VICTORIA KLOTSMAN v. GREAT NORTHERN INSURANCE COMPANY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5307-04T35307-04T3

VICTORIA KLOTSMAN,

Plaintiff-Appellant,

v.

GREAT NORTHERN INSURANCE

COMPANY,

Defendant-Respondent.

___________________________________

 

Submitted January 11, 2006 - Decided July 17, 2006

Before Judges Wecker and Graves.

On appeal from the Superior Court of New

Jersey, Law Division, Bergen County,

L-9669-04.

Ian R. Grodman, attorney for appellant.

Gennet, Kallman, Antin & Robinson,

attorneys for respondent (Richard S.

Nichols, on the brief).

PER CURIAM

Defendant, Great Northern Insurance Company, issued a "Valuable Articles" policy to plaintiff, Victoria Klotsman, for the period March 12, 2002 to March 12, 2003. The policy listed two items of jewelry to be covered, including a five-carat "princess cut" diamond ring valued at $85,000. Plaintiff filed a claim for the loss of that ring, claiming that she was wearing it while shopping in New York City on December 15, 2002. She did not know where or how it was lost.

The policy included certain conditions respecting defendant's liability for a claimed loss, including the obligation to appear for an examination under oath and to produce requested records and documents. In accordance with the policy terms, Great Northern requested plaintiff's examination under oath respecting the claimed loss, as well as respecting a long-unresolved water damage claim filed by plaintiff, along with her former husband, in October 1996. The examination notice included a list of documents the insurer sought at the examination:

[Y]ou are to produce for both the ring and water damage claims:

1. Any and all original records of any kind and description pertaining to the acquisition, replacement of repair or maintenance of the property (including any estimate and appraisal in regard thereto), real or personal, for which claim is made, including original invoices, receipts, credit card records, warranties, instructions and owners' manuals and canceled checks;

2. All photographs, movies and videotapes taken at any time depicting any of the property for which claim is made;

3. Any police and fire reports filed in connection with the within claim;

4. All documents dealing with any bankruptcies filed by the insured, including but not limited to all bankruptcy petitions, supporting schedules and all orders entered by the Bankruptcy Court;

5. All federal income tax returns filed by yourself for all tax years from 2000 through 2002, inclusive, including all W-2 and 1099 forms, and all schedules; and

6. All bills from your home telephone and cell telephone which include the dates 12/15/02 to 12/31/02.

TAKE FURTHER NOTICE, that your failure to appear will constitute a breach of the conditions of the policy and result in a denial of your claim. . . .

[Emphasis omitted.]

Mrs. Klotsman appeared for her examination, with counsel, on April 17, 2003. She testified that her former husband bought the ring in 1993 as a gift on the birth of their child. She described her activities on December 15, taking her children to New York to see the Christmas tree at Rockefeller Center, meeting her sister there with her children, shopping in several stores, trying on clothes, and then taking the children out for dinner on the way back to New Jersey. She noticed that the ring was not on her finger while she was driving home.

On the advice of counsel, however, plaintiff declined to answer numerous questions about her former husband, including his whereabouts, his current marital status, or his criminal record. She also declined to produce her income tax returns for the years 2000-2002. When plaintiff's attorney instructed her not to answer questions about a tax lien on the condominium where she lived, defendant's attorney stated "obviously we're dealing with a ring claim of $85,000 under mysterious circumstances, a mysterious disappearance so I think that clearly if there's some evidence of financial difficulties that the insured had at the time of the loss that the insurance company is entitled to inquire into that." By letter dated April 25, 2003, Great Northern requested production of certain documents that were not produced at plaintiff's examination, namely:

1. Her resume;

2. The name and address of the computer training school she attended in Edison;

3. The photographs showing Ms. Klotsman wearing the ring;

4. True copies of her federal income tax returns from 2000 to 2002, inclusive, including all W-2, 1099 forms and endorsements and attachments;

5. True copies of her telephone bills for her home and cell phones for all dates from December 15, 2002, to December 31, 2002.

Plaintiff's then attorney responded by letter dated May 19, 2003, enclosing a photograph of plaintiff, apparently wearing the ring whose loss was claimed, and certain telephone bills, but questioning the relevance of the requested tax returns.

On July 9, 2003, defendant wrote to counsel for plaintiff, denying both the claimed December 15, 2002 jewelry loss and the October 1996 water damage loss on the ground that plaintiff had failed to comply with contractual obligations to supply information under the applicable policies. Plaintiff subsequently retained her current counsel, who apparently had some telephone conversations with representatives of the insurance company and then wrote to defendant on April 21, 2004, offering Mrs. Klotsman's further appearance for examination under oath, but still questioning the relevance of her tax returns. Defendant responded by letter dated May 26, 2004, refusing to reconsider its July 2003 denial.

Plaintiff filed this declaratory judgment action on June 9, 2004, seeking a determination "that she is not required to provide personal information and documents which are irrelevant to Great Northern Insurance Company's investigation of the 2002 and 1996 losses under the policy of insurance which [it] issued to her . . . ." Defendant filed an answer and counterclaim, seeking judgment declaring that its policies "provide no coverage for the water damage and ring loss claims, by virtue of plaintiff's refusal to provide testimony, information and documents . . . pursuant to DiFrancisco v. Chubb Ins. Co., 283 N.J. Super. 601 (App. Div. 1995)."

On cross-motions for summary judgment, Judge Charles J. Walsh issued a letter opinion denying plaintiff's motion, granting defendant's motion, and dismissing plaintiff's complaint. We now affirm.

In DiFrancisco, under arguably even more suspicious circumstances, we held that the plaintiff's refusal to cooperate with his insurer by producing certain income tax returns and corporate books and records constituted a material breach of the insurance contract that justified denial of coverage. Id. at 603-05. We went on, however, to state "that for future guidance, an insured who is uncertain as to whether it must comply with the document production demands of its insurer under its policy must promptly file a declaratory judgment action seeking judicial clarification of its obligations under the policy." Id. at 605.

We did not set forth any bright-line rule in DiFrancisco defining what constitutes prompt action by an insured who challenges her insurer's document request. Nor did we address the standard to be applied in considering the scope of an insured's obligation to respond to every request for information, because the relevance of the requests in DiFrancisco was apparent. We merely note that there is obviously a direct relationship between the level of suspicion engendered by the claimed loss and the extent of the information an insurer reasonably may demand.

Here, the circumstances entitled the insurer to seek financial information from plaintiff about her own finances, as well as information that might bear upon her credibility, and information that would allow it to locate and question her former husband, who allegedly purchased the ring in the first place. Suffice it to say that plaintiff's offer to reappear for a further examination under oath, one year after her initial appearance and nine months after defendant's denial of coverage, while still challenging defendant's request for tax returns and without having filed a declaratory judgment action, was too little, too late, to forestall the result she now seeks to avoid.

Affirmed, substantially for the reasons set forth in Judge Walsh's April 21, 2005 letter opinion.

 

Plaintiff's appendix does not include defendant's answer and counterclaim, which defendant has supplied in its appendix. See R. 2:6-1(a)(1)(A).

We do not separately address the 1996 water damage claim. In addition to the reasons applicable to the lost ring claim, the statute of limitations on the 1996 claim had run long before plaintiff filed this suit.

(continued)

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A-5307-04T3

July 17, 2006