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Kneller v. Ganesan


December 20, 2006


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-6047-03.

Per curiam.


Argued November 1, 2006

Before Judges Fuentes and Baxter.

This is an appeal from the grant of summary judgment in favor of defendant New Jersey Manufacturers Insurance Company (NJM) and from the denial of plaintiff Alex Kneller's motion for reconsideration. Plaintiff sought damages and reformation of an insurance contract he purchased from NJM, alleging that NJM had violated the Consumer Fraud Act (CFA), committed common law fraud, and breached its duty of good faith. Plaintiff claimed that NJM misrepresented its insurance policy and subsequently caused damages to him by failing to remove a designation on his commercial automobile policy declaration page that read "limitation on lawsuit option."*fn1

Both parties filed motions for summary judgment, and on July 22, 2005, subsequent to oral argument, Judge Pullen granted summary judgment to NJM, and denied summary judgment to plaintiff.

On appeal, plaintiff claims that the trial court erred by:

(1) granting summary judgment to NJM, thereby wrongly dismissing plaintiff's claims of bad faith, common law fraud and his claims under the Consumer Fraud Act; (2) denying his claim for reformation of his insurance policy with NJM; and (3) denying his motion for reconsideration.

We agree with the trial court's conclusion that: (1) defendant NJM did not make any misrepresentation that was material to plaintiff's purchase or renewal of the commercial auto insurance policies he purchased between 1994 and 2002; (2) NJM's use of the phrase "limitation on lawsuit option" on each policy's declarations page played no part in any sale or marketing of the insurance product, and therefore did not violate any of the provisions of the CFA; (3) plaintiff suffered no "ascertainable loss" as required by CFA; and (4) plaintiff did not rely to his detriment on the subject language, thereby vitiating any claims of common law fraud.

In reviewing the grant of a summary judgment motion, this court applies the same standard that governs the trial court, and decides first whether there was a genuine issue of fact. If there was not, we then decide whether the lower court's ruling on the law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Summary judgment must be granted if the "pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to judgment or order as a matter of law." R. 4:46-2.

Here, the facts are undisputed and are gleaned from the documents submitted by the parties in support of, and in opposition to, the motion for summary judgment. Plaintiff, owner of Al's Gutter Gleaning, purchased a commercial automobile policy from NJM each year from 1994 to 2002, insuring the truck that he used in his business. Each year, the declarations page on the policy included language that appeared as either "lawsuit threshold" or "limitation on lawsuit option." Plaintiff cancelled his final policy on July 10, 2003.

Both parties agree that the language on the policy indicating a "limitation on lawsuit" had no legal effect on plaintiff's right to sue for personal injuries if he were to be injured while driving the truck. N.J.S.A. 39:6A-8. This is so because any limitation on the right to sue applies only to private passenger automobiles, where personal injury protection (PIP) is available, and not to commercial vehicles such as plaintiff's truck. N.J.S.A. 39:6A-2a. Because plaintiff's truck did not meet that definition, he did not have the option to buyout of the lawsuit threshold. As a result, the language on plaintiff's policy regarding a lawsuit limitation had no legal effect. Rather, any lawsuit limitation on his vehicle would be governed by any personal auto policy he may have had, or by any policy a "resident relative" may have had.

NJM asserted that all of its policies, business or personal, included an indication of whether a tort threshold applies or not. As noted earlier, however, neither plaintiff, nor any other person having the same language on a "business" policy would be bound by the language. NJM explained that it included the subject language on its policies only to indicate that the insured had not "opted-out" of the limitation. Indeed, no commercial policy insured would be permitted to "opt-out" and purchase PIP coverage.

On February 19, 2002, plaintiff was injured when a vehicle operated by Narayon Hosj Ganesan struck his vehicle. At the time, plaintiff was driving the truck insured by NJM. Ganesan was insured by Chubb Group of Insurance Companies (Chubb). Shortly after that accident, plaintiff sent Chubb copies of his MRI reports and a copy of the policy issued by NJM. The copy of the NJM's policy provided to Chubb included the "limitation on lawsuit" language.

Subsequent to receiving the declarations page of plaintiff's policy, Chubb sent plaintiff's counsel a letter indicating that Chubb would be closing the file on the accident, and denying recovery, because plaintiff's injuries did not satisfy the verbal threshold statute, N.J.S.A. 39:6A-8. Chubb's letter also indicated that if plaintiff wished to discuss this matter further, he should contact Chubb claims representative, James Dublin.

On December 31, 2002, after receiving the letter from Chubb, plaintiff, through his counsel, contacted NJM to discuss whether the "limitation on lawsuit" option on his policy should apply. Plaintiff's counsel spoke with claims representative Craig Murphy, who assured plaintiff's attorney that the lawsuit limitation could not, and would not, apply. Not satisfied with the resolution of the problem, plaintiff's attorney requested that the language be removed from the policy in effect at the time of the accident, and that an amended declarations page, including language indicating "no limitation on lawsuit," be issued to his client. Murphy informed plaintiff's attorney that NJM's computer program did not allow it to issue amendments to declaration pages on expired policies,*fn2 and that the law prohibited NJM from putting that language on a policy where no such designation was actually made.

Although he was not able to change the policy, Murphy, on the same day, explained to plaintiff's counsel that the insurance policy in effect at the time of the accident included the lawsuit limitation language "in error," and that counsel should explain this to Chubb to clear up any confusion. This entire conversation was documented by Murphy in a computer entry he routinely made summarizing each customer contact.

Some time after this conversation, after finding that NJM had erroneously changed plaintiff's policy, Murphy sent a letter and an amended declaration page, both dated January 16, 2003, to plaintiff's attorney. The amended declaration page was not for the policy in place at the time of the accident, but rather for the policy that was in place at the time of the December 31, 2002 phone call.*fn3 The letter indicated that the previous amendment made to this post-accident declarations page was made in error because the "no limitation on lawsuit" option is never available for commercial/business vehicle policies. NJM then apologized for the mistake and for any confusion this may have caused.

Although plaintiff had all the information he needed to satisfy Chubb that the "limitation on lawsuit" did not apply, neither plaintiff nor his attorney provided Chubb with Murphy's letter of January 16, 2003. Given that the letter was written by NJM's representative, it is reasonable to conclude that this document would have been accepted by Chubb as authoritative proof that plaintiff was not subject to the verbal threshold. Instead, plaintiff's counsel sent NJM a letter indicating his understanding of the law, and expressing his concern that, in light of the language in the declaration page, a false impression remained as to the scope of the coverage provided in plaintiff's policy. Plaintiff's attorney requested, in writing, confirmation that his client was not subject to the "limitation on lawsuit" language.

Following receipt of the letter from plaintiff's counsel, NJM's Administrator Stanley J. Brzezynski sent plaintiff a letter dated May 2, 2003, providing the following explanation as to the scope of plaintiff's coverage:

[c]ommercial auto policies issued by [defendant] are subject to the statutory requirement governing PIP options and thresholds. The law pertains to a natural person's usage of a private passenger automobile. Since the policy held by plaintiff insures only a commercial vehicle, his ability to "buy out" of the threshold is not available . . . . However, plaintiff may not be bound by this restriction. He should refer to his own personal auto insurance policy to determine what options were elected. In the absence of [that] he should refer to any resident relative in his household and the options they elected under their personal auto policy.

Should no other policies be applicable, the "No Limitation" option applies . . . .

NJM later learned that plaintiff was receiving medical coverage under a different NJM policy. That policy was plaintiff's mother's policy, in which there was a "no limitation on lawsuit" designation.*fn4 As a result, plaintiff was not limited by any lawsuit options because of NJM the language contained in his mother's policy. Nonetheless, neither plaintiff nor his attorney, conveyed this information to Chubb.

After sending the letter of May 2, 2003, Brzezynski certified that he did not hear from plaintiff or his attorney again, and that he considered the matter closed as a result. Plaintiff filed suit against NJM and Ganesan on August 19, 2003.

On April 26, 2005, in accordance with Rule 4:21A, plaintiff and Ganesan engaged in mandatory, non-binding arbitration in an attempt to settle plaintiff's personal injury claim. On July 21, 2005, the case was settled for $60,000, after Chubb acknowledged that plaintiff's policy was not subject to the verbal threshold limitations. Despite this, the litigation against NJM continued, culminating in the granting of NJM's summary judgment motion and the denial of plaintiff's motion for reconsideration.


Plaintiff first claims that the court improperly rejected his claim that NJM violated provisions of the Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to -20. Specifically, he asserts that NJM misrepresented the terms of the policy it issued to him by placing the words "limitation on lawsuit option" on the declaration page of each of plaintiff's annual insurance policies from August 1995 to the policy expiring in August 2003, when the policy, in actuality, had no such limitation.

The CFA was enacted for the purpose of "giv[ing] consumers relief from fraudulent practices in the marketplace and to deter merchants from employing those practices." Furst v. Einstein Moomjy, Inc., 182 N.J. 1 (2004). Under the language of the CFA, a violation is actionable when the defendant has committed an: act, use or employment . . . of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise . . . .

[N.J.S.A. 56:8-2 (emphasis added)]

In order for an act or omission to be unconscionable and therefore a violation of the CFA it must violate "the standard of conduct contemplating good faith, honesty in fact and observance of fair dealing." Mango v. Pierce-Coombs, 370 N.J. Super. 239, 250 (App. Div. 2004). Here, Judge Pullen found that NJM informed plaintiff on numerous occasions that the "limitation on lawsuit" language did not legally limit the scope of his coverage. Therefore, the judge correctly held that NJM did not act unconscionably, or knowingly misrepresent any material facts about the policy. Her conclusion that NJM was not in violation of the CFA is buttressed by plaintiff's concession that the subject language in the policy: (1) played no part in his decision to purchase it; and (2) did not increase the cost of the premium in any way.

Even if we were to find that NJM had committed a violation of the CFA, plaintiff would still be unable to prevail because he suffered no "ascertainable loss" as a result. In order to proceed with a claim under the CFA, after a violation is found, plaintiff must prove that he has suffered bona fide "ascertainable losses of moneys or property . . . as a result of" the action or omission in violation of the CFA. N.J.S.A. 56:8-19 (emphasis added).

Plaintiff asserts that as a result of NJM's alleged violation of the CFA, he has suffered ascertainable losses in four ways: (1) attorneys fees and costs incurred to correct the alleged fraud resulting from NJM's failure to remove the "limitation on lawsuit" language from his policy; (2) attorney's fees and costs in pursuing and preparing the personal injury case against Ganesan; (3) receiving an insurance policy of lesser value than the type of policy he purchased; and (4) loss of the time value of the settlement proceeds due to his inability to negotiate with Ganesan's carrier during the time the coverage issue remained unsettled.

Judge Pullen was correct in concluding that all of plaintiff's claims of ascertainable loss could have been avoided by plaintiff himself, and thus, were not causally related to any actions of NJM. Plaintiff acknowledges receiving the letter NJM sent to his attorney on May 2, 2003, in which NJM explained that because the policy was a commercial vehicle policy, there was no personal injury protection (PIP) coverage available under the policy. Thus, as NJM wrote, the "limitation on lawsuit" designation on his policy had no effect. As the judge observed, despite the information in Brzezynski's May 2, 2003 letter, plaintiff's counsel inexplicably delayed sharing this information with Ganesan's carrier, Chubb. As Judge Pullen found, once this information was presented to Chubb, the matter quickly settled.

In addition, Judge Pullen determined that plaintiff had failed to point to any monetary damages he had incurred as a result of NJM's inclusion of the "limitation on lawsuit" language in the policy. She properly rejected an award of attorney's fees and costs incurred in an attempt to remove the designation, finding that "any monetary losses that occurred, were counsel's alleged losses and did not result in any . . . damages to the plaintiff." We agree that any loss resulting from attorney's fees could have been avoided by plaintiff himself had he shared the relevant information with Chubb. As NJM properly states, "[w]ere the court to rule otherwise it would sanction the maintenance by counsel of a claim for fees and costs which he chose to incur even though he was [admittedly] well aware that his client's personal injury claim was not subject to the lawsuit limitation."

Plaintiff's claim that he suffered ascertainable losses under the CFA because he was forced to have his attorney prepare a lawsuit against the tortfeasor was also properly rejected by Judge Pullen as an ascertainable loss under the CFA. She correctly concluded plaintiff would have filed suit against Ganesan regardless of whether the subject language was included in the policy or not. Moreover, plaintiff's claim that he was required to pay $500 in order to secure a physician's certification of permanency pursuant to N.J.S.A. 39:6A-8, was properly rejected in light of plaintiff's knowledge that the lawsuit threshold did not apply.

As to plaintiff's third claim that he received a policy of lesser value than that for which he paid, he offers no evidence to support this allegation. In fact, when the "limitation on lawsuit" language in plaintiff's policy was temporarily changed*fn5 to "no limitation on lawsuit," the premium amount did not change at all. Thus, this claim of ascertainable loss was also properly rejected.

Plaintiff also claims that he lost an opportunity to settle earlier with Ganesan because of the limitation on lawsuit clause in his policy. As noted above, plaintiff had all the information he needed regarding the inapplicability of the limitation on lawsuit clause in his policy, at the very latest, when he received the letter from NJM, in May 2003. Yet, plaintiff failed to share this information with Chubb until shortly before the court-ordered arbitration. As a result, the parties failed to come to a settlement until July 2005, well after the date of the May 2003 letter. The court properly found that any lost opportunity for settlement sustained by plaintiff was a loss of his own making.


Plaintiff next claims that the court below erred in granting summary judgment to NJM dismissing plaintiff's claim for declaratory relief. Plaintiff had sought an order compelling NJM to reform the language of his past insurance contracts by deleting the words "limitation on lawsuit option."

Declaratory relief is available under the Uniform Declaratory Judgment Act. N.J.S.A. 2A:16-50 to -62. The purpose of declaratory relief under these statutory sections is "to settle and afford relief from uncertainty and insecurity with respect to rights, status and other legal relations." N.J.S.A. 2A:16-51.

The court below found that because there were never any "claims under any of [plaintiff's] prior insurance policies . . . there is no reason, based on law, that would require NJM to reform all prior and/or expired policies of [NJM]," as none of them are still in place. Judge Pullen properly found there was no genuine issue of fact, and plaintiff was not entitled to judgment as a matter of law; therefore, summary judgment was properly granted on the declaratory judgment claim.


Plaintiff next claims that the court committed reversible error when it granted summary judgment to NJM on plaintiff's claim of common law fraud. To establish a claim of common law fraud, a plaintiff must prove: (1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997).

Although plaintiff claims that all five elements of common law fraud were met, Judge Pullen, in her oral opinion, properly found that there has been "no material misrepresentation, i.e., no false statements made to plaintiff that induced him to purchase his insurance policies . . . [and no proof that] because of NJM's conduct, plaintiff suffered any damages." In rejecting the claim of common law fraud, Judge Pullen properly analyzed the law, and properly concluded that there remained no genuine issue of fact.


As to the denial of plaintiff's motion for reconsideration, we note that reconsideration should be construed narrowly and granted only in cases in which "either (1) the court has expressed its decision based upon a palpably incorrect or irrational basis, or (2) it is obvious that the court either did not consider, or failed to appreciate the significance of probative, competent evidence." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996). Additionally, "if a litigant wishes to bring new . . . information to the Court's attention which it could not have provided on the first application, the Court should, in the interest of justice (and in the exercise of sound discretion), consider the evidence." Ibid.

In this case, Judge Pullen determined that plaintiff had presented nothing to demonstrate that her original decision was erroneous or was the result of a failure to consider competent, probative evidence. Her reasons for denying the motion for reconsideration were sound.

Judge Pullen correctly determined that there were no genuine issues of material fact, and that NJM was entitled to judgment as a matter of law. We thus affirm both the grant of summary judgment to NJM and the denial of plaintiff's motion for reconsideration. R. 4:46-2; Brill v. Guardian Life Ins. Co., 142 N.J. 520, 530 (1995).


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