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DOCKET NOS. A-0513-04T50513-04T5

















Argued December 21, 2005 - Decided January 23, 2006

Before Judges Conley, Winkelstein and Lihotz.

On appeal from the Superior Court of New Jersey, Law Division, Sussex County, L-396-03.

Michael D. Schottland argued the cause for appellant Anna Marie Pugliese (Lomurro, Davidson, Eastman & Munoz, attorneys; Mr. Schottland, of counsel and on the brief; Tennant D. Magee, on the brief).

Glenn A. Bergenfield argued the cause for appellant Marianne Mauro.

Allan Maitlin argued the cause for respondent (Sachs, Maitlin, Fleming & Greene, attorneys; Mr. Maitlin, of counsel; Mr. Maitlin and Christopher Klabonski, on the brief).


Insureds Marianne Mauro (Mauro) and Anna Marie Pugliese (Pugliese) appeal summary judgment granted insurer Selective Insurance Company of America (Selective) in the parties' consolidated actions. We reverse.

This is an insurance coverage dispute triggered by a fire which damaged insureds' home. Although the fire officials did not file criminal arson charges, Selective investigated insureds' claims for coverage and was not, itself, satisfied. Part of its investigation efforts included a request that both Mauro and Pugliese undergo an examination under oath (EUO). Mauro's EUO was completed. Pugliese, however, became upset during her EUO and was not able to finish. Thereafter, Selective sent several requests to the attorney, Andrew Vecchione, who, at the time of the EUOs, appeared to represent both Mauro and Pugliese. But there is no evidence that Pugliese was aware of Selective's request that she return to complete the EUO. See Weber v. Gen. Accident Fire & Life Assurance Corp., 462 N.E.2d 422, 424 (Ohio Ct. App. 1983) ("[T]he insurance policy . . . is in reality a contract running between [insurer and insured], [so] fairness requires the notice [of a request for an EUO] be given, as a matter of course, to [insured] himself, as well as to his attorney."). There is, moreover, a factual issue as to whether Vecchione continued to represent her.

In any event, even though Mauro and Pugliese no longer lived at the property, Selective sent a certified letter to that address, advising Mauro and Pugliese that it was denying coverage because of Pugliese's "refusal to appear for an examination under oath" and Mauro's perceived "swearing falsely to material information." Specifically, the letter recites:

Dr. Mauro has breached the terms of the policy of insurance by swearing falsely with respect to material information requested and with respect to information supplied. By way of example and not by way of limitation, Dr. Mauro described her activities for Saturday, June 15, 2002 as renting a nearby storage facility and constantly driving back and forth, making deliveries of personal property from the house to the storage facility. The records of the storage facility indicate that subsequent to renting the facility, entry was made only once that entire day. An examination of the interior of the facility shows that there was very little personal property contained within the facility. Further, Dr. Mauro testified that when she left the house for the last time in the early hours of June 16, 2002, she had been through the house just before setting the alarm as she left and that there was no smoke, no fire, and nothing untoward in the house. Thereafter, while at a nearby hotel, she testified she received a communication that a fire occurred at the premises. The alarm records for the house show that at 2:04 A.M., Dr. Mauro exited and set the alarm. Within seven minutes, the alarm sounded, with the alarm being activated by intense heat within the home. The police were alerted and upon arrival observed large black smoke billowing form the house. The police called the fire department and the fire records indicate that the call came to the fire station at 2:16 A.M. Under the circumstances, with the alarm being activated within seven minutes of Dr. Mauro leaving the house and the police observing large black billowing smoke, it appears that the fire was in progress at the time that Dr. Mauro was in the house.

An examination of the fire scene reveals that the fire was not accidental. Additionally, it is clear that the fire originated outside the closet area. That should have been observable to Dr. Mauro while she was leaving the house. Dr. Mauro's conduct also caused an increase in the hazard under the policy, thereby voiding the coverage. In addition, Dr. Mauro has sworn falsely in the sworn statement in proof of loss, thereby voiding the policy.

The policy of insurance at F-1143-(05-02), page 6 of 8 of the endorsement entitled "Special Provisions - New Jersey," states as follows:

Section I and II - Conditions

Concealment or Fraud is deleted or replaced by the following:

2. Concealment or Fraud

a. Under Section I - Property Coverages, with respect to all "insureds" covered under this policy, we provide no coverage for loss under Section I -- Property Coverages if, whether before or after a loss, one or more "insureds" have:

(1) Intentionally concealed or misrepresented any material fact or circumstance;

(2) Engaged in fraudulent conduct or;

(3) Made false statements; relating to this insurance.

Dr. Mauro has violated this provision in all three respects. The policy provides that there is no coverage for loss under Section I if, before or after a loss, one or more insureds have violated these provisions. Under these circumstances, even if there were no other reasons available, the violation of the policy by Dr. Mauro is sufficient to warrant denial of the entire claim as to both Dr. Mauro and Ms. Pugliese.

With respect to Ms. Pugliese, as an insured under the policy, she is obligated to appear for and complete an examination under oath. A written demand for appearance for an examination under oath had been sent by the insurance company on August 20, 2002 and in response thereto, Ms. Pugliese appeared for an extremely short period of time before she terminated the examination under oath. Despite repeated requests for the continuation and completion of the examination under oath, Ms. Pugliese has failed and refused to appear. Under the circumstances, her failure to appear for the completion of the examination under oath is not only a violation of the policy of insurance, but has caused prejudice to the insurance company in the adjustment of the claim. Under the circumstances, Selective Insurance Company denies liability as to her independently of the other reasons which we have given for denial of benefits to the named insureds under the entire policy of insurance for any damages caused by the fire of June 16, 2002.

Selective filed a declaratory judgment action in Sussex County, where its headquarters are located, seeking a declaration of noncoverage. In count one, the complaint alleges:

1. Selective issued a policy of insurance to defendants, Mary Ann Mauro and Anna Marie Pugliese, under Policy No. H1081976, in effect from June 2, 2002 to June 2, 2003 (hereinafter "The Policy"). The Policy provided insurance coverage for defendants' residence located at 21 Monmouth Road, Oceanport, New Jersey.

2. On June 16, 2002, a fire occurred at the subject premises resulting in property damage, for which the defendants made claim under The Policy.

3. Pursuant to the terms and conditions of The Policy, Selective demanded that the insureds, Mary Ann Mauro and Anna Marie Pugliese, appear for examination under oath and give testimony with respect to the claims being made.

4. Mary Ann Mauro testified under oath in accordance with the demand for examination under oath. During the course of her testimony and presentation of documentation, the said defendant, Mary Ann Mauro, intentionally concealed or misrepresented material facts or circumstances, made false statements, and in other ways violated her obligations to give testimony under oath in a truthful manner.

5. Anna Marie Pugliese initially appeared for the taking of her examination under oath, but after a few minutes, terminated the testimony, and thereafter failed and refused to appear for the completion of her examination under oath, despite repeated requests for her to do.

6. Pursuant to The Policy, Selective will provide no coverage for a loss if, whether before or after a loss, one or more "insureds" have:

(1) Intentionally concealed or misrepresented any material fact or circumstance;

(2) Engaged in fraudulent conduct or;

(3) Made false statements;

relating to this insurance.

7. Defendants, individually and jointly, have violated the provisions of The Policy as set forth above, as a result of which The Policy is void and there is no insurance coverage for the loss that may have been sustained by the defendants as a result of the fire of June 16, 2002.

Count two alleges that both or either of the insureds intentionally set the fire. Count three alleges a failure to use all reasonable means to "save, preserve or protect the property at the time of or after the loss." Count four alleges that insureds' actions or inactions "resulted in an increase in the hazard, thereby suspending the insurance prior to the happening of the loss." Count five alleges that Pugliese "failed and refused to attend and complete her examination under oath, thereby breaching the terms of the policy . . . . " Finally, count six alleges that insureds "swore falsely with respect to the proof of loss and . . . falsely with respect to the extent of the damages sustained by them."

Shortly after this complaint was filed, Mauro filed a complaint against Selective in Monmouth County, where she resided and where the property was located. The complaint alleges the occurrence of the fire, asserts that all conditions of the policy had been complied with, and contends that Selective's refusal to provide coverage was a breach of its contractual obligations.

Responsive pleadings were filed in the lawsuits and Mauro and Pugliese unsuccessfully sought to transfer the Sussex County litigation to Monmouth County. Instead, the complaints were consolidated in Sussex County.

Precipitating this appeal was Selective's motion for summary judgment. The underlying basis for the motion was Pugliese's incomplete EUO. In support of the motion, Selective's attorney recited the numerous communications he had had with Vecchione to reschedule the EUO, including the following:

12. On October 24, 2002, I advised Mr. Vecchione in writing that we wished to continue Ms. Pugliese's examination under oath on November 20, 2002. I also requested in writing that Mr. Vecchione provide medical proof that Ms. Pugliese was unable to continue the examination under oath, which I had previously made a verbal request for. Attached hereto as Exhibit K is a true and accurate copy of my correspondence to Mr. Vecchione, dated October 24, 2002.

13. On November 6, 2002, Mr. Vecchione advised in writing that he was unable to obtain any medical report or other proof that Ms. Pugliese could not go forward with her examination under oath. Attached hereto as Exhibit L is a true and accurate copy of Mr. Vecchione's correspondence, dated November 6, 2002.

14. On November 11, 2002, I advised Mr. Vecchione in writing that we would afford Ms. Pugliese one last opportunity to complete her examination under oath on November 21, 2002, since he could produce no medical proofs as to why Ms. Pugliese was unable to complete the examination. Attached hereto as Exhibit M is a true and accurate copy of my correspondence to Mr. Vecchione, dated November 11, 2002.

15. I then subsequently left two (2) messages with Mr. Vecchione's office requesting he confirm the examination and, on November 20, 2002, faxed correspondence to him requesting that he please advise by 5:00 p.m. whether Ms. Pugliese would appear for the examination scheduled for November 21, 2002. Attached hereto as Exhibit N is a true and accurate copy of my correspondence, dated November 20, 2002.

16. Mr. Vecchione subsequently advised via telephone that Ms. Pugliese would not be appearing for the scheduled examination.

17. Selective subsequently denied coverage for, inter alia, Ms. Pugliese's failure to complete her examination. Attached hereto as Exhibit O is a true and accurate copy of Selective's declination letter, dated December 27, 2002.

Selective also relied on the following policy provisions:

Section I and II - Conditions

2. Concealment or Fraud is deleted or replaced by the following:

2. Concealment or Fraud

a. Under Section I - Property Coverages, with respect to all "insureds" covered under this policy, we provide no coverage for loss under Section I - Property Coverages if, whether before or after a loss, one or more "insureds" have:

(1) Intentionally concealed or misrepresented any material fact or circumstance;

(2) Engaged in fraudulent conduct or;

(3) Made false statements relating to this insurance.

[Emphasis added.]

In addition, the policy provides, as to Selective's right to cancel:

(2) When this policy has been in effect for 60 days or more, at any time if it is a renewal with us, we may cancel only for one or more of the following reasons:

. . . .

(f) Lack of cooperation from the "insured" on loss control matters materially affecting insurability of the risk.

Finally, Selective noted N.J.S.A. 17:36-5.20 which requires as a standard provision in a fire policy that:

The insured, as often as may be reasonably required, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examination[s] under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of accounts, bills invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representatives, and shall permit extracts and copies thereof to be made.

The underlying rationale for the motion, therefore, was Selective's assertion that Pugliese's failure to complete her EUO was a willful or substantial breach of her duty to cooperate, and constituted an intentional concealment of material facts such that Mauro, too, was not entitled to coverage. But, in opposing the motion, Pugliese pointed out in her certification:

7. At some point in August 2003, I received word that Selective Insurance Company had requested that I sit for an examination under oath at a law office in West Orange, NJ. Mary Ann Mauro and I traveled together to the examination under very tense, emotional circumstances in that I was still suffering from the breakup of our relationship. We met Andrew Vecchione, who was really Ms. Mauro's attorney, even though he had represented both of us at the closing, at Mr. Maitlin's office. During the course of my deposition, I remember pointing out to Mr. Maitlin that I had moved to 255 Clinton Avenue, in Eatontown, New Jersey (my parent's home) and was residing there at that time.

8. During the course of that deposition, I was having a difficult time providing the answers due to my becoming emotionally upset and as a result, the deposition was adjourned. Mr. Maitlin did not tell me that if I failed to come back to complete the deposition, the insurance company would disclaim or seek to void the policy. In any event, after the deposition was adjourned I never again heard from Mr. Vecchione about the necessity of completing my deposition. He never called me, he never advised me or questioned me about the need to complete my deposition.

9. My attention has been directed to a letter, which as been annexed hereto and marked Exhibit A, dated December 27, 2002 and addressed to myself and Mary Ann Mauro consisting of two pages with a third pages indicating copies were sent to Andrew P. Vecchione, Esq. and the Norwood Agency. Prior to my present lawyer showing me that letter, I absolutely deny ever seeing that letter or hearing about it. I also wonder why Selective Insurance Company would send a letter on December 27, 2002 addressed to me at 21 Monmouth Road, Oceanport, NJ when they knew we had sold the house and they knew I was residing with my parents at 255 Clinton Avenue in Eatontown, New Jersey. I can swear to this Court that Mr. Vecchione never notified me of this letter nor did he ever notify me of the necessity that I complete that deposition. I had and have absolutely no reason not to appear to complete my deposition and I once again reiterate to the Court my willingness to do so.

10. My attention was also directed to a letter dated January 8, 2003 addressed to Marianne Mauro, DMD, at her 252 Broad Street, Red Bank, N.J. address, from Mr. Vecchione, which I believe enclosed Exhibit A. This letter was contained in the copy of Mr. Vecchione's file obtained by my current counsel. A copy of same is annexed hereto as Exhibit B.

11. I reiterate that neither Ms. Mauro, Mr. Vecchione, nor Mr. Maitlin, or any representative of Selective Insurance Company ever advised me of the need to complete my deposition or face a loss of coverage for the fire loss.

In addition, her attorney certified:

2. We requested the entire file of Mr. Vecchione, which was provided, I have thoroughly searched through the file that Andrew Vecchione, Esq. provided to this office and cannot find any correspondence from Mr. Vecchione to Ms. Pugliese that stated: (1) The insurance company was requiring her to complete the EUO; (2) the insurance company was seeking medical documentation from her stating that she could not testify; (3) the insurance company would void her policy if she failed to submit to the EUO; or (4) that the insurance company was denying coverage to her and to Mr. Mauro. At least according to Mr. Vecchione's file, Ms. Pugliese was not getting information from him about the claim or its status before plaintiff instituted its action.

Of course, in the context of a motion for summary judgment, these assertions by Pugliese and her attorney, which have not been denied by Vecchione, must be accepted as true. E.g., Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Further, we have commented that motions for summary judgment "should not ordinarily be granted where an action or defense requires a determination of a state of mind or intent . . . . " Lilliston Chrysler v. Universal Underwriters Group, 329 N.J. Super. 318, 324 (App. Div. 2000). See also Wilson v. Amerada Hess Corp., 168 N.J. 236, 254 (2001).

Nonetheless, in granting the motion, the trial judge found "nothing in the record which would indicate . . . that Mr. Vecchione was not serving as [Pugliese's] legal counsel at the time." Clearly, the certifications are to the contrary. Further, as to cancellation of the policy for Mauro, the judge said:

By attending her examination, defendant Dr. Mauro, did not conceal any material facts. However, the policy indicates that the insured will not be covered if "one or more insureds" concealed any material facts. By not attending the examination under oath, without any certified medical reason that might excuse her, . . . Ms. Pugliese has concealed material facts.

But, wholly aside from whether Pugliese was properly notified of Selective's desire to continue her examination, a desire we cannot assume she should have been aware of in light of Mauro's full EUO and her own EUO, albeit terminated early, there is nothing in the motion record which would support a conclusion that Pugliese's intent in not completing the examination was to conceal material facts.

What remains, then, is whether cancellation is legally justified simply because an EUO under oath was not completed. The EUO is part of the insured's contractually imposed obligation to cooperate with the insurer. Cooperation clauses generally have been held to be material provisions of insurance policies with compliance therewith a condition precedent to the insured's liability and a breach thereof a possible basis for forfeiture of coverage. E.g., Griggs v. Bertram, 88 N.J. 347, 360 (1982); Mariani v. Bender, 85 N.J. Super. 490, 500 (App. Div. 1964), certif. denied, 44 N.J. 409 (1965). See State Farm Indem. Co. v. Warrington, 350 N.J. Super. 379, 382, 387-88 (App. Div. 2002); N.J. Auto. Full Ins. Underwriting Ass'n v. Jallah, 256 N.J. Super. 134, 141 (App. Div. 1992).

Early decisions in this state posited that in order to relieve itself of liability under the policy the insurance carrier must show that the cooperation clause was "deliberately breached in a material and essential particular," Pearl Assur. Co. Ltd. v. Watts, 69 N.J. Super. 198, 206 (App. Div. 1961), which, ordinarily, is an issue of fact, Mariani v. Bender, supra, 85 N.J. Super. at 500, and does not necessarily require "a demonstration of substantial detriment to the insurer," Kindervater v. Motorists Cas. Ins. Co., 120 N.J.L. 373, 377 (E. & A. 1938). More recently, we have made clear that there must be more than simple miscommunication or neglect. In DiFrancisco v. Chubb Ins. Co., 283 N.J. Super. 601 (App. Div. 1995), for instance, we upheld summary judgment granted insurer for insured's failure to cooperate by not providing corporate books and records because we were convinced the information requested was "highly relevant" and that the scope of the demand was "reasonable and specific." Id. at 612. Thus, "[w]e consider[ed] [insured]'s failure to produce the appropriate records as constituting a willful refusal to comply with the terms of his insurance contract." Id. at 613. See Prudential Prop. & Cas. Ins. Co. v. Nardone, 332 N.J. Super. 126, 138-39 (Law Div. 2000) ("subject to ordinary standards of reasonableness and fairness" and where the insurer has been prejudiced by non-cooperation, insured is not entitled to coverage). See generally 14 Couch on Insurance 199:23, 24, 25, 53 (3d ed. 2005); Robert E. Keeton & Alan I. Widiss, Insurance Law 7.3(b) (1988); 16 Williston on Contracts 49:107 (4th ed. 2000); Christopher Vaeth, Requirement Under Property Insurance That Insured Submit to Examination Under Oath As to Loss, 16 A.L.R.5th 412 (1993). See O'Leary v. Lumbermen's Mut. Cas. Co., 420 A.2d 888, 891 (Conn. 1979); Taricani v. Nationwide Mut. Ins. Co., 822 A.2d 341, 347 (Conn. App. Ct. 2003); Ausch v. St. Paul Fire & Marine Ins. Co., 511 N.Y.S.2d 919, 925, appeal denied, 516 N.E.2d 1223 (N.Y. 1987); New York Craniofacial Care, PC v. Lumbermen's Mut. Cas. Co., 771 N.Y.S.2d 844, 848 (N.Y. Civ. Ct. 2004) (insured's failure to appear for an EUO on two occasions was not a pattern of willful and persistent noncooperation as to constitute a material breach of the insurance policy sufficient to warrant forfeiture). Contrast, Laine v. Allstate Ins. Co., 355 F. Supp. 2d 1303, 1306 (N.D. Fla. 2005) (delaying examination of an insured for more than five years after the fire he allegedly set prejudices insurer warranting forfeiture of coverage); Fassi v. American Fire & Cas. Co., 700 So. 2d 51, 53 (Fla. Dist. Ct. App. 1997) (offer of insured to appear for examination under oath three months after insurer requested explanation of repeated failure to cooperate in fire investigation and to appear for scheduled examinations was too little too late and sufficient basis for denial of claim); Argento v. Aetna Cas. & Sur. Co., 584 N.Y.S.2d 607 (N.Y. App. Div. 1992) (where "the record [was] indicative of a three-year pattern of noncooperation insurer's fire investigation for which no reasonable excuse had been offered," dismissal of the insured's complaint was proper).

Here, the motion record shows that Mauro gave a full examination, Pugliese gave a partial examination and, viewed most favorably to her, Pugliese had no knowledge of Selective's desire to complete her examination. It further shows that if she had known, she would have complied. Moreover, even though Selective asserts on appeal that it has been prejudiced by Pugliese's incomplete EUO, this is nothing more than an unsupported assertion. In this respect, we note that Pugliese's EUO, as transcripted, is eighteen pages. Questions concerning where Pugliese was living right before the fire, her move to the motel, and where her possessions were located at the time of the fire, were asked and answered. We are not sure what other information Selective would have sought or whether further answers would have affected its investigation. Indeed, prejudice was not the basis of its motion for summary judgment. Given all of these circumstances, we are convinced summary judgment was not warranted.

Since the matter must be remanded for trial, we address the venue issue, also raised on appeal. R. 4:3-2(a) provides in pertinent part that venue for an action "affecting title to real property or a possessory or other interest therein, or for damages thereto" is "in the county in which any affected property is situate." Except for certain other matters not relevant here, "the venue in all other actions . . . shall be laid in the county in which the cause of action arose, or in which any party to the action resides at the time of its commencement." R. 4:3-2(a)(1),(3). Mauro's and Pugliese's motions were denied because Sussex County is where Selective has its headquarters.

Our review of the motion judge's determination is limited to ascertaining whether there was an abuse of discretion. Diodato v. Camden County Park Comm'n, 136 N.J. Super. 324, 326-27 (App. Div. 1975). Mauro and Pugliese argue here that R. 4:3-2(a)(1) applies as the matter affects property. It does not. This is an insurance coverage dispute. The title of the property, insured's interest therein, or damages relating thereto, are not affected. It is Mauro's and Pugliese's entitlement to insurance coverage that is at issue.

It is, therefore, R. 4:3-2(a)(3) that is applicable. Pursuant thereto, Sussex County is a permissible venue because that is where Selective is located. We might have thought Monmouth County would have been more convenient for the parties and potential witnesses. R. 4:3-3; J.J. Nugent Co. v. Sagner, 151 N.J. Super. 189, 192 (App. Div. 1977). But that, of course, is not the test for determining whether the motion judge abused her discretion in denying Mauro's and Pugliese's motion. However, since the matter must be remanded for further proceedings which may ultimately require a trial at which the Monmouth County investigating police and fire officials may well be required to testify, the trial judge should revisit the venue issue.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.





January 23, 2006


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