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Rivers v. Allstate Insurance Co.

June 25, 1998


Before Judges Keefe, P.g. Levy and Wecker.

The opinion of the court was delivered by: Keefe, J.A.D.

[9]    Argued May 12, 1998

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

Plaintiff, Ann Marie Rivers, appeals from the entry of summary judgment in favor of defendant Allstate Insurance Company (Allstate). The judgment under review has the effect of denying plaintiff underinsured motorist (UIM) benefits under an Allstate Automobile Insurance Policy issued to plaintiff's husband.

The undisputed facts are as follows. Plaintiff was involved in an automobile accident on September 5, 1995. The alleged tortfeasor, Edward G. Krelein, was insured by Royal Insurance Company (Royal), who issued a policy to the alleged tortfeasor with bodily injury limits of $15,000/$30,000.

On June 23, 1996, plaintiff's attorney wrote a letter to Allstate stating that Royal would "in all likelihood" be offering the full single limit of its policy to settle plaintiff's claim. The letter expressed an intention to pursue a UIM claim and asked Allstate to respond whether it wanted its subrogation rights to be protected. There was no response to that letter.

On July 8, 1996, plaintiff executed a general release in favor of Edward G. Krelein releasing him from "any and all claims resulting from motor vehicle accident on or about September 5, 1995." The release was forwarded to Royal by letter dated July 10, 1996.

On September 9, 1996, plaintiff received a settlement check from Royal. On September 12, 1996, plaintiff's attorney forwarded what counsel describes as "a Longworth letter" to Allstate. *fn1

Allstate responded to counsel's Longworth letter within thirty days. In its response, Allstate said it was unable to act upon plaintiff's request because it did not have proof of the tortfeasor's underinsurance and did not have a copy of the police report to evaluate liability. Further, Allstate indicated that it did not have access to plaintiff's PIP file and therefore asked for medical reports so that Allstate could evaluate plaintiff's claim. Lastly, Allstate requested a copy of the summons and complaint if suit had been filed against Krelein.

Apparently, between the receipt of the Allstate letter and October 25, 1996, plaintiff furnished the information requested by Allstate, including a copy of the release from Rivers to the Royal insured. On October 25, 1996, Allstate informed plaintiff's attorney that it was declining plaintiff's request for UIM benefits. In denying benefits to plaintiff, Allstate pointed out that plaintiff had given a general release to the Royal insured and "irrevocably nullified [Allstate's] subrogation rights" before plaintiff even issued the Longworth letter of September 12.

When Allstate persisted in its refusal to honor plaintiff's request for UIM benefits or the appointment of an arbitrator, plaintiff filed a complaint and order to show cause against Allstate seeking a declaration of coverage for her UIM claim. The parties exchanged letter briefs. On the return day of the order to show cause, plaintiff essentially contended that the letter of June 23, 1996, from plaintiff's counsel to Allstate was a proper Longworth notice. *fn2 Plaintiff contended that, although she settled her claim with the Royal insured before the thirty day period expired, Allstate failed to reply to the June 23, 1996, notice within the thirty day period presumptively permitted by Longworth. Plaintiff relied on this court's opinion of Breitenbach v. Motor Club of America Ins. Co., 295 N.J. Super. 328 (App. Div. 1996).

Judge Longhi found as a matter of law that the June 23, 1996, letter from plaintiff's counsel to Allstate was not a proper Longworth notice, but that the September 12, 1996, was the type of notice contemplated by Longworth. Judge Longhi found that Breitenbach was distinguishable on the facts, and entered summary judgment in favor of Allstate. This appeal followed. We agree with Judge Longhi's conclusion and affirm.

The procedure by which insureds are to perfect claims for UIM benefits when a settlement has been offered by the tortfeasor in the underlying personal injury matter was first set forth by this court in Longworth v. Van Houten, supra. That procedure was "essentially endorse[d]" in Rutgers Cas. Ins. Co. v. Vassas, 139 N.J. 163, 174 (1995). By the time Vassas was decided, the Court observed that the Longworth procedure had been followed "almost universally by the bar and insurance industry." Ibid. (quoting Craig & Pomeroy, N.J. Auto Insurance Law § 28:3, at 332 (1994)).

In recognition of the well-established practice, the Court contemplated a three-step procedure to be followed "when an insured under an automobile insurance policy providing UIM benefits is involved in an accident and undertakes legal action against the tortfeasor." Ibid. In such instances, the insured should first notify the UIM insurer of the action. *fn3 Ibid. Secondly, "[i]f, during the pendency of the claim, the tortfeasor's insurance coverage proves insufficient to satisfy the insured's damages, then the insured should again notify the UIM insurer of that fact." Ibid. (emphasis in the original). In our view, the letter from plaintiff's counsel to Allstate on June 23, 1995, constituted that notice. In that letter, plaintiff's counsel simply informed Allstate that he had determined that the Royal insured's coverage was insufficient to satisfy plaintiff's claim, and ...

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