On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket Nos. L-2802-04 and L-3232-04.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman, Yannotti and LeWinn.
The issue presented by this appeal is whether the failure of both the operator and the owner of a motor vehicle to cooperate with the vehicle's insurer, thus preventing the insurer from ascertaining whether the operator was a permissive user, provides sufficient grounds for the insurer to disclaim coverage. We conclude that such a failure of cooperation may result in "appreciable prejudice" to the insurer and therefore justify a disclaimer of coverage.
Defendant Rutgers Casualty Insurance Company (Rutgers Casualty) issued an automobile liability policy to defendant Edilberto Chilito insuring his pick-up truck. The policy contained a standard "cooperation clause" that required any person seeking coverage to "[c]ooperate with [the insurer] in the investigation, settlement or defense of any claim or suit."
On the evening of October 18, 2002, defendant Tammy Gonsalves, who was not a named insured under the policy, was operating Chilito's truck in Pleasantville. Gonsalves, who was intoxicated, was involved in two accidents within a period of nine minutes. The first accident did not result in any claim. However, the second accident caused substantial damage to the other car and serious personal injuries to the other driver, Nicole Hager, which resulted in Hager filing an automobile negligence action.
According to the police report, Gonsalves attempted to make a left-hand turn without yielding to Hager's car, which was traveling in the opposite direction, and the vehicles collided. Two witnesses who were driving behind Hager at the time of the accident informed the investigating police officer that Gonsalves "suddenly" crossed into the opposing lane of traffic, causing the impact. The officer issued Gonsalves summonses for driving while under the influence of alcohol, operating a vehicle without a license, driving while her license was suspended, failing to yield at an intersection and reckless driving.
Neither Gonsalves nor Chilito informed Rutgers Casualty of the accident. Rutgers Casualty became aware of the accident upon receipt of a letter from Hager's counsel more than five weeks after the accident. That same day, a Rutgers Casualty claims adjuster sent a letter to Chilito, by both certified and regular mail, which indicated that his vehicle had been involved in an accident on October 18, 2002 and reserved Rutgers Casualty's right to disclaim coverage. Chilito did not respond to this letter.
The claims adjuster then referred the matter to Rutgers Casualty's special investigation unit (SIU), which has responsibility for investigating claims that raise coverage questions. On January 31, 2003, an SIU investigator placed a telephone call to Gonsalves' home. The person who answered told him Gonsalves was at work and would return the call. On February 14, 2003, the SIU investigator called Chilito's home and left a message on his answering machine. Neither Gonsalves nor Chilito responded to these telephone calls.
The SIU investigator followed up these telephone calls with letters, dated February 14, 2003, to both Gonsalves and Chilito, which asked them to call him regarding the October 18, 2002 accident. However, neither responded.
On March 3, 2003, the investigator again sent letters, by certified mail, return receipt requested, to Gonsalves and Chilito. In the letters, the investigator warned that, absent a response, Rutgers Casualty would consider the two uncooperative and close the case. The investigator received return receipts acknowledging receipt of both letters. However, Gonsalves and Chilito again failed to respond to Rutgers Casualty's letters.
Rutgers Casualty's SIU investigator then called the Pleasantville municipal court clerk to determine the status of the motor vehicle summonses issued to Gonsalves. The clerk indicated that Gonsalves had failed to respond to the ...