AAMES v. FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC. et al, No. 1:2013cv02008 - Document 104 (D.N.J. 2014)
Court Description: MEMORANDUM OPINION & ORDER denying Plaintiff's 63 Motion for Summary Judgment seeking a Declaratory Judgment, and granting Fidelity's 75 Cross-Motion for Summary Judgment on Count One of the Amended Complaint. Signed by Judge Joseph H. Rodriguez on 9/25/2014. (TH, )
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AAMES v. FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC. et al Doc. 104 U N ITED STATES D ISTRICT COU RT D ISTRICT OF N EW JERSEY _____________________________ STEPHANIE AAMES, FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., et al., Defendants. _____________________________ _ _ _ Civil Action No. 13-20 0 8 : v. Hon. J oseph H. Rodriguez : Plaintiff, : MEMORANDUM OPINION & ORDER : : This m atter is before the Court cross-m otions for partial sum m ary judgm ent on Count One of the Am ended Com plaint in which Plaintiff Stephanie Aam es seeks a Declaratory J udgm ent that her hom eowners insurance policy holder, Defendant Fidelity an d Guaranty Insurance Underwriters, Inc., failed to provide notice of nonrenewal of her Policy # 983455770 6331 and, as a result, insurance coverage continued to be effective as of Septem ber 28, 20 12, the date a fire destroyed Plaintiff s Pennsville, New J ersey house; Fidelity argues that the policy was effectively nonrenewed prior to the fire. Oral argum ent was heard on the cross-m otions on Septem ber 10 , 20 14 and the record of that proceeding is incorporated here. Factual Background & Procedural History This action arises from a Septem ber 28, 20 12 house fire on Plaintiff s property located at 179 South Hook Road, Pennsville, New J ersey. According to the First Am ended Com plaint, on Septem ber 29, 20 12, when Plaintiff notified her hom eowners insurance policy 1 holder, Defendant Fidelity and Guaranty Insurance Underwriters, Inc., of her loss, she was advised that her policy had been cancelled effective Septem ber 1 Fidelity issued Hom eowners Policy No. 983455770 633 1 to Plaintiff with a policy period of Septem ber 19, 20 11 to Septem ber 19, 20 12. Schm idt Cert., J an. 22, 20 14, Ex. A; Hager Cert., Mar. 24, 20 14, Ex. A. Dockets.Justia.com 19, 20 12, and not renewed. 2 (Am . Com pl. ¶ 3.) Plaintiff alleges that she was not provided notice of this cancellation before the fire occurred on Septem ber 28, 20 12, and therefore asserts a claim again st Fidelity for a declaratory judgm ent that coverage rem ain ed in full force and effect. (Am . Com pl. ¶ 5; Count One.) Plaintiff also alleges that Fidelity s cancellation and non-renewal of her policy was arbitrary, capricious, and unfairly discrim inatory because it was based on prior losses; she therefore asserts that the can cellation and non-renewal was ineffective, and coverage rem ained in full force and effect. (Am . Com pl. ¶ 8-10 ; Count Two.) Finally, Plaintiff claim s that Fidelity breached its contractual obligation to provide insurance coverage. (Am . Com pl. ¶ 13; Count Three.) Fidelity has m aintain ed, since its original Answer, (Doc. No. 14), that it issued a Notice of Nonrenewal to Plaintiff on August 15, 20 12, advising that the policy would not be renewed on Septem ber 19, 20 12 because Plaintiff had sustained three or m ore losses within the previous five years, 3 rendering the risk ineligible for Fidelity s Hom eowner Program . Hager Cert., Mar. 24, 20 14, Ex. B. Plaintiff also has sued her insurance agent, Defendant USI Insurance Services, for breach of contract (Am . Com pl. Count Four) and negligence (Am . Com pl. Count Five) because USI did not notify Plaintiff of the cancellation an d non-renewal of her insurance policy, and failed to procure replacem ent coverage. 2 By letter dated October 12, 20 12, Fidelity denied Plaintiff s insurance claim on the basis that her policy was cancelled effective Septem ber 19, 20 12 and not renewed; as a result, the policy was not in effect on the date of the fire. Hager Cert., Mar. 24, 20 14, Ex. C. The letter also stated that [l]etters from both our underwriting departm ent and your agent were m ailed to you on J uly 19, 2012 inform ing you of the decision and the date of can cellation. Id. 3 The prior losses consisted of two wind losses dated J une 1, 20 0 9 an d March 19, 20 11, two alleged theft losses dated Novem ber 6, 20 11 and February 19, 20 12, and a liability loss dated April 4, 20 12. Hager Cert., Mar. 24, 20 14, Ex. B. With respect to the February 19, 20 12 theft loss, Plaintiff pleaded guilty to insurance fraud pursuant to N.J . Stat. Ann. 2C:21-4.6a. 2 In addition, Plaintiff has sued her m ortgage com pany, Defendant Wells Fargo Hom e Mortgage. As part of her m ortgage loan agreem ent (1) Plaintiff was required to escrow m onies to pay, am ong other things, casualty insurance prem ium s and (2) the m ortgage holder agreed to keep the property insured. (Am . Com pl. ¶ 27-28.) Plaintiff alleges that in J uly 20 12, Wells Fargo received notice from Fidelity that the insurance on Plaintiff s property would not be renewed, but Wells Fargo failed to advise Plaintiff of such and failed to take any other steps to ensure that Plaintiff s property was covered. (Am . Com pl. ¶ 32.) Therefore, Plaintiff has asserted a claim against Wells Fargo for breach of contract. (Am . Com pl. Count Six.) With leave of Court, Plaintiff also added a claim against Wells Fargo for violation of RESPA, 12 U.S.C. § 260 5(g) and N.J . Stat. Ann. § 17:16-F-18, because Wells Fargo allegedly failed to tim ely pay the prem ium for Plaintiff to obtain coverage from Selective Insurance Com pany, rather than Fidelity, as Plaintiff had requested in J anuary and February of 20 12. (Am . Com pl. ¶ 39-44; Count Seven.) On October 24, 20 13, the New J ersey State Fire Marshal issued an Incident Report concerning the Septem ber 28, 20 12 fire at Plaintiff s property. In his report, the Fire Marshal concluded that the fire was incendiary in n ature with m ultiple points of origin. Hager Cert., Mar. 24, 20 14, Ex. D. On Novem ber 1, 20 13, Fidelity filed a Motion to Am end its Answer and assert a Counterclaim based upon the inform ation provided by the Fire Marshal s Incident Report and the results of Fidelity s own investigation, which included a May 1, 20 13 inspection of Plaintiff s property. Prior to the filing of Fidelity s Motion, Wells Fargo had filed a Motion to Dism iss and Plaintiff cross-m oved for leave to file an Am ended Com plaint. On Decem ber 11, 20 13, this Court granted in part and denied in part Wells Fargo s Motion to Dism iss and granted Plaintiff s cross-m otion to am end to allow her to assert the RESPA claim against 3 Wells Fargo. Plaintiff filed a First Am ended Com plaint on Decem ber 18, 20 13. On Decem ber 23, 20 13, Fidelity filed an Answer to the First Am ended Com plaint and a Counterclaim , m irroring the proposed pleading that was the subject of its Motion to am end to include the defenses that the fire was incendiary in nature and that Plaintiff was involved in intentionally causing the fire in violation of the Concealm ent or Fraud provision of the hom eowners policy and a counterclaim against Plaintiff under New J ersey s Insurance Fraud Prevention Act, N.J . Stat. Ann. § 17:33(a)-1. On J anuary 8 , 20 14, the Honorable Karen M. William s, United States Magistrate J udge, dism issed as m oot Fidelity s Motion for Leave to file an Am ended Answer an d Counterclaim . The J udge determ ined that in light of Plaintiff s filing an Am en ded Com plaint, leave of Court was not required for Fidelity to file its Answer to the Am ended Com plaint and Counterclaim . Aam es v. Fidelity & Guaranty Ins. Underwriters, Inc., No. 13-cv-20 0 8, Doc. 58 (D.N.J . J an. 8 , 20 14). The plain language of the Rule does not dictate the need for leave of court nor does it provide that a party respond only to am ended portions of the am ending pleading to the contrary, the Rule states the required response is to the am en ded pleading. Id. As such, Fidelity has advanced the alternative defenses that its policy was not in effect at the tim e of the loss, but if it was, Plaintiff s actions constituted violations of the Concealm ent or Fraud condition of the policy an d her claim would be further barred by the policy s Intentional Loss exclusion. February 5, 20 14, Plaintiff filed a Motion to Strike the Third, Fourth, and Fifth Affirm ative Defenses contained in Fidelity s Answer to the First Am ended Com plaint and to Strike Fidelity s Counterclaim pursuant to Federal Rule of Civil Procedure 15(a) because they were filed without the Court s perm ission. Doc. No. 66. Alternatively, Plaintiff seeks to Dism iss the Third, Fourth, and Fifth Affirm ative Defenses and the Counterclaim contain ed in Fidelity s Answer to the First Am ended Com plaint pursuant 4 to Rule 12(b)(6) for failure to state a claim because the am endm ents allegedly have no basis in fact an d are futile, or to strike the sam e pursuant to Rules 9(b), and 12(f) for failure to plead the allegations of fraud with particularity and for pleading an insufficient defense containing im pertinent or scandalous m atter. Specifically, Plaintiff argues that the results of Fidelity s own investigation into the fire is m erely an opinion 4 , not facts that would form a sufficient basis for a Counterclaim of fraud. Plaintiff also argues that the Fire Marshal s Report should be disregarded under Daubert because it is does not establish that it is based upon reliable principles and m ethods of fire investigation as established by the National Fire Protection Association. Federal Rule of Civil Procedure 15 governs am endm ents to pleadin gs. See Fed. R. Civ. P. 15. The Rule provides that leave to am end shall be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). Thus, leave generally should be granted absent undue delay, bad faith or dilatory m otive on the part of the m ovant, repeated failure to cure deficiencies by am en dm ents previously allowed, undue prejudice to the opposing party by virtue of allowance of the am endm ent, or futility of am endm ent. Fom an v. Davis, 371 U.S. 178, 182 (1962). The decision as to whether leave to am end a com plaint should be granted is a m atter com m itted to the sound discretion of the district court. Arab African Int l Bank v. Epstein, 10 F.3d 168, 174 (3d Cir. 1993). Plaintiff s argum ents against allowing Fidelity s Answer to her Am ended Com plaint relate to the m erits of Fidelity s Affirm ative Defenses and Counterclaim which allege fraud and m isrepresentation based upon inform ation acquired after the 4 Plaintiff takes particular issue with Fidelity s conclusion that she had a m otive to com m it arson due to a March 19, 20 12 Notice of Intention to Foreclose which indicated that Plaintiff was behind in her m ortgage paym ents by two m onths for a total of $ 2,330 .49. Hager Cert., Mar. 24, 20 14, Ex. E. 5 original filings to the effect that the fire m ay have been incendiary in nature with m ultiple points of origin. As such, at oral argum ent the Court denied the m otion seeking to strike or dism iss Fidelity s Answer. Discussion Plaintiff also has filed a Motion for Partial Sum m ary J udgm ent. (Doc. No. 63.) By this m otion, Plaintiff seeks a Declaratory J udgm ent that Fidelity failed to provide notice of nonrenewal of Policy # 98 3455770 6331 and, as a result, insurance coverage continued to be effective as of Septem ber 28, 20 12, the date a fire destroyed Plaintiff s house. Fidelity has cross-m oved for sum m ary judgm ent on Count One of the Am ended Com plaint, arguing that the policy was effectively non-renewed prior to the fire. (Doc. No. 75.) Sum m ary judgm ent is proper if there is no genuine issue of m aterial fact and if, viewing the facts in the light m ost favorable to the non-m oving party, the m oving party is entitled to judgm ent as a m atter of law. Pearson v. Com ponent Tech. Corp., 247 F.3d 471, 48 2 n.1 (3d Cir. 20 0 1) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (198 6)); accord Fed. R. Civ. P. 56 (a). The Court will enter sum m ary judgm ent in favor of a m ovant who shows that it is entitled to judgm ent as a m atter of law, and supports the showing that there is no genuine dispute as to any m aterial fact by citing to particular parts of m aterials in the record, including depositions, docum ents, electronically stored inform ation, affidavits or declarations, stipulations . . . adm ission s, interrogatory answers, or other m aterials. Fed. R. Civ. P. 56 (c)(1)(A). An issue is genuine if supported by evidence such that a reasonable jury could return a verdict in the nonm oving party s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is m aterial if, under the governing substantive law, a dispute about the fact m ight affect the outcom e of the suit. Id. In determ ining whether 6 a genuine issue of m aterial fact exists, the court m ust view the facts and all reasonable inferences drawn from those facts in the light m ost favorable to the nonm oving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Initially, the m oving party has the burden of dem onstrating the absence of a genuine issue of m aterial fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the m oving party has m et this burden, the n onm oving party m ust identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id.; Maidenbaum v. Bally s Park Place, Inc., 8 70 F. Supp. 1254, 1258 (D.N.J . 1994). Thus, to withstand a properly supported m otion for sum m ary judgm ent, the nonm oving party m ust identify specific facts and affirm ative evidence that contradict those offered by the m oving party. Andersen, 477 U.S. at 256-57. A nonm oving party m ay not rest upon m ere allegations, general denials or . . . vague statem ents . . . . Trap Rock Indus., Inc. v. Local 8 25, Int l Union of Operating Eng rs, 982 F.2d 8 84, 8 90 (3d Cir. 1992) (quoting Quiroga v. Hasbro, Inc., 934 F.2d 497, 50 0 (3d Cir. 1991)). Indeed, the plain language of Rule 56(c) m andates the entry of sum m ary judgm ent, after adequate tim e for discovery and upon m otion, against a party who fails to m ake a showing sufficient to establish the existence of an elem ent essential to that party s case, an d on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. That is, the m ovant can support the assertion that a fact cannot be genuin ely disputed by showing that an adverse party can not produce adm issible evidence to support the [alleged dispute of] fact. Fed. R. Civ. P. 56(c)(1)(B); accord Fed. R. Civ. P. 56(c)(2). In deciding the m erits of a party s m otion for sum m ary judgm ent, the court s role is not to evaluate the evidence and decide the truth of the m atter, but to determ ine whether there is a gen uine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 7 249 (1986). Credibility determ in ations are the province of the factfinder. Big Apple BMW, Inc. v. BMW of N. Am ., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). It is undisputed that Fidelity Policy 983455770 633 covered the period of Septem ber 19, 20 11 to Septem ber 19, 20 12. The Declarations Page of that Policy had been changed effective Novem ber 19, 20 0 8 5 to reflect the m ailing address of the nam ed insured Stephanie Aam es as 496 W Calle Tuberia, Casa Grande, Arizona 85294. The Residence Prem ises covered continued to be 179 S. Hook Road, Pennsville, New J ersey 0 80 70 . Schm idt Cert., J an. 22, 20 14, Ex. A; Hager Cert., Mar. 24, 20 14, Ex. A, C. On August 15, 20 12, Fidelity issued a Notice of Nonrenewal for Policy 98 3455770 633, which was to expire effective Septem ber 19, 20 12. It stated, Risk in ineligible for our hom eowner program due to the fact: Insured has had 3 or m ore losses within the past 5 years, and referenced wind losses from 0 6/ 0 1/ 0 9 and 0 3/ 19/ 11 and theft on prem ises losses on 11/ 0 6/ 11 and 0 2/ 19/ 12, as well as an additional liability loss on 0 4/ 0 4/ 12. Hager Cert., Mar. 24, 20 14, Ex. E. The Notice of Nonrenewal was one of 45 notices grouped together for m ailing by Fidelity on August 15, 20 12. Hanley Cert., Mar. 19, 20 14, ¶ 1-2, Ex. A, C. It was sent via first class m ail to Plaintiff s Arizona m ailing address that day. Hanley Cert., Mar. 19, 20 14, ¶ 1-9, Ex. B, C. 6 In response to an October 18, 20 0 7 letter referencing First Trenton Indem nity Com pany Hom eowners Policy 6330 5440 , Plaintiff wrote re: m y property located at 179 S. Hook Rd., Pennsville, NJ 0 80 70 this property is owner occupied. The address you have on file for m ailing prem ium s is for m ailing purposes only, as I travel for business in the Southwest frequently. Continue to send any m ailings to the address of 496 W Calle Tuberia, Casa Grande, AZ 8 5294. Hager Cert., Mar. 24, 20 14, Ex. B. 5 The record also contains letters from Defendant USI to Plaintiff at the Arizona address, dated August 8 , 20 12 referencing Fidelity s plan to cancel the Policy effective 9/ 19/ 12 due to 3 or m ore losses within the past 5 years and Septem ber 26, 20 12 as a final rem inder that the Policy has been cancelled effective 9/ 19/ 20 12 due to the legal notice of cancellation sent to [Plaintiff] by Fidelity. Hager Cert., Mar. 24, 20 14, Ex. G, H. 6 8 The Nonrenewal provision of the Policy at issue is am ended by the New J ersey form endorsem ent and is set forth at Section 4 of the Policy, which states: a. We m ay elect not to renew this policy for any reason perm itted to cancel this policy. [E.g., increased hazard or m aterial change in the risk assum ed . . . .] If we elect not to renew this policy, we will deliver or m ail a notice of nonrenewal, stating the reasons for nonrenewal, to you at least 30 days but not m ore than 120 days before the expiration date of this policy. b. This nonren ewal notice m ay be delivered to you or m ailed to y ou at y our m ailing address show n in the Declarations by: (1) Certified m ail; or (2) First class m ail if we have obtained, from the U.S. Post Office, a date stam ped proof of m ailing showing your nam e and address. Schm idt Cert., J an. 22, 20 14, Ex. A; Hager Cert., Mar. 24, 20 14, Ex. A, C (em phasis added). This language reflects the regulations prom ulgated by New J ersey s Departm ent of Banking and Insurance which provide, [a]ll fire and casualty policies of insurance, except accident and health policies, shall provide for the issuing com pany to give . . . [t]hirty days written notice to the insured of said com pany s intent not to renew any policy. N.J . Adm in. Code 11:1-5.2(a)(3). Further, [n]o nonrenewal or cancellation shall be valid unless notice thereof is sent . . . [b]y first class m ail, if at the tim e of m ailing the insurer has obtained from the Post Office Departm ent a date stam ped proof of m ailing showing the nam e and address of the insured, an d the insurer has retained a duplicate copy of the m ailed notice. N.J . Adm in. Code 11:1-20 .2(i)(2). Here, the record shows that Fidelity s Notice of Nonrenewal was m ailed to Plaintiff at her m ailing address shown in the Declarations. See Ward v. Merced, 650 A.2d 10 (N.J . Super. Ct. App. Div. 1994) (Form 3877 constitutes proof of m ailing). This satisfies the notice requirem ent provided for by the Policy and does not offend New J ersey s adm inistrative regulations. Although Plaintiff has den ied receipt of the Notice, [a]n insured n eed not actually receive a cancellation notice in order for it to be effective, provided that the statutory proof of m ailing has been satisfied. 9 Nat. Ins. Co. on Behalf of NJ AFIUA, 615 A.2d 1259 (N.J . Super Ct. App. Div. 1992). The determ inative factor is the m ailing of the notice, not its receipt. Needham v. N.J . Ins. Underwriting Ass'n, 553 A.2d 8 21 (N.J . Super Ct. App. Div. 1989). While Plaintiff has argued that that the New J ersey requirem ent of notice to the insured im poses an obligation to insurance com panies to determ ine a physical location of each client, neither the statutes nor the case law supports such a burden. 7 Conclusion For these reasons, as well as those articulated on the record during oral argum ent, IT IS ORDERED on this 25th day of Septem ber, 20 14 that Plaintiff s Motion for Partial Sum m ary J udgm ent [63], seeking a Declaratory J udgm ent that Defendant Fidelity failed to provide notice of nonrenewal of Policy # 983455770 6331 an d, as a result, insurance coverage continued to be effective as of Septem ber 28, 20 12, the date a fire destroyed Plaintiff s house, is hereby DENIED. IT IS FURTHER ORDERED that Fidelity s cross-m otion for sum m ary judgm ent on Count One of the Am ended Com plaint [75] is hereby GRANTED. _ / s/ J oseph H. Rodriguez J OSEPH H. RODRIGUEZ U.S.D.J . Plaintiff argued that a Fidelity representative, in investigating a prior claim of loss, m ade notes that tend to show the com pany s actual knowledge that Plaintiff had left Arizona upon separation from her husband there, and m oved to her New J ersey residence as of J uly 19, 20 12. (Pl. Br., p. 9.) As the insurance com pany points out, however, the assum ption always was that Plaintiff resided at her Residence Address. The circum stance that she chose to receive corresponden ce regardin g the insurance policy at a separate m ailing address should not serve to invalidate any otherwise proper notice provided through such channel. 7 10
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