BELGICA ROQUEZ et al. v. SALVATORE DIDINO, JOSE MARTINEZ and REINA M. FERNANDEZ

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0996-04T20996-04T2

BELGICA ROQUEZ and MIGUEL

ROQUEZ,

Plaintiffs,

v.

SALVATORE DIDINO, JOSE MARTINEZ

and REINA M. FERNANDEZ,

Defendants.

_______________________________________

RUTGERS CASUALTY INSURANCE COMPANY,

Plaintiff-Appellant,

v.

REINA M. FERNANDEZ, ANGEL

FERNANDEZ, JOSE MARTINEZ,

SALVATORE DIDINO, BELGICA

RODRIGUEZ, AMANDA BEYANDAJ,

RAPHEL MARTINEZ, MARGARITA CHAVEZ,

LUCIA LOPEZ, GEORGE GABECIA,

S. ALTERMIRANO, A. CARINA,

R. GONZALEZ and V. SARMIERDO,

Defendants,

and

MARTHA ESCOBAR,

Defendant-Respondent.

_______________________________________

MARTHA ESCOBAR,

Plaintiff-Respondent,

v.

JOSE MARTINEZ, REINA M. FERNANDEZ,

Defendants,

and

RUTGERS CASUALTY INSURANCE COMPANY,

Defendant-Appellant.

_______________________________________

 

Argued December 12, 2005 - Decided January 17, 2006

Before Judges C. S. Fisher and Yannotti.

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. HUD-L-1632-02.

Susan L. Moreinis argued the cause for appellant, Rutgers Casualty Insurance Company.

William Pollack argued the cause for respondent, Martha Escobar (Larry M. Pollack, on the brief).

PER CURIAM

On May 18, 2001, Belgica Roquez (Roquez), Martha Escobar (Escobar) and other workers from a temporary employment agency were passengers in a blue Dodge van owned by Reina M. Fernandez (Reina). Jose Martinez (Martinez) was driving the vehicle, which was insured under a private passenger automobile insurance policy issued to Reina by Rutgers Casualty Insurance Co. (Rutgers). Martinez was transporting the workers from the agency's offices in Union City to a factory in Newark where they were working. The van was proceeding along Wilson Avenue in Newark when it struck an oncoming vehicle that was being operated by Salvatore Didino (Didino). Rutgers asserts that it is not obligated to provide personal injury protection (PIP) benefits or liability coverage for injuries allegedly arising from the accident because at the time, Reina's van was being used as a "public or livery conveyance for passengers" under N.J.S.A. 39:6A-2(a). The motion judge disagreed and entered orders on June 25, 2004, July 30, 2004, and September 27, 2004 requiring Rutgers to provide PIP benefits and liability coverage. The judge also awarded Escobar attorneys' fees and costs for prosecuting its action against Rutgers. Rutgers appeals and we affirm.

I.

We briefly summarize the procedural history and relevant facts. Roquez and her husband Miguel Roquez filed an action in March 2002 naming Didino, Martinez and Reina as defendants. Roquez asserted a claim for damages resulting from personal injuries that she allegedly sustained in the May 18, 2001 accident. Her spouse asserted a claim for loss of his wife's usual services and consortium. On May 31, 2002, Didino filed an answer denying liability and asserted cross-claims against Reina and Martinez for contribution and for property damage.

On May 2, 2002, Rutgers filed a declaratory judgment action against Reina and her brother Angel Fernandez (Angel). Rutgers alleged that Reina made false and misleading statements when she obtained private passenger automobile insurance for the van. Rutgers asserted that Angel was in the livery business and the vehicle had been used for livery purposes only. Rutgers therefore asserted that the van did not qualify for private passenger auto insurance because it was not an "automobile" under N.J.S.A. 39:6A-2(a). Rutgers further alleged that Reina and Angel misrepresented facts relevant to the claims arising from the accident during the company's investigation. Rutgers sought an order: declaring the policy null and void; declaring that Reina and Angel violated the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30; awarding compensatory damages for the cost incurred by Rutgers in its investigation; mandating return of any unearned premium; and decreasing the liability limits to the minimum financial responsibility required by law. With leave of court, Rutgers filed an amended complaint in which it named Didino, Escobar and others as defendants "for purposes of notice only."

Escobar filed her complaint on September 23, 2002, naming Martinez, Riena and Rutgers as defendants. Escobar alleged that she sustained personal injuries in the May 18, 2001 accident and sought an award against Martinez and Riena for damages, interest and costs of suit. Escobar also alleged that Rutgers was obligated to provide her with PIP benefits and liability coverage for Escobar's claims against Reina and Martinez. Rutgers filed an answer on March 20, 2003, denying Escobar's allegations.

The three actions were consolidated by orders filed January 10, 2003 and February 24, 2003. Escobar moved for summary judgment on Rutgers' claims. Didino filed a cross-motion seeking similar relief. Rutgers opposed the motions and cross-moved for summary judgment.

In support of its cross-motion, Rutgers submitted an affidavit from Jim Sciallo, a Rutgers employee who was assigned to investigate the circumstances of the May 18, 2001 accident. Sciallo asserted that he met with Reina and took a recorded statement from her regarding the matter. Sciallo attached a transcript of Reina's statement to his affidavit.

In her statement, Reina said that on the date of the accident, she owned the van and another vehicle. According to Reina, one of the vehicles was used for "personal things" and the other used for parties or trips. Reina asserted that she purchased the blue Dodge van from a dealer in Philadelphia, but she later called Sciallo and told him that she purchased the van from Angel. Reina also said that on May 18, 2001, she loaned the van to Angel but she denied knowing his purpose in using the van. She said that Angel only used the van on that day. Reina also denied knowing if Angel or Jose were livery drivers.

Sciallo also took a statement from Martinez. A copy of the transcript of this statement was appended to Sciallo's affidavit. Martinez told Sciallo that he worked part-time for Fernandez driving workers from the employment agency in Union city to various job sites. He said that Angel would call him when he was needed. Martinez asserted that he generally drives Angel's 15-seat red van but he drove Reina's blue van the day before the accident and the day of the accident because Angel's van had broken down.

Martinez also told Sciallo the he used Reina's van from "time-to-time" on other occasions. Martinez stated that Reina knew the reason why he was driving her van. He asserted that when he finished using Reina's van, he would park the vehicle on the street where Reina and Angel lived with their mother. Sciallo asked Martinez about fees charged to transport the workers. Martinez said that the agency "discounts them for the trip, and then that's paid to Angel."

Sciallo questioned Angel about the blue Dodge van. Angel told Sciallo that he is self-employed and worked for the employment agency transporting workers to temporary jobs. Angel asserted that he is paid by the agency, per person. Angel is paid between $3.50 and $4.50 per person and his fees cover any location he travels to. Angel told Sciallo that he is paid by check, without any deductions because he is self-employed.

Angel also said that he used his sister's van for "work purposes" three or four times before the accident. He maintained that he did not tell Reina what he was using the van for but his sister knew of his employment. Angel admitted that he sold Reina the van and he used the van for his "work" prior to the transfer of ownership. Angel asserted that he paid Martinez to drive for him because Angel's license is suspended. Angel also said that Martinez is listed as a driver on the commercial insurance policy covering the other van he owns.

Sciallo also interviewed Alfonzo Correa, who Angel identified as his "direct supervisor" at the employment agency. Correa said that Reina's van had been used to transport the agency's workers "three, four or five times." However, the agency did not keep records concerning the vehicles that were used to transport the workers.

Sciallo asserted that, based on his investigation, he determined that Reina's van had been transferred from Angel and insured with Rutgers so that Angel could benefit from lower premiums. He said that it was reasonable to conclude that Reina knowingly registered and insured the vehicle for private passenger use even though it was used in "a commercial manner" for the transportation of persons for the temporary employment agency.

Escobar was deposed. She testified that when she worked for the temporary agency, she would report to its offices each morning in Union City and the agency would provide transportation to the job site. She said that Martinez drove her to the factory on May 18, 2001. Before that day, he had given her rides "many times." Escobar said that Martinez drove her in a van. She testified that the van in which she was riding on the date of the accident was blue. She had been in that van "many" times before. She was asked if this was more than ten times and she replied, "Yes." Escobar said that she did not have to pay for transportation. She testified:

Q. Did you have to pay for transportation in that van or was that paid for by somebody else?

A. No, they just put you in.

Q. [The agency] would tell you to go in that van?

A. Yes.

Q. So it didn't cost you anything to ride in that van?

A. No, they tell everybody, get in such van.

Roquez also was deposed. She asserted that she had been working for the employment agency about two months before the accident. Roquez stated that the agency sent her to "various locations." On the date of the accident, she was sent to a job at a factory in Newark and she was driven there by a man named Jose, who had driven her "many times" from the agency to other jobs at other locations.

Roquez said that on the day of the accident, she was driven in a van but she had not been in that vehicle before. Roquez also said that the agency always provided transportation from the agency to the work sites. She never paid for transportation. She stated that no money was deducted from her pay for the transportation to and from worksites. Roquez also asserted that she never gave "Jose" money for the rides.

The judge heard argument on the motions and ruled from the bench. The judge found that Reina's van was not a livery vehicle. She said that the van "was not a vehicle that was held out for use by the general public for carrying passengers for hire." The judge added:

It is true that in this case the agency hired this vehicle, paid this vehicle to transport its employees from place to place, but it is not a livery vehicle, this Court finds, and, therefore, the exclusion in the policy of livery vehicles does not apply.

The judge also found that Rutgers was required by law to provide the statutory minimum coverages for personal injury, property damage and PIP benefits in respect of claims asserted by innocent third parties like Escobar, Roquez and Didino.

The judge entered three orders on June 25, 2004. The first order granted summary judgment in favor of Escobar and against Rutgers. The order required Rutgers to provide liability coverage up to $15,000 for any award or judgment obtained by Escobar against Martinez and to provide Escobar PIP benefits. The second order dismissed Rutgers' declaratory judgment action as to Didino and required Rutgers to provide Didino property damage coverage in the amount of $5,000. The third order denied Rutgers' motion for summary judgment on the issue of PIP benefits and liability coverage for Escobar's claims.

On July 30, 2004, the judge awarded Escobar attorneys' fees in the amount of $11,500 plus costs of $290. The judge entered another order that date voiding the policy issued to Reina ab initio; however, the order required Rutgers to provide coverage of: $15,000/$30,000 for bodily injury; $250,000 for PIP benefits; and $5,000 for property damage. This order also required Reina, Angel and Martinez to reimburse Rutgers for "any sums paid out to any claimant for bodily injury, personal injury protection benefits or property damage," as well as for attorneys' fees and costs for its investigation.

In addition, the judge entered a default judgment on September 27, 2004 against Reina, Angel and Martinez. This order awarded Rutgers the amounts that it had paid to Escobar, Roquez and Didino; counsel fees and costs of suit; and investigative costs.

II.

Rutgers argues that the judge erred in finding that coverage was not available under Reina's policy because Reina's van was not being used as a "public or livery conveyance" at the time of the accident. However, even were we to agree with Rutgers on that point, we are convinced that the orders mandating coverage must be affirmed on the alternative basis stated by the judge, specifically that Rutgers was legally obligated to provide coverage to Roquez, Escobar and Didino in the minimum amounts required by law. That determination was squarely in line with the well-settled principle which requires an insurer to cover claims of innocent third-parties, in the amounts required by law, where an auto insurance policy is retroactively cancelled or coverage is otherwise excluded due to some wrongdoing by the named insured.

This principle was recently reaffirmed in The Proformance Insurance Co. v. Jones, N.J. (2005) (slip op. at 21-22). In that case, Proformance provided an automobile insurance policy to Charmaine Panichi for her pickup truck. Panichi loaned the vehicle to a person named Ward with instructions that the truck not be used in Ward's business and no person other than Ward could drive the vehicle. Id. at 4. Ward allowed one of his employees to use the truck to deliver furniture for Ward's company. While doing so, the driver fell asleep at the wheel and the truck struck a parked vehicle. A passenger in the truck and a pedestrian were injured in the accident and they filed personal injury actions. Id. at 4-5. Proformance asserted that coverage was not available under the policy because Ward had not obtained the status of a permissive user and also because the policy excluded coverage for "business pursuits." Id. at 5-6.

The Court in Jones held that the business exclusion in the policy could not override the statutes mandating compulsory auto insurance. Id. at 20. The Court stated that "the protection of innocent third parties is a primary concern of our personal injury no-fault system and because the business use exclusion in the Proformance policy contravenes that concern, the exclusion will not be enforced in respect of innocent third parties". Id. at 20-21. The Court held that the insurer must provide coverage equal to the "statutorily required minimum limits." Id. at 22.

The Court in Jones relied upon Marotta v. NJAFIUA, 280 N.J. Super. 525 (App. Div. 1995), aff'd, 144 N.J. 325 (1996). Jones, supra at 21. In Marotta, we held that an insurer was required to provide the minimum statutory levels of coverage for claims of innocent third parties notwithstanding the retroactive cancellation of the policy based on the insured's misrepresentations. Marotta, supra, 280 N.J. Super. at 532-33. The Supreme Court affirmed our judgment. Marotta, supra, 144 N.J. 325. See also Fisher v. New Jersey Auto. Full Ins., 224 N.J. Super. 552, 557-58 (App. Div. 1988)(holding that the insurer is required to pay PIP benefits to an innocent third party injured in an auto accident when the policy is cancelled retrospectively).

Here, Rutgers issued a private passenger automobile insurance policy to Reina for her 1989 blue Dodge van. The policy provides bodily injury liability coverage in the amount of $15,000 per person and $30,000 per accident. The policy also provides property damage coverage in the amount of $10,000. In addition, Reina's policy provides PIP medical expense benefits in the amount of $250,000. As we explained previously, Reina, Angel and Jose did not answer the complaint and the judge entered a default judgment voiding the policy ab initio.

However, despite the retrospective cancellation of the policy, under the decisions in Jones, Marotta and Fisher, innocent third parties are entitled to coverage in the minimum amounts required by law, specifically bodily injury coverage of $15,000/$30,000; property damage of $5,000, and PIP benefits in the amount of $250,000. See N.J.S.A. 39:6A-3 and N.J.S.A. 39:6A-4(a). The motion judge correctly applied that principle in ordering Rutgers to provide the minimum required coverage to the parties in this case.

According to the judge's order of September 27, 2004, Rutgers paid Roquez $15,000 for her bodily injuries. Rutgers paid Escobar $9,000 for her bodily injuries and $6,481.91 in PIP benefits. In addition, Rutgers paid Didino $5,000 for property damage. The payments made by Rutgers therefore are the minimum amounts of coverage required by law.

Accordingly, we see no need to address the issue of whether Reina's van was being used as a "public or livery conveyance" on May 18, 2001. As we have pointed out, Reina's policy only provided coverage in amounts greater than the minimum coverage required by law for property damage ($10,000, rather than the mandated $5,000). Only Didino asserted a property damage claim. The record shows that Didino's claim was settled and he was paid $5,000. Therefore, the issue as to whether the parties also are entitled to coverage under Reina's insurance policy is moot.

III.

We turn to Rutgers' appeal from the judge's July 30, 2004 order awarding Escobar $11,500 in attorneys' fees. Rutgers concedes that the court has authority under R. 4:42-9(a)(6) to award counsel fees in this matter. See Estate of Leeman v. Eagle Ins. Co., 309 N.J. Super. 525, 536-37 (App. Div. 1998) (holding that attorneys' fees and costs may be awarded to successful claimant in a PIP action). Rutgers argues however that the award of $11,500 is disproportionate to the amount Escobar recovered, which was $15,481.91. We disagree.

Counsel for Escobar submitted a certification of services to the motion judge in which counsel stated that he devoted 43 hours to this case. The judge added three hours for the time spent by counsel responding to Rutgers' objections to the fee application. Escobar's attorney billed at a rate of $250 an hour. We are satisfied that counsel devoted a reasonable amount of time to this dispute and the hourly rate is reasonable. In our view, the judge did not abuse her discretion in awarding Escobar attorneys' fees in the amount of $11,500.

We reject Rutgers' assertion that the award is disproportionate to the results received by Escobar. Rutgers' reliance upon our decision in Scullion v. State Farm Ins. Co., 345 N.J. Super. 431 (App. Div. 2001), is misplaced. There we found an award of $28,000 to be substantially disproportionate to the $4,000 in dispute. Id. at 436. The difference between the fees and the recovery in this case is not comparable to the disparity in Scullion. Moreover, we note that, in order to contest Rutgers' denial of coverage, Escobar was required to incur legal expenses. The alternative was acceptance of Rutgers' wrongful refusal to provide coverage. We are not convinced that, in these circumstances, an award of counsel fees in the amount of $11,500 is unreasonable.

Rutgers also contends that Escobar's application was deficient because it did not detail her payment arrangements with counsel. This issue was not raised in the trial court and we decline to consider it. Conrad v. Robbi, 341 N.J. Super. 424, 447 (App. Div.), certif. denied, 170 N.J. 210 (2001). However, we note that in her reply brief submitted to the motion judge on the fee application, Escobar's counsel represented that Escobar did not have the financial resources to pay her attorneys. Any arrangements she may have made for payment of her legal fees would therefore appear to be irrelevant.

 
Finally, Escobar asserts that she is entitled to attorneys' fees and costs for this appeal. We decline to address this contention. Such an application must be made by formal motion following disposition of the appeal. See R. 2:11-4.

Affirmed.

Plaintiff Miguel Roquez was erroneously referred to as Michael Roquez in the caption of the notice of appeal. We have corrected the error.

A person named "Belica Rodriguez" was named as defendant. We assume that Rutgers intended to name Roquez as a defendant.

At the argument on the motions held on June 25, 2004, counsel for Didino stated that his client had a claim for "approximately" $8,000. Subsequently, an order of disposition was filed on September 13, 2004. The order states that Didino's cross-claim for property damage has been settled "and is not subject to the appeal." The default judgment which was prepared by Rutgers' counsel and entered by the court on September 27, 2004 awards Rutgers the $5,000 it paid to Didino.

(continued)

(continued)

2

A-0996-04T2

 

January 17, 2006