On certification to the Superior Court, Appellate Division.
The opinion of the Court was delivered by O'hern, J. Chief Justice Wilentz and Justices Handler, Garibaldi and Coleman join in Justice O'HERN's opinion. Justice Pollock filed a separate Concurring opinion in which Justice Stein joins.
The opinion of the court was delivered by: O'hern
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Robert Green v. Selective Insurance Company of America (A-74-95)
(NOTE: This is a companion case to Zirger v. General Accident Insurance Company also decided today.)
Argued January 29, 1996 -- Decided June 12, 1996
O'HERN, J., writing for a majority of the Court.
This appeal presents two issues: 1) whether the statute of limitations on a claim for underinsured motorist (UIM) benefits begins to run on the date of an accident or on the breach of the insurance contract; and 2) whether this claimant has forfeited a right to collect UIM benefits by failing to give prompt notice to the insurance company or otherwise having prejudiced the insurance company's subrogation rights.
On October 17, 1985, Robert Green was injured in a three-car automobile accident. The car driven by Johnnie Tingle collided with the car driven by Mary Galex. Those two vehicles then collided with Green's vehicle. The Tingle car had an insurance policy with a $15,000 limit of liability and the Galex car had a $250,000 policy limit. Green had $100,000 of UIM coverage with Selective Risks Insurance Company (Selective).
Selective had early notice of Green's injuries because it had paid him personal injury protection (PIP) benefits under his insurance policy. During the course of his treatment, Green had to sue Selective for the payment of additional PIP benefits. That matter was ultimately settled by the parties.
In June 1987, Green sued Galex and Tingle for the injuries he suffered in the accident. In August 1988, Tingle's insurance carrier paid its $15,000 policy limits into court. Green refused to settle for that amount and decided to proceed with the litigation. Inadvertently, the file was closed without notice to the parties during the pendency of the law suit. On August 26, 1992, the court reopened the case, five years after the original complaint was filed. In the interim, Tingle had died.
Although denying that Galex was responsible for the accident, Galex's insurer, on February 1, 1993, offered Green $2,500 to settle any claims against her. Green was concerned that without Tingle's testimony, he would be unable to prove that Galex was liable for the accident. Therefore, Green contacted Selective, his own insurance company to preserve his UIM benefit rights. Selective's representatives told Green that it considered its file closed because of the passage of time and that Green should exercise his own judgment as to whether or not to accept the offer. Green decided to accept the settlement.
In February 1993, over seven years from the date of the accident, Green sought arbitration of his claim against Selective for UIM benefits. Selective denied any duty to arbitrate, claiming that the statute of limitations barred Green's claim. In March 1993, Green brought a declaratory judgment action to compel Selective to submit to arbitration. Selective moved for summary judgment. The trial court granted the motion and dismissed Green's complaint. The court held that Green's claim was barred by the six-year statute of limitations applicable to contract claims and that the limitations period began to run on the date of the accident.
The Appellate Division affirmed the trial court's dismissal but not on the basis of the statute of limitations. Rather, the court relied on this Court's recent decision in Vassas, concluding that Green had not complied with the guidelines for processing a UIM claim because he had failed to promptly notify his carrier.
The Supreme Court granted Green's petition for certification.
HELD: The six-year statute of limitations on uninsured motorists/underinsured motorists (UM/UIM) claims should run from the date of an accident. In the interests of fairness and Justice, this holding should apply prospectively. However, the benefit of this prospective ruling shall apply only to other claims that have not expired within six months of the date of this decision.
1. The standard automobile policy does not set forth a period of limitation within which time a claim for UIM coverage must be brought. A majority of jurisdictions hold that the limitations period for a UIM claim begins to run when the insurance company breaches the policy, not when the accident occurs. However, some jurisdictions hold that the statute of limitations for UIM claims should begin to run on the date of the accident. (pp. 5-8)
2. Holding that the claim does not arise until there is a breach of the insurance contract runs counter to the policies that have prompted the Legislature to require the inclusion of UM coverage and the availability of UIM coverage in every automobile insurance policy. The Legislature has sought to provide maximum and expeditious protection to the innocent victims of financially irresponsible motorists. It is more consistent with the goals and philosophy of UIM coverage that the claims be thought to arise at the time of the accident. The processing of the tort action and insurance claims should generally start at the same time. A corollary of this Conclusion is that claimant's counsel should keep the UIM insurance carrier fully informed and alerted to the parallel handling of the automobile tort claim. The goal of this parallel management is that, to the maximum extent possible, the aim of a "one-stop" proceeding would be achieved. (pp. 8-12)
3. Because there has been uncertainty with respect to the issue of when the statute of limitations on a claim for UIM benefits begins to run and because the Court is resolving this issue for the first time, the interests of fairness and Justice dictate that this holding be applied prospectively. (pp. 12-14)
4. Selective knew that Green had extensive injuries because of its previous involvement in the PIP suit. Thus, Selective was on notice of the pending tort case. The Appellate Division relied on Vassas in affirming the trial court's dismissal of this case on the basis that the lengthy delay between the date of the accident and Green's claim against Selective for UIM benefits unfairly prejudiced Selective's subrogation rights. However, Vassas is distinguishable and does not control here. Green contacted Selective before he accepted a settlement and Selective told him to exercise his own judgment in respect of accepting it. Selective could have paid Green the $2,500 and taken over the case against Galex. Therefore, its subrogation rights were fully intact. Nonetheless, whether Selective has suffered prejudice because of the late notice must be determined by the trial court on a fuller assessment of the record. (pp. 14-16)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division for further proceedings in accordance with this opinion.
JUSTICE POLLOCK, Concurring, in which JUSTICE STEIN joins, agrees with the result of the majority but disagrees with the means in which it uses to achieve that result. Justice Pollock believes that the six-year statute of limitations did not begin to run until Selective breached its contract by denying Green's claim for UIM benefits. That denial occurred in February 1993; therefore, the limitations period did not expire on Green's claim before he instituted this action.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, GARIBALDI and COLEMAN join in JUSTICE O'HERN's opinion. JUSTICE POLLOCK filed a separate Concurring opinion in which JUSTICE STEIN joins.
The opinion of the Court was delivered by O'HERN, J.
This appeal presents two issues: (1) whether the statute of limitations on a claim for underinsured motorist (UIM) benefits begins to run on the date of an accident or on the breach of the insurance contract; and (2) whether this claimant has forfeited a right to collect underinsurance benefits by failing to give prompt notice to the ...