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George Dapper, Inc. v. New Jersey Property-Liability Insurance Guaranty Association

June 19, 2008

GEORGE DAPPER, INC., PLAINTIFF-APPELLANT,
v.
NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Middlesex County, No. L-7396-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 14, 2008

Before Judges Wefing, R. B. Coleman, and Lyons.

Plaintiff George Dapper Inc. ("Dapper") appeals from a trial court order granting summary judgment to defendant New Jersey Property-Liability Insurance Guaranty Association ("PLIGA"). After reviewing the record in light of the contentions advanced on appeal, we affirm.

Plaintiff Dapper operates a school bus company. On January 10, 2002, one of its buses, driven by one of its employees, was involved in a roll-over accident on an icy road. One of the students on the bus, James Pasch, was severely injured in the accident, and in January 2004 he began suit to recover damages for his injuries. Dapper forwarded the claim to its liability insurer, Legion Insurance Company, from which it had obtained a policy providing coverage of one million dollars. Legion, however, had been declared insolvent in July 2003, and defendant PLIGA stepped into Legion's shoes and assigned counsel to represent Dapper and defend it against the Pasch suit.

PLIGA is a non-profit, unincorporated entity created by the Legislature to provide a mechanism to deal with the consequences of an insolvent insurer, "to protect policyholders of insurance companies which become insolvent." N.J. Property-Liability Ins. Guar. Ass'n v. Hill Int'l, Inc., 395 N.J. Super. 196, 204 (App. Div. 2007) (quoting Lehmann v. O'Brien, 240 N.J. Super. 244, 246 (App. Div. 1989)); N.J.S.A. 17:30A-1 to -20. All insurers licensed to do business in New Jersey issuing policies of insurance within the statute's scope are members of PLIGA.

N.J.S.A. 17:30A-5. Their continued membership in PLIGA is a condition of their continued authority to transact insurance in New Jersey. N.J.S.A. 17:30A-6. In order to preserve its assets and provide recovery for the greatest number of persons affected by an insurer's insolvency, PLIGA's liability for a covered claim is capped at three hundred thousand dollars. N.J.S.A. 17:30A-8(a)(1).

On June 1, 2006, the attorney assigned by PLIGA to represent Dapper wrote to his client, advising it that Pasch's attorney had made a settlement demand of five hundred thousand dollars to resolve that litigation. Within that letter the attorney explained that Pasch had received two hundred and fifty thousand dollars from the uninsured motorist coverage provided by his parents' automobile policy. He also explained the statutory cap of three hundred thousand dollars and that PLIGA was required to reduce its coverage by the amount of the UM benefits Pasch had received, leaving Dapper with a maximum of fifty thousand dollars available through PLIGA. That statement was in accord with an opinion from this court, Thomsen v. Mercer-Charles, 377 N.J. Super. 267 (App. Div. 2005). He also informed Dapper that Pasch's attorney had told him that the case could not be settled for fifty thousand dollars.

Upon receiving this information, Dapper retained another attorney to represent it in connection with any claim for damages above that which would be covered by PLIGA. On June 13, 2006, the trial court conducted a settlement conference, attended by Pasch's attorney, the attorney assigned by PLIGA to represent Dapper, and the attorney Dapper had retained on its own initiative. As a result of that conference, plaintiff agreed to accept four hundred and fifty thousand dollars to settle his claims in full. The trial court used a prepared form of order to reflect this settlement. The form had a space provided for appropriate comments; on this line appeared the following handwritten notation:

50,000 from Fund & 150,000 from Bus Com The document was signed by each of the three attorneys. At the bottom of the form was the following direction:

ATTENTION ATTORNEYS:

THIS ORDER IS NOT TO BE SUBMITTED TO THE JUDGMENT SECTION, SUPERIOR COURT CLERK'S OFFICE, TRENTON, FOR RECORDING.

Six days later, the Supreme Court issued its decision in Thomsen v. Mercer-Charles, 187 N.J. 197 (2006), in which it reversed the earlier opinion of this court. Under the Supreme Court's opinion in Thomsen, PLIGA would no longer be entitled to assert as a set-off against its three hundred thousand dollar cap on liability the amount Pasch had received as UM benefits. After the Court issued its opinion, the attorney that Dapper had retained on its own behalf wrote to PLIGA, demanding that it pay the remaining balance on the Pasch settlement without regard to the two hundred and fifty thousand ...


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