STEVEN RUSSO v. STATE FARM INDEMNITY COMPANY
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1975-15T4
STEVEN RUSSO,
Plaintiff-Appellant,
v.
STATE FARM INDEMNITY COMPANY,
Defendant-Respondent.
_______________________________
Argued September 7, 2017 – Decided December 14, 2017
Before Judges Rothstadt and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Somerset County, Docket No. L-
1129-13.
Arthur J. Russo argued the cause for appellant
(Russo Law Offices, LLC, attorneys; Arthur J.
Russo, on the briefs).
Thomas W. Matthews argued the cause for
respondent (Soriano, Henkel, Biehl & Matthews,
attorneys; Thomas W. Matthews, on the brief).
PER CURIAM
Plaintiff Steven Russo appeals from orders granting defendant
State Farm Indemnity Company's summary judgment motion and denying
plaintiff's cross-motion for summary judgment in this insurance
coverage dispute. We reverse.
The facts are not disputed. In July 2012, plaintiff was a
passenger in a car that was involved in a single vehicle accident
caused by the driver's negligence. Plaintiff suffered significant
injuries requiring extensive medical treatment costing more than
$1,000,000. The driver's insurance carrier paid plaintiff the
$25,000 limit under the driver's automobile policy.
When the accident occurred, plaintiff owned a motor vehicle
and was insured by defendant. His policy provided underinsured
motorist coverage (UIM) with a $100,000 limit. At the time of the
accident, plaintiff resided with his parents, Mark and Mary Russo.
They also had an automobile policy with defendant that provided
UIM coverage with a $250,000 limit.
Plaintiff sought UIM coverage from defendant under his policy
and his parents' policy, and filed a declaratory judgment action
seeking coverage under both policies. Defendant subsequently paid
plaintiff the full amount due under his policy for UIM coverage,1
but disputed plaintiff's claimed entitlement to UIM coverage under
1
Defendant paid plaintiff $75,000 for UIM coverage under
plaintiff's policy after applying a credit against the $100,000
UIM policy limit for the $25,000 plaintiff received directly from
the driver's insurance carrier.
2 A-1975-15T4
his parents' policy.2 Plaintiff thereafter prosecuted his claim
that he was entitled to UIM coverage under his parents' policy.
Plaintiff's parents' 2012 insurance policy, which was in
effect at the time of the accident, excludes from UIM coverage a
resident relative, like defendant, who is a named insured under
another insurance policy providing UIM coverage and who suffers
bodily injury or property damage. Plaintiff does not dispute that
the plain language of the exclusion otherwise bars his claim for
UIM coverage under his parents' policy. Instead, he asserts the
exclusion cannot be enforced because defendant added the exclusion
in 1999 without providing adequate notice to his parents.
Plaintiff's parents have had an automobile policy with
defendant since 1990.
3 Prior to 1999, their policy extended UIM
coverage to resident family members. That coverage changed upon
the renewal of the policy in 1999.
The record shows that in June 1999, defendant sent plaintiff's
parents documents related to the renewal of their automobile policy
2
Although plaintiff's parents' policy had a $250,000 UIM policy
limit, plaintiff claims only $150,000 in coverage because he
recognizes defendant is entitled to credits against the policy
limit for the $25,000 he received under the driver's policy and
$75,000 he received under his own UIM policy with defendant.
3
For the first two years the policy, the insurer was State Farm
Mutual Automobile Insurance Company. In 1993, defendant became
the insurer under the policy.
3 A-1975-15T4
and changes to the policy. The documents were unaccompanied by a
letter from defendant describing or highlighting the policy
changes or directing that plaintiff's parents review the materials
provided to determine the changes to their policy. The documents
consisted of forty-one pages, including a two-page double-sided
"Auto Renewal Standard Policy" notice and premium invoice, a single
page double-sided document entitled "Private Passenger Automobile
Classification," an eleven-page pamphlet entitled "New Jersey Auto
Insurance Buyer's Guide," a single page double-sided document
entitled "News and Notes," three automobile insurance cards, and
a nineteen-page pamphlet entitled "Important Notice About Changes
to Your Car Policy."
The nineteen-page "Important Notice About Changes to Your Car
Policy" pamphlet described the changes to coverage over five pages,
including four numbered paragraphs explaining the changes to the
"UNINSURED AND UNDERINSURED MOTORIST COVERAGE." The third
paragraph stated in pertinent part that:
Coverage will . . . not apply to any person
other than [the named insured] if that person
is a named insured or relative of a named
insured under another policy providing
Uninsured and Underinsured Motorist Coverage.
The pamphlet also stated that the changes in the policy were
set forth in two attached endorsements. One of the endorsements
detailed the UIM coverage under the policy and identified changes
4 A-1975-15T4
to the exclusions to UIM coverage that were being added to the
policy. More particularly, the endorsement explained a change to
the policy adding the following exclusion to UIM coverage:
THERE IS NO COVERAGE FOR ANY RELATIVE IF THAT
RELATIVE IS A NAMED INSURED UNDER ANOTHER
POLICY PROVIDING UNINSURED AND UNDERINSURED
MOTORIST COVERAGE.
The "Important Notice About Changes to Your Car Policy"
pamphlet also directed the insured to the four-page "Auto Renewal
Standard Policy" notice, which detailed the premiums charged for
various coverages under the policy and served as the renewal bill
for the policy. The pamphlet begins with the statement that "[t]he
enclosed renewal bill reflects premium savings as well as coverage
changes as a result of" the enactment of the Automobile Insurance
Cost Reduction Act of 1998 (AICRA),
N.J.S.A. 39:6A-1.1 to -35.
(Emphasis added). However, the "Auto Renewal Standard Policy"
notice did not identify any changes to plaintiffs' parents' UIM
coverage. To the contrary, the notice included a section entitled
"Additional Policy Information" listing three endorsements to the
policy, but the endorsements pertained to personal injury
protection under the policy. The notice did not list the
endorsement, included in the "Important Notice About Changes to
Your Car Policy" pamphlet, pertaining to the change in UIM
coverage.
5 A-1975-15T4
Following plaintiff's parents' receipt of the June 1999
documents and their payment of the premium, in July 1999 defendant
sent them an automobile insurance standard policy booklet, which
included the insurance policy, and additional auto declarations
pages. The declarations pages for the 1999 renewal policy, and
the declarations pages issued for subsequent annual policy
renewals prior to the 2012 accident, did not highlight or identify
the 1999 change in UIM coverage excluding resident family members
who had personal automobile policies. The 1999 renewal policy,
and each succeeding annual renewal policy issued to plaintiff's
parents prior to the 2012 accident, included an exclusion from UIM
coverage for resident family members who had personal automobile
policies with UIM coverage.
Defendant moved for summary judgment arguing that plaintiff
was excluded from UIM coverage under his parent's policy because
he was a resident family member with his own automobile policy
with UIM coverage. Plaintiff opposed the motion and cross-moved
for summary judgment asserting the exclusion could not be enforced
because his parents had not been properly notified of the change
in UIM coverage in 1999 and thereafter.
The motion court granted defendant's motion and denied
plaintiff's cross-motion. The judge rejected plaintiff's reliance
on Skeete v. Dorvius,
184 N.J. 5, 9 (2005), where the Court
6 A-1975-15T4
determined that an insurance carrier's notice of a change in UIM
coverage "was insufficient because of its presentation as part of
an essentially undifferentiated passel of two hundred documents."
The judge found Skeete required that a carrier "fairly" notify an
insured of coverage changes, and determined that defendant's
delivery of the "Important Notice About Changes To Your Car Policy"
pamphlet, which described the change to the UIM coverage and
explained the exclusion, provided fair notice of the 1999 change
in UIM coverage. The judge found the package of documents
defendant delivered in June 1999 was "incomparable to the package
in Skeete both in terms of quantity and clarity," and concluded
plaintiff's parents received the fair notice of the policy change
that Skeete requires. See id. at 8-9.
The court entered an order granting defendant's summary
judgment motion, dismissing the complaint and denying plaintiff's
cross-motion. This appeal followed.
We conduct a de novo review of a trial court's grant of
summary judgment, and apply the same standard as the trial court.
Conley v. Guerrero,
228 N.J. 339, 346 (2017). The movant is
entitled to summary judgment if the record shows "there is no
genuine issue as to any material fact and 'the moving party is
entitled to a judgment or order as a matter of law.'" Ibid.
(quoting Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co.
7 A-1975-15T4
of Pittsburgh,
224 N.J. 189, 199 (2016)); see also R. 4:46-2(c).
Interpretation of an insurance policy presents a legal question,
which we review de novo. Selective Ins. Co. of Am. v. Hudson E.
Pain Mgmt. Osteopathic Med. & Physical Therapy,
210 N.J. 597, 605
(2012).
Plaintiff first argues the facts here are identical to those
in Skeete and the judge erred in finding the June 1999 documents
fairly notified plaintiff's parents of the addition of the UIM
exclusion for resident family members who have automobile policies
with UIM coverage. Plaintiff further argues defendant failed to
provide fair notice of the change in coverage because the
declarations pages in 1999 did not detail or provide notice of the
coverage reduction resulting from the exclusion. Plaintiff also
asserts that defendant provided contradictory information about
the exclusion in 1999 because although the "Important Notice About
Changes To Your Car Policy" pamphlet referred to the endorsement
incorporating the exclusion, the "Auto Renewal Standard Policy"
notice did not list the UIM endorsement as applying to plaintiff's
parents' renewal policy.
In Skeete, the insured received two packages of information
concerning changes to his automobile policy. Skeete, supra,
184 N.J. at 7. The first package consisted of eighty-three pages
concerning changes required under AICRA. Ibid. The two packages
8 A-1975-15T4
included a cover letter outlining the changes and advising the
insureds to review the changes, a New Standard Policy Booklet, a
renewal declarations page, insurance cards, three endorsements,
personal injury protection pre-certification requirements, a
guide, and a Rating Information Form. Ibid. The insureds were
subsequently sent a third package consisting of an additional
seventy-eight pages of documents, including New Standard
Automobile Policy booklets, an amended declarations page, and an
"Important Notice to New Jersey Policyholders, highlighting policy
changes." Id. at 8.
In Skeete, we determined that because the insurance carrier
"inundate[ed] [the insured] with almost 200 pages of documents in
a two-week period, burying the changes in a few unremarkable
paragraphs, and failing to note the change on the declaration
page," the manner in which the carrier attempted to provide notice
to the coverage change "was inadequate for the average policyholder
to determine that the [UIM] coverage was amended and how the
amendment would affect the policy holder." Skeete v. Dorvius,
368 N.J. Super. 311, 317 (App. Div. 2004), aff'd,
184 N.J. 5 (2005).
We found the information concerning the change in UIM coverage was
"buried in the materials" supplied by the carrier, it was "neither
unreasonable nor cost-prohibitive for an insurance carrier to
highlight specific changes in coverage . . . on the declaration
9 A-1975-15T4
page," and that "[i]t is insufficient . . . to simply state in a
cover letter that policy changes are enclosed without specifically
highlighting those changes on the declaration page." Id. at 318.
We held "that unless specific changes in the limits of coverage
are noted on the declaration page, the carrier's notice of changes
in coverage is inadequate." Id. at 319.
We further concluded that notice of the coverage change was
inadequate because the insured was required "to wade through almost
200 pages of material" and compare the previous policy with the
new policy to discover the change in coverage. Id. at 319-20. We
determined it was "unlikely the average policyholder would have
identified" the coverage change "without extensive detective work"
and, for that reason, the notice of the coverage change was
inadequate. Id. at 320.
Our Supreme Court agreed that notice of the coverage change
was insufficient "because of its presentation as part of an easily
undifferentiated passel of two hundred documents." Skeete, supra,
184 N.J. at 9. The Court, however, added the "caveat" that not
"every single policy change must be reflected on the declarations
sheet" because it "may not be practical in every situation," for
example, where there is a "large scale statutory overhaul." Ibid.
The Court observed that the result may have been different if the
carrier had sent a "cover letter with the three page notice
10 A-1975-15T4
outlining the changes separately, thus giving the insured a chance
to digest the changes before drowning . . . in a sea of paper."
Ibid. The Court held that "policy changes must be conveyed fairly
to the policyholder, although in no particular form . . . ." Ibid.
Based on our review of the record, we are convinced the
undisputed facts here are sufficiently similar to those presented
in Skeete to require the same result. In Skeete, the insurer sent
a cover letter with the materials "advising the insured to read
the notices of the changes and a three-page notice outlining the
changes." Id. at 7. Nevertheless, the Court determined the
materials sent were undifferentiated and failed to provide
sufficient notice to the insured. Id. at 9. Here, defendant did
not separately send a cover letter, or include a cover letter with
the documents advising plaintiff's parents of changes to the
policy, including the addition of an exclusion from UIM coverage
for resident family members who had personal automobile policies
with UIM coverage. See ibid. Further, although it is unnecessary
to identify every change in coverage in the declaration sheet,
ibid., the declarations sheets in 1999 never identified any change
in UIM coverage for resident family members.4
4 Although the 1999 declarations sheets are not available, the
parties stipulated that they did not show any change in the UIM
coverage.
11 A-1975-15T4
Moreover, although the passel of documents here consists of
less pages than those in Skeete, defendant sent numerous documents
comprising the first package's forty-one pages and an additional
fifty-seven pages of documents comprising the second package
delivered in July 1999.5 The documents bore labels similar to the
documents distributed in Skeete, and they suffered from the same
lack of differentiation. Again, defendant simply delivered the
documents without any cover letter mentioning or highlighting the
policy changes, or directing plaintiff's parents as to the manner
in which they should navigate the sea of paperwork related to the
policy renewal.
We reject the motion court's conclusion that the documents
here "are incomparable to the package in Skeete . . . in terms of
. . . clarity." The documents delivered by defendant in 1999
included a deficiency that was not present in Skeete. In Skeete,
the sole issue presented was the "placement of the notice" of the
change in the UIM coverage. Ibid. The "specificity" of the notice
was not an issue. Ibid. That is, the Court was required to
5 In July 1999, plaintiff's parents were sent declaration sheets
and an automobile insurance standard policy booklet. The
declaration sheets for the 1999 documents are unavailable.
However, there was testimony that the declaration sheets sent more
recently are similar to those that would have been sent in 1999.
Thus, the record reflects that the declarations sheets and policy
booklet consisted of approximately fifty-seven pages.
12 A-1975-15T4
consider only whether the insurer's placement of the notice of the
coverage change was sufficient to fairly advise the insured about
the change. Ibid. The Court was not required to determine if the
notice of coverage change, when found amongst the passel of
documents, clearly communicated the coverage change. Ibid.; see
id. at 15 (LaVecchia, J., dissenting) ("[T]here is no suggestion
in this record that the notice description of the changes in [UIM]
coverage, which [the insurer] provided in its supplemental
material, was inadequate in any way.").
Here, the inadequacy of the notice is not limited to its
placement amongst the documents. It is also a product of the
inconsistent information provided in the June 1999 document
package. The nineteen-page "Important Notice About Changes to
Your Car Policy" pamphlet included an endorsement containing the
UIM exclusion for resident family members with personal automobile
policies, but also advised that the renewal bill "reflects . . .
coverage changes." The renewal bill, however, does not include
any mention of any change to UIM coverage. Instead, it expressly
lists endorsements to the policy, but fails to include any
reference to the endorsement described in the "Important Notice
About Changes to Your Car Policy" pamphlet for the changes in UIM
coverage. Thus, unlike in Skeete, the myriad of documents
defendant delivered to plaintiff's parents in 1999 included notice
13 A-1975-15T4
there was an endorsement that changed UIM coverage to exclude
resident family members with personal automobile policies but also
reflected that the endorsement was not included as part of
plaintiff's parents' policy. To understand the conflicting
information buried within the almost 100 pages of documents,
plaintiff's parents were therefore required to undertake the type
of detective work the Court in Skeete found rendered the notice
of change in coverage inadequate. See id. at 8.
Under all of the circumstances presented, we are not convinced
the documents supplied by defendant in June and July 1999 "fairly
conveyed to" plaintiff's parents that there was a change in the
UIM coverage excluding resident family members who had their own
automobile policies with UIM coverage. See id. at 9. The
placement of the notice of the change amongst the almost 100 pages
of documents, and the conflicting information provided about the
change in UIM coverage, did not provide fair notice of the UIM
coverage exclusion relied upon by defendant here. The motion
court erred in concluding otherwise. We therefore reverse the
court's orders granting defendant's motion for summary judgment
and denying plaintiff's summary judgment motion.
Reversed.
14 A-1975-15T4
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