Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Rutgers Casualty Insurance Co. v. Kennedy


September 30, 2009


On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-4219-04.

Per curiam.


Argued September 14, 2009

Before Judges Rodríguez, Reisner and Yannotti.

This case, like the companion appeal decided today,*fn1 arises from a dispute over a claim for personal injury protection (PIP) benefits filed by Christopher Kennedy, premised on a policy of insurance purchased by his sister-in-law, Alice Kennedy. The insurer, Rutgers Casualty Insurance Company (Rutgers), sued Alice and Christopher seeking damages and a declaration voiding the policy on grounds of legal and equitable fraud. Alice counter-claimed against Rutgers for malicious use of process and malicious abuse of process. In the case before us, Rutgers appeals from a $392,630 judgment based on the jury's verdict in favor of Alice on her counter-claim for malicious abuse of legal process, and from the trial court's order denying Rutgers' motion for judgment notwithstanding the verdict.


On this appeal, Rutgers contends that the trial court should have dismissed the malicious abuse of process claim because plaintiff did not prove any "further acts" beyond the filing of the complaint; that Rutgers was entitled to invoke the litigation privilege; and that plaintiff did not prove a "special grievance." Rutgers also alleges that there were plain errors in the jury charge; that the court made improper evidentiary rulings; that the court should have bifurcated the compensatory and punitive damages aspects of the trial and should have stricken plaintiff's jury demand; and that opposing counsel made improper comments in summation.

We reverse, because we agree with Rutgers that plaintiff failed to prove one of the elements of a cause of action for malicious abuse of process, i.e., a further improper act beyond the initial filing of the complaint.*fn2 We also agree with Rutgers that the trial court improperly permitted plaintiff to introduce evidence of the number of claims Rutgers investigated for possible fraud and the number of fraud complaints that Rutgers filed against other insureds. In light of those conclusions, and because Alice has not cross-appealed from the jury's no-cause verdict on the malicious use of process claim, we need not address Rutgers' remaining appellate contentions.


These are the most pertinent facts. In March 2002, Alice Kennedy, who lived in Burlington City, New Jersey, applied to Rutgers for auto insurance. On the application, which asked for the names of "all licensed and unlicensed individuals permanently and/or temporarily residing with the applicant," she listed herself, her husband Joseph, and their daughter, whose driver's license was temporarily suspended. She did not list her brother-in-law Christopher Kennedy.

On May 3, 2003, Christopher was injured in an auto accident, while a passenger in a vehicle not owned or insured by Alice. In May 2003, he signed an affidavit of no insurance, attesting that he had no auto insurance of his own and was not living with anyone who had insurance.*fn3 In June 2003, he filed a claim with Rutgers for PIP benefits, representing to Rutgers that he resided in Alice's household at the time of the accident. According to Robert Cooper, the manager of Rutgers' Special Investigations Unit (SIU), the discrepancy between Christopher's claim that he lived with Alice and her failure to list him as a resident in her insurance application, caused the assigned underwriter to refer the claim to the SIU. Cooper further explained that under the State Insurance Fraud Act, insurance companies were required to investigate claims that presented "red flags" or possible indicia of fraud, and they could be fined if they failed to do so.

According to Cooper, Christopher's attorney refused to produce his client for more than ten minutes, when a proper interview would require at least an hour. Stymied, Cooper then had investigator James Angermeier interview Alice, who told him that Christopher was living at her house at the time she made the insurance application. Alice explained that she did not list him on the application because she knew his driver's license had been suspended for a long time. Later in the interview, however, Alice equivocated as to exactly when Christopher was living in her house, stating that he moved around. After Angermeier completed his investigation, Cooper sent the file to the legal department for review. On cross-examination, Cooper was asked about the number of fraud lawsuits Rutgers had filed against its insureds.

Called by Rutgers, Joseph Kennedy testified that Christopher was not living in his household in 2002, although he was visiting temporarily at the time of the 2003 accident. He testified that Christopher tended to move around and stay with various relatives. Called as Rutgers' witness, Alice corroborated Joseph's testimony. She explained that she initially told the investigator that Christopher was living with them in 2002 because she was not good with dates.

In his testimony, Christopher also confirmed that he was not living with Joseph and Alice in 2002, although he was staying with them temporarily at the time of the accident because he was "between apartments." He explained that he signed the May 2003 affidavit of no insurance because he understood it to ask if anyone in his household had insurance, and he did not consider the Kennedy's home to be his "household." He therefore believed he was entitled to PIP benefits from the insurance covering the host vehicle. He later withdrew that application when he realized that he was entitled to coverage under the Rutgers policy, since he was living in Alice's house at the time of the accident.

The trial judge denied defendants' motion for a directed verdict at the close of Rutgers' case, giving Rutgers the benefit of all favorable inferences and concluding that the case hinged on credibility determinations which the jury should decide.

Testifying as a defendant and counterclaimant, Alice explained that Christopher's transient lifestyle made it hard for her to remember when he had been staying at her house. She insisted that she had filled out the insurance application accurately. She, and later Joseph, both detailed her emotional distress over the fraud lawsuit.

In his deposition, read to the jury in lieu of his testimony, Angermeier confirmed that Rutgers sometimes sued its insureds for alleged fraud. His investigation in this case was aimed at determining whether Christopher was living in Alice's household at the time of the accident and whether he was living there at the time Alice applied for insurance. He relied on Alice's statement to him in concluding that Christopher in fact was living with her when she made the application. He testified that when he was hired as an investigator, Cooper had instructed him to "shoot straight" and just report the facts regardless of their impact on Rutgers' interests.

Alice's next witness was Delores Henry, who worked as a PIP claims adjuster with Rutgers from 2002 to 2004. She had extensive prior experience as a PIP adjuster with other insurers. She was the adjuster on Christopher's claim. She did not know what percentage of all Rutgers PIP claims were sent to the SIU, but she testified that about thirty percent of the PIP cases she handled were sent to the SIU. However, on cross-examination she admitted that in her deposition she had testified that thirty percent was "a wild guess." Over Rutgers' counsel's objection, she was permitted to testify that in her twenty-seven years working in the insurance industry she had never "heard of an insurance company suing their insured for fraud."

On cross-examination, she explained that there were various reasons why a claim might be sent to the SIU including discrepancies in benefit forms, and non-cooperation from the claimant. She also explained that, according to the SIU transmittal form, Christopher's claim was sent to the SIU due to "[u]ndisclosed household" to "determine if he was deliberately undisclosed, because of adverse driving record or suspension."

Alice's last witness was Benjamin Goldstein, an attorney who was a Rutgers corporate officer and supervisor of claims and litigation. He was responsible for reviewing files sent from the SIU and deciding whether to refer them to the company's legal counsel. He explained that before a fraud complaint was filed, a case would be reviewed by Cooper, himself and legal counsel. He testified that in many of the fraud lawsuits Rutgers filed, the insured would "admit what was done, [and] there's a proof hearing." He admitted that in many of the proof hearings, the defendant did not have an attorney. He was also questioned about the severe repercussions to a defendant found liable for fraud. On cross-examination, Goldstein explained that the State required the company to follow a fraud SIU manual, detailing the kinds of "red flags" that should resulting a file being sent to the SIU. The company would be audited by the State insurance department for compliance with the manual.

In his closing argument, Alice's attorney argued to the jury that not only was the fraud complaint unjustified but "this wasn't a fluke event. . . . This happens regularly. This is a mode of operation, it's the way they've done business. And that's why . . . your decision here today is so important, because it has to stop." He argued that the complaint was filed "intentionally" and "with reckless disregard of Alice's rights" and that it constituted malicious use and abuse of process. Alternatively, he argued that the complaint was filed "recklessly" because if anyone would have [taken a look] at this file, in legal, in SIU, before that lawsuit was filed, somebody would have looked and goes, man, there's really nothing here.

He emphasized that "this is the time, folks, to stop this behavior and to award Alice a sum of money that you think's fair and reasonable for everything they did, along with stopping this procedure by Rutgers . . . in terms of punitive damages."


We begin by addressing Rutgers' argument that the trial court erred in denying its motion for judgment notwithstanding the verdict. R. 4:40-2. In reviewing that ruling, we apply the same standard as the trial court: "'[i]f, accepting as true all the evidence which supports the position of the party defending against the motion and according [that party] the benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied . . . .'" Boyle v. Ford Motor Co., 399 N.J. Super. 18, 40 (App. Div.), certif. denied, 196 N.J. 597 (2008) (quoting Verdicchio v. Ricca, 179 N.J. 1, 30 (2004); see Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 415 (1997). However, we do not defer to the trial judge's "interpretation of the law and the legal consequences that flow from established facts." Raspa v. Office of Sheriff of Gloucester, 191 N.J. 323, 334-35 (2007) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

With that standard in mind, we consider the tort of malicious abuse of process. In Baglini v. Lauletta, 338 N.J. Super. 282 (App. Div.), certif. denied, 169 N.J. 607 (2001), Judge Havey cogently articulated the distinction between causes of action for malicious use of process and malicious abuse of process:

The gist of the tort of malicious abuse of process is not commencing an action without justification, as in malicious use of process (or malicious prosecution). Rather, it is the misuse, or "misapplying process justified in itself for an end other than that which it was designed to accomplish. The purpose for which the process is used, once it is issued, is the only thing of importance." Prosser & Keeton on Torts § 121 at 897 (5th ed. 1984)(footnote omitted; emphasis added). The Court of Errors and Appeals succinctly described the difference between a misuse and abuse of process in Ash v. Cohn, 119 N.J.L. 54, 58 (E. & A. 1937) as follows:

An action for malicious abuse of process is distinguished from an action for malicious use of process in that the action for abuse of process lies for the improper, unwarranted and perverted use of process after it has been issued while that for the malicious use of it lies for causing process to issue maliciously and without reasonable or probable cause. Thus it is said, in substance, that the distinction between malicious use and malicious abuse of process is that the malicious use is the employment of process for its ostensible purpose, although without reasonable or probable cause, whereas the malicious abuse is the employment of a process in a manner not contemplated by law. [Citation omitted.]

Consequently, basic to the tort of malicious abuse of process is the requirement that the defendant perform "further acts" after issuance of process "which represent the perversion or abuse of the legitimate purposes of that process." [Id. at 293-94 (citation omitted).]

More recently we reaffirmed that a plaintiff claiming malicious abuse of process must prove that the defendant engaged in a "further act" beyond filing the complaint:

The tort of malicious abuse of process lies not for commencing an improper action, but for misusing or misapplying process after it is issued. To be found liable for malicious abuse of process, a party must have performed additional acts "after issuance of process 'which represent the perversion or abuse of the legitimate purposes of that process.'" We have further clarified that "process is not abused unless after its issuance the defendant reveals an ulterior purpose he had in securing it by committing 'further acts' whereby he demonstrably uses the process as a means to coerce or oppress the plaintiff." [Hoffman v. AsSeenOnTV. Com, 404 N.J. Super. 415, 431 (App. Div. 2009) (citations omitted).]

In Hoffman, we agreed with the trial court that defendant had not proven malicious abuse of process, where an attorney had filed consumer fraud lawsuits against many internet vendors for allegedly offering free gifts and then charging buyers for the cost of mailing the "gifts." Apart from the fact that the consumer fraud claim itself had some facial merit, even if Hoffman had not suffered an ascertainable loss, we concluded that the internet-advertiser defendant had not proven a "further act" by which Hoffman had abused the process he had filed. We also held that "plaintiff's filing of numerous earlier suits that defendant denominates similar to this one is irrelevant to its cause of action." Id. at 432.

In particular, we explained why that evidence was inadmissible:

Defendant provided evidence that plaintiff had filed "over 40 purported class-action, consumer fraud lawsuits in Bergen County," most all of which plaintiff prosecuted with a similar pattern of demanding a "large sum from defendants to settle with him alone" before he sought class certification. Our concern with reliance on this proffered information is that, as represented by counsel, many of these suits were settled before class certification could be attempted or achieved, and we are in no position to nor will we assess the bona fides of those actions or any other extant matters. Likewise, we are in no position to determine why each defendant settled these matters if such matters presented no form of exposure to them. Defendant's claim that plaintiff is engaged in a form of "extortion" carries little weight on this record.

[Id. at 433.]

Baglini and Hoffman are on point. Alice did not prove that Rutgers engaged in any "further acts" which constituted malicious abuse of process. See also Penwag Prop. Co. v. Landau, 148 N.J. Super. 493, 498-99 (App. Div. 1977), aff'd on other grounds, 76 N.J. 595 (1978); Gambocz v. Apel, 102 N.J. Super. 123, 128-30 (App. Div.), certif. denied, 52 N.J. 485 (1968). Filing the complaint for the allegedly improper purpose of avoiding payment of a valid insurance claim does not satisfy the "further act" requirement. Hoffman, supra, 404 N.J. Super. at 431.

There is simply no evidence that Rutgers took any improper or abusive action after filing the complaint such as, for example, attempting to coerce the withdrawal of the PIP claim. Alice's reliance on Wozniak v. Pennella, 373 N.J. Super. 445 (App. Div. 2004) is misplaced. In Wozniak, a landlord filed a criminal complaint against a tenant, and then attempted to use the criminal complaint as leverage to induce the tenant to withdraw his pending civil action against the landlord. Id. at 461-62. Since Alice did not prove a further act, the court should have dismissed her complaint for malicious abuse of process.

Moreover, in an attempt to shore up her palpably weak counterclaim, Alice improperly relied on innuendo based on irrelevant evidence. We agree with Rutgers that the trial court erred in allowing Alice to introduce evidence of the number of other fraud investigations Rutgers had undertaken and the number of fraud lawsuits it filed against insureds. As we concluded in Hoffman, those other investigations were irrelevant to this case. See also N.J.R.E. 404(b); Showalter v. Barilari, Inc., 312 N.J. Super. 494, 511-12 (App. Div. 1998). There was no proof that any of those other investigations or complaints was unfounded or undertaken for an improper purpose. For all we know based on this record, Rutgers may have undertaken a large number of fraud investigations because it had cause to believe that it was receiving many fraudulent claims. In fact, to the extent there was any evidence on that point, it supported a conclusion that Rutgers undertook the fraud investigations to comply with its legal obligations under the Insurance Fraud Prevention Act.

Without more, the fact that Rutgers investigated other insurance claims was irrelevant to Alice's complaint for malicious use or abuse of process. Further, the evidence was highly prejudicial, because it allowed the jury to infer, without proof, that Rutgers had some nefarious motive for undertaking those investigations. In his closing arguments, Alice's counsel inappropriately urged the jury to engage in that speculation, contending in essence that Rutgers made a habit of suing small, defenseless insureds to avoid paying claims. See Hoffman, supra, 404 N.J. Super. at 433; Verni v. Aramark, 387 N.J. Super. 160, 190-93 (App. Div. 2006) certif. denied, 189 N.J. 426 (2007).

We are not unsympathetic to the suffering this case imposed on Alice, who was accused of insurance fraud on the basis of evidence that could fairly be described as less than compelling. However, her counterclaim was also weak, and her counsel's argument was an inappropriate appeal to the jurors' emotions, unsupported by evidence.

Because Alice did not prove an essential element of her cause of action, the December 21, 2007 order denying Rutgers' motion for judgment notwithstanding the verdict is reversed, and the November 20, 2007 judgment against Rutgers Casualty Insurance Co. and in favor of Alice Kennedy is hereby vacated.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.