JOHN SAUER v. PRESERVER INSURANCE GROUP

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6134-08T16134-08T1

JOHN and AMY SAUER, h/w, as

intended Third party

beneficiaries of a Policy

of insurance issued to

Alliance Concrete, Inc.,

Plaintiffs-Appellants,

v.

PRESERVER INSURANCE GROUP,

Defendant-Respondent.

___________________________________________________

 

Argued May 4, 2010 - Decided

Before Judges Skillman and Simonelli.

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket

No. L-4426-07.

John B. Kearney argued the cause for appellants (Kearney and Associates, attorneys; Mr. Kearney, on the brief).

Stephen J. Foley, Jr. argued the cause for respondent (Campbell, Foley, Lee, Murphy & Cernigliaro, attorneys; Mr. Foley, on the brief).

PER CURIAM

On March 11, 2004, plaintiffs filed a complaint against Alliance Concrete (Alliance) and others asserting claims for negligence and breach of contract in connection with the construction of plaintiffs' home in Atco, which allegedly caused substantial water damage. Alliance failed to answer plaintiffs' complaint, and on October 21, 2005, a default judgment was entered against Alliance in the amount of $118,327.40.

At the time Alliance performed work in connection with the construction of plaintiffs' home, it had a liability insurance policy issued by defendant Preserver Insurance Group (Preserver). Alliance failed to notify Preserver of the action brought by plaintiffs, and Preserver did not become aware of the action until March 13, 2006, which was nearly two years after the filing of the complaint and six months after entry of the default judgment.

On August 24, 2007, more than a year after entry of the default judgment against Alliance, plaintiffs brought this action against Preserver for recovery of the amount of the judgment. Plaintiffs claimed the status of third-party beneficiaries of the insurance policy issued to Alliance.

After discovery was conducted, the case was brought before the trial court by cross-motions for summary judgment. The court granted Preserver's motion and dismissed plaintiffs' complaint on the ground that Alliance had breached its duty to notify Preserver of plaintiffs' underlying action and that it would be "unfairly prejudicial" to hold Preserver liable for the default judgment entered against Alliance.

On appeal, plaintiffs present the following argument:

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN FAVOR OF THE DEFENDANT INSURANCE COMPANY BY FAILING TO RECOGNIZE THE VALIDITY OF THE CLAIMS PRESENTED BY PLAINTIFFS, AS THE THIRD-PARTY BENEFICIARY OF AN INSURANCE POLICY ISSUED TO AN ENTITY THAT ALLOWED A DEFAULT JUDGMENT TO BE ENTERED AGAINST IT AS THERE WAS NO APPRECIABLE PREJUDICE DONE TO THE INSURANCE COMPANY IN THIS MATTER.

Plaintiffs' argument is clearly without merit. R. 2:11-3(e)(1)(E). The appreciable prejudice to Preserver from Alliance's breach of its duty to provide notice of plaintiffs' underlying action is manifest based on the passage of nearly two years between the filing of the complaint and Preserver being made aware of the action, the dismissal of other potentially liable parties from the underlying action during that intervening period, and the entry of a default judgment against Alliance.

Affirmed.

 

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A-6134-08T1

May 27, 2010