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Ochs v. Federal Insurance Co.

Decided: June 30, 1982.

CHRISTIAN J. OCHS, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
FEDERAL INSURANCE COMPANY AND CHUBB/PACIFIC INDEMNITY GROUP, DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS



On appeal from and certification to the Superior Court, Appellate Division, whose opinion is reported at 177 N.J. Super. 19 (1980).

For reversal and remandment -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. For affirmance -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

The court below, with one judge dissenting, interpreted the limitations provision in the New Jersey Automobile Reparation Reform Act (No Fault Act), N.J.S.A. 39:6A-11 to -16, differently from another panel of the Appellate Division in Danilla v. Leatherby Insurance Co., 168 N.J. Super. 515 (1979). Inasmuch as we agree with the Danilla approach, we reverse.

I

On November 10, 1974, while riding his motorcycle, plaintiff, Christian J. Ochs, was involved in an accident with an automobile. As a result plaintiff was seriously injured and underwent several extended periods of hospitalization.

At the time of the accident plaintiff owned a 1974 Fiat automobile insured by defendant Federal Insurance Company (Federal) for the period August 17, 1974 to February 17, 1975. Shortly after the accident plaintiff's mother inquired of Federal's agent, on plaintiff's behalf, as to the coverage applicable to plaintiff's medical expenses. She was informed that the Personal Injury Protection (PIP) provision in plaintiff's insurance policy excluded coverage of motorcycles and therefore plaintiff was not entitled to receive any PIP benefits. This information was accurate at the time, although, as will be developed below, the exclusion was later declared invalid.

Plaintiff did not make a formal application for PIP benefits until February 18, 1978. On April 17, 1978 Federal denied the application on the ground that the claim was barred by statutory limitations contained in N.J.S.A. 39:6A-13.1(a). That section required plaintiff's action to

be commenced not later than 2 years after the injured person * * * suffers a loss or incurs an expense and either knows or in the exercise of reasonable diligence should know that the loss or expense was caused by the accident, or not later than 4 years after the accident whichever is earlier, provided, however, that if benefits have been paid before then an action for further benefits may be commenced not later than 2 years after the last payment of benefits. [ N.J.S.A. 39:6A-13.1(a) (footnotes omitted).]

On May 8, 1978 plaintiff commenced this action for recovery of PIP benefits. Both parties moved for summary judgment. The plaintiff argued, and the trial court apparently agreed, that the above-mentioned two-year period of limitations does not start to run until the last expense related to the injury is incurred. Under that reasoning plaintiff was not time-barred because he was entitled to two years after his final expense in which to bring suit, assuming the four year outside limit had not yet been reached. The trial court, obviously unaware of Danilla's requirement that suit be brought within two years after the first expense is incurred, granted plaintiff's motion for summary judgment, awarding him $69,301.06 plus interest.

The Appellate Division modified the trial court's judgment to reflect its interpretation of the N.J.S.A. 39:6A-13.1(a) statute of limitations. Ochs v. Federal Insurance Co., 177 N.J. Super. 19 (1980). Under the Appellate Division's construction the statute bars recovery only of those expenses that are more than two years old when suit is brought and not of those expenses that were incurred within the two-year period prior to suit, provided only that the suit is commenced within the four year period. Id. at 24.

Judge Allcorn dissented from the modification, voting instead for a reversal of the judgment for plaintiff on the basis of Danilla, supra. Id. 177 N.J. Super. at 25. We granted plaintiff's petition for certification. 87 N.J. 314 (1981). Defendant ...


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