On appeal from the Superior Court of New Jersey, Law Division, Burlington County.
King, Shebell and Keefe. The opinion of the court was delivered by Keefe, J.A.D.
This appeal is resolved by defining the duty of an automobile dealer to a purchaser of an automobile under a retail installment sales contract when credit life and disability insurance is sold to the purchaser in connection with the sale. Although this question has not been previously decided, established principles defining an insurance agent/broker's duty foretell the result. Consequently, we hold that summary judgment was improvidently entered in favor of defendants McKeon Ford, Inc. (McKeon)*fn1 and Transamerica Occidental Life Insurance Co. (Transamerica) but affirm the judgment entered in favor of Ford Motor Credit Company (FMC).
These are the facts. In July 1987, plaintiff Charlotte Tomaszewski visited McKeon for the purpose of buying a 1987 Ford Thunderbird. She initially spoke with John McKeon Jr., a principal of McKeon, who was her cousin. She told him that she wanted to purchase a vehicle in her own name; "something she could say was her own." McKeon advised plaintiff that she would probably not be approved for credit unless her husband also joined as a co-buyer. After that discussion, he turned plaintiff over to a salesman who took the credit information from plaintiff.
When plaintiff and her husband, Frank, returned to the dealership the next day to finalize the transaction, they met with another employee of McKeon, presumably the finance manager. They discussed the length of the loan, the monthly payments and the purchase of an extended warranty. With the exception of advising plaintiff where to sign the application form for credit life and disability insurance coverage, there was no discussion between the credit manager and the Tomaszewskis concerning credit life or disability insurance. Plaintiff signed at the bottom of the retail installment contract in the space provided for the "buyer." Her husband signed in the space provided for the "co-buyer." The application for credit life and disability insurance is located in the center of the second page of the contract. Plaintiff signed for both life and disability insurance in the spaces provided. Her husband did not sign beneath her name. The space to the left of plaintiff's signature under the word "insured(s)" was not completed. Although both the plaintiff and her husband were afforded an opportunity to read the contract, neither one read it. The premium charge for the credit life insurance was $480.42 and $841.97 for the disability insurance. We were advised at oral argument that the dealer receives a commission equal to 45% of the premium.
Transamerica thereafter issued an insurance policy which identified plaintiff as the "insured." The box providing for single coverage under the policy was marked with an "X", and the box providing for joint coverage was left blank. Plaintiff did not read the policy when she received it.
At the time of the transaction, July 2, 1987, plaintiff earned approximately $800 gross per month as a chiropractor's assistant. Her husband earned $2,250 per month. The amount financed was $18,180.59 and the monthly payments for the vehicle were $412.73 for 59 months. When FMC questioned the credit application, John McKeon Jr. asked FMC to approve it because of his relationship with plaintiff.
On November 19, 1987 Frank Tomaszewski died. Plaintiff filed a claim with Transamerica for credit life benefits. Transamerica rejected plaintiff's claim, noting that only plaintiff was insured under the policy. Plaintiff was unable to make the requisite monthly loan payments prompting FMC to repossess the vehicle. The balance due at the time of repossession was $23,525.61, and the deficiency after repossession sale was $6,526.85. FMC has made a claim for the deficiency against the plaintiff.
Plaintiff instituted this action against defendants seeking various forms of relief. Plaintiff's cause of action was not artfully pleaded in the complaint. However, various theories of recovery now presented on appeal were set forth in her brief in opposition to defendants' motions for summary judgment. In addition to opposing defendants' motions, plaintiff moved to amend her complaint to add John McKeon Jr. and John McKeon III as defendants based upon their position as licensed insurance agents, claiming negligence in the sale of the credit life and disability policy. The Law Division judge granted all defendants' motions and denied plaintiff's motion to amend. This appeal followed.
Plaintiff raises various issues on appeal. We conclude that two of the issues raised have merit and require reversal. Therefore, we address only those issues.
In our view, the focal point of the analysis begins with McKeon's duty to plaintiff in connection with the purchase of the insurance policy. The basis of plaintiff's cause of action against McKeon is not so much what the policy covered but what it did not cover. We agree with Transamerica that the policy clearly and unambiguously informs the reader that plaintiff is the only insured. Thus, while the policy, had it been read by plaintiff, may have informed her that she was insured, it did not serve, nor could it have, as the vehicle for ...