Before Judges King, Carchman and Lefelt.
The opinion of the court was delivered by: Carchman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 6, 1999
On appeal from Superior Court of New Jersey, Law Division, Bergen County.
Defendant Donna McAllister was injured when the vehicle which she was driving was struck in the rear by a police patrol car. She made a claim for PIP coverage under her automobile insurance policy issued by plaintiff Selective Insurance Company. Pursuant to the policy, plaintiff paid defendant $44,739 for medical expenses, wage loss and essential services. Approximately eighteen months after defendant filed her claim, a claims adjuster noted that one of the submitted medical bills had been altered. Further investigation revealed that defendant altered other medical bills, submitted false invoices and received reimbursements for treatments she did not receive. Moreover, surveillance of defendant established that she was actively working in her own cleaning service and was fully capable of taking care of herself and her home during the time that she claimed she was disabled, unable to work and in need of essential services benefits.
The policy issued by plaintiff to defendant contains the following language:
We do not provide coverage for any "insured" who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under this policy.
Plaintiff promptly filed a civil action pursuant to the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30, seeking to recoup the benefits previously paid to defendant.
Plaintiff then filed a criminal complaint against defendant charging theft by deception in excess of $500, N.J.S.A. 2C:20-4. Defendant was indicted, tried by a jury, convicted of third-degree theft by deception and sentenced to two years probation, restitution in the amount of $511, a $50 violent crimes compensation penalty and a $75 Safe Neighborhood Fund Penalty. Defendant appealed her conviction, challenging the denial of her pretrial intervention application as well as asserting the misuse of criminal process. We affirmed. State v. McAllister, A-6698-95T5 (App. Div. Mar. 13, 1998). Notwithstanding the conviction, plaintiff neither voided nor canceled defendant's policy and continues to provide automobile insurance coverage to defendant.
Following the affirmance of the criminal conviction, plaintiff moved for summary judgment in the civil case asserting that the judgment of conviction in the criminal case precluded defendant from relitigating the issue of fraud. The trial judge, relying on the doctrine of res judicata and the Supreme Court's decision in Longobardi v. Chubb Insurance Co., 121 N.J. 530 (1990), held that the criminal conviction was dispositive and entered judgment in favor of plaintiff for $44,739, together with $15,495.85 in prejudgment interest. No proofs were provided which established any fraudulent submission in excess of the $511, apparently proven at the criminal trial. Because we conclude that there was a genuine issue of material fact not adjudicated in the criminal proceedings, we reverse and remand for trial.
The doctrine of res judicata "contemplates that when a controversy between parties is once fairly litigated and determined it is no longer open to relitigation." Lubliner v. Board of Alcoholic Beverage Control, 33 N.J. 428, 435 (1960).
Reliance on the theory of res judicata requires:
(1) a final judgment by a court of competent ...