March 19, 2008
MICHAEL R. SCULLY, PLAINTIFF-APPELLANT,
THE GUARDIAN LIFE INSURANCE CO., DEFENDANT, AND HANSON & RYAN, INC., DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6275-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 12, 2007
Before Judges Lisa, Lihotz and Simonelli.
This matter involves a whole life insurance policy plaintiff Michael R. Scully purchased in 1990 from defendant The Guardian Life Insurance Company (Guardian).*fn1 Plaintiff alleges he suffered damages as a result of certain misrepresentations made about the policy by Thomas Hogan, a representative of defendant Hanson & Ryan, Inc. Plaintiff appeals from the order of October 22, 2006, denying his motion for reconsideration of the order of August 10, 2006, granting summary judgment to defendant and dismissing the complaint with prejudice. We affirm.
The following facts are derived from the record submitted by the parties in support of and in opposition to the summary judgment motion, viewed in a light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). On or about July 21, 1990, plaintiff purchased a $500,000 whole life insurance policy from Guardian. Plaintiff claims that Hogan represented that the policy had a "vanishing premium" option*fn2 where, after paying an annual premium of $6665.65 for ten years, the policy would accumulate sufficient dividends to pay all future premiums for the rest of plaintiff's life. Plaintiff also claims Hogan represented that the policy was an investment vehicle, and Guardian would reinvest a portion of the premium in the stock market and guarantee a minimum four percent return or growth of the policy's cash value.*fn3
To obtain the "vanishing premium" option, a policyholder had to select dividend option D, "Paid Up Additional Insurance." However, to qualify for that option, the policy had to accumulate sufficient dividends. Thus, plaintiff did not qualify for that option at the time he purchased the policy. Also, plaintiff did not select any method of premium reinvestment. Instead, he selected option B, "Reduced Premiums." Under this option, plaintiff's annual dividend was applied to the following year's premium, thus reducing the amount of that premium. As a result, from 1990 to 1995, plaintiff only paid an annual premium of $6000.
In 1995, without consulting Guardian, plaintiff signed a form changing his dividend option to the "Purchase Paid Up Life Additions" option. He began paying the $6665.65 annual premium, and his annual dividend was reinvested rather than applied to reduce the amount of future premiums. Eventually, if plaintiff had continued this way, by 2000 or 2001, he would have generated sufficient dividends to qualify for the "vanishing premium" option, and those dividends would have paid future premiums. However, plaintiff never selected this option, and he stopped paying his premiums in 2000. As a result, pursuant to the policy, the unpaid premiums were paid by an automatic loan. Nevertheless, the policy's value continued to grow during the period in which automatic loan payments were made.
On or about August 25, 2003, Guardian advised plaintiff that the policy would be cancelled effective August 30, 2003, for non-payment of premiums. Plaintiff then commenced this litigation alleging breach of contract, equitable estoppel, negligent misrepresentation, negligence, breach of fiduciary duties, equitable and common law fraud, and consumer fraud.*fn4
Plaintiff's liability expert opined that defendant breached its duty of care to plaintiff. However, the expert could not opine as to causation or damages, and was not qualified to determine when the policy premiums could vanish. He also admitted that the "vanishing premium" option was still available to plaintiff, and plaintiff merely had to fill out a form and submit it to Guardian. Plaintiff never did so.
Defendant's expert opined that plaintiff suffered no damages because (1) the vanishing premium option was still available to plaintiff as of January 31, 2006, and, since the policy had performed well, if plaintiff chose that option his premiums would vanish; (2) for five years plaintiff paid a reduced premium; and (3) plaintiff paid no premiums during the time they were paid by automatic loan. The expert also emphasized that as of August 4, 2005, the policy had a cash value of $96,625, and the 2005 dividend was $3610.95.
As a result of plaintiff's failure to produce an expert on causation and damages, defendant filed a motion for summary judgment, contending that absent expert testimony, plaintiff could not prove causation and damages. Defendant argued that without evidence of a loss and the aid of expert testimony, a jury would have to speculate on damages in areas where laypersons do not have sufficient knowledge or expertise; that plaintiff's formulation of damages ignored the fact that he paid a reduced premium from 1990 to 1995, which is an offset against his damages claim, the amount of which requires expert testimony to establish; and that plaintiff's formulation of damages ignored the fact that from 2001 to 2006, the policy's dividends were applied in a way that increased the value of the policy.
In response, plaintiff contended that expert testimony is not required to prove causation and damages. He argued that at a minimum, his damages include $52,000 for the automatic loan payments of the unpaid premiums; that the court could take judicial notice of the stock market's performance as shown by the NASDAQ Composite Index during the ten-year period; and that the jury could compute damages by comparing the policy's actual performance to that of the stock market utilizing an index such as the NASDAQ. In a written opinion, Judge Toskos concluded as follows:
The Court agrees with Defendant that expert testimony is necessary in this case in order for a jury to determine what damages, if any, Plaintiff suffered as a result of Defendant's actions in this matter. Without expert testimony, a jury simply does not have the knowledge, skill or experience to make a fair and reasonable estimate of Plaintiff's damages in this case. The Court finds very difficult Plaintiff's claim that the damages [he] suffered are readily ascertainable by reference to the amount of its premium loan, or by comparison with the performance of the stock market in the 1990s. With respect to the former, the Court notes that the Plaintiff's policy has continued to grow in value during the period in which the automatic premium loans have been incurred. With respect to the latter, judicial notice of the performance of the stock market during a specific period in time does not alone provide a reasonable estimate of Plaintiff's damages, nor does it provide the requisite showing of causation. The motion record does not contain any expert opinion on Plaintiff's economic loss, or an opinion [causally] connecting any such loss to Defendant's actions. Furthermore, a reasonable estimate of Plaintiff's damages is not apparent to the Court from the record. To the contrary, Defendant's expert report by Martin Lebson, opines that Plaintiff "has suffered no damage," and that "despite . . . deviations from the original illustration, the policy still performed well, and can 'vanish' at any time" if Plaintiff were to notify Guardian that he elects to stop paying premiums.
Although Plaintiff has submitted an expert report of [plaintiff's liability expert], which alleges certain failings by [defendant], the report does not opine as to any measure of damages Plaintiff suffered as the result of these deviations. . . . At his deposition, [plaintiff's liability expert] conceded that he is unable to calculate at what point in time the premiums on Plaintiff's policy would have vanished had the Defendant's representative selected the correct dividend option of Plaintiff's 1990 insurance application. There is simply no expert opinion as to the amount of damages Plaintiff suffered in this case. A party cannot defeat a motion for summary judgment merely by submitting an expert's report in his or her favor. Brill [supra, 142 N.J. at 544.] In order for such a report to have any bearing on the appropriateness of summary judgment, it must create a genuine issue of material fact. [Id.]
In this matter, Plaintiff has failed to present an expert opinion [causally] relating Defendant's actions and/or alleged misrepresentations to any ascertainable economic loss. As such, the Complaint must be dismissed on summary judgment as a matter of law.
We use the standard the trial court uses in deciding a summary judgment motion. Bressman v. Gash, 131 N.J. 517, 528-29 (1993); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."
R. 4:46-2(c); Brill, supra, 142 N.J. at 528-29. "Genuine" means "only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).
In determining whether there is a genuine issue of material fact for summary judgment purposes, the trial court must ascertain "what reasonable conclusions a rational jury can draw from the evidence." Brill, supra, 142 N.J. at 535. To make the determination, "'the court must accept as true all evidence which supports the position of the party defending against the motion and must accord him [or her] the benefit of all legitimate inferences which can be deduced therefrom[.]'" Ibid. (quoting Pressler, Current N.J. Court Rules, comment on R. 4:40-2 (1995)). If reasonable minds could differ, the motion must be denied. Ibid.
After carefully considering the record and briefs, we are satisfied that Judge Toskos properly granted summary judgment. The causation and damages issues in this case are complicated and involve specialized knowledge of the insurance and investment industries and the financial consequences of different life insurance policy options. We agree that expert testimony is necessary first, to show plaintiff suffered damages, second, to show causation, and finally, to show the amount of damages. Without such testimony, the average juror would impermissibly be required to speculate on damages in areas where they have no knowledge, skill and experience. Kelley v. Berlin, 300 N.J. Super. 256, 268 (App. Div. 1997).