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Weinisch v. Sawyer

Decided: March 14, 1991.

BIBI WEINISCH, A/K/A BOB WAYNE, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
THOMAS E. SAWYER AND ALLSTATE INSURANCE COMPANY, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 237 N.J. Super. 195 (1989).

For reversal and reinstatement -- Chief Justice Wilentz and Justices Pollock, Clifford, Handler, Garibaldi and Stein. Opposed -- none. The opinion of the Court was delivered by Pollock, J.

Pollock

[123 NJ Page 335] This case requires us to decide whether reformation is the appropriate remedy when an insurance agent negligently fails to inform an insured about available coverage, and if so, whether the insured is nonetheless entitled to a jury trial. Plaintiff, Bibi Weinisch, a/k/a Bob Wayne, sued his insurer, Allstate Insurance Company (Allstate), and its agent, Thomas E. Sawyer, for their failure to inform him of the availability of higher underinsured motorist (UIM) coverage under his automobile insurance policy. The trial court granted defendants' motion to strike plaintiff's jury demand, and after trial entered a judgment for defendants. The Appellate Division reversed and remanded, holding that reformation was not plaintiff's sole

remedy and that the underlying issues justified a jury trial. 237 N.J. Super. 195, 567 A.2d 259 (1989). We granted certification, 121 N.J. 658, 583 A.2d 345 (1990), and now reverse the judgment of the Appellate Division and reinstate the judgment of the trial court. We hold that when an insured sues the insurer and its agent for the agent's failure to inform the insured of available coverage, the proper remedy is reformation, to which a right to trial by jury does not attach.

-I-

Many of the material facts are undisputed. Plaintiff sustained personal injuries and automobile damage when his car was struck from the rear on May 25, 1984. He sued the negligent driver and settled with her insurance company for the policy limits of $100,000. Plaintiff alleges that the settlement did not fully compensate him for his injuries. He was insured by Allstate under an automobile policy with liability coverage of $250,000 per person, $500,000 per event, and a $1,000,000 liability umbrella. His uninsured/underinsured (UM/UIM) motorist coverage, however, was only $15,000 per person or $30,000 per event, the statutory minimum. Plaintiff contends that Allstate and Sawyer breached a duty to inform him of the availability of optional higher limits of UM/UIM coverage.

From 1966 to 1983, Allstate automatically renewed plaintiff's automobile policy on a yearly basis. In 1969, plaintiff instructed Sawyer to increase his bodily injury liability coverage to the highest available amount, $250,000/500,000. In 1973, pursuant to a change in New Jersey law, N.J.S.A. 17:28-1.1, every automobile policy, including plaintiff's policy with Allstate, was amended to include a minimum amount of uninsured motorist coverage. In 1980, Allstate offered UIM coverage to all insureds, including plaintiff.

In 1982, Allstate had mailed to plaintiff information describing UM/UIM coverage, and in 1983, Allstate notified plaintiff of the availability of additional UIM coverage. A 1984 statute

required insurers to provide all policyholders with a coverage-selection form and a buyer's guide in order to inform insureds about both insurance-law changes and policy limits, including UM/UIM coverage. New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984, L. 1983, c. 362 (codified in relevant part at N.J.S.A. 39:6A-23); see also N.J.A.C. 11:3-15.1 to 3-15.9 (regulations promulgated by Commissioner of Insurance to implement statute). By May 1984, Allstate had mailed guides and forms to all of its insureds, including plaintiff. Plaintiff acknowledges that before the accident he received the 1984 packet of documents from Allstate, including information about available coverage and a coverage-selection form that he was to complete and return.

At this point, the parties' factual versions diverge. According to plaintiff, in May 1984 he telephoned Sawyer, an Allstate sales and service agent, concerning the documents. Plaintiff testified that Sawyer advised him to ignore the documents unless he wanted to reduce his coverage or lower his premiums. Purportedly following Sawyer's advice, plaintiff claims he discarded the Allstate packet. Plaintiff said that he did not read the brochures because he felt that his premiums were high enough to provide plenty of coverage. He testified that he relied on Sawyer to let him know if he needed any additional coverage.

Sawyer's testimony contradicted plaintiff's version. Sawyer did not recall the May 1984 conversation with plaintiff. Sawyer's usual practice was to answer specific questions when policyholders called about those documents. When callers indicated that they did not understand the form, Sawyer reviewed the entire form with them and line by line explained the coverages or changes. According to Sawyer, he never would have advised plaintiff not to complete and return the forms. If a policyholder had UM/UIM coverage lower than the policyholder's liability coverage, Sawyer would recommend an increase to the level of that coverage. Sawyer stated that if

plaintiff had called him, he would have advised plaintiff to purchase ...


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