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Mancini v. Eds on Behalf of New Jersey Automobile Full Insurance Underwriting Association

Decided: June 14, 1993.

MARY JANE MANCINI AND ANTHONY MANCINI, PLAINTIFFS-RESPONDENTS,
v.
EDS ON BEHALF OF THE NEW JERSEY AUTOMOBILE FULL INSURANCE UNDERWRITING ASSOCIATION, DEFENDANT-APPELLANT.



On certification to the Superior Court, Appellate Division

Pollock, Wilentz, Handler, O'Hern, Garibaldi, Stein

Pollock

The opinion of the court was delivered by

POLLOCK, J.

This appeal involves a default judgment entered in favor of plaintiffs, Mary Jane Mancini and her husband, Anthony Mancini, against defendant, Electronic Data Systems Corporation (EDS), a servicing carrier of the New Jersey Automobile Full Insurance Underwriting Association, commonly known as the Joint Underwriting Association or JUA. The Law Division denied EDS's motion to vacate the default judgment and its motion to reconsider that judgment. In an unreported decision, the Appellate Division affirmed. We granted defendant's petition for certification, 130 N.J. 596 (1992), and now reverse.

-I-

On June 17, 1989, Mary Jane Mancini was involved in an automobile accident in which she sustained serious personal injuries. The liability carrier for the other motorist paid her its policy limit of $15,000. Mrs. Mancini then claimed underinsured-motorist benefits under her own insurance policy, which EDS had issued. EDS did not respond to the claim. On June 28, 1990, plaintiffs filed a complaint against EDS seeking payment of personal-injury benefits. The complaint also sought to compel EDS to consent to settle and to arbitrate.

The Sheriff of Burlington County served the complaint on EDS on August 2, 1990. EDS did not answer. On October 10, 1990, the court granted plaintiffs' request to enter a default judgment. On November 9, 1990, plaintiffs' counsel sent to EDS by certified mail, return receipt requested, an order consenting to settle. An unidentified employee of Toensmeier Adjustment Services, which had contracted with EDS to process claims, stamped the receipt and returned it to plaintiffs. EDS, however, did not respond. On November 14, plaintiffs sent by certified mail a demand for arbitration, which was delivered to EDS on November 16. Again, EDS did not answer.

Plaintiffs thereafter selected an attorney as their arbitrator, and moved for the appointment of a second arbitrator. On January 30, 1991, the Law Division ordered plaintiffs' arbitrator to select a neutral arbitrator and proceed with the arbitration. Plaintiffs sent EDS a copy of the order. And once again, EDS did not answer.

The arbitration proceeded on March 20, 1991, before two arbitrators. One was an attorney selected by plaintiffs and the other an attorney selected by the first. The two attorneys determined liability for plaintiffs and awarded them $810,000, less the $15,000 plaintiffs had already received. By certified mail, plaintiffs' counsel sent EDS a notice of the arbitration award and of EDS's right under N.J.S.A. 2A:24-7 to move to vacate or modify the award. EDS received the notice, but again did not answer.

Pursuant to N.J.S.A. 2A:24-7, plaintiffs moved to confirm the award. On May 10, 1991, EDS received notice of the application, but did not respond. On June 3, 1991, the Law Division confirmed the award and entered a judgment for plaintiffs, which the court later reduced to the $500,000 policy limit.

Pursuant to the judgment, plaintiffs moved to levy on EDS's bank account, sending a notice of the levy to EDS. Finally, EDS responded. On July 26, 1991, it moved to vacate the default judgment. Plaintiffs cross-moved for a turnover of funds, payment of counsel fees, and enforcement of their rights.

On August 9, 1991, the trial court denied the motion to vacate. Defendant filed a motion for reconsideration, which the court denied on October 30, 1991. The Appellate Division affirmed. Defendant has paid plaintiffs' counsel ...


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