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Fiore v. Allstate Insurance Co.


March 24, 2008


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-371-04.

Per curiam.


Submitted: February 27, 2008

Before Judges Axelrad and Messano.

This case arises out of a September 10, 1995 automobile accident in which plaintiffs (driver and passenger), who were insured by Allstate, were injured when their vehicle was struck by an automobile driven by Miguel Muniz and owned by Paul and Betty Skeens. As this appeal involves a decision following remand, the following recitation is taken directly from our per curiam opinion directing the remand. Fiore v. Allstate Ins. Co., No. A-2269-04T2 (App. Div. February 15, 2006).

The Skeens had a $20,000/$40,000 policy with State Insurance Company (State Insurance). Plaintiffs' coverage under their Allstate Insurance policy was $100,000/$300,000. Ralph Furino, Jr. filed suit on plaintiffs' behalf against Muniz and the Skeens in Middlesex County. By correspondence of May 21, 1998 to Allstate's claims adjuster Bruce Isendorfer, Furino detailed his phone calls beginning in March regarding State Insurance's offer and plaintiffs' intention to pursue a UIM (underinsured motorist) claim, and further confirmed Furino's inability to ascertain whether Muniz had insurance. On June 3, 1998, Furino requested written permission from Isendorfer to finalize settlement with the primary tortfeasor for the $38,000 figure they had previously discussed, and to proceed on plaintiffs' UIM claim, which Isendorfer received on June 25. Having Allstate's approval, Furino accepted the settlement on plaintiffs' behalf and dismissed the lawsuit against Muniz and the Skeens, although the record does not reflect the date of dismissal.

On June 24, 1998, Allstate was informed by its investigator that, as of the date of the underlying accident, Muniz had a registered vehicle insured through State Farm with a $100,000/$300,000 policy. This letter indicated it was a supplement to a May 18, 1998 report, and was based upon Muniz's driving abstract dated June 10, 1998. Susan Nuzzo, Allstate's Property-Casualty Claim Representative, purportedly advised Furino of this information by letter of July 10, 1998, which Furino certified he never received. Allstate hired attorneys to defend the arbitration claim, who proceeded with discovery and medical examinations in preparation for the UIM arbitration.

According to the certifications presented to the court in connection with plaintiffs' motion to compel UIM arbitration, discussed infra, both plaintiffs' and Allstate's counsel first learned at the arbitration on March 1, 2001, when the July 10, 1998 letter was faxed over from Allstate, that Muniz potentially had additional coverage equal to the limits of plaintiffs' policy and Allstate was taking the position that plaintiffs' UIM coverage did not extend to the underlying accident. The arbitration was adjourned so Furino could conduct discovery about Muniz's policy with State Farm. The hearing was adjourned or cancelled by someone other than Allstate, and apparently no new date was specified.

Plaintiffs' present counsel became involved around November 2003, and on February 4, 2004, he filed an order to show cause to compel Allstate to schedule a UIM hearing. Allstate filed an answer with separate defenses. It did not assert the statute of limitations defense in its answer. In April the court vacated the order to show cause and discovery ensued. Plaintiffs renewed their motion to compel in August, and during argument plaintiffs' counsel raised the issue that Allstate was estopped from asserting the existence of the State Farm policy. The court deemed the argument abandoned and denied the motion in a letter opinion and order dated October 7, 2004, and further denied plaintiffs' motion for reconsideration.

Plaintiffs appealed, and on February l5, 2006 we reversed and remanded, stating:

In its ruling, the court did not mention the October 19, 1995 letter from Allstate to State Farm [contained in Allstate's file which was not disclosed to Furino nor plaintiffs' current counsel until February 2004 in connection with the order to show cause to compel UIM arbitration] nor plaintiffs' former counsel's certification that he did not receive Allstate's July 10, 1998 letter and was unaware of Muniz's State Farm policy or Allstate's intention to deny UIM coverage until he appeared at the arbitration on March 1, 2001. According, we remand this matter to the trial court to reconsider plaintiffs' estoppel argument in light of these facts. The trial court shall conduct whatever further proceedings it deems appropriate, including a plenary hearing. It shall then make specific findings pursuant to Rule 1:7-4 as to whether Allstate is estopped from denying UIM benefits to plaintiffs.

[Id., slip op. at 82-83.]

Following the remand, pursuant to the trial court's instructions, plaintiffs submitted a letter brief on the issue of estoppel. In its reply brief Allstate unilaterally raised, for the first time, the alternative argument that even if estoppel did apply it was not warranted, as plaintiffs, knowing Allstate was taking the position that there was no UIM coverage under the policy, failed to assert their claim for estoppel within the six-year statute of limitations for UIM claims.

By written decision of August 4, 2006, the trial court concluded that plaintiffs had established that Allstate should be estopped from denying UIM coverage because of all the activities that occurred before the arbitration, which actually was scheduled to take place in March 2001. The court stated, in pertinent part:

On February 15, 2006, the Appellate Division remanded the above-captioned matter to the Trial Court to consider the argument presented by Plaintiff that Allstate Insurance Company should be estopped from denying coverage under the underinsured provision of the Plaintiff's policy.

On May 21, 1998, as a result of a telephone call from the attorney representing the tortfeasor, Mr. Furino wrote to Bruce Isendorfer of Allstate Insurance Company indicating that he was not aware of any insurance coverage for Mr. Muniz, the operator of the vehicle that struck the Plaintiffs. There was no direct reply to the May 21, 1998 letter by Allstate Insurance Company.

On June 3, 1998, Mr. Furino confirmed an oral communication with Mr. Isendorfer in which Mr. Isendorfer authorized the settlement of the underlying case for $38,000.00.

It appears from the record that the underlying case was settled in the month of April 1998. The two releases signed by the Plaintiff are dated April 15, 1998 and a check from State Farm Auto Insurance was issued on June 11, 1998.

The settlement amounts were disbursed on July[]28, 1998, some 18 days after a letter dated July 10, 1998 was issued by Allstate Insurance Company indicating that Mr. Muniz was covered by a State Farm Insurance Company policy. By this time, the releases had been delivered and funds had been transferred.

I find that the Plaintiffs relied upon the representations made by Allstate Insurance Company to settle the underlying cause of action. The execution and forwarding of the releases to the tortfeasor, as well as disbursement of the settlement check, was completed before the July 10, 1998 letter from Allstate Insurance Company. This constitutes an estoppel.

[Plaintiffs' counsel] is to prepare an Order consistent with this opinion.

On August 8, 2006, Allstate sent correspondence to the court requesting it address the statute of limitations argument raised in its reply brief "[i]n order that the record be complete." Plaintiffs opposed Allstate's requested relief. The court addressed the statute of limitations defense raised by Allstate. By letter opinion dated October 13, 2006, the court concluded that the six-year statute of limitations had run by the time plaintiffs filed suit to enforce UIM coverage in 2004 and there was nothing indicating Allstate did anything to cause plaintiffs to fail to timely file their claim. Accordingly, by order of October 20, 2006, it dismissed with prejudice plaintiffs' complaint seeking a UIM arbitration hearing. By order of March 29, 2007, the court denied plaintiffs' motion for reconsideration. This appeal ensued.

On appeal, plaintiffs contend the court misapplied the law to the facts and Allstate waived its statute of limitations defense. We agree the statute of limitations defense was waived as never having been asserted in the answer or during the litigation preceding the remand. Moreover, Allstate's actions from the outset were inconsistent with the statute of limitations defense. On several occasions Allstate was put on notice that plaintiffs were preparing to pursue UIM arbitration and Allstate acknowledged, in writing, its awareness of the UIM claim, and sent plaintiffs' counsel instructions for submission of the claim. Allstate did not assert a statute of limitations defense at any time during the nine years following the accident in which it investigated the matter, authorized settlement with the primary tortfeasor and the processing of plaintiffs' UIM claim, conducted discovery, took depositions, appeared for UIM arbitration, and litigated plaintiffs' order to show cause to compel UIM arbitration.

Moreover, Allstate never raised the statute of limitations as an issue in response to plaintiffs' motion to compel UIM arbitration and, as a consequence, the only issue addressed in the appeal and directed on the remand was that of estoppel. On that issue, the court found in favor of plaintiffs, namely that Allstate was estopped from asserting the existence of the State Farm policy as a basis for denying UIM coverage. Therefore, the trial court exceeded the scope of the limited remand when it subsequently sought to accommodate Allstate and addressed an entirely new defense that had never been a part of the case. Accordingly, as it was a mistaken exercise of discretion for the court to enter the October 20, 2006 order dismissing plaintiffs' complaint with prejudice based on the statute of limitations, such order must be vacated. We therefore remand for the entry of an order to compel UIM arbitration consistent with the court's opinion of August 4, 2006.


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