On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Before Judges Skillman, Wallace and Kleiner.
The opinion of the court was delivered by
In this appeal by third-party defendant Merrimack Mutual Fire Insurance Company of the grant on cross-motion of summary judgment to third-party plaintiffs, Anna and Vincent Montalto, we are required to determine as a case of first impression, the applicable statutory and regulatory requirements for the cancellation of a homeowner's insurance policy. We conclude that cancellation of homeowner's insurance is governed by N.J.S.A. 17:29C-1 and N.J.A.C. 11:1-5.2. The motion Judge erroneously applied N.J.A.C. 11:1-20.1 and relied upon In the Matter of N.J.A.C. 11:1-20, 208 N.J. Super. 182 (App. Div. 1986). Accordingly, we reverse the order granting summary judgment.
On March 21, 1990, plaintiff, Elena DiGiacomo, slipped and fell on steps leading to 205-207 Washington Avenue, Belleville, New Jersey. The residence at 205 Washington Avenue is owned by defendants-third-party plaintiffs Anna and Vincent Montalto (Montalto). The residence at 207 Washington Avenue is owned by defendants Louis and Frances Saladino, who are not involved in this appeal.
Montalto was the named insured on a homeowner's insurance policy issued by Merrimack, effective October 1, 1989. On February 14, 1990, Merrimack informed Montalto by certified mail that the homeowner's policy would be canceled effective March 20, 1990. When Merrimack received the complaint, which was forwarded to it by Montalto, it disclaimed coverage predicated upon the February 14, 1990 notice of cancellation. Montalto instituted a third-party action for declaratory judgment, contending that the notice of cancellation failed to comply with the regulatory provisions of N.J.A.C. 11:1-20 et seq.
After the issue was joined, Merrimack filed a motion for summary judgment, contending that its notice of cancellation fully complied with N.J.S.A. 17:29C-1 and N.J.A.C. 11:1-5.2. Montalto filed a cross-motion for summary judgment, contending that the notice of cancellation was ineffective because it failed to comply: (a) with N.J.A.C. 11:1-20.1; and (b) with the specific contractual provisions of the insurance policy. The motion Judge concluded that Merrimack's notice of cancellation failed to comply with N.J.A.C. 11:1-20.1 and therefore granted summary judgment to Montalto. The court did not address the second issue raised by Montalto, which asserted a breach of the insurance contract.
"Prior to September 1985, few executive, legislative, or judicial pronouncements discussed mid-term insurance cancellation on grounds other than non-payment of premium or fraud." Harvester Chemical Corp. v. Aetna Casualty & Sur. Co., 277 N.J. Super. 421, 427 (App. Div. 1994). On September 16, 1985, N.J.A.C. 11:1-20 was adopted on an emergency basis, 17 N.J. Reg. 2460, and was readopted without change on November 16, 1985, 17 N.J. Reg. 2978. The emergency action was necessary as:
The Department of Insurance is receiving numerous complaints from both agents and insureds concerning mid-term cancellations, block cancellations and nonrenewals of entire lines of insurance, the failure to provide timely notice of such terminations and midterm increases in premiums with respect to property and casualty/liability insurance coverages.
[17 N.J. Reg. 2460.] At that time, subchapter 20 was entitled "Cancellation and Nonrenewal of Property and Casualty/Liability Insurance Policies." 17 N.J. Reg. 2461. The scope of the regulation read in pertinent part:
(a) This subchapter shall apply to all property and casualty/liability insurance policies except workers' compensation insurance, accident and health insurance and, to the extent this subchapter may be inconsistent with applicable statutes and regulations, policies covering automobiles as defined at N.J.S.A. 39:6A-3.
In 1985, the Department of Insurance issued Bulletin #85-1, regarding the interpretation of N.J.A.C. 11:1-20 et seq. as it then existed. 17 N.J. Reg. ...