November 28, 2008
THOMAS PATRICK KELLY, JR., PLAINTIFF-APPELLANT,
TRAVELERS INSURANCE COMPANY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Cape May County, Docket No. DC-2556-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: September 17, 2008
Before Judges Fisher and C.L. Miniman.
Plaintiff Thomas Patrick Kelly, Jr., appeals from a summary judgment dismissing his September 7, 2007, complaint against defendant Travelers Insurance Company (Travelers) seeking to recover $12,000 for alleged property damage to his yacht, a 1993 Four Winns Horizon 190, which occurred on August 14, 2005. The Standard First Insurance Company (Standard) answered the complaint on October 26, 2007, alleging that it was improperly impleaded as Travelers Insurance Company. It denied that the damage was a covered loss and asserted, among other things, that Section One, Provision N, of the Standard fire policy required any action against it to be brought within one year after damage occurs.
The insurance policy covering plaintiff's yacht, Policy #0945215400-8301, was issued by Standard, one of The Travelers Property Casualty Companies, effective July 15, 2005. The policy covered direct physical loss or damage to plaintiff's yacht up to the agreed value of $12,000 in the event of a covered loss. Section One of the policy, "General Policy Conditions and Limitations," provided in ¶ N as follows: "No action will be brought against us unless there has been full compliance with all policy provisions; and such action is started within one year after loss or damage occurs."
Standard moved for a summary judgment in November 2007, asserting that the action was not commenced within one year of the August 14, 2005, loss; the motion was granted on December 10, 2007. Following a motion for reconsideration, the judge reconsidered his decision, reaffirmed the grant of summary judgment, and dismissed the complaint by order dated January 11, 2008. The judge attached a written opinion as follows:
This [c]court determines that Standard Insurance is a proper party [d]efendant as indicated in its answer and that the answer to the Complaint and Motion for Summary Judgment were properly filed. . . .
It is clear that the parties dispute the cause of damage claimed by [p]laintiff. . . . Notwithstanding this dispute[,] the following facts are not disputed:
(1) Travelers['] subsidiary is the insurer of the boat policy for the period of July 15, 2005 to July 15, 2006.
(2) Date of [l]oss was August 14, 2005.
(3) Plaintiff made a claim by telephone on August 24, 2005.
(4) Denial of [c]laim by letter of September 13, 2005.
(5) Denial final following [p]lain-tiff's appeal by letter dated July 13, 2006.*fn1
The [p]olicy at Section I, Provision N requires that action on the policy must be started within one year after loss.
Plaintiff made a claim to the carrier within one year but failed to file any action . . . until September 7, 2007. Legal action should have been filed at the very latest on or before July 13, 2006. This [p]laintiff failed to do. Summary [j]udgment is appropriate. Having reconsidered, [s]ummary [j]udgment is entered.
This appeal followed the entry of the January 11, 2008, order.
Plaintiff asserts that the judge violated Rule 6:3-1(7) when it entered judgment in favor of Standard. That rule provides as an exception to the applicability of Part IV Rules to the Special Civil Part "that, in Special Civil Part actions . . . if it becomes apparent that the name of any party listed in the pleadings is incorrect, the court, at any time prior to judgment on its own motion . . . and consistent with due process of law, may correct the error . . . ." Ibid. The comment to the rule states, "Correction is permitted at any time prior to judgment of incorrectly named parties." Pressler, Current N.J. Court Rules, comment 2 on R. 6:3-1 (2008).
We find no merit in plaintiff's claim that the dismissal of his complaint must be reversed because the caption of his action was never modified by the judge, Travelers is still a party to his action, and default should have been entered against it. It is abundantly clear that any action against Travelers on the policy at issue here is foreclosed by the judgment below because the policy was indisputably issued by Standard, not Travelers, and thus Travelers was not and is not a proper party.
Next, plaintiff contends that Section One, ¶ N, is ambiguous because it fails to specify who must be in "full compliance with all policy provisions" before an action may be brought against Standard. Insurance contracts are contracts of adhesion that are subject to special rules of interpretation. Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990); Meier v. N.J. Life Ins. Co., 101 N.J. 597, 611-12 (1986). An insurance carrier is "expert in its field and its varied and complex instruments are prepared by it unilaterally whereas the assured or prospective assured is a layman unversed in insurance provisions and practices." Allen v. Metro. Life Ins. Co., 44 N.J. 294, 305 (1965). When interpreting insurance policies, we "assume a particularly vigilant role in ensuring their conformity to public policy and principles of fairness." Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992).
Insurance policies are interpreted according to their plain and ordinary meaning. Longobardi, supra, 121 N.J. at 537. "[P]olicies should be construed liberally in favor [of the insured] to the end that coverage is afforded 'to the full extent that any fair interpretation will allow.'" Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961). Where there is a dispute over interpretation of the policy, "it is the insured's burden to bring the claim within the basic terms of the policy." Rosario v. Haywood, 351 N.J. Super. 521, 529-30 (App. Div. 2002) (quotations and citation omitted).
In the absence of an ambiguity, we may not engage in a strained construction to impose a duty on the carrier that is not contained in the policy. See Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 273 (2001). When the terms of the policy are clear, we must enforce them as written. Stone v. Royal Ins. Co., 211 N.J. Super. 246, 248 (App. Div. 1986); see also Flynn v. Hartford Fire Ins. Co., 146 N.J. Super. 484, 488, (App. Div.), certif. denied, 75 N.J. 5 (1977). We may not make a better policy for the parties than the one they purchased. Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979).
Where an ambiguity exists, it is ordinarily resolved in favor of the insured. Cruz-Mendez v. ISU/Ins. Servs., 156 N.J. 556, 571 (1999); Doto v. Russo, 140 N.J. 544, 556 (1995); Lundy v. Aetna Cas. & Sur. Co., 92 N.J. 550, 559 (1983) ("Where the policy language supports two meanings, one favorable to the insurer and the other to the insured, the interpretation favoring coverage should be applied."). However, an ambiguity does not arise simply because the parties have offered two conflicting interpretations. Rosario, supra, 351 N.J. Super. at 530-531 (citing Powell v. Alemaz, Inc., 335 N.J. Super. 33, 44 (App. Div. 2000)). Rather, a genuine ambiguity exists only if the "phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo, supra, 81 N.J. at 247; see also Lee v. Gen. Accident Ins. Co., 337 N.J. Super. 509, 513 (App. Div. 2001).
Even if a particular phrase or term is capable of being interpreted in the manner sought by the insurer, "where another interpretation favorable to the insured reasonably can be made that construction must be applied." Ellmex Const. Co., Inc. v. Republic Ins. Co., 202 N.J. Super. 195, 204, (App. Div. 1985), certif. denied, 103 N.J. 453 (1986). In this regard, coverage clauses should be interpreted liberally, whereas those of exclusion should be strictly construed. Butler v. Bonner & Barnewall, Inc., 56 N.J. 567, 576 (1970); Ellmex Constr. Co., Inc., supra, 202 N.J.
Super. at 205. Finally, insurance contracts are to be construed in a manner that recognizes the reasonable expectation of the insured. Zuckerman v. Nat. Union Fire Ins., 100 N.J. 304, 320-21 (1985). [Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 429 (App. Div. 2004).]
As a general proposition, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); see also Rowe v. Hoffmann-La Roche, 383 N.J. Super. 442, 452 (App. Div. 2006), rev'd on other grounds, 189 N.J. 615 (2007). The interpretation of an insurance contract is a question of law which we decide independently of a trial court's conclusions. Simonetti, supra, 372 N.J. Super. at 428; Nat'l Union Fire Ins. Co. v. Transp. Ins. Co., 336 N.J. Super. 437, 443 (App. Div. 2000). Because the issue raised by plaintiff respecting the interpretation of the policy presents a question of law, we decide the issue de novo. See Raspa v. Office of Sheriff of Gloucester, 191 N.J. 323, 335 (2007).
With respect to plaintiff's claim that the limitation-of-action clause is ambiguous, it is clear that the policy imposes duties on both parties. It imposes a duty on Standard to pay covered claims made by the insured; to defend and indemnify the insured with respect to third-party claims; to pay reasonable medical and funeral expenses for persons injured while in, upon, boarding or leaving the covered yacht; to investigate claims made against the policy; and to pay for the destruction or removal of covered property presenting an "attractive nuisance." The policy also imposes a duty on plaintiff to give notice of loss as soon as practicable and provide the information required by the policy; to assist in loss settlement; to refrain from assuming any contractual liabilities; to refrain from waiving any rights against others; to submit to examination under oath; to give a written statement of loss within sixty days of a request for same; to protect damaged property from further damage; and to allow inspection of the property and to produce records verifying the claim.
We must construe the policy as a whole when we interpret the meaning of any particular language in the policy. See, e.g., Zacarius v. Allstate Ins. Co., 168 N.J. 590, 602 (2001) (discussing the import of a declarations page in the context of an insurance policy as a whole) (citing Lehrhoff v. Aetna Cas. & Sur. Co., 271 N.J. Super. 340, 347 (App. Div. 1994)); Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 457 (1994) ("In interpreting a contract, a term's ordinary definition should be given weight, but the definition is only useful when viewed in the context of the contract as a whole.") (citation omitted); J. Josephson, Inc. v. Crum & Forster Ins. Co., 293 N.J. Super. 170, 216 (App. Div. 1996) ("[A]n insurance contract must be interpreted by considering the agreement as a whole, and whenever possible, meaning must be given to all of its parts."); Villa Enters. Mgmt. Ltd. v. Fed. Ins. Co., 360 N.J. Super. 166, 183 (Law Div. 2002) (observing that "where the meaning of a policy term is clear from the context of the policy as a whole, no ambiguity exists") (citation omitted).
Here, the policy provides: "No action will be brought against us unless there has been full compliance with all policy provisions; and such action is started within one year after loss or damage occurs." Although plaintiff urges that the first phrase is ambiguous because it does not indicate who is to comply with the policy provisions, we are not satisfied that the "phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." See Weedo, supra, 81 N.J. at 247. The allegedly ambiguous language is not ambiguous at all.
Clearly, plaintiff could hardly bring an action against Standard if Standard was in full compliance with all policy provisions; that is, if Standard investigated and paid the claim. It is only where Standard has breached its duty under the policy that plaintiff would have a basis for bringing an action against Standard. Thus, it is readily apparent that it is plaintiff that must fully comply with his duty to give a written statement of the loss, permit an inspection, and provide proofs verifying the claim before filing an action.
More to the point, however, is that Standard has not alleged that plaintiff could not bring this action because he failed to comply with his duties under the policy, nor was a summary judgment granted on that basis. Rather, based on the undisputed facts respecting the date of the loss and the date of institution of this case, summary judgment was granted because plaintiff failed to institute this action within one year of the date of the loss. We find no error in that determination as such limitation clauses are enforceable. Cf. Peloso v. Hartford Fire Ins. Co., 56 N.J. 514, 517, 521 (1970) (similar limitations clause enforceable, but limitations period tolled from time insured gave insurer notice of claim until insurer formally declined liability).
We briefly address plaintiff's contention that he has an extra-contractual claim against Standard based on conduct of the claims adjuster and the claims investigator it hired, both of whom were allegedly authorized representatives of Standard. Plaintiff urges that such a claim is not subject to the limitations period of the policy. In support of this claim, plaintiff made certain allegations "upon information and belief." Statements made upon information and belief do not meet the requirements of Rules 1:6-6 and 4:46-5(a) and were properly rejected by the judge. See Claypotch v. Heller, Inc., 360 N.J. Super. 472, 488-89 (App. Div. 2003) (certification for party opposing Rule 4:46 summary judgment was insufficient because the "mandate of Rule 1:6-6 that an affidavit supporting a motion must be based on personal knowledge is not satisfied by a statement based merely on information and belief") (quotations omitted); see also Pressler, Current N.J. Court Rules, comment on R. 1:6-6 (2009) ("Personal knowledge, the mandate of the rule, clearly excludes facts based merely on 'information and belief.'"). We will not consider them here. In any event, we are satisfied that the limitations clause of the policy barred plaintiff's "extra-contractual" claim. Plaintiff's remaining arguments are without sufficient merit to warrant discussion in this opinion.