On appeal from and certification to the Superior Court, Appellate Division, whose opinion is reported at 368 N.J. Super. 356 (2004).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
The issue in this appeal is whether an insurer should be barred from raising the statute-of-limitations defense to an insured's claim for uninsured motorist benefits.
On August 30, 1995, a vehicle driven by Howard Wanderman stuck Theodore Price, a pedestrian in the course of his employment. Price's insurance carrier was New Jersey Manufacturers Insurance Company (NJM) and the policy in question included uninsured motorist coverage. Language in the uninsured motorist coverage provided that if the insured and the carrier did not agree on the issue of coverage or the amount of damages recoverable from an owner or operator of an uninsured or underinsured vehicle, then the matter could go to arbitration at either party's request.
Sometime after the accident, Price learned that Wanderman's insurance company had denied coverage for the accident. On February 12, 1998, Price's attorney wrote to NJM notifying the carrier that Price would be presenting an uninsured motorist claim and asking NJM to establish an uninsured motorist claim file. By letter dated March 18, 1998, NJM's claims representative acknowledged receipt of Price's letter and asked for information regarding Price's injuries and any workers' compensation lien.
In a June 1998 letter, Price's attorney notified NJM that Price had filed an action against Wanderman to protect NJM's subrogation interest. The attorney also informed NJM of the amount of the workers' compensation lien and expressly noted that he hoped to proceed with the uninsured motorist claim. Price's attorney enclosed copies of Price's medical records and other information to "allow [NJM] to begin to evaluate this claim." In September 1998, Price's attorney mailed the workers' compensation file to NJM. The insurer responded with a letter authorizing Price to dismiss the action against Wanderman.
On April 20, 1999, NJM scheduled a medical examination of Price by its doctor and on September 14, 1999, Dr. Bosniak examined Price. On January 15, March 1, and April 5, 2001, Price's attorney sent NJM various documents including medical reports, employment records, a workers' compensation lien letter, and a medical authorization form. Finally, on August 21, 2001, nine days before the expiration date of the statute of limitations, NJM requested Price's complete workers' compensation file, the original MRI films from 1996 and 1998, and his employer's policy language regarding their uninsured motorist coverage and exposure to this loss. Price's attorney forwarded most of the requested information on September 20, 2001, continuing to send additional information on the claim as it was received through September 2002. NJM failed to respond to a letter request in September 2002 from Price's attorney asking for NJM's evaluation of the uninsured motorist claim.
On November 22, 2002, Price filed a complaint and Order to Show Cause, seeking to compel NJM to participate in arbitration. NJM asserted that Price failed to formally request coverage or demand arbitration prior to the expiration of the statute of limitations on August 30, 2001; therefore, it was not required to participate in arbitration. The trial court disagreed, finding NJM's actions lulled Price's attorney into a false sense of having timely made an uninsured motorist claim.
On appeal, a majority of the Appellate Division affirmed the decision of the trial court, holding that NJM was estopped from raising the statute-of-limitations defense and that it should have notified Price of its intent to rely on that defense. The dissenting member of the panel found no trickery or misconduct by NJM sufficient to apply equitable estoppel.
NJM appealed to the Supreme Court as of right based on the dissent in the Appellate Division. The Court granted NJM's separate petition for certification on the issue of whether the Appellate Division's notification rule should apply retroactively or prospectively.
HELD: The record amply supports the trial court's finding that NJM's conduct lulled Price and his attorney into believing that the uninsured motorist claim had been appropriately filed. Therefore, the trial court properly rejected NJM's statute of limitations defense.
1. The six-year statute of limitations applies to uninsured motorist claims and begins to run from the date of the accident. Price was injured on August 30, 1995, and the complaint was filed on November 22, 2002, a year after the statute had run. The primary purpose of the statute of limitations is to enable a defendant the opportunity to reasonably defend and to prevent plaintiffs from litigating stale claims. Nonetheless, when defendants are on notice of the claims and there will be no significant prejudice in permitting the litigation to proceed, the reasons for strict adherence to the statute diminish. To avoid the harsh results from a mechanical application of the statute of limitations, the Court has applied equitable principles to conclude that the statute should yield to other equitable considerations. (Pp. 6-7)
2. Here, the undisputed facts support an equitable tolling of the statute of limitations. Price's attorney notified NJM in February 1998 that he would be presenting an uninsured motorist claim and, in June 1998, enclosed various documents to enable NJM to "begin to evaluate this claim." Price met every one of NJM's requests. It was not until October 28, 2001, more than a year after the running of the statute of limitations that NJM notified Price that the statute barred his claim. NJM violated its duty of good faith and fair dealing. It was unreasonable for NJM to sit back, request and receive various documents for over three years and then deny Price's claim because he didn't request arbitration or file a complaint before the running of the six-year statute of limitations. (Pp. 7-10)
3. A court need not invoke estoppel when a carrier denies coverage prior to the running of the statute of limitations. Here estoppel was appropriate because NJM did not disclaim coverage until after the running of the statute. The fair resolution here is to allow Price to arbitrate his claim. NJM suffers no prejudice nor is the result repugnant to the policies served by the statute of limitations. (Pp. 10-11)
4. Because the parties did not dispute the material facts, there was no need for a plenary hearing. (Pp. 11-12)
5. The Court does not read the Appellate Division opinion as requiring a notice requirement in all cases where the insurer intends to raise a statute-of-limitations defense. (Pp. 12-13)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN, and RIVERA-SOTO join in JUSTICE WALLACE'S opinion. ...