NICHOLAS and VERONICA FIORE v. ALLSTATE INSURANCE CO.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2269-04T22269-04T2

NICHOLAS and VERONICA FIORE,

Plaintiffs-Appellants,

v.

ALLSTATE INSURANCE CO.,

Defendant-Respondent.

_______________________________

 

Submitted: January 24, 2006 - Decided February 15, 2006

Before Judges Skillman and Axelrad.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-371-04.

Sama & Russell, attorneys for appellants (Felicia Bonanno Russell and Johanna D. Roccanova, on the brief).

McDermott & McGee, attorneys for respondent (John L. McDermott, Jr., on the brief).

PER CURIAM

Plaintiffs Nicholas and Veronica Fiore appeal from the December 1, 2004 order, which denied reconsideration of the October 7, 2004 order denying their motion to compel underinsured motorist (UIM) arbitration against defendant Allstate Insurance and dismissed with prejudice their verified complaint seeking a UIM arbitration hearing. On appeal, plaintiffs contend the trial court misapplied the law to the facts and further contend Allstate is estopped from denying UIM coverage.

On September 10, 1995, Nicholas Fiore was operating a motor vehicle in which Veronica Fiore was a passenger, when a vehicle operated by Miguel Muniz and owned by Paul and Betty Skeens negligently struck the Fiores' vehicle. Both Fiores were injured as a result of the collision. Ralph Furino, Jr. filed suit on plaintiffs' behalf against Muniz and the Skeens in Middlesex County, Docket No. L-11171-96. Defendants Muniz and the Skeens were apparently represented by Paul J. Soderman of Zucker, Facher and Zucker. The Skeens had a $20,000/$40,000 policy with State Insurance Company (State Insurance).

Plaintiffs were covered under an automobile insurance policy through Allstate with liability limits of $100,000/$300,000. A letter in Allstate's file dated October 19, 1995 arguably demonstrated its knowledge at that time that Muniz was potentially covered under an automobile insurance policy through State Farm Insurance Company (State Farm). The letter, which was addressed to State Farm, referenced this accident, requested a new claim be set up for its insured Muniz under policy number y251461731730 and attached the police report. The letter further provided:

Your insured, Miguel Muniz, was the driver of a vehicle insured by State Auto Ins., out of West Virginia. The type of policy that the owners of the vehicle have states that State Auto will be "excess" in the case where the driver does not have express permission to use the car. According to the owners of the vehicle, Miguel Muniz, did not have express permission to use the vehicle.

Once your claim has been established, please contact me at 201-691-4182 so that we can proceed with subrogation matters.

For your information, my insured and his passenger (Mr. and Mrs. Fiore) were both injured in this loss.

The letter was signed by Patti Schepens, Claim Department, and noted a copy to the file.

This letter was not disclosed to Furino nor to plaintiffs' counsel in this litigation until February 2004, in connection with the order to show cause to compel UIM arbitration. Nor was Allstate's claims adjuster Bruce Isendorfer aware of the existence of this letter or that any investigation had been performed by Allstate regarding coverage for Muniz, or the results of same. This is evident in view of Furino's May 21, 1998 correspondence to Isendorfer detailing their phone calls beginning in March regarding State Insurance's offer and plaintiffs' intention to pursue a UIM claim. The letter further confirmed Furino's conversations with Soderman and State Insurance's adjuster, who informed him that they were unsuccessful in contacting Muniz for discovery and trial purposes and that the carrier could not determine or verify whether he had insurance.

On June 3, 1998, Furino requested written permission from Isendorfer to finalize settlement with the "primary tort feasor," which presumably was Muniz and the Skeens, for the $38,000 settlement they had previously discussed, and proceed on plaintiffs' UIM claim. Isendorfer signed and returned the letter on June 25. Having Allstate's approval, Furino accepted the settlement on plaintiffs' behalf and dismissed the lawsuit against Muniz and the Skeens, although the record does not reflect the date of dismissal.

On June 24, 1998, Allstate was informed by its investigator that Muniz had a registered vehicle, insured through State Farm with a $100,000/$300,000 policy, as of the date of the underlying accident. This letter indicated it was a supplement to a May l8, 1998 report, and was based upon Muniz's driving abstract dated June l0, 1998. Susan Nuzzo, Allstate's Property-Casualty Claim Representative, purportedly advised Furino of this information by letter of July 10, 1998, which Furino certified he never received. Apparently, neither did defense counsel, who proceeded with discovery and medical examinations in preparation for the UIM arbitration.

According to the certifications, both counsel first learned at the arbitration on March 1, 2001, when the July 10, 1998 letter was faxed over from Allstate, that Muniz potentially had additional coverage equal to the limits of plaintiffs' policy and Allstate was taking the position that plaintiffs' UIM coverage did not extend to the underlying accident. The arbitration was adjourned so Furino could conduct discovery about Muniz's policy with State Farm. The August 9, 2001 arbitration was rescheduled or cancelled by someone other than defense counsel.

Plaintiffs' present counsel became involved around November 2003, and was informed by defense counsel about the State Farm policy and of Allstate's position that plaintiffs were not underinsured at the time of the accident. In February 2004, the court granted plaintiffs' order to show cause for Allstate to proceed with the UIM arbitration, which was vacated in April and discovery ensued. Plaintiffs renewed the motion in August, and during argument plaintiffs' counsel first raised the issue that Allstate was estopped from asserting the existence of the State Farm policy. The court deemed the argument abandoned and denied the motion in a letter opinion and order dated October 7, 2004, concluding that:

[T]he record reflects that at a time that the Plaintiffs settled their case, there existed an insurance policy which covered the Defendant Muniz and, therefore, Allstate Insurance Company is not obligated to arbitrate underinsured claims.

Plaintiffs moved for reconsideration with regard to the issue of estoppel, and following oral argument, the court denied plaintiffs' motion, stating:

I do note that Allstate gave authorization [to plaintiffs] on June 25th of 1998 to settle the case. It was for $38,000 of a $40,000 policy.

But, then 15 days later they -- when they received notification they immediately notified the plaintiff that, in fact, the target . . . tort [feasor] in this particular case. They have a State Farm policy. And, counsel has just indicated to me that there was not really an arbitration. That at that arbitration hearing, again, [on March l, 200l] plaintiffs' former counsel was advised that there is no coverage. And, therefore, I don't think this case is identical to the case that's been cited to me, which is . . . [Barrett v. New Jersey Mfrs. Ins. Co., 295 N.J. Super. 613 (App. Div. 1996), (holding that insured passenger's justifiable reliance upon her UIM carrier's authorization to settle her tort claim estopped the carrier from denying UIM benefits), certif. denied, 150 N.J. 29, (1997)]. And, there is a distinction in the facts between the two. And, so the motion for reconsideration is denied.

. . . .

[and] the case is over with. . . .

In its ruling, the court did not mention the October 19, 1995 letter from Allstate to State Farm nor plaintiffs' former counsel's certification that he did not receive Allstate's July 10, 1998 letter and was unaware of Muniz's State Farm policy or Allstate's intention to deny UIM coverage until he appeared at the arbitration on March 1, 2001. Accordingly, we remand this matter to the trial court to reconsider plaintiffs' estoppel argument in light of these facts. The trial court shall conduct whatever further proceedings it deems appropriate, including a plenary hearing. It shall then make specific findings pursuant to Rule 1:7-4 as to whether Allstate is estopped from denying UIM benefits to plaintiffs.

Remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

 

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A-2269-04T2

February 15, 2006