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Tlumacki v. CNA Insurance Companies

March 31, 2009

MARK TLUMACKI AND DEBRA TLUMACKI, PLAINTIFFS-RESPONDENTS,
v.
CNA INSURANCE COMPANIES, CNA INSURANCE GROUP, AND CONTINENTAL INSURANCE COMPANY, DEFENDANTS/THIRD-PARTY PLAINTIFFS-APPELLANTS,
v.
CLARENDON NATIONAL INSURANCE COMPANY, THIRD-PARTY DEFENDANT-RESPONDENT.
MARK TLUMACKI AND DEBRA TLUMACKI, PLAINTIFFS-RESPONDENTS,
v.
CNA INSURANCE COMPANIES, CNA INSURANCE GROUP, AND CONTINENTAL INSURANCE COMPANY. DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket Nos. L-21-04 and L-2076-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 3, 2009

Before Judges Wefing, Yannotti and LeWinn.

These appeals arise from a claim by plaintiff Mark Tlumacki for underinsured motorist (UIM) coverage under a policy of insurance issued by defendants CNA Insurance Companies, CNA Insurance Group and Continental Insurance Company (collectively, CNA). CNA appeals from orders entered by the trial court that, among other things, dismissed its third-party complaint against Clarendon National Insurance Company (Clarendon) for contribution and/or indemnification; compelled it to participate in UIM arbitration; and confirmed the arbitration award entered in favor of plaintiff. For the reasons that follow, we affirm.

I.

We begin with a brief recitation of the relevant facts. In 1998, plaintiff was employed as a chief mechanic by Ferraro Trucking Co., Inc. (Ferraro), a company owned by his son, Mark Tlumacki, Jr. (Mark). Ferraro owned, and allowed plaintiff to use, a 1994 Land Rover. That vehicle, and several others owned by Ferraro, were insured under a CNA insurance policy that provided UIM coverage of $1 million.

On July 2, 1998, plaintiff and Mark drove the 1994 Land Rover to the Woodbridge Land Rover dealership to have it serviced. There, Mark signed an agreement with Enterprise Rent-A-Car (Enterprise) to rent a "service loaner" or replacement vehicle. The dealership paid the rental fee.

At approximately 7:26 p.m. that evening, plaintiff was injured in an accident while riding as a passenger in the rental vehicle, which was being driven by his wife, Debra Tlumacki (Debra). The rental vehicle was struck by a car that was being driven by Victor Hsu (Hsu). According to Debra, Hsu "ran the stop sign" at an intersection and she was unable to stop in time to avoid the collision.

The vehicle that Hsu was driving was owned by his mother, Meige Hsu. Liberty Mutual Insurance Company (Liberty Mutual) insured the Hsu vehicle. Its policy provided $250,000 of liability coverage. Enterprise was self-insured and it did not provide UIM coverage. The Land Rover dealership was insured under a policy issued by Clarendon, which provided $1 million in UIM coverage.

In March 2000, plaintiff and Debra filed an action against Hsu and his mother. Plaintiff alleged, among other things, that he sustained in the accident a closed head injury, abbreviated loss of consciousness, post-traumatic amnesia, and traumatic brain injury with residual cognitive neurological impairments. Debra asserted a claim for the loss of her husband's services, society and consortium.

Hsu and his mother filed a third-party complaint against Debra. CNA provided coverage to Debra and had an answer to the third-party complaint filed on her behalf. CNA also intervened in the personal injury action, as permitted by Zirger v. General Accident Insurance Company, 144 N.J. 327, 340-41 (1996).

The trial in the matter commenced on June 17, 2003. The following day, plaintiff and Debra agreed to settle their claims against the Hsus for $225,000, and the Hsus agreed to settle their claims against Debra for $35,000. Plaintiff and Debra provided CNA with notice of the proposed settlement pursuant to Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988). Plaintiff and CNA did not, however, provide notice to Clarendon.

By letter dated June 20, 2003, plaintiff made a formal demand for UIM arbitration. CNA rejected plaintiff's demand. In a letter dated June 24, 2003, CNA's attorney stated that plaintiff was not entitled to UIM coverage because he failed to exhaust the limits under the policies covering the vehicles and failed to protect CNA's subrogation rights. In a letter dated July 8, 2003, CNA's counsel further asserted that CNA never gave plaintiff permission to settle the personal injury action. He again stated that plaintiff did not qualify for UIM benefits.

In January 2004, plaintiff filed an order to show cause and verified complaint seeking to compel CNA to submit his claim to UIM arbitration.*fn1 This action was docketed as MER-L-21-04. On February 20, 2004, CNA filed an answer denying coverage. CNA subsequently filed a third-party complaint against Clarendon seeking contribution and/or indemnification. In its third-party complaint, CNA alleged that Clarendon was obligated to provide primary UIM coverage to plaintiff.

Plaintiff thereafter filed a motion for summary judgment on his demand for UIM arbitration, and CNA and Clarendon filed cross-motions for summary judgment. The trial court considered the motions on January 6, 2006, and placed its decision on the record that day. The court granted plaintiff's motion for summary judgment, denied CNA's cross-motion and granted Clarendon's cross-motion. The court entered orders dated January 9, 2006, which memorialized its decision. In the order granting plaintiff's motion, the court directed plaintiff and CNA to designate their respective arbitrators within twenty days.

CNA did not appoint an arbitrator but filed a motion for reconsideration of the January 9, 2006 order. Plaintiff filed a cross-motion for appointment by the court of a defense arbitrator. The trial court considered the motions on March 17, 2006, and placed its decision on the record on that date. The court denied CNA's motion for reconsideration and granted plaintiff's motion for appointment of a defense arbitrator.

The court entered an order dated March 17, 2006, which memorialized its decision and appointed Gregory J. Giordano (Giordano) to serve as the defense arbitrator. CNA filed a notice of appeal from the trial court's January 9, 2006 and March 17, 2006 orders. This appeal was docketed as A-4024-05.

The arbitration hearing was conducted on July 5, 2006, by Giordano, John Gorman (Gorman) and Louis J. DeMille, Jr. (DeMille), a neutral arbitrator selected by Giordano and Gorman. On July 31, 2006, the arbitrators issued their decision. By a unanimous vote, the arbitrators found that Hsu was 100% responsible for the accident. In addition, by a two-to-one-vote, the arbitrators awarded plaintiff damages in the amount of $845,000.

In August 2006, plaintiff filed a summary action to confirm the arbitration award.*fn2 This action was docketed as MER-L-2076-06. Thereafter, CNA filed a cross-motion to vacate the award. In October 2006, we granted CNA's motion to dismiss the appeal docketed as A-4024-05 and remanded the matter to the trial court until plaintiff's newly-filed action was resolved.

On January 12, 2007, the court conducted oral argument in the matter and placed its decision on the record. The court denied CNA's motion to vacate the award and confirmed the award. The court entered a judgment dated January 29, 2007, for plaintiff and against CNA in the amount of $595,000, which represented the $845,000 awarded by the arbitrators, less the $250,000 liability limits under Hsu's policy. CNA then filed a motion for reconsideration, which the court denied in an order entered on April 3, 2007.

On April 13, 2007, CNA filed a notice of appeal from the trial court's January 29, 2007 and April 3, 2007 orders. This appeal was docketed as A-4249-06. We entered an order on September 4, 2007, vacating the remand of A-4024-05 and consolidating the appeals.

II.

CNA first argues that the trial court erred by granting Clarendon's motion for summary judgment and dismissing CNA's third-party claim for contribution and/or indemnification.

In considering whether the trial court erred by granting summary judgment in favor of Clarendon, we apply the same standard that the trial court applies when it considers a summary judgment motion. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Rule 4:46-2(c) provides that summary judgment may be granted only when the evidential materials before the court "show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."

Here, the trial court held that CNA had a duty to provide Longworth notice to Clarendon regarding the proposed settlement of plaintiff's claims in the underlying personal injury action and its failure to do so barred it from asserting a claim for contribution or indemnification against Clarendon for plaintiff's UIM ...


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