.

First Jersey's May 3, 2002 letter that was cited in the judge's decision, upon which plaintiff principally relies, was addressed to Patricia. The letter's sole mention of Goldman is found in the following sentence: "Along with your agent, Arthur Goldman, First Jersey Insurance Agency, Inc. is always here to meet the needs of our policyholders" (emphasis added). While the trial judge correctly recognized that this letter could not form the basis for a finding of Goldman's apparent authority as an agent of First Jersey, because the letter was sent to her after the events in question, there is also nothing about this statement that would suggest First Jersey held Goldman out as its employee or agent; instead, First Jersey therein unequivocally stated that Goldman was "your agent," i.e., Patricia's agent.

Since plaintiff produced nothing further of substance in attempting to create a material question as to whether Goldman was an agent or employee of First Jersey, the trial judge correctly concluded that Goldman's alleged knowledge of the falsity of the content of the insurance application could not be imputed to First Jersey and, because it was not shown that First Jersey had knowledge of the falsity of the insurance application, no such knowledge could be imputed to Guarantee Trust. As a result, the trial judge correctly concluded that Heake did not apply and, in the absence of the circumstances referred to in Heake, Patricia's material misrepresentations in the insurance application compelled a finding that the insurance policy should be held void ab initio. An insured's prior medical history is both relevant and material to the insurer's decision to issue the insurance policy, and an insured's false statements compel the rescission of the policy. Gallagher v. New England Mut. Life. Ins. Co. of Boston, 19 N.J. 14, 21 (1955) ("The prior medical history of an applicant is naturally and logically a most material matter to a life insurance company which has been asked to underwrite a death risk, and the working rule is that inquiries propounded in the application form and the truthfulness and completeness of answers thereto touching a physical condition and pathological history of the applicant, are material to the risk as a matter of law.").

Affirmed.

 

During his deposition, plaintiff testified that at or about the time the insurance application was submitted he "would take [Patricia to] dialysis. And like I would -- every day at lunch I would come home and make sure she [was] breathing."

Goldman also asserted that plaintiff was never present at any meetings he had with Patricia and that he asked Patricia "each and every question on the application, as written, and recorded each answer as stated to me. At no time did I suggest that any information be changed or fraudulent information be provided." Since summary judgment was entered in favor of defendants, we assume for present purposes, as did the trial judge, the accuracy of plaintiff's contrary version of the facts.

The facts in Heake are significantly different from those asserted by plaintiff herein. We assume, without deciding, that Heake should be interpreted as broadly as plaintiff argues.

(continued)

(continued)

15

A-0750-04T5

October 7, 2005