On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-118-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Winkelstein, Gilroy and Chambers.
Defendant Torres-Ruiz appeals from a judgment against her in the amount of $214,080.52 for violating the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30 (the Act), in connection with her application for automobile liability insurance. Plaintiff Rutgers Casualty Insurance Company (RCIC) has filed a cross-appeal maintaining that it is also entitled to the judgment under the common law doctrine of equitable fraud.
After conducting a trial, the trial court initially found for defendant, applying the clear and convincing standard of proof. We reversed and remanded in light of new case law, Liberty Mut. Ins. Co. v. Land, 186 N.J. 163 (2006), imposing the preponderance of the evidence standard in this type of case. Rutgers Cas. Ins. Co. v. Torres-Ruiz, No. A-2483-05 (App. Div. Feb. 22, 2007). On remand, the trial court found for RCIC. For the reasons set forth below, we reverse and remand for a new trial.
This declaratory judgment action was brought by RCIC due to various misrepresentations defendant made on her application for automobile liability insurance. On February 15, 2001, defendant went to the office of her broker, William Bernhardt, to apply for automobile liability insurance. He completed the RCIC application in her presence, and she signed it. The application indicated that she was divorced. It also asked for information about all individuals, licensed or unlicensed, temporary or permanent, living in her household. No one, other than defendant, was listed in response to this question. In conjunction with this question, defendant also signed a separate document entitled "CONFIRMATION OF ALL PERMANENT AND TEMPORARY RESIDENTS OF MY HOUSEHOLD" stating that she understood that she must list all of these residents and their accidents or motor vehicle violations and suspensions, whether they are licensed or unlicensed. In addition, the application requested information about summonses and convictions issued within the last thirty-six months to anyone in the household or anyone who drives the applicant's vehicles. Defendant provided no information in this section. The application asked whether the license or registration of "anyone who usually drives the applicant's motor vehicle [has] EVER been suspended or revoked." No one was listed in response to this question. Based on this application, RCIC issued the insurance to defendant. Later that year, on December 24, 2001, defendant was involved in a motor vehicle accident,*fn1 and she received personal injury protection (PIP) benefits under the policy for injuries sustained in that accident.
Thereafter, RCIC learned that at the time defendant made the application, she was married, having married Joed Ruiz in August 2000, six months before she signed the application. Further, his license had been suspended, and his motor vehicle driving record showed infractions. At the time of RCIC's investigation, defendant was living with Ruiz, and he was part owner of the premises where they lived. In addition, defendant had not disclosed on the application that her three children were living with her.
RCIC brought this declaratory judgment action against defendant alleging fraud and violations of the Act and seeking monetary damages and a declaration that the policy was void ab initio. Defendant denied making these misrepresentations, contending that she was separated from Ruiz at the time of the application and that she had so advised Bernhardt.
At trial, Bernhardt testified that when filling out the application, defendant told him she was divorced and that Ruiz was living in Puerto Rico. He also said that defendant did not disclose that she had children living with her.
Lynn Lannon, a senior underwriter for RCIC, testified that when an applicant indicates on an application that she is separated, the separation is considered an underwriting factor and the insurance company will conduct a further investigation, requesting information about the other spouse. This is not done when the applicant is divorced. She indicated that if spouses are separated and not living together, and the separated spouse is not using any of the insured vehicles, then the premiums would be the same as though the parties were divorced. Lannon further testified that because defendant's children were minors and unlicensed drivers, defendant's failure to list them on the application did not effect the premiums. The children are required to be listed for tracking purposes only.
In her testimony, defendant denied telling Bernhardt that she was divorced, although she also testified that she could not remember Bernhardt asking her questions. She said that at the time the application was made, Ruiz was no longer living with her, noting that they had an "off and on" relationship over a period of many years preceding their marriage and thereafter. She could not provide dates or timeframes in which they lived together nor could she say exactly when Ruiz had stopped living with her before she made the application. She testified that she had forced Ruiz to leave her home after the marriage because he began using drugs and that he moved back in with her after the accident. The testimony of defendant's brother, Ramon Torres, confirmed that she was not living with Ruiz at the time of the application.
During the timeframe between the marriage and the accident, when defendant maintained Ruiz was not living with her, he had no other known residence. At trial, defendant testified that Ruiz would on occasion live in the basement of the building where she lived. In a statement recorded by RCIC's investigator prior to trial, defendant stated that ...