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Kor v. National Consumers Insurance Co.

March 05, 1998


Argued: October 22, 1997

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

Before Judges Muir, Jr., Cuff and Steinberg.

The opinion of the court was delivered by: Steinberg, J.s.c. (temporarily assigned).

This appeal requires us to consider the holding in Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), in circumstances where the underinsured motorist (UIM) insurer and the tortfeasor's liability insurer are the same carrier. Plaintiff settled his personal injury claim against the tortfeasor. Defendant then denied plaintiff's UIM arbitration claim on grounds plaintiff failed to protect its subrogation rights against the tortfeasor. Plaintiff filed this action against defendant seeking UIM benefits, personal injury protection benefits, and other ancillary relief.

When plaintiff filed a motion for summary judgment, the motion judge concluded plaintiff's noncompliance with the requisites of Longworth required denial of plaintiff's motion. The Judge held plaintiff's failure to give timely notice that the statute of limitations was about to expire, coupled with the failure to either file an action against the tortfeasor or to advise defendant a suit had not been filed, prejudiced defendant in its ability to pursue a subrogation claim against the tortfeasor. The Judge did so even though plaintiff, prior to submission of a "Longworth" letter, had negotiated a settlement of his claim against the tortfeasor with a liability claims adjuster of defendant. Subsequent to the denial of the summary judgment, the parties consented to a dismissal of the complaint. Plaintiff appeals the denial of summary judgment. We reverse.

On March 10, 1994, plaintiff sustained injuries when the automobile he was driving was struck by the vehicle driven by the tortfeasor. Defendant provided automobile liability insurance to both plaintiff and the tortfeasor.

Plaintiff did not file suit against the tortfeasor prior to commencing negotiations with the adjuster. On or about February 28, 1996, twelve days before expiration of the statute of limitations, the parties settled the claim against the tortfeasor for the tortfeasor's policy limits subject to a "Longworth" letter. Plaintiff then sent the letter. Defendant rejected plaintiff's UIM claim on grounds it had been prejudiced by the failure of the plaintiff to protect defendant's subrogation claim against the tortfeasor due to plaintiff's failure to file suit against the tortfeasor prior to the running of the statute of limitations. Plaintiff then filed this action.

In support of his motion for summary judgment, plaintiff furnished a certification of Kenneth Lucianin, a legal assistant employed by plaintiff's attorney. According to Mr. Lucianin, he sent a letter to defendant's liability adjuster, Eunice Wynn, on February 23, 1996, advising her of plaintiff's claim, enclosing plaintiff's "medical package", and calling to her attention a February 16, 1996, telephone conversation. During this conversation, Mr. Lucianin advised Ms. Wynn that the statute of limitations was running and that plaintiff wanted to settle as quickly as possible, especially since plaintiff's injuries were in excess of the tortfeasor's policy limits. At this time, Ms. Wynn agreed that the case would likely settle and said that plaintiff should not file suit.

The February 23, 1996 letter, also stated, in bold print, that the statute of limitations "will be running on March 10, 1994." Obviously this was a misprint, as the caption of the letter correctly set forth the accident date as March 10, 1994. Finally, Mr. Lucianin asked that defendant set up an underinsured motorist claim file. Mr. Lucianin contended that he sent the February 23, 1996 letter to defendant through Lawyers Service. He attached a receipt to his affidavit indicating that the letter was received by defendant on February 26, 1996.

Subsequently, Mr. Lucianin had a telephone conversation with Ms. Wynn on February 28, 1996, during which she offered the tortfeasor's policy limits of $15,000 and asked that plaintiff not file suit against the tortfeasor. She also asked that Mr. Lucianin send a "Longworth" letter to the attention of Tanya McKinny, the personal injury protection benefits adjuster handling plaintiff's claim. Mr. Lucianin sent this letter.

Mr. Lucianin also spoke with Ms. McKinny on February 28, 1996, and said that he would be sending her a "Longworth" letter by facsimile transmission and Lawyers Service that day. He advised her that time was of the essence. The Longworth letter correctly set forth March 10, 1994, in the caption, as the date of the accident, thereby formally advising Ms. McKinny that the statute of limitations was about to expire. The Longworth letter also advised Ms. McKinny that plaintiff intended to accept the $15,000 policy limits in exchange for providing the tortfeasor with a general release. Additionally, the letter asked Ms. McKinny, on behalf of defendant, for guidance as to how to proceed. That is, plaintiff inquired as to whether defendant would either instruct him not to issue a general release and pay the tortfeasor's policy limits to plaintiff in return for an assignment of plaintiff's claim, or settle his UIM claim, or proceed to arbitration. In the alternative, plaintiff asked that defendant permit settlement to take place if defendant did not wish to pursue subrogation.

The February 29, 1996 letter asked Ms. McKinny to respond within thirty days. The statute of limitations expired prior to the end of the thirty-day time period Longworth recommended. Mr. Lucianin telecopied the letter to Tanya McKinny on February 29, 1996, and attached to his certification a facsimile transmittal sheet indicating transmission of the letter on that date. In addition, he attached a receipt from Lawyers Service indicating that the letter addressed to Tanya McKinny was received by defendant on March 4, 1996, six days prior to the expiration of the statute of limitations. Significantly, the letters to Ms. Wynn and Ms. McKinny were both sent to the same office address.

In opposition to the motion, defendant furnished the certification of Ms. Wynn who stated that when she received the "medical specials" on behalf of plaintiff on February 29, 1996, she extended authority to settle the claim against the tortfeasor, "subject to a one (1) month notice period to enable plaintiff to pursue UIM and the release would then come." Obviously, Ms. Wynn was aware of the fact that a "one month notice" extended beyond the statute of limitations.

Defendant also supplied a certification of Kerry Cecil, who stated that she was the UIM adjuster and that her office received a notice seeking UIM benefits from plaintiff on March 5, 1996. This was five days prior to the running of the statute of limitations. The carrier took no immediate action and waited until March 18, 1996, to assign the file to Ms. Cecil. This was eight days after the statute of limitations had run. On March ...

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