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Kubiak v. Allstate Insurance Co.

Decided: December 19, 1984.

EDWARD KUBIAK, PLAINTIFF-APPELLANT,
v.
ALLSTATE INSURANCE COMPANY, DEFENDANT-RESPONDENT



McElroy, Dreier and Shebell. The opinion of the court was delivered by Shebell, J.A.D.

Shebell

[198 NJSuper Page 116] This appeal from the entry of summary judgment again raises the issue of whether an insurance carrier may be liable for punitive damages for breach of its obligation to pay personal injury protection benefits.

Plaintiff, a quadraplegic, seeks punitive damages through an amended verified complaint alleging:

2. On September 15, 1982, Charles O'Laughlin, adjuster in charge of this matter for Defendant Allstate, called plaintiff's attorney and advised him that he has not worked on this case for five months because he has been busy with other matters.

3. The conduct of Defendant Allstate Insurance Company in this matter is of such a nature to give rise to willful disregard of its insured's rights, a helpless quadraplegic, jeopardizing his care, and gives rise to the imposition of punitive damages.

The Law Division issued an order to show cause based on the amended complaint and directed defendant to answer the complaint within 30 days. On the adjourned return date of the order counsel for both parties informed the court that all claims made in the first count of plaintiff's complaint had been resolved and Allstate would make all PIP payments when due. The show cause order was dismissed with the reservation that the claim for punitive damages would be tried according to the court's normal trial schedule.

Defendant moved for summary judgment on the second count. Its motion was granted pursuant to R. 1:6-2 and the court issued a letter decision, stating:

My decision is based on the reasoning set forth in Milcarek v. Nationwide Ins. Co., 190 N.J. Super. 358 (App.Div.1983).

Although the plaintiff's contention is somewhat unique due to the facts as set forth within his affidavit, I believe that it is the responsibility of the Appellate Division to determine whether the facts of this case constitute a special fiduciary relationship which might subject the defendant to a claim for punitive damages. It certainly is not the provence [sic] of the trial court to determine if the facts of this case fall within the ambit of a special relationship as referred to by Judge King.

Plaintiff, an insured of the defendant, was a passenger in a vehicle which left the roadway and struck a tree. The driver was killed. Plaintiff suffered a broken neck and spinal cord damage rendering him a quadraplegic. Defendant investigated the claim and acknowledged its obligation to pay PIP benefits. It undertook payments on a basis which plaintiff complains was neither consistent nor regular. Between June 1981 and August 1982 counsel for plaintiff directed 23 letters demanding payment.

Defendant's records reveal that payments were initially made within four to eight weeks after presentation of each claim but payments ceased on or about June 25, 1982 and only began again after institution of suit. That payment record reveals no payments between June 25, 1982 and October 4, 1982 although it shows that 38 bills for care were received from the providers of services.

Plaintiff maintains that a prima facie case for punitive damages arises against an insurer when a "special relationship" has developed between the insured and insurer and the insurer breaches that relationship by either a deliberate act or an act ...


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