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Selective Insurance Company of America v. Amberg

May 31, 2007


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1606-98.

Per curiam.


Argued October 18, 2006

Before Judges Stern, Collester and Messano.

Plaintiff, Selective Insurance Company of America (Selective), appeals from the motion judge's denial of its cross-motion for partial summary judgment, his grant of partial summary judgment in favor of defendants, Michael J. Amberg and Yellow Freight Systems (YFS), and his denial of Selective's motion for reconsideration. We have carefully reviewed the record and considered it in light of the governing legal standards. We reverse in part, affirm in part, and remand the matter for further proceedings consistent with our opinion.


The litigation has its genesis in a motor vehicle accident that occurred on March 6, 1989. Ann Marilyn Snider was driving her car when a tractor trailer driven by Amberg, on behalf of YFS, swerved into Snider's lane of traffic and struck her vehicle head-on. Snider required medical treatment for her injuries and applied for Personal Injury Protection benefits (PIP) through her automobile insurance policy with Selective. On June 28, Selective discontinued PIP medical benefit payments to Snider, and in July, it discontinued PIP income continuation benefits to her. In large part, Selective based its decision upon the medical report of Dr. Abbott J. Krieger, retained by Selective to conduct an independent medical examination of its insured. Krieger opined that Snider's "maladies were by and large the result of a number of pre-existing conditions including multiple sclerosis" and a "long-standing spondylosis of her cervical spine." Snider, however, continued her medical treatment despite Selective's discontinuation of her benefits.

Snider filed a lawsuit for personal injuries against Amberg and YFS in 1989. In May 1990, she filed a second suit against Selective seeking payment of her PIP benefits. In February, 1991, Selective initiated this action alleging it was entitled to reimbursement from defendants pursuant to N.J.S.A. 39:6A-9.1 for all sums "paid or to be paid under collision and under PIP" to Snider. In the second count of its complaint, Selective alleged that YFS "refused to engage in negotiations or arbitration despite repeated requests" in contravention of N.J.S.A. 39:6A-9.1 which "contemplates arbitration between PIP carriers . . . and the insurers of commercial vehicles." The complaint, however, did not request the court to compel YFS's participation in any future arbitration.

Selective and Snider then agreed to resolve the PIP suit through binding arbitration. Selective's counsel notified YFS's counsel of this development and invited his participation in the PIP arbitration; YFS declined. Selective never moved to compel defendants' participation in the arbitration. In December, 1992, the arbitration panel awarded Snider $176,443.78 which reflected unpaid medical bills, income continuation benefits, her counsel fees, the arbitrator's fees, and interest. The award was based, in part, upon a second report filed by Krieger in which he acknowledged that he had no expertise with respect to multiple sclerosis and determined that "it [was] far from clear" whether multiple sclerosis had any causal relationship to Snider's injuries or complaints.

In 1994, YFS's motion to consolidate the two actions in which it was named as a defendant was denied but it entered into a partial settlement with Selective over the claimed PIP reimbursements. In return for partial payment, Selective released YFS from any claims based upon PIP benefits it paid during 1989, but it retained the right to pursue reimbursement from the defendants for any PIP payments made thereafter. In June, 1996, Snider settled her direct case against Amberg and YFS for $495,000. However, she continued to amass bills for medical treatment that Selective has paid, and, as of August, 2004, Selective's claim for reimbursement against defendants was more than $500,000 for medical payments, $70,000 for expenses, and $80,000 for counsel fees. Selective's complaint was voluntarily dismissed on several occasions and reinstated; at each turn, defendants agreed to waive any statute of limitations defense.

The parties continued to engage in discovery which included subjecting Snider to examination by defendants' expert, Dr. Stuart D. Cook, a renowned specialist in treating and diagnosing multiple sclerosis. Defendants other expert, Dr. Leo J. Wolansky, a radiologist, read MRI studies of Snider's spine that predated the motor vehicle accident. Both opined in 1996 that Snider was suffering from multiple sclerosis at the time of the accident and that her neurological deficits after the accident were attributable to that condition, not the injuries suffered in the accident.


Defendants moved for partial summary judgment and Selective cross-moved in opposition. Defendants sought relief: 1) limiting their reimbursement obligation to Selective to $75,000 pursuant to N.J.S.A. 39:6A-4(a); 2) declaring they were not collaterally estopped from re-litigating the 1992 arbitration award that resulted from the settlement of Snider's claim against Selective; 3) declaring they were not responsible for Selective's costs and counsel fees. Selective, in turn, cross-moved opposing defendants' motion and arguing: 1) defendants' liability should not be capped at $75,000 under the statute; 2) defendants were collaterally estopped from challenging the $176,443.78 arbitration award made in 1992; and 3) defendants were responsible for Selective's costs and counsel fees.

On May 27, 2005, the judge entered two orders. One denied Selective's cross-motion for partial summary judgment in its entirety. The second granted defendants partial summary judgment and limited their reimbursement liability to a maximum of $51,729.60 -- $75,000 less the amount already paid in partial settlement of the claim. In written "Findings of Fact and Conclusions of Law" issued on June 1, 2005, the motion judge concluded "[b]y the plain language of the statute, PIP benefits in excess of $75,000 are to be reimbursed by the Unsatisfied Claim and Judgment Fund (the UCJF)." He determined defendants could not be held responsible for PIP payments made by Selective in excess of $75,000.

He then concluded that defendants were not "estopped from contesting the arbitration award" because the case primarily relied upon by Selective, Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996), was inapplicable. Since the Supreme Court limited its holding to prospective application, and since the arbitration took place in 1992, Zirger could not apply. The judge further reasoned that collateral estoppel did not apply because defendants and Selective did not share a "privity of interest" at the PIP arbitration.

Lastly, the judge determined that defendants were not responsible for Selective's counsel fees and costs. He reasoned since YFS was a commercial trucking company, self-insured and not required to maintain PIP insurance, N.J.S.A. 39:6A-9.1 limited Selective's right of reimbursement to the "amount of payments" it made and did not provide for reimbursement of Selective's counsel fees and costs.

Selective moved for reconsideration which was denied. On July 22, 2005, the parties entered into a stipulation of partial settlement. Defendants agreed to pay Selective $51,729.60 with the understanding that Selective preserved all rights to appeal the motion judge's orders. Defendants, however, preserved their right in the event "an Appellate Court reverses the orders of the trial Court" "to challenge in its entirety the payment of PIP bills by Selective, on the basis that the treatment received by . . . ...

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