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Ferriola v. IFA Insurance Co.

February 19, 2009


On appeal from Superior Court of New Jersey, Law Division, Monmouth County, No. L-2946-05.

Per curiam.


Argued October 29, 2008

Before Judges Rodríguez, Payne and Waugh.

Defendant IFA Insurance Company appeals from a judgment in the amount of $4.2 million in favor of plaintiff Carol Ferriola, as assignee of IFA's insured Ramona Rivera. We reverse.


On August 29, 1999, Ferriola was seated in the front passenger's side of a car driven along Route 35 in Keyport by her husband, John Ferriola. The Ferriola car was struck in the side by a car driven by Rivera, who had missed an exit ramp and attempted a u-turn from the shoulder, "T-boning" the Ferriola car. The Ferriola car turned over and Ferriola was ejected. She sustained severe injuries. She was seven months pregnant at the time. Her baby, a daughter, had to be delivered by cesarean section shortly after the accident. Ferriola's injuries required substantial medical treatment, including surgery.

Rivera was insured by IFA, under a $35,000 single limit policy. On September 10, 1999, Brian Drazin, Ferriola's attorney, contacted Rivera to notify her that he represented Ferriola and request that her insurance company contact him "or we [would] institute a lawsuit on September 17, 1999." Drazin also contacted IFA directly on September 10, 1999, informing it of his representation of Ferriola and warning that he would initiate a lawsuit without considering settlement if IFA did not respond in 30 days.

On September 22, 1999, IFA offered its full policy limit of $35,000 in settlement of all claims by Carol and John Ferriola for personal injury and property damage. In February 2000, Drazin asked whether Rivera had additional insurance. IFA responded that Rivera was only covered up to $35,000 and had no additional insurance. At Drazin's request, Rivera completed an affidavit to this effect on June 6, 2000.

Drazin contacted IFA on August 30, 2000, to determine if Rivera would voluntarily submit to discovery concerning any additional assets. IFA responded on September 13, 2000, confirming its prior offer to settle the matter for $35,000, the full amount of its policy, and declining to provide further information concerning Rivera's assets.

On November 10, 2000, Liberty Mutual Group, which insured the Ferriola car, sent IFA a subrogation claim in the amount of $11,055.50 for the property damage to the Ferriola vehicle. On November 20, 2000, IFA responded by informing Liberty Mutual that it had made a settlement offer to Drazin, but would be withdrawing the offer in light of Liberty Mutual's subsequent claim. Drazin was copied on that letter. Liberty Mutual also relayed the message to Drazin on February 5, 2001.

On April 6, 2001, Drazin informed IFA's claims department, in writing, that because Ferriola believed that Rivera had no assets, she would be willing to accept the $35,000 settlement, but that she would only provide a release for her own claim. Drazin made it clear that the release would "not apply to any potential claim which her child may some day assert" against Rivera. IFA responded on April 9, 2001, pointing out that it had never renewed its earlier offer to settle and directing Drazin to an IFA claims manager for further settlement discussions.

Drazin wrote to IFA again on April 9, 2001, seeking to settle Ferriola's claim for the policy limit. IFA wrote to Drazin on April 16, 2001, noting that, to date, Ferriola's medical expenses were $131,078 and her daughter's were $207,221. IFA proposed to divide the settlement by giving $15,000 to Ferriola, $15,000 to her daughter, and $5,000 to Liberty Mutual, in exchange for releasing Rivera from all three claims. On April 19, 2001, Liberty Mutual informed Drazin that it would waive its right to participate in Rivera's $35,000 policy, but would pursue Rivera directly for damage to the Ferriola car.

On May 14, 2001, Drazin wrote to IFA, stating that, because IFA had withdrawn its offer to settle with Ferriola for the full $35,000, he was rejecting the April 16th settlement proposal and would be filing suit. IFA responded on May 17, 2001, explaining why it had withdrawn the original offer, adding that it was IFA's "position to let a judge determine the division of the settlement between the mother and child" and noting that the judge would "then appoint an attorney to represent your client's daughter, in order to protect her interests since her parents have not."

Ferriola filed her complaint on August 24, 2001. IFA assigned the Law Offices of Jennifer M. Campbell to represent Rivera. The answer was filed on December 13, 2001. On December 26, 2001, John B. Krug, an attorney at the Campbell firm, contacted Rivera, urging her to obtain personal counsel because she faced substantial liability in excess of her insurance coverage. Rivera, who was 74 years old and living on Social Security, responded that she had no assets. She decided not to retain personal counsel. Krug wrote to Drazin on June 27, 2002, to inform him that Rivera had no personal assets and urge him to settle both the mother and child's claim.

On July 10, 2002, Liberty Mutual filed a complaint against Rivera seeking subrogation for the damages it paid to the Ferriolas for property damage to their car. Krug filed an answer on Rivera's behalf on October 9, 2002. The two cases were consolidated on November 22, 2002.

IFA filed a motion for leave to deposit the $35,000 policy amount with the court. On January 10, 2003, an order was entered granting IFA's motion. Liberty Mutual, apparently convinced that its action was futile, ...

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