FRANCISCO LUGO v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5562-03T25562-03T2

FRANCISCO LUGO,

Plaintiff-Appellant,

v.

NEW JERSEY MANUFACTURERS

INSURANCE COMPANY,

Defendant-Respondent.

_______________________________

 

Argued October 3, 2005 - Decided

Before Judges A. A. Rodr guez, Alley and Yannotti.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-1627-03.

Charles N. Riley argued the cause for appellant (Riley & Sandilos, attorneys; Mr. Riley, of counsel and on the brief).

Joseph D. Connell argued the cause for respondent (Robert R. Nicodemo III, attorneys; Richard V. Cosentino, on the brief)

PER CURIAM

This is an appeal by plaintiff Francisco Lugo from a grant of summary judgment against him in favor of New Jersey Manufacturers Insurance Company (NJM). The only issue is whether the $2,500 deductible is applicable to the plaintiff's claim, the third he has filed, for Personal Injury Protection (PIP) benefits arising out of a 1995 motor vehicle accident.

Prior to plaintiff's present claim for PIP benefits, he filed two complaints for PIP benefits pertaining to the same accident. In both answers, defendant raised the deductible as a defense, among other defenses. The first claim was settled in 1999 and the second was settled in 2002. In the third of these cases, NJM once again asserted the deductible as a defense.

The trial court having granted summary judgment for NJM on that defense, plaintiff now appeals. He contends that NJM should not be allowed to assert the deductible as a defense, based on theories such as the entire controversy doctrine, res judicata, and waiver.

More specifically, plaintiff alleges that he sustained the subject injuries in an automobile accident in Camden on October 15, 1995. At the time of the accident, plaintiff was insured by defendant under a policy that provided PIP coverage, with a $2,500 deductible and a twenty percent co-pay on the first $5,000 in medical expenses.

In 1997, plaintiff filed suit for unpaid PIP benefits pertaining to treatment of injuries resulting from the accident. NJM asserted in its answer "Separate Defenses," including that "all medical expenses found to be recoverable, if any, are subject to the deductible and co-payment provisions in accordance with N.J.S.A. 39:6A-4 and N.J.S.A. 39:6A-4.1." The parties settled this first litigation and executed a release on or about August 2, 1999. Plaintiff agreed to accept $18,174.31 for all medical bills incurred for treatment as of May 18, 1999. The release provided,

It is expressly understood and agreed that acceptance of the said amount is in full accord and satisfaction of and in compromise of the aforesaid claim and that payment thereof is not an admission by the Releasee that any treatment received or other expenses incurred by the Releasor prior to May 18, 1999, are related to the automobile accident of October 15, 1995, nor is payment thereof an admission that any said treatment or other expenses were reasonable or necessary, nor is payment thereof an admission of liability, but instead, payment is made for the sole purpose of terminating any dispute, litigation and claims between the parties.

When plaintiff thereafter filed a second suit for further PIP benefits pertaining to the same accident, NJM's answer, under "Separate Defenses," asserted that "all medical expenses found to be recoverable, if any, are subject to the deductible and co-payment provisions in accordance with N.J.S.A. 39:6A-4 and N.J.S.A. 39:6A-4.3, and in accordance with the terms of the policy of insurance in question." The parties again settled. In that connection, they executed a release on or about July 20, 2002. Pursuant to the release, plaintiff agreed to accept $24,486.95 for all medical bills incurred for treatment as of April 7, 2002. This second release provided,

It is expressly understood and agreed that acceptance of the said amount is in full accord and satisfaction of and in compromise of the aforesaid claim and that payment thereof is not an admission by the Releasee that any treatment received or other expenses incurred by the Releasor prior to April 7, 2002, are related to the automobile accident of October 15, 1995, nor is payment thereof an admission that any said treatment or other expenses were reasonable or necessary, nor is payment thereof an admission of liability, but instead, payment is made for the sole purpose of terminating any dispute, litigation and claims between the parties.

The present dispute, the third claim connected to the October 1995 accident, arose under the same circumstances as the two previous disputes. Plaintiff complained that defendant failed to pay PIP benefits, whereas NJM argued that it was not required to pay the benefits because they do not exceed the $2,500 deductible. Plaintiff took the position that defendant's failure to apply the deductible in the two previous matters precludes it from now applying the deductible. In granting defendant's motion for summary judgment, the trial judge found "as a fact that the [defendant] did not raise the issue of a deductible in either of the two previous claims for benefits ... [and thus defendant is] not preclude[d] ... from asserting it now." The judge explained,

The arguments of plaintiff's counsel regarding the entire controversy doctrine, res judicata, [and] waiver, in this Court's opinion are misplaced when it comes to PIP litigation. In each of the two prior proceedings the defendant's answer set forth that all medical expenses found to be recoverable are subject to the deductible and co-payment provisions of the policy. In each of these cases the matter was settled and releases were executed. The releases were not a release of future PIP benefits.

The defendant argues that the language applies equally to plaintiff and the defendant and that while the release does not preclude a plaintiff from pursuing future benefits, it does not preclude the defendant from raising these defenses, and to that extent I agree.

We reverse. The availability or non-availability of the deductible was put in issue by NJM in all three proceedings. The releases by their own terms covered "any dispute, litigation, and claims between the parties."

The governing principles are firmly established. First, as our Supreme Court recently stated in Puder v. Buechel 183 N.J. 428, 437-38 (2005):

For nearly forty-five years, New Jersey courts have found that the "'settlement of litigation ranks high in [the] public policy'" of this State. Nolan ex rel. Nolan v. Lee H, 120 N.J 465, 472 (1990) (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J 61 (1961)). Therefore, our courts have actively encouraged litigants to settle their disputes. E.g., Morris County Fair Hous. Council v. Boonton Tp., 197 N.J. Super. 359, 366 (App. Div. 1984).

A settlement agreement is to be construed in accordance with ordinary principles of contract interpretation. But our courts "will strain to give effect to the terms of a settlement wherever possible." Dep't of Pub. Advocate v. N.J. Bd. of Pub. Utils., 206 N.J. Super. 523, 528 (App. Div. 1985). There is not present in this matter, moreover, any "fraud or other compelling circumstance," such as "mutual mistake, undue haste, pressure or unseemly conduct," that would vitiate the settlement. Honeywell v. Bubb, 130 N.J. Super. 130, 136 ((App. Div. 1974).

Applying these precepts to the facts before us leads to the conclusion that it is beyond legitimate question that the issue of the deductible's application to plaintiff's PIP claims could not have survived the first of the releases. Here, before the instant third litigation, NJM's claim that it could assert the deductible had been released twice, not just once. There is no reasonable way to construe the release by NJM that expressly covered "any dispute, litigation, and claims between the parties," except to conclude that it includes matters that the parties put in issue. The alleged defense of the PIP deductible was one of these issues, as was expressly asserted in NJM's answer.

Accordingly, that defense did not survive the releases that covered it and the trial court properly granted summary judgment on that issue.

In determining this appeal on the foregoing basis, we find no reason to reach any conclusion regarding the remaining points, namely, the entire controversy doctrine, res judicata, the voluntary payment doctrine and the other issues raised by plaintiff NJM on this appeal, except that we note the following.

The entire controversy doctrine requires that the adjudication of a legal controversy should occur in one litigation, in only one court. Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989). Accordingly, all parties involved in a litigation should present all of the claims and defenses that are related to the underlying controversy. Ibid. "The . . . doctrine does not require that all claims be adjudicated in one proceeding, [rather] it merely requires that a party assert those claims at the outset." Mystic Isle Dev. Corp v. Perskie & Nehmad, 142 N.J. 310, 332 (1995). "[I]t is the party's original compliance with the doctrine, rather than the absence of a conclusive determination of a claim, that ensures preservation of that claim." Ibid. Further, "[t]he boundaries of the doctrine are not limitless" - it "does not apply to bar component claims that are unknown, unarisen, or unaccrued at the time of the original action." Id. at 323. Because it "is an equitable principle, its applicability is left to judicial discretion," based on the given circumstances. Ibid.

 
Reversed.

Plaintiff's brief states that the release covers any treatment prior to April 4, 2002, while defendant's release cites April 7, 2002 as the cut-off date. Based on the handwritten inserts in the actual release, for purposes of this decision we take it that the actual cut-off date was April 7, 2002.

(continued)

(continued)

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A-5562-03T2

October 25, 2005