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DOCKET NO. A-0688-10T3


























May 24, 2012


Argued January 11, 2012 - Decided


Before Judges Axelrad, Sapp-Peterson and Ostrer.


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-6217-07.


Steven P. Marshall argued the cause for appellant.


Robert Wright argued the cause for respondents (White and Williams, L.L.P., attorneys; Mr. Wright and Michael J. Kozoriz, of counsel; Mr. Kozoriz, on the brief).


In this appeal, plaintiff Peter Heller (Heller) appeals from two orders of the trial court, the first denying his cross-motion for summary judgment against defendant First UNUM Life Insurance Company (First UNUM), and the second, following a bench trial, dismissing the counts in his complaint alleging breach of contract and violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195. We affirm.

Heller worked as a police officer for the Port Authority of New York and New Jersey. On January 15, 1993, he purportedly suffered disabling injuries in an accident while on duty at the Port Authority building in New York City. There were no witnesses, but he claimed that he fell down an entire flight of stairs, injuring his knee, back, and shoulder. Ten days later, he applied for accidental disability retirement with the State of New York. That application was subsequently approved.

At the time of the accident, Heller was insured by First UNUM under three policies (the policies). The policies provided for monthly payments while Heller was totally disabled and under the care of a physician other than himself, following an initial elimination period when no benefits were available. "Total disability" was defined as being injured to the point that, "as a result of sickness or injury, you are unable to perform the material and substantial duties of your occupation." The policies also provided for "own occupation" coverage, meaning he would still be eligible for monthly benefits even if he returned to some form of work other than that of police officer, as long as his injury still prevented him from being a police officer.

Receipt of benefits under the policies required Heller to notify First UNUM of the claimed disability and to provide medical information relating to the injury as well as a summary of the events leading to the injury. When the January 15, 1993 accident occurred, Heller was under investigation by the federal government for illegally receiving disability payments in connection with another work-related injury he sustained in 1980. He was indicted and suspended without pay on February 2, 1993. He was tried that summer and convicted in August 1993 of conversion, fraud, and making false statements to the Social Security Administration. He was sentenced to eighteen months in prison and permanently banned from securing employment as a police officer. Before trial on the matter, Heller advised First UNUM in a letter dated "April 13, 199[3]"1 that he had been injured in an accident on January 15, 1993 and was providing the required ninety-day notice, but stated he "[was] not, however, making a claim for benefits" and he would let First UNUM know "of any change in [his] condition should a claim ever be necessary."

Also in August 1993, following an independent medical examination, a determination was reached that Heller's January 15 accident resulted in permanent left shoulder disability. On September 27, 1993, Heller was granted accidental disability retirement. On January 10, 1995, an arbitrator determined that Heller was already retired when indicted, and therefore the Port Authority had no authority to discipline him and eliminate his post-retirement benefits.

In early 1996, after being released from prison, Heller filed a claim with First UNUM seeking benefits for injuries sustained as a result of the January 15, 1993 accident. He later withdrew this claim. In 2000, however, he filed a new claim alleging that on July 11, 2000, he began experiencing pain in his back and knee, but made no mention of any shoulder injury. First UNUM denied this claim, and Heller took no further action.

In 2003, Heller filed another claim with First UNUM seeking disability benefits based upon his 1993 shoulder injury. First UNUM considered the claim untimely, but agreed to re-visit it. During its investigation, First UNUM learned about Heller's 1993 conviction. It denied Heller's claim on September 27, 2004, on the basis that: (1) it did not find the claim credible, (2) Heller provided false information on his applications for insurance coverage, and (3) it had been prejudiced by the lack of supporting evidence related to his claimed shoulder injury. Following this denial, Heller's attorney continued to engage in discussions with First UNUM's in-house counsel. In a letter dated March 13, 2006, in-house counsel advised Heller's attorney that the claim was time-barred because Heller failed to assert his claim within three years of the time when the proof of loss was required to be filed.

On July 16, 2007, Heller filed a complaint against First UNUM, a number of its affiliates and individual employees, and certain public officials of the State of New Jersey. The complaint contained counts for breach of contract (Count I), breach of the covenant of good faith and fair dealing (Count II), breach of fiduciary duty (Count III), declaratory relief (Count IV), intentional and negligent infliction of emotional distress (Count V), unlawful, unfair, and intentional violations of the Claims Settlement Practices Act (CSPA), N.J.S.A. 17B:30-13.1 (Count VI), violation of the CFA (Count VII), violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), N.J.S.A. 2C:41-1 to -6.2 (Count VIII), and an action in lieu of protective writs (Count IX). Counts I-VIII were brought against the First UNUM defendants only, while Count IX was brought against the State defendants only. Defendants collectively filed a motion to dismiss, and on May 9, 2008, Judge Paley granted the motion to dismiss with respect to Counts III, VIII, and IX.2

Defendants then answered the complaint on June 13, 2008, denying all allegations. On August 12, 2009, defendants moved for summary judgment on all remaining counts. Heller filed a cross-motion for summary judgment on December 11, 2009. Judge Paley denied Heller's cross-motion and granted First UNUM's motion for summary judgment with respect to Counts II and V,3 leaving only Counts I (breach of contract), IV (declaratory relief), VI (CSPA), and VII (CFA) to be tried.

Trial commenced in April 2010 after Heller waived his right to a jury trial. On August 20, 2010, Judge Paley dismissed all remaining claims, although he awarded Heller a return of premiums paid to keep the policies in effect from the last denial of his claim. Heller filed a Notice of Appeal on October 4, 2010.

On appeal, Heller raises the following points for our review:













Heller first claims the trial court erroneously denied his cross-motion for summary judgment. We disagree.

We review the grant or denial of summary judgment decisions de novo, utilizing the same standard employed by the trial court. Agurtov. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005). Specifically,

[i]n deciding a motion for summary judgment, the trial court must determine whether the evidence, when viewed in a light most favorable to the non-moving party, would permit a rational fact-finder to resolve the dispute in the non-moving party's favor. Brillv. Guardian Life Ins.Co. of Am., 142 N.J. 520, 540 (1995). The trial court cannot decide issues of fact but must decide whether there are any such issues of fact. Ibid.; R. 4:46-2(c). Our review of a trial court's summary judgment decision is de novo, applying the Brill standard. PrudentialProp. Ins. v. Boylan, 307 N.J. Super. 162, 167, (App. Div.), certif.denied, 154 N.J. 608, (1998).



This standard requires that we, as a reviewing court, first determine whether the evidence presents genuinely disputed issues of material fact sufficient to require submission to a jury or bench trial, or whether the evidence is "so one-sided that one party must prevail as a matter of law." Brill, supra, 142 N.J. at 540 (quoting Anderson v.Liberty Lobby, Inc., 477 U.S. 242, 251-252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).

"Bare conclusions in the pleadings, without factual support in tendered affidavits, will not defeat a meritor[i]ous application for summary judgment." United States Pipe& Foundry Co. v.Am. Arbitration Ass'n, 67 N.J.Super. 384, 399-400 (App. Div. 1961). Therefore, summary judgment should be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2.

Heller urges that because his policies were in effect at the time of his injury, he was granted disability, and he timely filed his 2003 claim, his cross-motion for summary judgment should have been granted. He contends his 2003 claim for benefits was timely because First UNUM "expressly waived its right to contest the lateness of Heller's 2003 application for benefits in 1993 by expressly inviting him to file a new application for those benefits in 2003." He argues that when he received permission to re-file his claim in 2003, it constituted a waiver of the timeliness and legal action provisions in the policies.

"Waiver is traditionally defined as the voluntary relinquishment of a known right evidenced by a clear, unequivocal and decisive act from which an intention to relinquish the right can be based." Country Chevrolet, Inc. v.North Brunswick PlanningBd., 190 N.J. Super. 376, 380 (App. Div. 1983). "The party waiving a known right must do so clearly, unequivocally, and decisively." Knorr v.Smeal, 178 N.J. 169, 177 (2003). "The intent to waive need not be stated expressly, provided the circumstances clearly show that the party knew of the right and then abandoned it, either by design or indifference." Ibid.

In New Jersey, within the context of insurance policies,

an insurer may waive any provision for its benefit and may waive any representation, warranty, condition or limitation in the policy upon which it would otherwise be entitled to rely. . . . A waiver of a forfeiture clause is predicated upon the acts or conduct of the insurer with knowledge of a breach tending to show a recognition of the policy, or an intent to relinquish the right to declare a forfeiture for the known breach.


[EnglishtownAuction Sales, Inc. v.Mt. Vernon Fire Ins.Co., 112 N.J. Super. 332, 337 (App. Div. 1970) (quoting Bruni v. PrudentialIns. Co., 100 N.J. Super. 154, 163-64 (App. Div. 1967) (J. Carton, dissenting), rev'd, 51 N.J. 408 (1968)).]


Judge Paley found that permitting Heller to re-file his claim in 2003, at the very least, raised a genuine issue of material fact as to whether or not First UNUM waived any policy provisions. That decision is supported by the record.

The letter to Heller notifying him that he would be permitted to re-file his claim did not simultaneously advise Heller that First UNUM was waiving its defenses to the claim. Rather, the letter made clear that First UNUM was merely considering what, if any, benefits to which he was entitled. Further, the letter advised Heller of his appeal rights in the event of an adverse decision. Hence, there is sufficient evidence in the record, when viewed most favorably towards First UNUM, demonstrating that permitting Heller to re-file his claim was not an unequivocal and decisive waiver of its defense. Knorr, supra, 178 N.J. at 177.

Likewise, the facts, when viewed in the light most favorable to First UNUM, show that a genuine issue of material fact existed as to whether the delay in giving First UNUM notice and filing any proof of loss claim prejudiced First UNUM and occurred because Heller intended to hide his criminal conviction. Therefore, Heller's motion for summary judgment was properly denied.


Heller also argues that the dismissal of his bad faith claim was improper. In the insurance context, an insurer or insured will typically be granted summary judgment on a bad faith claim if the disputed claim is not "fairly debatable." Pickett v.Lloyd's, 131 N.J. 457, 473 (1993). If there is any factual or legal dispute, summary judgment will not be granted to either party. Ibid.

To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. It is apparent, then, that the tort of bad faith is an intentional one. [I]mplicit in that test is our conclusion that the knowledge of the lack of a reasonable basis may be inferred and imputed to an insurance company where there is a reckless indifference to facts or to proofs submitted by the insured.


[Id. at 473 (citations omitted).]


"[B]ad faith denotes a reckless disregard or purposeful obliviousness of the known facts suggesting impropriety by the fiduciary. It is not established by negligent or careless conduct or by vague suspicion." N.J. Title Ins.Co. v. Caputo, 163 N.J. 143, 155 (2000). Additionally, if the underlying claim is even "fairly debatable," a bad faith claim can not succeed. Pickett, supra, 131 N.J. at 473.

Here, Heller submitted a claim for benefits under the policies ten years after he sustained the purported injuries. There was evidence in the record that he failed to satisfy a number of the conditions for the receipt of benefits, including inexplicably submitting his proof of loss well beyond the time frame set forth in the policies and failing to respond to First UNUM's April 26, 1996 request for an explanation for the delay. Further, there was little evidence of any continuing treatment for his left shoulder after September 1993. As such, Judge Paley properly concluded that Heller's entitlement to benefits was "fairly debatable." Ibid.


Turning to Heller's claim that the findings of the trial court were not supported by the weight of the evidence, we initially note that at the conclusion of the presentation of all the evidence, Heller's attorney advised the court that if the court were to entertain motions at that time, he would urge that Heller was entitled to judgment as a matter of law. Because counsel apparently agreed to incorporate their motions in their written summations, the motions were not heard. We have not been provided with a copy of the written summations. We are therefore uncertain whether Heller's counsel proceeded with this motion. Nonetheless, we find no merit to Heller's contention.

Generally, findings by the trial court, following a bench trial, are binding on appeal when supported by adequate, substantial, credible evidence. Rova Farms Resort,Inc. v. Investors Ins.Co., 65 N.J. 474, 484, (1974). The deference a reviewing court accords to those findings is particularly appropriate "when the evidence is largely testimonial and involves questions of credibility." In re Returnof Weapons to J.W.D., 149 N.J. 108, 117 (1997). "Because a trial court 'hears the case, sees and observes the witnesses, [and] hears them testify,' it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Pascale v.Pascale, 113 N.J. 20, 33, (1988) (quoting Gallov. Gallo, 66 N.J. Super. 1, 5 (App. Div. 1961)) (alterations in original). Therefore, we will not disturb the "factual findings and legal conclusions of the trial judge unless [we are] convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova, supra, 65 N.J. at 484.

Heller first asserts his credibility was not an issue in this case. When a witness takes the stand to testify, the witness places his credibility in issue. See State v.Daniels, 182 N.J. 80. 92-93 (noting "'[i]t is well-settled that when a defendant waives his right to remain silent and takes the stand in his own defense, he thereby subjects himself to cross-examination as to credibility of his story'") (quoting State v. Robinson, 157 N.J.Super. 118, 120 (App. Div.), certif. denied, 77 N.J. 484 (1978)); see also N.J.R.E. 607 ("for the purpose of impairing or supporting the credibility of a witness, any party including the party calling the witness may examine the witness and introduce extrinsic evidence relevant to the issue of credibility"); State v.Brunson, 132 N.J. 377, 383 (1993) (stating that under N.J.S.A. 2A:81-12,4 evidence of any testifying witness's conviction of any crime can be presented to attack his credibility).

He additionally contends that because his own expert's testimony was not helpful to him, Judge Paley should have disregarded the testimony. Heller offered this expert's testimony, and his attorney did not object to any questions posed to the expert on cross-examination. Under Rule 1:7-2, if a party does not raise an objection at trial, that party cannot object to that same point on appeal.

Heller also asserts the trial court erred in determining he did not receive medical treatment to the level required under the policies. The policies required that Heller "is receiving medical care from someone other than himself which is appropriate for that injury". Heller presented no such evidence. Consequently, the court correctly found:

Mr. Heller has presented little proof of continuing medical treatment for his left shoulder injury, or, indeed, any medical care after September 1993. The Attending Physician Statement of 2000 did not refer to a shoulder injury and was not completed by a shoulder specialist . . . . [T]here is virtually no evidence of medical care following 1993.


Regarding Heller's claim that First UNUM was not prejudiced by the ten-year delay in filing his claim for benefits, there is substantial credible evidence in the record to support Judge Paley's conclusion that First UNUM was appreciably prejudiced by Heller's conduct. The delay prevented First UNUM from obtaining a description of Heller's job duties from the Port Authority. Likewise, it was deprived of the opportunity to have Heller undergo a medical examination reasonably close in time to the purported injury. Judge Paley therefore properly determined at trial that First UNUM satisfied its burden of demonstrating it was prejudiced by Heller's ten-year delay in providing notice and filing his proof of loss forms.


Heller additionally argues that his count against First UNUM alleging a violation of the CFA was erroneously dismissed. "The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon, . . . is declared to be an unlawful practice." N.J.S.A. 56:8-2.

Heller claims First UNUM engaged in an unconscionable practice by selling insurance to him and never intending to pay any claims, no matter what it would uncover in its investigation. There is, however, no evidence First UNUM violated the CFA. Heller asserts there "is a fair inference that [First UNUM] knew about his conviction in 1996," but he points to no evidence in the record in support of this conclusion. What the record reveals is that First UNUM never completed its investigation in 1996 because Heller withdrew his claim after First UNUM sought certain information.

Moreover, to be considered unconscionable, an action must be performed with a lack of good faith, honesty, and fair dealing. Coxv. Sears Roebuck &Co., 138 N.J. 2, 18 (1994). When a court determines as a matter of law that an insurer's denial of a claim is fairly debatable, as it has here, there has been no bad faith. Pickett, supra, 131 N.J. at 473. When a trier of fact does "not detect any bad faith or lack of fair dealing, . . . the breach of contract does not rise to the level of an 'unconscionable commercial practice.'" Cox, supra, 138 N.J. at 20.


Heller also contends Judge Paley committed reversible error by excluding a letter First UNUM wrote to the New Jersey Office of Insurance Claims Ombudsman, which Heller, in his brief, claims is evidence that First UNUM waived the ten-year delay. Judge Paley excluded it after determining it was duplicative because it referred to other correspondence already introduced into evidence that provided more thorough information.

When issues arise regarding evidentiary rulings, "'[g]enerally, appellate courts review a trial court's determination of the admissibility of evidence for an abuse of discretion.'" Estateof Hanges v. Metro.Prop. & Cas. Ins.Co., 202 N.J. 369, 383 (2010) (quoting Statev. Harvey, 151 N.J. 117, 166 (1997), cert. denied, 528 U.S. 1085, 120 S. Ct. 811, 145 L. Ed. 2d 683 (2000)).

We agree the excluded letter did not provide any new information not already disclosed in other documents admitted into evidence. The letter simply mentions that the reasoning behind the denials is contained in attached correspondence, and each of those attachments was admitted into evidence. He then claims the letter demonstrates that the only reason First UNUM denied his claim was due to a violation of the policies' conditions and time limits. However, while the letter does state that the policies' time limits and legal action provisions were reasons for denying benefits, it also refers to Heller's legal problems. Therefore, Judge Paley did not abuse his discretion by excluding the letter.


Heller contends further that Judge Paley erred in dismissing the RICO count. We disagree.

Under N.J.S.A. 2C:41-1(a), forgery and fraudulent practices are included in the definition of racketeering activity. A "[p]attern of racketeering activity" requires:

(1) Engaging in at least two incidents of racketeering conduct one of which shall have occurred after the effective date of this act and the last of which shall have occurred within 10 years (excluding any period of imprisonment) after a prior incident of racketeering activity; and


(2) A showing that the incidents of racketeering activity embrace criminal conduct that has either the same or similar purposes, results, participants or victims or methods of commission or are otherwise interrelated by distinguishing characteristics and are not isolated incidents.


[N.J.S.A. 2C:41-1(d).]


Heller claimed First UNUM violated RICO, but he fails to satisfy the minimal pleading requirements of both sections of the statute. R. 4:5-8(a). He pleads no specific facts that, if true, would constitute violations of RICO.


The remaining arguments advanced by Heller, not specifically addressed in this opinion, have been considered in light of the record and applicable legal principles. We are satisfied they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).



1 The letter is dated April 13, 1992, which is presumably a typographical error.

2 Count III was dismissed because Judge Paley did not believe there was a fiduciary obligation owed to plaintiff. Judge Paley dismissed Count VIII because he felt "the numerous alternative causes of action pleaded . . . incorporate[d] all of [plaintiff's claims] and that having RICO in this case is mere surplusage." Count IX was dismissed because the parties mutually agreed to drop the State defendants from the case.

3 Judge Paley dismissed Count II for breach of the covenant of good faith and fair dealing because he found First UNUM's denial of benefits was fairly debatable and thus not in bad faith. He dismissed Count V alleging intentional and negligent infliction of emotional distress after concluding he knew "of no authority which permits emotional distress damages in a breach of contract action[.]"

4 N.J.R.E. 609, which was adopted two weeks after Brunson was decided, echoes the language of N.J.S.A. 2A:81-12.