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Brooks v. Stoney

July 17, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-0298-03.

Per curiam.


Argued April 23, 2008

Before Judges Sapp-Peterson and Messano.

Plaintiff, Sheila Brooks, was a passenger in a motor vehicle operated by defendant, James Stoney, Jr. (Stoney), and owned by his father, James Stoney, Sr., that was involved in an accident with a stolen vehicle. The unidentified driver of the stolen vehicle fled the scene following the collision. At the time of the accident, Stoney was insured under his father's policy of insurance with defendant, New Jersey Manufacturers Insurance Company (NJM). The policy provided $500,000 in bodily injury liability coverage and $500,000 in uninsured motorist (UM) coverage.

Plaintiff filed a complaint in Superior Court alleging that she sustained serious bodily injury proximately caused by Stoney's negligence and the negligence of the driver of the uninsured vehicle. The third count of the complaint included a UM claim against NJM, demanding that NJM "set up an uninsured motorist claim, administrate same, and submit said claim to arbitration[.]" Shortly thereafter, Stoney also filed a complaint against NJM asserting a UM claim.

Plaintiff's complaint proceeded to mandatory, non-binding arbitration on March 2, 2004. The arbitrators awarded plaintiff $500,000 in gross damages, which she rejected. By order dated April 16, 2004, the court consolidated the Brooks and Stoney complaints for trial. By further order of April 15, 2005, the court bifurcated damages and the matter proceeded to trial on liability only. The jury allocated liability at fifty-five percent against Stoney and forty-five percent against NJM. As a result of the jury's verdict, the court entered judgment dismissing Stoney's UM claim against NJM with prejudice. We affirmed the dismissal of Stoney's complaint. Stoney v. New Jersey Mfrs. Ins. Co., No A-5719-04 (App. Div. June 19, 2006) (slip op. at 35). Stoney's petition for certification was also denied. 188 N.J. 357 (2006).

While Stoney's petition for certification was pending, plaintiff underwent additional surgical procedures and the parties continued exchanging discovery. Plaintiff's orthopedic expert was deposed and updated defense medical examinations were conducted.

By letter dated January 10, 2007, plaintiff's counsel formally demanded $500,000 to settle the UM claim. The letter stated it was plaintiff's "inten[tion] to assert a bad faith claim against NJM" if defendant did not tender the $500,000 maximum UM policy amount. Defendant's attorney made a combined bodily injury and UM settlement offer of $600,000. Plaintiff unsuccessfully tried to get defense counsel to break down the dollar allocation between the bodily injury claim and the UM claim. Plaintiff ultimately rejected the offer and demanded a gross award of $975,000.

On January 16, 2007, the court conducted a settlement conference, and NJM's combined settlement offer rose to $700,000. Plaintiff rejected this offer, and the court, at the request of counsel for both parties, permitted the parties to place their respective positions on the record. Defense counsel represented that he did not know how NJM would split the two claims. Because defense counsel did not provide a dollar allocation between the liability and UM claims, plaintiff's counsel stated on the record that NJM's settlement strategy constituted bad faith. On January 23, 2007, the parties settled the bodily injury claim against Stoney for the policy limits of $500,000. The next day, NJM offered $250,000 to settle the UM claim, which plaintiff rejected and demanded $475,000, to settle the UM claim.

With the percentages of liability established and plaintiff's claims against Stoney dismissed with prejudice because of the settlement, NJM moved for a trial adjournment in order to submit the damages claim to arbitration pursuant to the policy provisions that mandated contractual arbitration of the disputed UM claim. Plaintiff opposed the motion, arguing that defendant had waived its right to contractual arbitration. The court nonetheless granted the adjournment. The arbitrators awarded $800,000 in gross damages. A dissenting arbitrator awarded $1,100,000 in gross damages. Based upon the $800,000 award, NJM was liable for forty-five percent of that award, or $360,000. Plaintiff rejected the award and demanded a trial de novo. See R. 4:21A-6. Several days after plaintiff rejected the award, defendant offered plaintiff $300,000. Plaintiff rejected this offer and "continued her demand of $975,000." NJM did not agree to this demand and the matter proceeded to trial.

The jury awarded plaintiff $2,000,000. Prior to the entry of final judgment, the parties briefed whether the court should enter judgment against NJM in the full amount or a molded verdict to reflect the $500,000 UM policy limits, whether plaintiff was entitled to prejudgment interest, and whether NJM acted in bad faith in its settlement negotiations strategy. The court entertained oral argument and thereafter, in an oral opinion, found that NJM's negotiation strategy did not constitute bad faith and declined to award prejudgment interest. The court molded the verdict to reflect the UM policy limits. The present appeal followed.

On appeal plaintiff contends she is entitled to recover the full forty-five percent of the jury's $2,000,000 verdict because NJM engaged in bad faith in its settlement negotiation strategy with plaintiff.

Appellate review of a judgment entered in a non-jury case is a "limited function." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). The appellate court will "not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (citing Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)) (internal quotation mark omitted). However, ...

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