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Binkewitz v. Allstate Insurance Co.

Decided: February 4, 1988.


On appeal from the Superior Court, Law Division, Essex County.

R. S. Cohen and Landau. The opinion of the court was delivered by R. S. Cohen, J.A.D.


We are called upon to decide whether defamatory words are privileged if uttered in the course of and with some relation to loss appraisal proceedings arising out of an insurance policy provision mandated by statute. We hold that such words are not protected by the absolute privilege accorded to defamatory words uttered in judicial proceedings, but are entitled to a qualified privilege which may be defeated by a showing of abuse of privilege, such as that the utterer knew the words were false or spoke in reckless disregard of their truth or falsity.

Plaintiff is a public adjustor of casualty claims on behalf of insureds. Pursuant to Allstate policy language required by N.J.S.A. 17:36-5.20, lines 123-140, he was named by insureds, whom he did not represent, as an appraiser of certain residential fire claims. Allstate objected, asserting that plaintiff was not "competent and disinterested" as the statute requires. Plaintiff then filed this action for damages against Allstate and certain employees.

Plaintiff's complaint had four counts, one for defamation, one for tortious interference with advantageous business relationships, one for a statutory violation which plaintiff no longer presses, and one for careless, reckless, and negligent conduct. Defendants moved for summary judgment on all counts. The Law Division granted the motion; plaintiff appealed, and we now reverse.

The Law Division held that Allstate's words about plaintiff were reasonably susceptible of a defamatory meaning. It found a qualified privilege immunizing the statements in the absence of a showing of malice. It discerned no malice on defendants' part, and therefore dismissed the defamation count.

The second count, charging tortious interference, fell also, because the acts alleged were the same, and thus the absence of a showing of malice was fatal. The fourth count also alleged the same acts, but characterized them as careless, reckless and negligent. The court found nothing that supported such characterizations, and therefore dismissed that count as well. The court dismissed the third count, charging violation of the Unfair Claims Settlement Practices Act, N.J.S.A. 17:29B-4(9), for reasons plaintiff does not challenge before us.

The context of the dispute is the statutorily required appraisal provision of a homeowner's insurance policy. N.J.S.A. 17:36-5.20. It is invoked when the insured and insurer cannot agree on the amount of a fire loss. Either party may make a written demand for an "appraisal" to settle the amount of the loss. Each party names a "competent and disinterested" appraiser; together they select an "umpire." If the appraisers cannot agree on the amount of the loss, they submit their differences to the umpire. An award may be made by any two of the three.

Plaintiff has acted as an appraiser before in claims against Allstate. Never, apparently, has he appraised a loss by use of realty market data. Allstate took the position that plaintiff was not competent to make such a market data appraisal. In addition, because plaintiff had handled so many claims against Allstate as an adjustor representing insureds, Allstate considered him not to be disinterested.

On February 18, 1985, Allstate wrote to a person who had nominated plaintiff as an appraiser:

Please be advised that we do not feel [plaintiff] is competent to prepare by actual cash value appraisal of subject's property. For that reason we must reject appraisal papers you have submitted.

Allstate made similar responses to nominations of plaintiff as appraiser on other occasions soon thereafter. In them, however, it "rejected" the insureds' choice of plaintiff as appraiser instead of rejecting the appraisal papers. The grounds were either that plaintiff was not competent, not disinterested or not qualified to be an appraiser of the loss. These opinions and their repetition form the basis of plaintiff's causes of action. Allstate's publication of the allegedly defamatory words was limited to communications with the persons who had named plaintiff as appraiser.

We assume for the sake of decision that plaintiff was competent and disinterested in the statutory sense, that he was qualified, and that therefore defendants' words were false. Allstate argues that the words were not defamatory, but only represented non-actionable opinions. In addition, Allstate argues that the words were absolutely privileged because uttered in connection with quasi-judicial proceedings. If not absolutely privileged, Allstate continues, the words merit a qualified privilege, and plaintiff failed to show the malice required to defeat that privilege. Finally, Allstate contends that plaintiff did not suffer any damages.

Addressing the matter of whether the words were defamatory, the Law Division correctly held that the words were not "pure opinion" but implied the existence of undisclosed underlying defamatory facts. In those circumstances, the words were not mere non-actionable opinion. Kotlikoff v. The Community News, 89 N.J. 62 (1982); Karnell v. Campbell, 206 N.J. Super. 81 (App.Div.1985). They, furthermore, could reasonably be taken to have a defamatory meaning. Molnar v. Star Ledger, 193 N.J. Super. 12, 18 (App.Div.1984); Hall v. Heavey, 195 N.J. Super. 590 (App.Div.1984).

Defendant's words were not absolutely privileged. Words uttered by judges, witnesses, ...

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