September 26, 2007
HEE SOO PYUN AND MYONG PYUN, PLAINTIFFS,
ARIELLE M. CHESNOVITZ, PETER W. CHESNOVITZ AND JOHN LESKI, DEFENDANTS.
JOHN LESKI, PLAINTIFF,
ARIELLE M. CHESNOVITZ, PETER W. CHESNOVITZ, HEE S. PYUN, DEFENDANTS, AND NEW JERSEY RE-INSURANCE COMPANY,*FN1 DEFENDANT-RESPONDENT, AND QUINCY MUTUAL FIRE INSURANCE COMPANY, DEFENDANT-APPELLANT, AND HANOVER INSURANCE COMPANY, DEFENDANT/INTERVENOR-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-912-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 11, 2007
Before Judges Wefing, R. B. Coleman and Lyons.
Co-defendant, Quincy Mutual Fire Insurance Company (Quincy), appeals an order of summary judgment in favor of co-defendant, New Jersey Re-Insurance Company (New Jersey Re), declaring that the uninsured motorists (UM) endorsement in a commercial automobile insurance policy issued by Quincy to Fence Mender, provides coverage to plaintiff, John Leski (Leski), for injuries he sustained in an automobile accident. Because we disagree with the trial court's analysis, we reverse.
On February 15, 2004, plaintiff, Leski, was driving a Chevy Blazer owned by his friend, Deborah J. Martinez, when he was initially struck by a vehicle driven by defendant, Arielle Chesnovitz (Chesnovitz). Chesnovitz advised the police that she had lost control of her vehicle when she was cut-off by a phantom vehicle, described as a silver Cadillac. After the initial impact, the Chesnovitz vehicle then struck another vehicle operated by Hee Soo Pyun (Pyun).*fn2 Leski contends that after Chesnovitz hit Pyun, his vehicle was struck a second time, this time by the Pyun vehicle.
The car Leski was driving at the time of the accident was insured by New Jersey Re. Also, at that time, Leski was operating a fencing business as a sole proprietor under the trade-name of "Fence Mender." He was not operating his friend's vehicle in connection with his business at the time of the accident, though. At the time of the accident, there was a commercial automobile policy issued by Quincy in which the named insured was listed as "Fence Mender." The declaration page also indicated that the named insured was a corporation. When the Quincy policy was first purchased approximately four years earlier, Fence Mender was a corporation. However, about one year after obtaining the policy, Leski dissolved the corporation but continued to operate his business as a sole proprietor under the trade-name Fence Mender.
As a result of the accident, Leski filed claims for uninsured motorists coverage with New Jersey Re and Quincy. In addition, he filed a claim with Hanover Insurance Company because, at the time of the accident, Leski resided with his father who had a policy of automobile liability insurance issued by that company. Hanover Insurance Company intervened in this matter based upon that claim.
In March 2004, Quincy denied Leski's claim. It explained that its policy only provided UM coverage for vehicles actually owned by Fence Mender. The only vehicle listed as a "covered 'auto'" under the Quincy policy was a 1988 Ford Super Duty Pickup. The Quincy endorsement pertaining to New Jersey uninsured motorists coverage provides coverage for persons that are found to be "insureds" under the policy. Section B of the Quincy uninsured motorists coverage endorsement provides in pertinent part that:
Who is An Insured If the Named Insured is designated in the Declaration as:
1. An individual, then the following are "insureds":
a. The Named Insured and any "family members".
b. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction.
2. A partnership, limited liability company, corporation or any other form of organization, then the following are "insureds":
a. Anyone "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction.*fn3
In April 2005, Leski filed the within suit. Thereafter, Quincy filed for summary judgment seeking a judicial declaration that there was no UM insurance coverage due Leski under its policy for the accident at issue. New Jersey Re cross-moved for summary judgment seeking a declaration that Quincy was obligated to provide Leski with UM coverage.*fn4
The trial court denied Quincy's motion and granted the cross-motion for summary judgment declaring that Quincy's policy issued to Fence Mender provided UM coverage to Leski with respect to the motor vehicle accident at issue. This appeal ensued.
On appeal, Quincy presents the following arguments for our consideration:
THE MOTIONS COURT FAILED TO SUPPORT CONCLUSIONS WITH THE LAW AS WELL AS THE UNDISPUTED FACTS.
THE MOTIONS COURT IMPROPERLY DENIED QUINCY MUTUAL'S MOTION FOR SUMMARY JUDGMENT BECAUSE PURSUANT TO THE CLEAR LANGUAGE OF THE POLICY ISSUED TO FENCE MENDER, THERE IS NO UM COVERAGE DUE AND OWING TO JOHN LESKI.
JOHN LESKI IS NOT ENTITLED TO UM COVERAGE UNDER THE POLICY ISSUED TO FENCE MENDER AND, IN SO FINDING, THE MOTION COURT UNJUSTIFIABLY REFORMED THE POLICY.
In essence, Quincy argues that the trial court failed to follow the clear and unambiguous policy language and misapplied the holding in American Bankers Ins. Co. of Florida v. Stack, 208 N.J. Super. 75 (Law Div. 1984).
At the outset, we note that an appellate court uses the same standard as the trial court in reviewing summary judgment decisions. First, it decides whether there was a genuine issue of material fact and, if it concludes there was not, it then decides whether the trial 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). Further, in determining whether a genuine issue of material fact exists, Rule 4:46-5(a) expressly requires that a party resisting a summary judgment motion must respond with competent proof of specific facts which demonstrate the existence of a genuine issue of material fact. Moreover, it is clear that a party cannot successfully resist a summary judgment motion by relying on conclusory allegations or the denials in the pleadings. See Pressler, Current N.J. Court Rules, comment 1 on Rule 4:46-5 (2008).
We note from the record though that there is no dispute as to certain material facts in this case. There is no dispute as to the existence of a phantom vehicle having been involved in the accident. There is no dispute that Leski was driving his friend's vehicle which does not meet the definition of a "covered 'auto'" or a "temporary substitute for a covered 'auto'" under the Quincy policy. There is no question that the renewal declaration page of the Quincy policy indicates that it was issued to Fence Mender as the named insured and states that "[t]he named insured is: corporation." Further, there is no dispute that sometime after the initial policy was obtained, Leski dissolved the corporation and continued to operate his fencing business as a sole proprietorship using the trade-name Fence Mender.
Quincy correctly points out that based on the material undisputed facts in this case, there would be no UM coverage for Leski. The named insured on the declaration page of the Quincy policy is listed as a corporation and, therefore, paragraph B (2) of the UM endorsement would apply and Leski would not meet the definition of an insured under that paragraph so as to afford him coverage.
The trial judge found, that at the time of the accident, Fence Mender was, in fact, no longer a corporation but a trade-name for Leski's fencing business which he was operating as a sole proprietorship. The trial judge, relying on the holding in American Bankers, concluded that Fence Mender, which was listed as the named insured on the policy, was the alter ego of Leski.
American Bankers adopted the reasoning of O'Hanlon v. Hartford Acc. & Indemn. Co., 639 F.2d 1019 (3d Cir. 1981), that where an insured purchases an insurance policy in a trade-name, the policy will be viewed as if issued in his given name. American Bankers, supra, 208 N.J. Super. at 79. The trade-name in such a case is to be viewed as the alter ego of the natural person. Ibid.
In our judgment, American Bankers is distinguishable. In that case, the named insured in the policy was always an unincorporated family business which used a trade-name, while in this case the named insured was, in fact, initially a corporation and continued to be listed as one. In American Bankers, the policy definition of "insured" read as if the named insured was a natural person while the Quincy policy UM endorsement language distinguishes between natural persons and business entities. Lastly, the American Bankers court specifically noted that "[c]orporations and unincorporated trade-name businesses are not legal equivalents and cannot be treated as such in the present case," American Bankers, supra, 208 N.J. Super. at 79.
New Jersey Re argues that, while the policy states Fence Mender is a corporation, in point of fact, at the time of the accident it was a trade-name for a sole proprietorship. The question is, though, what does this fact mean? It does not change the policy's declaration page. It does not make the language of the policy ambiguous. It merely raises an implication that Leski may have expected that the Quincy insurance policy would cover his sole proprietorship. However, there were no proofs submitted as to Leski's expectations pursuant to Rule 4:46-5(a). While Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260 (2001) recognizes that policies should be construed to comport with an insured's reasonable expectations of coverage, it is not reasonable for Leski to have assumed his sole proprietorship would be covered absent proof that he appropriately advised Quincy of the change in his business form, and there is absolutely no proof in the record that Leski ever advised Quincy that he dissolved his corporation. Moreover, there is no mention in the record of any request by New Jersey Re or any of the litigants evidencing a need for further discovery to pursue this topic.
Rule 4:46-5 places the burden on the non-moving party to respond to a summary judgment with specific facts that create a genuine issue of material fact. Here, New Jersey Re simply provided the fact that the corporation, Fence Mender, no longer existed. However, that standing alone did not create a material factual issue in this case. The policy at issue is not ambiguous. Progressive holds that an ambiguity arises "only where the phrasing of the policy is so confusing that the average policy holder cannot make out the boundaries of coverage." Progressive, supra, 166 N.J. at 272. That is not the case here.
We also note that:
"[a]s early as 1926, the general rule in New Jersey has been that an insured is under a duty to examine his insurance policy; if the terms disclosed by such an examination are inconsistent with his desires, he is required to notify the company of the inconsistency and of his refusal to accept the policy in the proferred condition." [Martinez v. John Hancock Mut. Life Ins. Co., 145 N.J. Super. 301, 310 (App. Div. 1976)].
This concept was recently reestablished in Aden v. Fortsh, 169 N.J. 64, 86 (2001), where our Supreme Court said, "[i]n some actions against an insurance company, but not involving a broker, an insured may be charged with a responsibility to read the policy." Ibid. In this case, there are no proofs submitted that Leski read the declaration page or took any action if he had done so.
Further, we note that the Quincy policy provides in the endorsement regarding changes-cancellation and non-renewal in paragraph C, that if a policy is a renewal, Quincy may cancel the policy if there has been a non-disclosure to Quincy of a material fact at the time of the acceptance of the risk. This contractual provision further evidences the contractual obligation on the part of Leski to inform his carrier of material changes. Moreover, the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-4(a)(3), evidences the public policy that a person may not conceal or knowingly fail to disclose a material event to its carrier which may affect a persons initial or continued right to a benefit.
Quincy also argues that the trial court's judgment effectively reformed the policy to provide coverage when the unambiguous plain language of the policy would not afford Leski coverage. "The general rule with respect to the reformation of contracts applies equally to insurance policies: relief will be granted only where there is mutual mistake or where a mistake on the part of one party is accompanied by fraud or unconscionable conduct by the other party." Heake v. Atlantic Cas. Ins. Co., 15 N.J. 475, 481 (1954). There are no proofs in the record which would support a conclusion that there was a mutual mistake in this case. At best, one could surmise that Leski mistakenly obtained renewal coverage with the named insured being listed as a corporation as opposed to a sole proprietorship. However, there are no proofs in the record which support such a supposition. Rule 4:46-5(a) requires that any proofs would have to have been submitted in opposition to the summary judgment motion by way of affidavit. No such proofs are in the record. Moreover, even if we were to assume that Leski was operating under a unilateral mistake, there is nothing in the record to indicate any fraud or other unconscionable conduct by Quincy. Accordingly, there was no basis for reforming the policy to provide Leski coverage.
We find, therefore, that the Quincy policy is not ambiguous and that its language was in accordance with the example of clear language referred to by the Court in Progressive, supra, 166 N.J. at 278-79. The Quincy policy specifically listed Fence Mender as a corporation as opposed to a trade-name used by a sole proprietorship and, therefore, the reasoning of American Bankers is inapplicable to this case. We further find, that in the absence of proofs that Leski notified Quincy that he had dissolved the corporation and was using Fence Mender as a trade-name for his sole proprietorship, that it would be unfair to expand the policy's coverage. Our Supreme Court has held, that in the absence of an ambiguity, courts "should not write for the insured a better policy of insurance than the one purchased." Progressive, supra, 160 N.J. at 273 (quoting Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990)). There is no proof that Quincy received any notice which would give rise to an argument for reformation or that the insured's reasonable expectations were not met. The burden of producing that proof in the face of a summary judgment motion rested with New Jersey Re, which did not carry that burden.
Accordingly, we reverse the judgment entered by the trial court and remand the matter so that an order may be entered declaring that Quincy is not obligated to afford UM coverage to Leski in this instance.