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Estate of Hainthaler v. Zurich Commercial Insurance

August 7, 2006


On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-2790-04.

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



Argued June 6, 2006

Before Judges Kestin, R. B. Coleman and Seltzer.

Plaintiff*fn1 appeals from a summary judgment dismissing her complaint to compel defendant to participate in underinsured motorists (UIM) arbitration on the ground that it was filed beyond the six-year period of limitations the judge found applicable to the action. Because we believe the initial agreement of defendant to submit to arbitration requires that the motion to dismiss be analyzed with a view to considerations other than the statute of limitations, we reverse and remand for further proceedings.

The facts presented on defendant's motion for summary judgment were essentially uncontested. On December 27, 1997, Gertrude Hainthaler was injured by a vehicle insured under a policy with liability limits of $25,000. Ms. Hainthaler was insured under a policy issued to her son, plaintiff Richard Hainthaler, affording her $1,000,000 of UIM coverage. Defendant's predecessor was promptly notified of the accident and the possibility of a UIM claim. Defendant ultimately authorized a settlement with the tortfeasor on April 23, 1998. See Rutgers Casualty Ins. Co. v. Vassas, 139 N.J. 163, 171 (1995) (adopting the procedure described in Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988)).

Plaintiff entered a nursing home on January 11, 1999. At defendant's request, her counsel forwarded copies of her available medical records to defendant's counsel. Additional medical information was supplied by letters dated March 2, 1999, and April 19, 1999. Settlement negotiations with respect to the UIM claim failed and, on October 18, 1999, plaintiff's counsel notified defendant that "this office hereby appoints Anna M. Liuzzo, Esquire as its arbitrator. Kindly advise the name of your party-appointed arbitrator." On November 19, 1999, defense counsel responded: "This letter shall serve to advise you that Zurich hereby appoints Scott A. Parsons, Esquire as their arbitrator with regard to the above referenced under-insured motorist arbitration." The record does not reveal any action taken by the named arbitrators after their appointment.

Defendant asked for additional medical information in November 1999, December 1999, June 2000, and August 2000. The requests were accompanied by disclaimers that they were "without prejudice to any questions of coverage that may exist in this matter" and that defendant "reserve[d] the right to contest all coverage questions at a later time should they, in fact, arise[]." Defendant, however, never repudiated the agreement to arbitrate evidenced by its November 1999 letter appointing an arbitrator.

On August 22, 2000, defendant's counsel authored a letter to plaintiff's counsel, reminding her that defendant's discovery requests had gone unanswered. Counsel then advised that, "in light of the passage of time and the complete absence of any discovery or communication from your office, we will assume that your client does not wish to proceed with this matter and we will close out our file. If this is not accurate, please provide all the information so that we can proceed with this matter in an ordinary fashion." Plaintiff's counsel responded, on September 20, 2000, to advise that Ms. Hainthaler had died on September 12, 2000, and agreed to forward outstanding medical liens when received.

On February 26, 2001, defendant acknowledged receipt of the requested medical records and asked for a copy of the entire convalescent center file together with a death certificate. Counsel then added, "[f]inally, rather than selecting a three member panel of arbitrators, I would like to proceed by utilizing a retired judge to review what is likely to be extensive medicals in this matter and hear the appropriate testimony. Would you kindly advise me if you would consent to proceed in that regard and whether you have any particular judge you would prefer to use." On March 29, 2001; May 3, 2001; and June 29, 2001, defendant sought further medical information.

Plaintiff did not respond to defendant's requests or communicate with defendant again until December 8, 2003, when plaintiff's counsel faxed a letter to defense counsel indicating she intended to pursue the claim and asking "if Zurich will honor said claim." She also advised defendant that "[i]n the event I do not hear from you by the end of this week, I will be forced to prepare an Order to Show Cause." In the same letter, plaintiff rejected the suggestion that the arbitration proceed before a judge rather than a panel.

On December 11, 2003, defense counsel wrote back, advising that the file had been closed and that he could not respond to the inquiry as to whether Zurich "will honor said claim" until he reviewed the file. Moreover, counsel advised that "I do not believe that an Order to Show Cause is appropriate until I have been able to review the file . . . . [I]f you insist on proceeding by way of order to show cause, I will request fees in light of the history of this action."

Plaintiff provided additional information by letter dated December 24, 2003, and, on January 23, 2004, defendant acknowledged receipt of that information, noting again the failure of plaintiff to provide other previously requested information. That letter suggested, for the first time, the possibility that "Zurich will assert the Statute of Limitations." On April 12, 2004, counsel ...

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