July 5, 2007
ANA BIRCK, PLAINTIFF-APPELLANT,
HANOVER INSURANCE COMPANY, PALISADES INSURANCE COMPANY, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-12014-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 20, 2007
Before Judges Graves and Lihotz.
On March 18, 2004, plaintiff Ana Birck suffered significant injuries when the vehicle in which she was a passenger, driven by Irina Blaine, collided with a utility pole. Plaintiff filed a complaint in the Law Division against defendants to recover the cost of her medical expenses. Plaintiff appeals from the order dated November 9, 2005, entered after a bench trial, which concluded that: (1) the insurance contract between plaintiff and defendant Hanover Insurance Company was void ab initio, due to a material misrepresentation by plaintiff regarding her place of residence in her application for insurance; and (2) under N.J.S.A. 39:6A-7(b)(1), plaintiff was excluded from collecting Personal Injury Protection Benefits (PIP) under Blaine's automobile insurance policy, issued by defendant Palisades Insurance Company, because she held no valid motor vehicle insurance coverage at the time of the accident. Plaintiff also appeals from the December 20, 2005 order denying her motion for reconsideration. We affirm.
The circumstances surrounding plaintiff's purchase of the Hanover policy are contextually necessary for our review of the trial judge's decision. On November 13, 2003, plaintiff, who was a New Jersey resident, traveled to Massachusetts to visit a friend. On that date, she purchased a 1997 Mercury Sable from Express Auto Center in Marlboro, Massachusetts (Express). An employee of Express first took plaintiff to the Rapo-Jepsen Insurance agency to obtain automobile insurance coverage and then to the office of the Massachusetts Registry of Motor Vehicles to register the car. The registration and insurance application forms completed and executed by plaintiff that day listed her residential address as "26A Summit Avenue, Brookline, MA 02446." The insurance application signed by plaintiff is entitled, "Application for Massachusetts Motor Vehicle Insurance," and contains the following statement:
NOTICE: If you or someone else on your behalf has knowingly given us false, deceptive, misleading or incomplete information and if such false, deceptive, misleading or incomplete information increases our risk or loss, we may refuse to pay claims under any or all of the Optional Insurance Parts and we may cancel your policy.
Additionally, above plaintiff's signature appears her attestation that the statements in the application are true.
Plaintiff agrees she never resided at the Massachusetts address. She contends, however, that she did not fill-out the forms; rather, a representative of Express or the insurance brokerage agency completed the forms and she signed them. Plaintiff asserts she was at a disadvantage because her native language is Portuguese and she is not fluent in English. On cross-examination, plaintiff admitted she understood what was meant by "residential address," and did not disclose to the insurance agency representative that she lived in New Jersey.
After receiving plaintiff's application for insurance, Hanover issued policy number ADN7244218, initially effective for the period November 13, 2003 to November 13, 2004. Plaintiff paid monthly payments of $122 to Hanover.
The Hanover policy repeated the above stated notice language appearing in the insurance application in two places: at section 28 "General Provisions and Exclusions" paragraph 18, entitled "False Information;" and on page two of the coverage selections sheet, where it is set-off from and appears at the top of the page before other policy provisions. The policy's cancellation provisions state:
We can cancel all or any part of this policy including your Compulsory Insurance if:
2. We find that you were responsible for fraud or material misrepresentation when you applied for this policy or any extension or renewal of it. . . .
Finally, the Hanover contract contains choice of law provisions, which include: "This policy is a legal contract under Massachusetts law . . . . There are many laws of Massachusetts relating to automobile insurance. We and you must and do agree that, when those laws apply, they are part of this policy."
At the time of Blaine's accident, plaintiff's car was still registered in Massachusetts and insured by Hanover as a Massachusetts vehicle. After the accident, plaintiff completed and forwarded to Hanover and Palisades an application for PIP benefits. By letter dated June 23, 2004, Hanover responded, reserving its rights under the policy due to an allegation of false information pertaining to plaintiff's Massachusetts's residence. A letter from Hanover dated July 23, 2004, which was not presented at trial, but in respect of which no objection has been lodged to its use on appeal, stated plaintiff's "Optional Medical Payment" coverage of $25,000 had been denied due to plaintiff's inability to provide proof of her alleged Massachusetts address; however, Hanover offered plaintiff up to $8,000 in Compulsory PIP benefits. The record contains no response from Palisades to plaintiff's request.
Plaintiff filed her Law Division action seeking payment of her accident-related medical expenses to be allocated between the defendants. A bench trial was held on August 16, 2005. In his seven-page written opinion dated October 28, 2005, Judge Donohue first determined that "there were misrepresentations made, specifically the registration and insurance application stated that the plaintiff resided in Brookline[,] MA[,] when, in fact, the plaintiff was a resident of New Jersey." The trial judge examined the Massachusetts statute governing an insurance carrier's right to cancel a policy, which states, in pertinent part:
No oral or written misrepresentation or warranty made in the negotiation of a policy of insurance by the insured or [o]n his behalf shall be deemed material or defeat or avoid the policy or prevent its attaching unless such misrepresentation or warranty is made with actual intent to deceive, or unless the matter misrepresented or made a warranty increased the risk of loss. [M.G.L.A. 175 § 186.]
Next, Judge Donohue examined whether providing a false address on the application increased Hanover's risk of loss, stating:
In this instance the plaintiff misrepresented not just the city she lived or her street address, but the state in which she resided. The plaintiff's actions caused . . . Hanover to quote her a rate based on auto insurance regulations and requirements of Massachusetts, which are different then those of New Jersey, where the plaintiff actually resided. By misleading Hanover as to where she lived, the plaintiff increased Hanover's risk of loss. Had Hanover known the plaintiff lived in New Jersey, it would have quoted her a higher rate compensation for the increased liability exposure it faced in New Jersey. According to quotes provided by Hanover, the New Jersey rate would have been between $1,000 and $1,200 more then the Massachusetts rate.
The trial judge concluded that in accordance with the Massachusetts statute, Hanover could void the policy with plaintiff and decline payment of her medical expenses arising from the accident of March 18, 2004.
The trial court also rejected plaintiff's argument that Hanover was estopped from voiding the policy because it accepted plaintiff's payments, which were written on out-of-state checks. The trial judge concluded that because a material misrepresentation was made by plaintiff at the time the contract was signed, the policy was void at its inception. Judge Donohue stated: "Anything that happened thereafter certainly does not resurrect any rights that she alleges she may have."
Finally, after concluding the Hanover policy was void ab initio, the trial court applied the exclusions contained in N.J.S.A. 39:6A-7, to conclude that plaintiff was not entitled to PIP medical benefits from Palisades.
"[O]ur appellate function is a limited one: we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)(quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). Credibility is always for the factfinder to determine. Ferdinand v. Agric. Ins. Co. of Watertown, N.Y., 22 N.J. 482, 492 (1956). Where a judge articulates sufficient reasons justifying those determinations, they should not be disturbed on appeal by our court engaging in an independent review. State v. Locurto, 157 N.J. 463, 471-73 (1999). When reviewing questions of law, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995).
On appeal, plaintiff does not argue that the Hanover contract's choice of law provision is inapplicable. Instead, she asserts that Hanover waived its right to deny her an $8,000 Compulsory PIP benefit because the terms of coverage limit Hanover's remedy to rescission of the "Optional Medical Benefits" coverage. It is clear that where the language in an insurance policy is ambiguous, the ambiguity is to be resolved against the insurer, Bryan Constr. Co. v. Employers' Surplus Lines Ins. Co., 60 N.J. 375, 377 (1972), and insurance policy language is to be interpreted liberally in favor of the insured. Bowler v. Fidelity & Cas. Co. of New York, 53 N.J. 313, 321-22 (1969). If the controlling language will support two meanings, one favorable to the insurer and the other favorable to the insured, the interpretation sustaining coverage will be applied. Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504, 513-14 (1965).
Here, however, we discern no ambiguity in the policy clauses.
Massachusetts law provides that: "Statements made in an application for insurance are in the nature of continuing representations and speak from the time the application is accepted or the policy is issued." Hanover Ins. Co. v. Leeds, 674 N.E.2d 1091, 1094 (Mass. App. 1997) (citations omitted). A misrepresentation in an application for insurance enables the insurer to avoid the policy if the misrepresentation was made with actual intent to deceive, or it is material. Ayers v. Massachusetts Blue Cross, Inc., 352 N.E.2d 218, 221 (Mass. App. 1976). A "material fact" is one which would "naturally influence the judgment of [an] underwriter in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of the premium." Hanover Ins. Co., supra, 674 N.E.2d at 1094 (citations omitted).
Plaintiff executed a contract to obtain a Massachusetts automobile insurance policy, which included a false Massachusetts address. Judge Donohue's findings that plaintiff knowingly made a material misrepresentation regarding her address to obtain the automobile insurance policy, and that the uncontroverted evidence submitted by Hanover established that the misrepresentation resulted in Hanover's increased risk of loss are "supported by adequate, substantial and credible evidence" in the record. Rova Farms, supra, 65 N.J. at 484. The legal conclusion resulting therefrom, that the policy is void from inception, is affirmed.
We also determine that neither Hanover's acceptance of plaintiff's payments, nor the post-accident correspondence Hanover sent to plaintiff's counsel, bar Hanover's enforcement of the unambiguous policy provisions.
Finally, we affirm the trial court's application of N.J.S.A. 39:6A-7, which resulted in the denial of PIP benefits to plaintiff from Palisades. PIP protection is mandated by statute "for the payment of benefits without regard to negligence, liability or fault of any kind, . . . to other persons sustaining bodily injury while occupying . . . the automobile of the named insured." N.J.S.A. 39:6A-4. However, the statutory requirements are limited by exclusions based on conduct of the claimant, as found in N.J.S.A. 39:6A-7, which provides:
b. An insurer may also exclude from the benefits provided in sections 4 and 10 . . . any person having incurred injuries or death, who, at the time of the accident:
(1) was the owner or registrant of an automobile registered or principally garaged in this State that was being operated without personal injury protection coverage[.]
"[T]he legislative intent of N.J.S.A. 39:6A-7(b)(1) is to exclude one from the benefits of PIP coverage under another's insurance policy when the claimant has failed to obtain PIP coverage for [her] own vehicle as required by law." Kennedy v. Allstate Ins. Co., 211 N.J. Super. 515, 517 (Law Div. 1986). This exclusion applies even if the claimant's car was not involved in the accident. Id. at 520.
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