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MacKenzie v. New Jersey Auto. Full Ins. Underwriting Ass'n

March 24, 1997

MICHAEL MACKENZIE, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
v.
NEW JERSEY AUTOMOBILE FULL INSURANCE UNDERWRITING ASSOCIATION, DEFENDANT-APPELLANT/CROSS-RESPONDENT, AND NEW JERSEY SHORE INSURANCE BROKERS, INC., THERESA COTUGNO AND STATE FARM INSURANCE COMPANY, DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Monmouth County.

Approved for Publication March 24, 1997.

Before Judges King, Conley and Loftus. The opinion of the court was delivered by Conley, J.A.D.

The opinion of the court was delivered by: Conley

The opinion of the court was delivered by

CONLEY, J.A.D.

This appeal arises from plaintiff insured's suit against his licensed broker, Theresa Cotugno/New Jersey Shore Insurance Brokers, Inc. (Shore), *fn1 and against his insurer, the New Jersey Automobile Full Insurance Underwriting Association (JUA). *fn2 Ultimately, plaintiff obtained a judgment against the JUA for reformation of his automobile policy and for $45,034.67 in counsel fees. We reverse.

The litigation was triggered by an automobile accident sustained by plaintiff. In 1988, plaintiff was a first-time insured and obtained a policy with the JUA through Shore. When he was injured as a result of the automobile accident which occurred while the JUA policy was in effect, plaintiff sought and obtained personal injury income protection (PIP) income continuation benefits. As submitted to JUA by Shore, plaintiff's insurance application and other necessary forms had contained a selection of option Q5 which provides for $400 per week with a maximum of $41,600 and plaintiff received that amount. There was available, however, at the time he completed and submitted his application an unlimited income continuation benefit option while disabled. See N.J.S.A. 39:6A-10. Plaintiff did not select this option and, thus, did not receive those benefits.

Plaintiff sued for reformation of his policy and/or damages arising from his failure to select the option for income continuation while disabled. He claimed Shore never told him of this option and that neither did the JUA. It is undisputed, however, that the application for insurance submitted by Shore to the JUA's servicing carrier included a signed "Coverage Selection Form" expressly acknowledging knowledge of the available options. Unbeknownst to the JUA, the signature on the form was not that of plaintiff, but his father whom he had requested to complete the insurance process for him and to pay the first installment on the required premium. It is not disputed that Shore had been supplied by JUA with the necessary forms that advised potential insureds of the available options.

In denying the JUA's motion for summary judgment, the motion Judge essentially concluded that Shore was JUA's agent for the purpose of informing the first-time insured of the available options. He thus concluded: "to say that the JUA ought to get out of this case now that there's no chance of reformation of the policy against it now is ridiculous." We disagree. While there are other issues raised by this appeal and the JUA'a cross-appeal arising from the proceedings and rulings following the denial of JUA's motion for summary judgment, we reverse the denial of the JUA's motion for summary judgment and do not address these other issues.

For the purposes of the motion, the JUA stipulated to the facts as alleged by plaintiff in his pretrial memo and as augmented by the deposition testimony of plaintiff's father. Plaintiff's factual contentions were as follows:

In late August of 1988, plaintiff, accompanied by his mother, went to the office of defendant, Jersey Shore Insurance Brokers, Inc., and inquired of one of its employees, defendant, Theresa Cotugno, about purchasing automobile insurance. After having asked plaintiff some general questions, defendant, Cotugno, inquired about the types of coverage plaintiff would like to purchase. Plaintiff explained that he was unfamiliar with the various options available and asked defendant, Cotugno, to explain. Defendant, Cotugno, explained various options and the cost to purchase. Plaintiff specifically asked defendant, Cotugno, what the most complete comprehensive income continuation benefit was that he could purchase. At no time did defendant, Cotugno, ever inform plaintiff that there were unlimited income continuation benefit options which could be purchased which would have been payable for as long as an insured remained disabled.

After plaintiff had reviewed all of the options that were made available, defendant, Cotugno, assured him that the option designated as Q-5 was the most complete and comprehensive income continuation benefit available for his purchase. Based on defendant, Cotugno's assurances, plaintiff chose the Q-5 option, believing it to be the most complete and comprehensive income continuation benefit available. On that date, plaintiff's personal information and insurance coverage selection were entered by defendant, Cotugno, into her files. Plaintiff was to return to the defendant, Jersey Shore Insurance's office on September 3, 1988, to pay the premium for this policy.

A few days later, on September 2, 1988, plaintiff's father went to the office of the defendant, Jersey Shore Insurance Brokers, Inc., to pay the first installment on the insurance chosen by plaintiff. Plaintiff's father signed the application form in plaintiff's name without plaintiff's prior knowledge that anything further was necessary.

At a later date, plaintiff was mailed a copy of his automobile insurance policy number J362457-CO2-30. This policy had been issued by defendant, N.J.A.F.I.U.A., through its servicing carrier, State Farm Insurance Company, effective September 2, 1988, through September 2, 1989. The policy issued and furnished to plaintiff listed only eight (8) income continuation options, all of which have limited maximum total benefits. The ...


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