ALLSTATE INSURANCE COMPANY, individually et al. v. FARRAH A. CHARLES and BRENDA CHARLES

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NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3689-05T53689-05T5

ALLSTATE INSURANCE COMPANY,

individually and a/s/o

THOMAS J. KOHLHEPP,

Plaintiff,

v.

FARRAH A. CHARLES and

BRENDA CHARLES,

Defendants,

and

FARRAH A. CHARLES and

BRENDA CHARLES,

Third-Party Plaintiffs-

Appellants,

v.

ABCO INSURANCE AGENCY, INC.,

Third-Party Defendant-

Respondent.

______________________________

 

Argued March 26, 2007 - Decided April 12, 2007

Before Judges Lintner and S.L. Reisner.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Atlantic County, Docket No. DC-903-05.

Gary P. Levin argued the cause for appellants.

Nicholas Kierniesky argued the cause for respondent (Marshall, Dennehey, Warner, Coleman and Goggin, attorneys; Mr. Kierniesky, on the brief).

PER CURIAM

Third-party plaintiffs, Brenda and Farrah Charles, appeal from two trial court orders, the first vacating a default judgment against third-party defendant Abco Insurance Agency, Inc., and the second granting Abco's motion for summary judgment dismissing the Charles' complaint under the Consumer Fraud Act. We affirm.

I

These are the most pertinent facts. In 2003, Brenda Charles (Brenda) held automobile insurance underwritten by State National Insurance Company (also known as FTP) and issued by Abco, an insurance producer. When Brenda renewed the policy in 2004, she chose to finance the premium through Preferred Payment Plan, a premium financing company which, in turn paid the premium installments to Abco.

On April 16, 2004, FTP sent Brenda a letter notifying her that she owed an additional premium, the balance of which was $27, which amount "MUST BE PAID IMMEDIATELY."
The additional $27 was due to Brenda's having added a 1993 Buick LeSabre to her policy. According to Brenda she received the April 16 letter but did not read it.

During this same time period, Brenda also fell a month behind in her regular installment payments, and Preferred Payment sent her notice that her coverage would be cancelled effective June 30, 2004 unless she made a payment of $133.81 before that date. Brenda sent the catch-up payment to the finance company but did not pay the additional $27, which was due to be paid directly to the insurance company.

According to Brenda, on August 11, 2004, she went to Abco's offices and asked an Abco employee if she owed anything more than the $195.01 payment she had come there to deliver. Brenda testified at her deposition that the Abco employee

got my file, she [came] back, she gets on the phone, she said no. And I said, are you sure? [The employee] said, that's what they said but she called back, she said, customer says are you sure, does she owe anything for late fees or anything? And they said, evidently they said no because her reply to me was no, so I pay her [the $195.01] and I left.

Consistent with Brenda's testimony, the Abco employee responsible for taking payments from customers testified that her normal procedure was to check the insured's file and to call the financing company to determine the amount due.

Viewing the facts in the light most favorable to the Charles family, Brenda received inaccurate information from the Abco employee, because she owed $27 in addition to the $195, and her insurance was cancelled due to her failure to pay the $27.

After Brenda's daughter was involved in an auto accident for which there was no coverage due to the cancellation, Allstate Insurance Company sued Farrah and Brenda to recoup the amount they paid to their insured, who was the other party involved in the accident. In turn, Brenda and Farrah filed a third-party complaint against Abco. Their third-party complaint did not plead negligence. Rather, as their counsel candidly stated at oral argument, the essence of the complaint was that the Abco employee was guilty of an omission, rather than an intentional misstatement. There was no claim that the Abco employee was poorly trained or incompetent to perform her job duties. There was no claim that Abco obtained or sought to obtain any benefit from Brenda's reliance on the alleged misstatement.

When Abco failed to answer the complaint, default judgment was entered in favor of Brenda and Farrah. The trial court eventually granted a motion to vacate the default on the grounds that Abco had not been served with a copy of the initial complaint but only with the third-party complaint, and that Abco had a facially meritorious defense. Following discovery, the trial court granted Abco's motion for summary judgment, concluding that the Consumer Fraud Act (CFA) did not apply to an insurance producer acting in its professional capacity, and that in any event the complaint did not state a claim under the CFA.

II

We review a trial court's decision to vacate a default judgment under an abuse of discretion standard. Regional Constr. Corp. v. Ray, 364 N.J. Super. 534, 540-41 (App. Div. 2003). Our review of a trial court order granting summary judgment is de novo, using the Brill standard. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); Prudential Property & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Employing those standards, we find no basis to disturb the decisions of the trial court.

Pursuant to Rule 4:8-1(a), third-party plaintiffs were required to serve Abco with a copy of the underlying complaint in the action, not merely the third-party complaint. Failure to serve Abco with the complaint was adequate grounds to vacate the default judgment. Moreover, we agree with the trial judge that Abco had a meritorious defense.

Even viewing the facts in the light most favorable to third-party plaintiffs, their complaint against Abco simply does not state a claim under the CFA, and their arguments to the contrary are without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), beyond the following comments. There is no evidence that Abco's employee made any "omission of any material fact with intent that others rely" on it, within the meaning of the CFA, N.J.S.A. 56:8-2. Such a claim requires a showing "that the defendant acted with knowledge, and intent is an essential element of the fraud." Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994)(emphasis omitted). There is no evidence that the Abco employee to whom Brenda spoke was aware that her statement concerning the amount owed was inaccurate. In fact, according to Brenda, the employee made two telephone calls to the financing company to attempt to ascertain the correct figure. The facts alleged could not possibly constitute consumer fraud under the CFA.

 
Affirmed.

In light of our disposition, we need not address the trial court's alternate ground for granting summary judgment, that the CFA does not apply to an insurance producer acting in its professional capacity.

(continued)

(continued)

6

A-3689-05T5

 

April 12, 2007


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