On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-10037-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 19, 2007
Before Judges Wefing, Parker and Lyons.
Defendant/third-party plaintiff, Proformance Insurance Co. (Proformance), appeals from an order entered on September 22, 2006 compelling Proformance to appear at an underinsured motorist (UIM) arbitration within ninety days. We affirm.
Plaintiff Wendy Karamolegos was involved in an auto accident with defendant Benzion Yunger on December 17, 2002. Plaintiff claimed injuries to her back and neck. Yunger was driving a car owned by "Swifty Rent-A-Car" (Swifty) at the time of the accident. Plaintiff was insured by Proformance.
In February 2004, Yunger and Swifty offered plaintiff $14,000 to settle the matter. Their policy limit was $15,000. On February 27, 2004, plaintiff's attorney wrote to counsel for Proformance and requested permission to accept the settlement offer and pursue an underinsured motorist (UIM) claim under Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988).
On April 16, 2004, Proformance responded to plaintiff's February 27 letter and advised that Yunger may have had additional insurance through Allstate. On May 17, 2004, Proformance advised plaintiff's counsel that it would not approve plaintiff's settlement with the tortfeasor. In June 2004, however, Allstate denied coverage for the accident. Thereafter, plaintiff's counsel sent a second request for Proformance to approve the settlement. Notwithstanding Allstate's denial of coverage, on June 28, 2004, Proformance again refused to approve the settlement, claiming that Yunger may have been covered under his mother's Allstate policy and that Allstate had not yet made a determination of that coverage.
On September 15, 2004, plaintiff's counsel sent another notice to Proformance alleging breach of fiduciary obligations and lack of good faith for withholding settlement approval for more than 200 days. In addition to the letters, plaintiff's counsel made numerous telephone calls to Proformance requesting settlement approval and UIM arbitration. Finally, in December 2004, almost two years after the accident, plaintiff filed her complaint.*fn1
On January 6, 2005, Proformance sent a letter to plaintiff's counsel setting forth its parameters for UIM arbitration. Plaintiff's counsel accepted Proformance's terms in a letter dated March 22, 2005. Proformance failed to respond. Nevertheless, in May 2005, Proformance moved for leave to file a third-party complaint against Allstate.
In August 2005, seventeen months after first requesting Proformance's approval, plaintiff accepted defendants' settlement offer and executed releases and stipulations of dismissal in favor of Yunger and Swifty.
On August 30, 2005, Proformance denied plaintiff's claim for UIM benefits claiming that plaintiff failed to give notice to Proformance prior to executing the stipulation of dismissal, thereby jeopardizing Proformance's subrogation rights.
When Proformance moved for summary judgment and argued that its subrogation rights were violated, plaintiff cross-moved to compel Proformance to appear at the UIM arbitration. Plaintiff's motion was granted and Proformance appealed, again arguing that plaintiff jeopardized its subrogation claim by dismissing her claims against the tortfeasor with prejudice.
Proformance maintains that, although plaintiff provided adequate and timely notice that the tortfeaser had made an offer within his policy limits, "Proformance repeatedly made it clear to plaintiff that it would not authorize this settlement and proceed to a UIM arbitration due to the outstanding issue of whether or not the tortfeaser had additional coverage through his mother's Allstate policy." Proformance notes that plaintiff dismissed her complaint against Yunger after ...