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Vaccaro v. Pennsylvania National Mutual Casualty Insurance Company

March 13, 2002


On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1092-00.

Before Judges Havey, Braithwaite and Weissbard.

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


Argued February 25, 2002

Plaintiffs James and Karen Vaccaro were injured in an automobile accident and obtained a default judgment in the total amount of $305,710.62 as a result of a proof hearing in the action they filed against the uninsured, unrepresented, and non-appearing tortfeasor. When defendant Pennsylvania National Mutual Casualty Insurance Company, plaintiffs' insurer, refused to pay plaintiffs' judgment under the uninsured/underinsured motorist provision of their policy, plaintiffs instituted a declaratory judgment action against defendant. Defendant claimed that it was not liable to plaintiffs because they had failed to give it sufficient notice of the claim.

On cross-motions for summary judgment, the judge granted summary judgment to plaintiffs, finding that defendant received notice of plaintiffs' claim. The judgment was stayed for sixty days, however, so that defendant could conduct discovery on the issue of whether the tortfeasor was truly uninsured.

Defendant filed a motion for reconsideration. Although the motion judge reaffirmed her earlier determination that defendant had received notice of plaintiffs' claim, she reversed the summary judgment order with respect to damages because no one had represented defendant's interests at the proof hearing and, therefore, the damages award would have to be arbitrated pursuant to plaintiffs' policy with defendant.

Plaintiffs appeal the order that requires the issue of damages to be arbitrated. They assert that defendant is bound by the default judgment for damages because it declined to intervene in the underlying tort action after receiving notice. Defendant cross-appeals from the order finding that it had notice of plaintiffs' claim. It argues that plaintiffs did not provide adequate notice and if they did, the default judgment for damages is not binding and the matter should proceed to arbitration. We reject plaintiffs' contentions and affirm the order requiring the issue of plaintiffs' damages to be submitted to arbitration. We also reject defendant's notice argument and affirm the order finding that defendant received notice of plaintiffs' claim.


On June 1, 1996, plaintiff James Vaccaro was driving a car along Ocean Avenue in Belmar. His wife, plaintiff Karen Vaccaro, was a passenger. At the same time, Miguel Arenas was driving a car owned by Alica Gaticaseguel *fn1 along River Road in Belmar. At some point, the car driven by Arenas struck the Vaccaro car. Plaintiffs' car was insured by defendant. Gaticaseguel's car was insured by Liberty Mutual Insurance Company ("Liberty Mutual").

On July 3, 1996, plaintiffs filed a complaint against Arenas and Gaticaseguel in the Law Division, Monmouth County, seeking compensatory damages (Vaccaro v. Arenas action). Gaticaseguel filed an answer to the complaint, denying liability, and asserting a counterclaim for contribution and indemnity against plaintiffs.

On June 2, 1997, plaintiffs' counsel wrote a letter to defendant, which informed it that plaintiffs had been in an accident on June 1, 1996; that they were insured by defendant; that they had filed a lawsuit against the owner and the operator of the other car; and that the owner's insurance company, Liberty Mutual, had denied coverage. The letter also stated that Gaticaseguel had filed a motion for summary judgment, asserting lack of agency, and that plaintiffs had moved for substituted service on Liberty Mutual because Arenas could not be served. The letter advised that both motions were returnable on June 13, 1997. The letter concluded:

Because of the denial of coverage by Liberty Mutual, the tortfeasor's car may be uninsured. I am making a claim for Uninsured Motorist benefits on behalf of both James and Karen Vaccaro for personal injuries sustained in this accident, contingent on whether Liberty Mutual has validly disclaimed coverage. You are invited to participate in the liability action.

Defendant received the letter on June 4, 1997. On September 16, 1997, defendant, through its claims representative, Arlene L. Gonzalez, acknowledged notice of plaintiffs' UM claim, although Gonzalez and plaintiffs' ...

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