The opinion of the court was delivered by: Koch
On August 9, 1996, and again on September 27, 1996, this court heard oral argument on a motion for summary judgment brought by defendant Liberty Mutual Insurance Company. The court also heard oral argument on a cross-motion for summary judgment brought by plaintiff Vincent Norcia, as Administrator of the Estate of Livio A. Norcia, deceased. Liberty Mutual's motion for summary judgment is granted. Norcia's cross-motion for summary judgment is denied.
On February 14, 1988, the decedent Livio Norcia was struck and killed by Henry S. Santiago, and employee of the Drug Enforcement Administration (DEA) at the time of the accident. Santiago was driving a United States Government-owned vehicle. The U.S. early on disclaimed responsibility. Santiago was apparently using the car on his own business. This vehicle is listed as "self-insured" in the police lists.
Santiago was intoxicated at the time of the accident and charged with death by auto and driving while intoxicated. On April 28, 1988, he pled guilty to one charge of death by auto and to the charge of driving while intoxicated.
Vincent Norcia brought an action against Santiago and the Centro Orensano Social Club, where Santiago had been drinking. A default judgment for $350,000 was entered against Santiago. The action against the Social Club was settled for $7,500.
On April 18, 1988, Norcia filed a claim for administrative settlement with the DEA. The DEA failed to make a final Disposition of this claim within six months, finding that Santiago was acting outside the scope of his employment when the accident occurred. Norcia then filed a complaint against the federal government in the U.S. District court for New Jersey. On March 3, 1993, the DEA and Norcia settled this claim for $80,000. Included in this settlement was a stipulation stating that the settlement agreement did not constitute an admission of liability or fault on the part of the defendant or any of defendant's agents, servants, employees, or instrumentalities on account of the incidents giving rise to the action.
In force on the day of the accident was an insurance policy, issued by the N.J.A.F.I.U.A. and serviced by defendant Liberty Mutual, which provided Norcia with $300,000 of uninsured motorist (UM) coverage. Under this policy, the insured has a duty to promptly notify Liberty Mutual of "how, when and were the accident or loss happened." The insured must also cooperate in the defense or prosecution of any action by or against the tortfeasor. Furthermore, the insured is required to forward any "legal papers" filed or received in connection with any litigation arising from an accident. Finally, UM coverage for bodily injury is not provided if the injured person settles the claim without Liberty Mutual's consent.
Norcia did not notify Liberty Mutual of the underlying claim or Norcia's intention to seek recovery under its UM policy until around February 9, 1990. Furthermore, Norcia did not notify Liberty Mutual or obtain its authorization before settling with the U.S. Government.
On June 15, 1994, more than six years after the date of the accident, Norcia sent Liberty Mutual a letter informing them of a change of counsel, naming an arbitrator and requesting that Liberty Mutual name its own arbitrator. Liberty Mutual marks this letter as Norcia's first formal request for arbitration made to Liberty Mutual. On August 19, 1994, Norcia's arbitrator sent a letter to Liberty Mutual supplying the names of potential neutral arbitrators.
On December 12, 1994, Liberty Mutual sent a letter to Norcia inquiring as to whether Norcia was still pursuing a UM claim against them. On March 7, 1995, Norcia indicated his intent to pursue his claim and again requested designation of an arbitrator. On March 22, 1995, Liberty Mutual indicated that it would not appoint a UM arbitrator. On October 24, 1995, Norcia once again requested designation of an ...