November 19, 2007
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, PLAINTIFF-APPELLANT,
RICHARD J. KOPECKY, M&A VALLEY TRANSPORTATION,*FN1 RLI INSURANCE CO., DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-4760-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 30, 2007
Before Judges Winkelstein and Yannotti.
Plaintiff New Jersey Manufacturers Insurance Company (NJM) appeals from a summary judgment dismissing its complaint for arbitration of its claim against defendants for reimbursement of personal injury protection (PIP) benefits plaintiff paid pursuant to an automobile insurance policy. The trial court dismissed NJM's claim on the grounds that it did not timely demand arbitration. We reverse the dismissal of the complaint as to defendant RLI Insurance Co. and affirm as to the remaining defendants.
On May 25, 2004, a vehicle driven by Shafiya Samuel and owned by Letisha Bethel collided with a school bus driven by Richard Kopecky and owned by M&A Valley Transportation (M&A). Keisha Boyd was a passenger in Samuel's vehicle. Kopecky was making a left turn when he saw the vehicle driven by Samuel approaching; he stopped the bus, but Samuel collided with it. Samuel reported that Kopecky cut in front of her, causing her to collide with him.
At the time of the accident, Bethel was insured by plaintiff. Neither Samuel nor Boyd had their own automobile insurance. They were both injured in the accident, and plaintiff paid PIP benefits on their behalf under Bethel's policy - $11,606.41 for Samuel and $12,343.84 for Boyd.
Kopecky was operating the bus in the course and scope of his employment for M&A, which was insured by RLI. Plaintiff claims that on February 6, 2006, it sent a letter and PIP payment ledger to RLI requesting reimbursement for the PIP payments it made on behalf of Samuel and Boyd. Plaintiff received no response to the letter, and defendant denies having received it.
On May 24, 2006, plaintiff mailed a second request for reimbursement for the PIP payments to RLI. That same day, plaintiff sent another letter to RLI, demanding arbitration. RLI received both letters on May 31, 2006.
The parties agree that the statute of limitations expired at the end of May 25, 2006, two years from the date Samuel and Boyd filed their PIP claims. On that day, plaintiff filed a complaint in the Superior Court against Kopecky, M&A, and RLI. Plaintiff demanded reimbursement for the PIP payments; alternatively, it sought an order directing the parties to arbitration. RLI received the complaint on June 28, 2006.
On July 14, 2006, defendants moved to dismiss the complaint for failure to state a claim. RLI asserted that it did not receive notice of plaintiff's request for reimbursement or demand for arbitration until May 31, 2006, which was six days after the expiration of the two-year statute of limitations for bringing a reimbursement claim. Defendants also asserted that because RLI insured Kopecky and M&A, plaintiff could only seek reimbursement from RLI.
The trial court dismissed the claims against Kopecky and M&A because they were insured by RLI, and the relevant statute, N.J.S.A. 39:6A-9.1, only permits recovery of PIP benefits from the insurer. The court dismissed the complaint against RLI because plaintiff did not make a timely demand for arbitration. The court ruled that neither the act of mailing the demand for arbitration on May 24, 2006, nor filing the complaint on May 25, 2006, tolled the statute of limitations because defendants did not receive the demand for arbitration by May 25, 2006, the date the statute of limitations expired.
N.J.S.A. 39:6A-9.1 provides:
An insurer . . . paying . . . personal injury protection benefits . . . as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage . . . or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident. In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer . . . is legally entitled to recover the amount of payments and amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.
The statute applies to owners, operators, and insurers of commercial vehicles, who are not, by law, required to provide personal injury protection benefits. State Farm Mut. Auto. Ins. Co. v. Licensed Beverage Ins. Exch., 146 N.J. 1, 13 (1996). Plaintiff is an insurer that paid PIP benefits to Samuel and Boyd, and defendants do not dispute that plaintiff qualifies as an insurer eligible for reimbursement under the statute.
The trial court dismissed all claims against the insureds because plaintiffs did not dispute that M&A and Kopecky were insured by RLI and the statute only permits recovery from the insurer in that circumstance. N.J.S.A. 39:6A-9.1 states that when relief is sought against an insured tortfeasor, like Kopecky and M&A, "the determination as to whether an insurer . . . is legally entitled to recover . . . shall be made against the insurer of the tortfeasor." Thus, "recovery from an uninsured tortfeasor may be direct, but recovery from an insured tortfeasor must be through his or her insurer." Unsatisfied Claim & Judgment Fund Bd. v. N.J. Mfrs. Ins. Co., 138 N.J. 185, 193 (1994). Here, because the bus owned by M&A and driven by Kopecky was insured by RLI, we agree with the trial court that plaintiff could only seek reimbursement from RLI.
The trial judge dismissed plaintiff's claim against RLI on the grounds that plaintiff failed to assert its demand for arbitration within the applicable statute of limitations. Plaintiff asserts, and RLI disputes, that it sent RLI a request for reimbursement on February 6, 2006, thus having the effect of putting RLI on notice of its claim. The trial court found that, even though this factual issue had yet to be decided, a request for reimbursement such as that allegedly sent on February 6 does not have the effect of tolling the statute of limitations under N.J.S.A. 39:6A-9.1. We agree that the February 6 letter, even if it had been sent and received, would not have tolled the statute of limitations.
A mere request for reimbursement within two years of the filing of a claim for PIP benefits does not satisfy N.J.S.A. 39:6A-9.1. N.J. Auto. Full Ins. Underwriting Ass'n v. Liberty Mut. Ins. Co., 270 N.J. Super 49, 54 (App. Div. 1994). An insurance company seeking reimbursement from a tortfeasor's insurance company must file a formal demand for arbitration within two years of the filing of the PIP claim; sending mere notice of its claim to the defendant within a two-year period does not constitute a demand for arbitration and does not toll the statute of limitations. Ibid.
Here, the February 6, 2006 letter, if indeed it was sent, constituted a request for reimbursement, not a demand for arbitration. It was therefore insufficient to toll the statute of limitations under N.J.S.A. 39:6A-9.1.
Nevertheless, we conclude that plaintiff's second request for reimbursement, because it was accompanied by a formal demand for arbitration and sent to defendant on May 24, 2006, when considered in conjunction with plaintiff's filing a complaint containing a demand for arbitration on May 25, 2006, substantially complied with the two-year statute of limitations.
N.J.S.A. 39:6A-9.1 provides two means of securing reimbursement for PIP payments: agreement between the parties and arbitration. N.J. Auto. Full Ins. Underwriting Ass'n, supra, 270 N.J. Super at 53. The statutory language reads: "An insurer . . . shall, within two years of the filing of the claim, have the right to recover the amount of payments. . . .
[T]he determination [of entitlement to and amount of recovery] . . . shall be by agreement . . . or, upon failing to agree, by arbitration." N.J.S.A. 39:6A-9.1. If an agreement is not reached, the only other way to obtain reimbursement is by arbitration. N.J. Auto. Full Ins. Underwriting Ass'n, supra, 270 N.J. Super at 53; see also Allstate Ins. Co. v. Universal Underwriters Ins. Co., 330 N.J. Super. 628, 636 (App. Div. 2000). In general, the Legislature intended that these claims not be pursued in the courts but rather through agreement or arbitration. Unsatisfied Claim & Judgment Fund Bd., supra, 138 N.J. at 196-97; Fireman's Fund Ins. Co. v. N.J. Mfrs. Ins. Co., 341 N.J. Super. 528, 533 (App. Div.), certif. denied, 170 N.J. 211 (2001).
Here, the parties did not reach agreement on eligibility or amount of recovery, so the only way plaintiff could have complied with the statute of limitations was to file a demand for arbitration within two years. N.J. Auto. Full Ins. Underwriting Ass'n, supra, 270 N.J. Super at 53-54. Though the mechanics required for filing such a demand are often governed by intercompany agreement, the parties here had no such agreement. In the absence of an intercompany agreement, the question is whether plaintiff's actions of sending a demand for arbitration prior to the expiration of the statute of limitations, but received by RLI six days after the statute expired, along with filing a complaint demanding arbitration on the last day of the statute, were sufficient to toll the statute and permit plaintiff to proceed with its claim.
The Supreme Court of New Jersey has cautioned against rigid application of statutes of limitations where the parties are not prejudiced. We look to the "particular circumstances" to determine whether to use "the harsh approach of literally applying the statute of limitations" rather than "the application of the more equitable and countervailing considerations of individual justice." Galligan v. Westfield Ctr. Serv., Inc., 82 N.J. 188, 192 (1980). "'The primary purpose of the statute of limitations is to provide defendants a fair opportunity to defend and to prevent plaintiffs from litigating stale claims,'" and "'where defendants are on notice of the claims, and no significant prejudice results, the policy reasons for upholding a strict statute of limitations recede.'" Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519, 524 (2005) (quoting W.V. Pangborne & Co. v. N.J. Dep't of Transp., 116 N.J. 543, 563 (1989)). The Court has cautioned against using the statute of limitations to "inflict obvious and unnecessary harm upon individual plaintiffs without advancing [the] legislative purposes," and has added that "[w]henever dismissal would not further the Legislature's objectives in prescribing the limitation, [a] plaintiff should be given an opportunity to assert his claim." Galligan, supra, 82 N.J. at 192-93.
Under the facts in this case, RLI has not demonstrated that it was prejudiced by having received the demand for arbitration on May 31, 2006, six days after the statute of limitations expired. Thus, the policy reasons for strictly applying the statute of limitations are, at best, minimal.
More significantly, however, is that plaintiff filed its complaint, which included a demand for arbitration, on May 25, 2006, within the two-year statute. That latter action was itself sufficient to toll the statute. Though N.J.S.A. 39:6A-9.1 lacks a court-based reimbursement remedy, the court may still assume jurisdiction to determine if the parties should proceed to arbitration. See State Farm, supra, 146 N.J. at 3-4 (affirming trial court's grant of summary judgment requiring defendant to submit to arbitration of reimbursement claim under N.J.S.A. 39:6A-9.1); see also Hanover Ins. Co. v. Borough of Atlantic Highlands, 310 N.J. Super. 599, 602 (Law Div. 1997), aff'd, 310 N.J. Super. 568 (App. Div.), certif. denied, 156 N.J. 383 (1998).
Accordingly, because defendant suffered no prejudice by receiving notice of a demand for arbitration six days after the expiration of the two-year statute of limitations, and because plaintiff sought arbitration by filing a complaint that included a demand for arbitration within the period of limitations, we conclude that plaintiff substantially complied with the statute of limitations, and its claim against RLI is not barred. We remand to the trial judge to direct the parties to proceed to arbitration.
Affirmed in part, reversed in part, and remanded.