On Appeal from the Superior Court, Law Division, Morris County.
Pressler, O'Brien and Stern. The opinion of the court was delivered by Pressler, P.J.A.D.
In Barbara Corp. v. Bob Maneely Ins. Agency, 197 N.J. Super. 339 (App.Div.1984), app. dism. 102 N.J. 339 (1985), we held that a policy of casualty insurance will be deemed automatically renewed if the insurer fails to give the insured notice of the expiration date and the advice that if the stated renewal premium is not timely paid, the policy will not be renewed. The question before us is whether the automatic renewal rule applies if the broker has given that notice to the insured and the insured responds to the broker by affirmatively declining the opportunity to renew. In our view, the answer to this question must be in the negative. Accordingly, we reverse the summary judgment here appealed from which was based on the Barbara rule.
The essential procedural and substantive facts are not in dispute. Defendant Joseph Hegedus and his wife, Joan Hegedus,
owned a mobile home park which they operated as an unincorporated business. In March 1982 plaintiff Violet Insinga, a resident of the park, slipped on an accumulation of ice on the premises and, joined by her husband who sued per quod, brought this negligence action in June 1983 against Joseph Hegedus. Joseph Hegedus then filed the third-party complaint which engages us here in which he sought contribution from Joan Hegedus, to whom he was married when Mrs. Insinga fell but from whom he was thereafter divorced. He also joined as third-party defendants in what was, in effect, a declaratory judgment coverage action, his insurer Excelsior Insurance Company*fn1 and his broker, Charles F. Colliver Agency. Joan Hegedus counterclaimed against Joseph Hegedus and cross-claimed against Excelsior and Colliver. As we understand the record, the Insinga complaint was in due course severed from the third-party complaint and ultimately disposed of in the manner hereafter described.
With respect to the third-party complaint, Excelsior moved in October 1984 for summary judgment dismissing the coverage complaint against it. According to the undisputed facts then relevant, its three-year casualty policy, which would have covered the risk here in issue, expired in September 1981. Excelsior stipulated that it had not sent a notice to the Hegeduses advising them that the policy would expire if the stated renewal premium were not paid. Based on those essential facts, the trial judge, relying on Citta v. Camden Fire Insurance Assoc., Inc., 152 N.J. Super. 76 (App.Div.1977), dismissed the third-party complaint as against Excelsior. Our decision in Barbara, which traced the regulatory history since Citta and concluded that N.J.A.C. 11:1-5.5, now 11:1-5.2, mandated an automatic renewal rule in these circumstances, was filed a month or two later. The Hegeduses filed a motion for reconsideration, which
was held in abeyance pending the Supreme Court decision in Barbara, which was anticipated in view of the right to appeal conferred by reason of the dissenting opinion therein filed. Unfortunately, neither the court nor the parties became aware that the appeal in Barbara pending in the Supreme Court had been dismissed in October 1985 on the basis of a stipulation of dismissal, and it was not until October 1987 that Excelsior's original reconsideration motion was heard. The trial judge who heard that motion concluded that Barbara applied as a matter of law, vacated the original summary judgment in favor of Excelsior, and entered summary judgment in favor of the Hegeduses on their coverage claims against Excelsior. He thereafter denied Excelsior's motion to reconsider this determination. Excelsior appeals from the summary judgment entered on the Hegeduses' reconsideration motion and the denial of its subsequent reconsideration motion.
As we understand the record, Excelsior's opposition to the summary adjudication of coverage was based on the circumstance that between the time of the original pre- Barbara adjudication in its favor and the 1987 reconsideration, the remaining portion of the third-party complaint, that is the claims of the Hegeduses against the broker Colliver, were tried before a jury. The gravamen of the claim was, inevitably, that the broker was at fault for the lapse in insurance coverage. The broker defended that claim on the factual assertion that it had in fact sent the Hegeduses a notice of premium due and that Mr. Hegedus had telephoned to advise the broker that he was selling the business and moving to Florida and, therefore, was declining to renew the insurance. The claim was decided in favor of the broker on the basis of these two interrogatories submitted to the jury:
1. Did the actions by the Charles F. Colliver Agency reasonably lead Joseph Hegedus to rely on the agency to give him notice that his policy would expire on September 15, 1981?
2. Was notice given to Joseph Hegedus that his policy would expire ...