The opinion of the court was delivered by: POLITAN
ORIGINAL ON FILE WITH CLERK OF THE COURT
This matter comes before the Court on the cross-motions for summary judgment of defendant General Star Indemnity Company and plaintiff ALI, Inc., pursuant to Federal Rule of Civil Procedure 56. Defendant Generali joins plaintiff in opposing defendant General Star's motion, and further moves for indemnification and contribution from defendant General Star. Oral argument was heard on January 27, 1997. For the reasons stated herein, plaintiff's motion as against defendant General Star is DENIED WITH PREJUDICE, and defendant General Star's motion is GRANTED.
This case arises out of the usual dispute over the denial of insurance coverage by an insurance company. Crestmont Federal Savings & Loan Association, to whom plaintiff is the successor-in-interest, obtained an insurance policy from defendant General Star. The policy insured real property, including 46-66 Oakwood Avenue, in Orange, New Jersey. The policy was effective from January 1, 1993, to January 1, 1994.
In the interim, the subject property was foreclosed upon and the court-appointed receiver, Alpert & Alpert, obtained an insurance policy for the property. Specifically, defendant Generali issued a policy effective from June 16, 1993, to June 16, 1994. Thereafter, on December 31, 1993, the property in question suffered water damage as a result of vandalism.
Consequently, on March 17, 1994, Crestmont notified defendant General Star of the loss. In addition, the receiver made a demand for payment from both insurance companies of $ 183,255.87. Defendant Generali paid $ 117,758.00, based on a pro rata adjustment on the belief that defendant General Star is a coinsurer. Defendant General Star submitted a letter to plaintiff on June 17, 1994, declining coverage.
I. Can the Plaintiff Sue?
Defendant General Star asserts that plaintiff's claim is barred by the one-year suit limitations period contained in the insurance policy, as mandated by New Jersey law, N.J.S.A. 17:36-5.20. Both parties agree that the suit limitations period is valid and that the limitations period is tolled from the date the insured gives notice to the carrier until the date on which the insurer declines liability. Peloso v. Hartford Fire Ins. Co., 56 N.J. 514, 521, 267 A.2d 498 (1970). The resolution of this motion, therefore, turns on whether the letter of defendant General Star, dated June 17, 1994, was an effective declination of coverage. The Court finds that it was.
The New Jersey Supreme Court in Peloso stated that an insured is required to institute suit twelve months from the date "when [the insured was] notified in writing that liability was denied." Id. The court did not elaborate as to what, if anything, the letter must contain. Plaintiff asserts that the New Jersey Supreme Court has mandated that the letter of declination include the reasons for the decision, a statement advising the insured to obtain an attorney, as well as notifying the insured of the limitations provision. See Bowler v. Fidelity & Cas. Co. of N.Y., 53 N.J. 313, 328, 250 A.2d 580 (1969). Plaintiff relies on the court's statements in Bowler :
[The insurer] must notify the insured of its decision not to pay his claim. But mere naked rejection would not be sufficient. The giving of such notice should be accompanied by a full and fair statement of the reasons for its decision not to pay the benefits, and by a clear statement that if the insured wishes to enforce his claim it will be necessary for him to obtain the services of an attorney and institute a court action within the appropriate time. The "appropriate ...