On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. OCN-L-15802.
The opinion of the court was delivered by: Coburn, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS
Before Judges Coburn, Wecker and Graves.
The issuer of an occurrence based excess automobile insurance policy obtained summary judgment forfeiting the insured's right to coverage based on the insured's violation of the policy's notice provision even though the violation did not cause the issuer any appreciable prejudice. We reverse because in the absence of prejudice, the contractual violation was immaterial and the ruling caused a disproportionate forfeiture.
On January 9, 2000, Miller was driving a car owned by his employer, the Archdiocese of Newark. While driving in Brick Township, the car collided with a pedestrian, plaintiff John Gazis, causing a severe fracture of his ankle, facial fractures, brain contusions, a subdural hematoma, and other injuries. After hospitalization and treatment in a rehabilitation center, Gazis was released in March 2000 with, among other things, permanent loss of his sense of smell and most of his sense of taste.
On the day after the accident, Miller reported the accident to Kemper National Account Service, Co. ("Kemper"), the claims servicing company that administered automobile claims for the Archdiocese under a policy of insurance issued by Lumberman's Mutual Casualty, a Kemper company, which provided occurrence based liability protection of $250,000. The Archdiocese was further insured for liability under a $750,000 excess policy issued by third-party defendant, The National Catholic Risk Retention Group, Inc. ("National"). Kemper, National, and the Archdiocese had agreed that Kemper would be responsible for all appropriate notices to National, which, in turn, had reinsurance with American Re. In short, the coverage provided for one accident, was $250,000 from Kemper, then $350,000 from National, and finally $400,000 from American Re. The annual premium for the National policy was approximately $340,000. This policy provided for indemnity only and not for defense.
National is not an ordinary commercial insurance company issuing policies to the general public. Rather, it is a risk retention group operating pursuant to the Liability Risk Retention Act of 1986, 15 U.S.C.A. § 3901 to -3906, which means that it could provide liability insurance to entities engaged in similar or related activities. National's owners and insureds are its membership, approximately sixty-three dioceses and other Roman Catholic organizations throughout the United States. Its board of directors consists of representatives from those groups.
The notice of claim provision of National's policy provides, in relevant part as follows:
[The insured] shall give written notice to the Company as soon as practicable but no more than 120 days after receiving notice of any event which . . . may give rise to a covered loss irrespective of any apparent liability, when the event results in any of the following:
(3) Multiple Injuries requiring hospitalization for more ...