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State Farm Insurance v. Encompass Insurance

January 12, 2009

STATE FARM INSURANCE, INDIVIDUALLY AND AS INSURER OF PATRICK O'NEILL, PLAINTIFF-RESPONDENT,
v.
ENCOMPASS INSURANCE, FORMERLY KNOWN AS CONTINENTAL INSURANCE COMPANY AND A/K/A CNA PERSONAL INSURANCE, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1413-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 19, 2008

Before Judges Parrillo and Messano.

Defendant, Encompass Insurance, f/k/a Continental Insurance Company, and a/k/a CNA Personal Insurance (Encompass), appeals from the September 28, 2007 order that granted summary judgment in favor of plaintiff State Farm Insurance (State Farm) in the amount of $36,741.20 plus counsel fees associated with the motion. Encompass raises the following issues for our consideration:

POINT ONE THE GRANTING OF SUMMARY JUDGMENT BY THE LOWER COURT WAS BASED ON ISSUES NOT BEFORE THE COURT AND/OR WAS PREMATURE.

POINT TWO THE DOCTRINE OF RES JUDICATA IS NOT APPLICABLE IN THE PRESENT CASE.

We have considered these contentions in light of the record and applicable legal standards. We reverse.

I.

This action arises from a motor vehicle accident that occurred on June 1, 2002. Doreen Whitehead's car was rear-ended by a Chevy Blazer driven by Patrick O'Neill and owned by Patrick Dillon. O'Neill fled the scene and was charged with various motor vehicle offenses. Whitehead's vehicle was insured by New Jersey Manufacturers Insurance Co. (NJM), Dillon was insured by Encompass, and O'Neill was insured under a policy issued by State Farm. In the event O'Neill was operating a "non-owned car," his policy with State Farm provided only excess coverage to any primary coverage that existed on that vehicle.

On July 19, 2002, in response to NJM's claim for property damage to Whitehead's car and after conducting its investigation, Encompass declined payment, "hav[ing] concluded that [its] insured[,] [Dillon,] was not responsible for the occurrence[,]" because "O'Neill was not authorized to use the vehicle owned by [] Dillon." Indeed, the police report from the investigation that followed the accident revealed that Dillon's stepson, Chris Matthews, was in possession of the Blazer pursuant to Dillon's permission. After the police found the unattended vehicle near the site of the crash, they located Matthews who told them that O'Neill had taken the car without his permission when Matthews fell asleep.

On June 1, 2004, Whitehead filed her negligence suit against O'Neill and Dillon, alleging that O'Neill was "the agent, servant and/or employee of . . . Dillon." On August 24, 2004, Whitehead's suit was consolidated with a subrogation action filed by NJM against O'Neill and Dillon seeking reimbursement of payments it made for Whitehead's property damage claim.

Discovery ensued in the consolidated action with State Farm appointing counsel to represent O'Neill and Encompass appointing counsel to represent Dillon. On January 24, 2006, Dillon was deposed with all counsel for all parties present. Dillon testified that he had given permission to his step-son to use the vehicle on the date of the accident, but that no one else had permission to use the Blazer.

On May 3, 2006, once again with both O'Neill and Dillon being represented by counsel, O'Neill was deposed. He testified as follows regarding his conversation with Matthews over the use of the car:

Q: Did you ask him if you could use the vehicle?

A: Yes, I did.

Q: And what did ...


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