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Baldwin v. High Point Insurance Co.


July 19, 2007


On appeal from Superior Court of New Jersey, Law Division, Gloucester County, L-420-04.

Per curiam.


Submitted June 5, 2007

Before Payne and Lihotz.

Plaintiff, Chante Baldwin, was injured in an auto accident with an unidentified, and thus "uninsured" motorist. She filed suit against defendants High Point Insurance Company, which had issued a policy to her providing $15,000 in uninsured motorist (UM) coverage, and Allstate Insurance Company, which had issued a policy to Baldwin's parents, which provided UM coverage in the amount of $25,000 to Baldwin as a resident relative. Following return of a jury verdict of $55,000 in compensation for Baldwin's injuries, the trial court entered an order that limited Baldwin's recovery to $25,000, as required by the anti-stacking provisions of N.J.S.A. 17:28-1.1c, and prorated liability for that amount to the carriers in accordance with their policy limits. The trial judge denied without comment Baldwin's request for prejudgment interest, an attorney's fee award of $750 pursuant to R. 4:21A-6(c)(3), compensation for witness costs in the amount of $500 pursuant to R. 4:21A-6(c)(4), and the inclusion in the judgment of a statement that: "This lawsuit and this order does not address any issue with respect to any allegation that the defendant acted in bad faith. In this regard, all claims and defenses are reserved without prejudice." Baldwin has appealed.

On appeal, Baldwin raises the following issues:

I. There was no legal basis to mold the jury's verdict and even if there was, which is denied, the form of judgment should have included the language that it was entered without prejudice to any future bad faith claim.

II. Prejudgment interest, costs and the attorney fee imposed against the non-prevailing party, where the non-prevailing party filed a trial de novo from an arbitration award, should have [been] awarded by the trial court below.

This matter has a somewhat lengthy procedural history. After suit was filed, the defendant insurers moved for summary judgment on the ground that Baldwin had failed to cross the verbal threshold. Allstate's motion was granted by order dated April 29, 2005. The record does not contain a similar order with respect to High Point, but we assume its entry from the existence of a docketed appeal by Baldwin. Following the Supreme Court's decisions, on June 14, 2005, in DiProspero v. Penn, 183 N.J. 477, and Serrano v. Serrano, 183 N.J. 508, the parties moved for a remand of the matter, which we granted in an order dated November 30, 2005. Baldwin's appeal was dismissed. A renewed motion for summary judgment on verbal threshold grounds was filed by Allstate on April 18, 2006, and denied on May 26, 2006.

On May 11, 2006, the case was the subject of mandatory, non-binding arbitration pursuant to R. 4:21A-1. An award of $30,000 was entered. However, on June 5, 2006, Allstate rejected the award and filed a demand for trial de novo pursuant to R. 4:21A-6. The record does not reflect whether High Point similarly sought a new trial.*fn2 In a letter to both insurers, dated September 22, 2006, before trial had taken place, Baldwin demanded payment of policy limits,*fn3 and stated: "In the event there is a verdict greater than the limits, based on the nature of the relationship, insured and insurer, it will be our position that the full verdict along with costs and counsel fees are collectable."

On September 27, 2006, following trial of the matter, the jury returned its $55,000 verdict. After the jury had been excused, Allstate orally requested that the court mold the verdict in accordance with policy limits. The trial judge requested a written motion, which was submitted by Allstate, along with a supporting brief. In a letter from Baldwin's counsel, inexplicably dated September 22, 2006, counsel stated to the court:

Kindly accept this letter as our application for the entry of judgment in the above matter. Please recall that it is our position that the relationship between the parties, insurer and insured, means that Defendants have a fiduciary duty to the Plaintiff and a duty to act in good faith with respect to the handling of the claim at issue.

Nevertheless, we have reconsidered our position as to whether this Court in the context of this case can determine whether there was bad faith and award counsel fees and all litigation costs. We have determined that we have a separate cause of action in this regard. See, Pickett v. Lloyds, 131 NJ 457 (1993) and Rova Farms v. Investor[s] Insurance, 65 NJ 474 (1974).

Therefore, kindly accept our form of Judgment. In summary, the judgment is for $25,000.00, plus interest calculated on that number, the limited recoverable costs, and the $750.00 attorney fee penalty relating to the Defendant's trial de novo. Finally, the proposed Order indicates that the Order does not address any issue with respect to any allegation that the Defendants acted in bad faith, and that all claims and defenses in that regard are reserved without prejudice.

In a subsequent letter, dated October 5, 2006, counsel for Baldwin also sought $500 for expert expenses. Allstate submitted opposition to Baldwin's request for relief, noting among other things, that an award of fees and costs was contractually precluded by the UM provisions of its policy, which contained the following language regarding arbitration of claims:

Regardless of the method of arbitration, when any arbitration award exceeds the Financial Responsibility limits of New Jersey, either party has a right to trial on all issues in a court of competent jurisdiction. This right must be exercised within 30 days of the award. Costs, including attorney fees, are to be paid by the party incurring them.

High Point joined in all of Allstate's briefing, stating additionally that it "would add that there is a similar provision in the High Point policy which indicates that the parties pay the expenses and fees it incurs." However, High Point did not cite to the applicable policy provision, and we have been unable to locate it.*fn4

As we stated previously, the trial judge entered an order of judgment in the amount of $25,000, dated October 11, 2006, with liability of $15,625 allocated to Allstate and $9,375 allocated to High Point. For unstated reasons, no prejudgment interest, costs or attorney's fees were awarded, and the language sought by Baldwin was not included in the judgment.

On appeal, Baldwin claims that the court erred in molding the verdict, because "[p]rima facially the facts supported a bad faith claim," and Baldwin's right to recover an excess verdict was recognized in Pickett v. Lloyd's, 131 N.J. 457 (1993) and Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474 (1974). Alternatively, Baldwin argues that, even if the verdict were molded, the form of judgment should have clearly indicated that it was being entered without prejudice to a future bad faith action.

We disagree with both prongs of Baldwin's argument. We discern no merit in Baldwin's assertion, on appeal, of entitlement to the jury's $55,000 verdict in light of her counsel's September 22, 2006 letter to the trial judge withdrawing all claims to that full amount. See State v. Jenkins, 178 N.J. 347, 359 (2004); State, Dep't of Law & Pub. Safety v. Gonzalez, 142 N.J. 618, 632 (1995) (discussing judicial estoppel).

Further, we note that recovery in an amount in excess of the $25,000 limits of the policy issued to Baldwin's parents by Allstate is precluded by the anti-stacking provisions of the applicable UM statute, N.J.S.A. 17:28-1.1c, which states:

Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits.

Both Allstate's and High Point's policies contain language reflecting this statutory prohibition.

We additionally note the inapplicability of Rova Farms and Pickett in the present circumstances, both of which were actions against insurers for bad faith. Here, Baldwin did not claim bad faith in her complaint against Allstate and High Point, and the issue was not raised before the jury in the trial of her action for UM benefits. Accordingly, there is no evidentiary basis for an award premised on that theory.

We likewise find no misuse of discretion on the trial judge's part in declining to insert the language in the judgment that Baldwin sought. In essence, what Baldwin requested was an advisory opinion that any subsequent action by her, premised upon bad faith, would not be barred by the entire controversy doctrine or any other legal defense. We agree with the court's implicit conclusion that such an opinion would have been unwarranted in circumstances in which no suit was pending and issues relevant to its continuance were wholly unbriefed. New Jersey Div. of Youth & Fam. Servs v. S.S., 187 N.J. 556, 564 (2006); Grand Union Co. v. Sills, 43 N.J. 390, 410 (1964).

Baldwin also argues that she was entitled to prejudgment interest in excess of policy limits pursuant to R. 4:42-11(b) and to the costs and attorney's fees provided by R. 4:21A-6 upon the return of a verdict substantially in excess of the arbitrator's award.

Baldwin is correct that the prejudgment interest rule, nominally applicable only to tort actions, has been found applicable as well to UM claims in accordance with contractual and equitable principles. See New Jersey Mfrs. Ins. Co. v. Nat. Cas. Co., ___ N.J. Super. ___ (App. Div. 2007); Martellio v. Burbank, 341 N.J. Super. 520, 526 (App. Div.), certif. denied, sub nom, Martellio v. State Farm Ins. Co., 170 N.J. 387 (2001); Derfuss v. N.J. Mfrs. Ins. Co., 285 N.J. Super. 125, 135 (App. Div. 1995); Childs v. N.J. Mfrs. Ins. Co., 199 N.J. Super. 441, 452 (App. Div. 1985), rev'd on other grounds, 108 N.J. 506 (1987); Rivers v. General Acc. Group, 192 N.J. Super. 355, 359 (App. Div. 1983). However, the lack of any explanation by the trial court for denying such an award renders meaningful review of that decision impossible.

Baldwin has also correctly cited R. 4:21A-6(c)(3) and (4) as authorizing the limited attorney's fees and costs sought by her. But here again, we lack the trial court's reasons for rejecting that relief, including the court's analysis of the interplay between the provisions of the trial de novo rule and N.J.S.A. 17:28-1.1c, capping recovery of UM benefits at a level less than the arbitrator's award, and also including its analysis of the effect of Allstate's contractual language with respect to fees and costs. We likewise lack a full understanding of the conduct of the parties leading to Allstate's request for a trial de novo. Further, we do not know whether High Point joined in Allstate's request and, if it did not, whether the trial court's denial of attorney's fees and costs was, in part, based upon that fact.

Accordingly, the matter is remanded to the trial court for a statement of reasons, pursuant to R. 1:6-2(f), for the denial of interest, attorney's fees and costs. If an evidentiary hearing is required to resolve any of the issues raised, such may be scheduled.

The reduction of the jury's award to $25,000 is affirmed. The matter is remanded for further proceedings in accordance with this opinion on Baldwin's claim for prejudgment interest, attorney's fees, and costs. We do not retain jurisdiction.

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