MAXINE CRESPI v. NJ CURE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6081-04T36081-04T3

MAXINE CRESPI,

Plaintiff-Respondent,

v.

NJ CURE,

Defendant-Appellant.

_______________________________________

 

Argued March 8, 2006 - Decided March 28, 2006

Before Judges Fall and Yannotti.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. MID-L-7660-04.

Robert J. Maloof argued the cause for appellant NJ Cure.

Peter J. Lamont argued the cause for respondent Maxine Crespi (Gainey & McKenna, attorneys; Mr. Lamont, on the brief).

PER CURIAM

Defendant NJ CURE appeals from orders entered June 24, 2005 denying its motion for summary judgment and granting a cross-motion for summary judgment by plaintiff Maxine Crespi. We affirm.

The facts are essentially undisputed. On February 13, 2002, plaintiff was operating her model year 1995 Toyota Camry traveling south on Spring Street in Elizabeth, New Jersey. At the time, Jamaine Fitzergald (Fitzgerald) was driving a model year 2000 Mitsubishi owned by Elia Meneses (Meneses). Fitzgerald was traveling west on East Grand Street. He ran a red light at the intersection with Spring Street and struck plaintiff's vehicle, causing plaintiff's vehicle to collide with another car traveling south on Spring Street. Fitzgerald fled the scene and was apprehended on Garden Street. The police report states that the insurer and policy number for the Meneses vehicle was unknown. The police report also states that plaintiff sustained injuries to her neck, back, face, wrist, hand and chest.

Plaintiff's automobile was insured under a policy issued by defendant, which includes uninsured motorist (UM) coverage. The policy provides in pertinent part that defendant will pay damages that the insured is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury." An "uninsured motor vehicle" is defined to include any vehicle without coverage for bodily injury at the time of the accident. An "uninsured motor vehicle" is also defined to include a hit-or-run vehicle whose operator or owner cannot be identified and which hits the insured, a family member or the "covered auto." The policy provides, however, that UM coverage is excluded for any "bodily injury" sustained by the insured if the insured settles the claim without the insurer's consent.

Part E of the policy sets forth the insured's duties after an accident or loss. Part E states in pertinent part:

A. We [the company] must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses.

B. A person seeking any coverage must:

1. Cooperate with us in the investigation, settlement or defense of any claim or suit.

2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss.

3. Submit, as often as we reasonably require:

a. To physical exams by physicians we select. We will pay for these exams.

b. To examination under oath and subscribe the same.

4. Authorize us to obtain:

a. Medical reports; and

b. Other pertinent records.

5. Submit a proof of loss when required by us.

C. A person seeking Uninsured Motorist Coverage must also:

1. Promptly notify the police if a hit-and-run driver is involved.

2. Promptly send us copies of the legal papers if a suit is brought.

Part F of the policy addresses the defendant's right to recover monies from third parties in the event it pays a claim under the policy. Part F states in pertinent part:

A. If we [the company] make a payment under this policy and the person to or for whom payment was made has a right to recover damages from another we shall be subrogated to that right. That person shall do:

1. Whatever is necessary to enable us to exercise our rights; and

2. Nothing after loss to prejudice them.

Following the accident, plaintiff filed a claim with defendant. On February 22, 2002, Allison Praschil (Praschil), one of defendant's claims representatives, wrote to plaintiff and acknowledged receipt of the claim. Praschil requested the submission of a completed driver's report of the accident, a copy of the police report, a completed application for personal injury protection benefits, as well as an affidavit of no insurance. Plaintiff submitted the completed driver's report. In the report, plaintiff said that her automobile had been struck by a stolen vehicle. She also provided information concerning the accident and her injuries.

By letter dated May 13, 2002, plaintiff's attorney advised defendant that plaintiff had been involved in an accident, "wherein her vehicle was struck by an automobile that, upon information and belief, was previously stolen." Counsel informed defendant that plaintiff was asserting both an UM claim and/or an underinsured motorist (UIM) claim. Counsel requested that defendant have its claims representative contact him as soon as possible to discuss the matter.

Donna Mikula (Mikula), one of defendant's claims representatives, replied in a letter dated May 23, 2002. Mikula wrote that the loss was under investigation. She asked plaintiff's attorney to provide her with permission to access plaintiff's no-fault file. Mikula also asked for a copy of the theft reports filed with Meneses' insurance carrier and the police. By letter dated May 29, 2002, plaintiff's attorney authorized defendant to access plaintiff's no-fault file. Counsel advised that once Meneses' carrier had been identified, he would forward that information to defendant along with the theft report, "if any."

In July 2002, Liberty Mutual informed defendant that, although Meneses was its insured, the 2000 Mitsubishi was not covered under Meneses' policy at the time of the accident. Mikula wrote to plaintiff's attorney on September 6, 2002 and asked that he submit a completed UM claim questionnaire. Counsel responded to the request for information in a letter dated October 3, 2002.

The parties thereafter discussed settlement of the claim. Mikula wrote to plaintiff's counsel on March 10, 2003. In her letter, Mikula stated that on February 19, 2003, defendant offered to settle the claim for $18,500 but plaintiff rejected the offer. Mikula therefore asked for copies of films of MRIs taken of plaintiff's lumbar spine on May 3, 2002. Mikula wrote, however, that the offer to settle the claim was still available.

Plaintiff did not reply to Mikula's March 10, 2003 letter and on April 10, 2003, Mikula wrote and asked counsel to inform her regarding plaintiff's intentions. In the letter, Mikula stated, "If [plaintiff] has decided not to pursue this matter, please let me know so I can close my file." Plaintiff's attorney wrote to Mikula on April 23, 2003 and advised that, since the parties had not been able to settle the claim, plaintiff was appointing an arbitrator. Counsel asked that defendant appoint its arbitrator.

Defendant appointed counsel to handle the matter and in a letter dated May 30, 2003, defendant's attorney stated that before defendant would proceed to an arbitration hearing, he wanted to obtain plaintiff's statement under oath. Defendant's attorney scheduled the deposition for August 7, 2003. Counsel asked plaintiff to provide answers to interrogatories. Defendant's attorney also asked that plaintiff provide the MRI films or authorization that would permit release of the films to defendant for review by its radiologist. By letter dated June 4, 2003, defendant's counsel requested that plaintiff submit authorizations for the release of certain medical records.

It appears that thirteen months passed before any further action was taken by plaintiff respecting her claim. On July 21, 2004, plaintiff provided answers to the interrogatories, as well as the authorization for release of the MRI films.

Defendant's counsel deposed Meneses and her daughter Julieta on September 15, 2004. Meneses stated that her daughter Julieta was the "usual driver" of the Mitsubishi. Meneses said that she had an argument with her daughter on January 6, 2002 and, although Meneses told her daughter not to take the Mitsubishi, Julieta left with the vehicle. Meneses went to the police. She reported that Julieta had stolen money from her bank account and left home with her car. Apparently Meneses brought charges against her daughter, but the charges did not include theft of the vehicle. In her deposition, Julieta said that after the argument with her mother on January 6, 2002, she took the Mitsubishi but returned the car "soon after that." Julieta stated that the Mitsubishi was stolen sometime in January 2002 from the vicinity of her mother's home.

On October 20, 2004, plaintiff filed this action seeking to compel defendant to arbitrate her UM claim and to appoint an arbitrator. Defendant answered and filed a counterclaim seeking a declaratory judgment that plaintiff was not entitled to UM coverage because plaintiff had prejudiced defendant's right to subrogation by failing to commence a lawsuit against the alleged negligent tortfeasors within two years of the accident, as required by the applicable statute of limitations.

The parties thereafter filed motions for summary judgment. Finding that plaintiff was entitled to UM coverage, the judge denied defendant's motion, granted plaintiff's cross-motion and ordered that the matter proceed to arbitration. In his decision on the record, the judge noted that the company made no payments on plaintiff's claim, never requested that plaintiff commence a lawsuit, and took no action until after the statute of limitations had run, even though the company had notice of the claim four months after the accident. The judge stated:

The insured has an obligation to cooperate, but the right to subrogation is a right that belongs to the insurance company. [The company] [is] entitled to notice, [and the company] got notice. [The company is] entitled to know that a claim is being made, [and the company] had that claim notice. After that, it is the insurance company's decision and right to start a lawsuit on behalf of their insured, if [the company] feel[s] that that is the appropriate course of action.

Obviously, any provision in a policy, that may be ambiguously interpreted, must be interpreted against the drafter. And, in this particular case, I see no reason to make a decision that this policy provides that the insured [has] any obligation to start any lawsuit in order to protect the rights of the insurance company, in the absence of a request by the insurance company to do so. Motion is denied.

In this appeal, defendant argues that the judge erred in finding that plaintiff was entitled to UM coverage under the policy of insurance in respect of her claim arising out of the February 13, 2002 accident because plaintiff failed to meet her obligations under the policy to protect defendant's subrogation rights. Defendant contends that plaintiff was required to file a lawsuit against Meneses and Fitzgerald in order to protect its subrogation rights. Defendant maintains that, because plaintiff failed to file that action within the time prescribed by the applicable statute of limitations, plaintiff prejudiced defendant's subrogation rights and therefore she is not entitled to UM coverage under the policy. We disagree.

We note at the outset that the policy in question does not expressly state that a person asserting a UM claim must commence an action against any alleged tortfeasors prior to the running of the statute of limitations. As we pointed out previously, Part E of the policy sets forth the duties and obligations of the insured respecting any accident or loss. The policy requires that the insured inform defendant of the accident or loss, cooperate with defendant's investigation of the claim and provide defendant with "copies of the legal papers if a suit is brought." It does not require the filing of a lawsuit.

We recognize that Part F of the policy states that the person receiving payment must do "[w]hatever is necessary to enable [defendant] to exercise [its] right." Part F also states that the person "to whom or for whom" payment has been made, must do "[n]othing after loss to prejudice" defendant's subrogation rights. However, the policy does not expressly state that in order to satisfy these obligations, a person who receives payment on a UM claim, or files such a claim, is required to file a lawsuit against any alleged responsible person or entity prior to the running of the statute of limitations.

Thus, by its expressed language, the policy did not place plaintiff on notice that she was required to commence a lawsuit against the alleged, negligent tortfeasors in order to ensure UM coverage. Moreover, at no time prior to the running of the statute of limitations did defendant, its claims representative or attorney advise plaintiff that the filing of a lawsuit against Meneses and Fitzgerald was necessary to protect defendant's subrogation rights. We therefore are convinced that in the particular circumstances of this case, plaintiff's failure to commence an action against Meneses and Fitzgerald prior to the running of the statute of limitations is not a bar to plaintiff's UM claim.

We do not agree with the trial judge's suggestion that defendant should have acted to protect its subrogation rights by commencing an action against Meneses or Fitzgerald. Under the policy, defendant did not have any subrogation rights before it paid the claim. Defendant therefore did not have a right to file a complaint asserting any right plaintiff may have had to recover damages. However, in late 2003 and early 2004, when plaintiff's UM claim had not been resolved and the time was running on any subrogation claim that might be asserted against Meneses or Fitzgerald, defendant had an obligation to inform plaintiff that her UM claim would be denied unless she filed an action to protect defendant's subrogation rights.

Our conclusion is supported by Price v. New Jersey Mfrs. Ins. Co., 182 N.J. 519 (2005). In that case, the Court held that an insurer could not raise a statute of limitations defense to a claim for UM benefits because the insured had informed the carrier that he intended to present a UM claim and responded to various requests for information from the insurer so that it could evaluate the claim. Id. at 521-23. The insurer denied payment because the plaintiff had not formally requested coverage or demanded arbitration prior to the expiration of the six-year statute of limitations on the UM claim. Id. at 523. The trial court found that the insurer had "lulled" plaintiff's attorney into a "false sense" of having made a timely claim. Ibid. We affirmed that judgment, holding that the insurer was estopped from raising the statute of limitations defense. Ibid.

The Supreme Court affirmed our judgment and noted that every insurance policy includes an implied covenant of good faith and fair dealing. Id. at 526 (citing Sears Mortgage Corp. v. Rose, 134 N.J. 326, 347 (1993), and Griggs v. Bertram, 88 N.J. 347, 360-61 (1982)). The Court stated:

In dealing with plaintiff, [the insurer] was required to act in a fair manner and inform plaintiff if there were any deficiencies in his claim or if he needed to file a request for arbitration by a certain date. It was not reasonable for [the insurer] to sit back, request and receive various documents over a three and one-half year period, and then deny plaintiff's claim because he failed to file a complaint in Superior Court or request arbitration prior to the running of the six-year statute of limitations.

[Ibid.]

The Court said that the insurer had a duty to inform the plaintiff if it did not agree with his apparent understanding that the carrier was acting upon his filed claim. By failing to do so, the insurer violated its duty of good faith and fair dealing. Ibid.

Here, defendant had a similar obligation. Plaintiff submitted a UM claim and responded to several requests for information concerning that claim. Plaintiff asserted that the Mitsubishi had been stolen and defendant did not contest that assertion. In fact, defendant's claims representative offered to settle the claim. Furthermore, defendant and its attorney were well aware that plaintiff had not commenced an action against the alleged responsible tortfeasors. Defendant's counsel also knew that any such claim had to be asserted within two years of the accident.

Because the policy did not clearly state that plaintiff was required to commence a lawsuit against the alleged responsible tortfeasors in order to protect defendant's subrogation rights, defendant had a duty to inform plaintiff that her claim would be denied if she failed to start a lawsuit against Meneses and Fitzgerald prior to the expiration of the statute of limitations. Defendant breached its duty of good faith and fair dealing by failing to place plaintiff on notice that UM coverage was contingent upon the filing of the lawsuit. We are satisfied that in these circumstances, defendant must be estopped from asserting plaintiff's failure to file the lawsuit as a basis for denial of her UM claim.

In support of its appeal, defendant relies upon the Supreme Court's decision in Rutgers Cas. Ins. Co. v. Vassas, 139 N.J. 163 (1995). In that case, Vassas had been involved in an auto accident. The driver of the other vehicle was insured under a policy with liability limits of $15,000/$30,000. Id. at 166. Vassas had UIM coverage in the amounts of $100,000/$300,000. Vassas asserted a claim against the other driver and secured an arbitration award in the amount of $15,000. Two years later, Vassas made a UIM claim under his policy. The insurer denied coverage on the grounds that Vassas destroyed its subrogation rights by resolving his claim against the other driver without notice to the insurer. The Supreme Court held that Vassas violated the relevant provisions of his policy by failing to notify the insurer promptly of the accident and failing to forward legal papers to the insured related to the accident. Id. at 169. The Court also stated that Vassas "was under an obligation to preserve and not prejudice [the insurer's] rights to recover any payments made under the policy in a subrogation action." Ibid.

We are convinced that defendant's reliance upon the Vassas case is misplaced. In Vassas, the insured pursued his own claim against the alleged responsible tortfeasor and resolved it without providing notice to the insurer. In doing so, the insured violated the provisions of the policy requiring that notice be given of any such litigation and effectively destroyed any subrogation rights that the insurer would have had upon payment of the claim. Here, plaintiff never brought an action against the alleged tortfeasor and promptly notified defendant of the accident and the UM claim. Defendant was on notice of the claim and the potential loss of subrogation rights and never informed plaintiff that her claim would be denied if she failed to commence a lawsuit against Meneses and Fitzgerald. Thus, this case does not present a situation where the insured compromised a potential subrogation claim without notice to the insurer.

Defendant also relies upon Brown v. Selective Insurance Company, 311 N.J. Super. 210 (App. Div. 1998). There, the plaintiff was involved in an accident with an uninsured motorist while driving his employer's vehicle. Id. at 211-12. Plaintiff had UM coverage under a policy covering his employer's vehicle and under his own auto insurance policy. Id. at 212. Plaintiff asserted a claim against his employer's carrier but he did not give notice to his insurer of the UM claim until five years after the accident. We stated that, because the statute of limitations had run on the claims against the uninsured tortfeasor before plaintiff's insurer had notice of the UM claim, the insurer's subrogation rights had been irrevocably prejudiced. We held that in these circumstances, the employer's insurer could not seek a pro rata share of its payment on the claim from the plaintiff's insurer. Id. at 214-15.

 
The Brown case also is distinguishable. In Brown, notice had not been provided to the carrier of the accident and the UM claim. However, in this matter, plaintiff informed defendant of the accident well within the time for the filing of an action against the alleged responsible tortfeasors. Plaintiff did not file the action but as we have explained, the policy did not expressly require such action and, despite the ongoing contacts between the defendant and plaintiff during the limitations period, defendant never informed plaintiff that her claim would be denied unless such a suit was filed.

Affirmed.

(continued)

(continued)

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A-6081-04T3

March 28, 2006