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Ruoff v. American Asphalt Co.


November 25, 2009


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-1837-07.

Per curiam.


Argued: September 23, 2009

Before Judges Cuff and C.L. Miniman.

In this appeal we review an order denying a motion for reconsideration filed by defendant Penn National Insurance (Penn National) seeking dismissal of plaintiff Geremy Ruoff's action for uninsured/underinsured motorist (UM/UIM) benefits. Plaintiff's complaint for UM/UIM benefits implicates a step-down provision in his employer's automobile insurance policy. The motion judge held that a recent amendment to N.J.S.A. 17:28-1.1 should be applied retroactively, and the insurer's motion for reconsideration was not timely. Penn National argues that the decision regarding the effect of the recent statutory amendment was erroneous as was the decision to deny its motion for reconsideration filed soon after publication of Olkusz v. Brown, 401 N.J. Super. 496 (App. Div. 2008), which held to the contrary. We reverse.

We relate the procedural history of this matter in detail because it informs our analysis of the orders under review. On February 11, 2005, plaintiff was driving an automobile owned by his employer, defendant American Asphalt Company, Inc. (American Asphalt). Penn National insured the vehicle. Plaintiff filed a claim for UM/UIM coverage with Penn National. The insurer "stepped down"*fn1 the amount recoverable by plaintiff from $1,000,000 to $100,000, the maximum amount of coverage available under plaintiff's wife's auto insurance policy. Having exercised the step-down provision, Penn National denied the claim.

On April 3, 2007, plaintiff filed a complaint against his employer and Penn National alleging that the step-down provision was vague and ambiguous (Counts One and Ten), that the broker and Penn National owed a duty to disclose to his employer the consequences of the step-down provision to its employees and deprived the employer of exercising an informed choice (Counts Seven, Eight and Nine), and that enforcement of the step-down provision by insurers, such as Penn National, was against public policy (Count Eleven). In Counts Two through Six, and Count Twelve, plaintiff alleged that defendant American Asphalt and Millville Iron Works, the employer, negligently or intentionally chose UM/UIM coverage that limited coverage to certain employees and caused them damage. Plaintiff also alleged defendant Risnychok and Associates, Inc., an independent insurance broker breached its duty to provide appropriate insurance coverage to defendant employer, failed to adequately advise defendant employer of the consequences of its choice, and breached its duty to plaintiff by failing to adequately inform the employer of the different effects of the coverage on employees. Plaintiff founded the latter claim on the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184.

An order dated June 22, 2007, dismissed all claims against defendant Penn National. Plaintiff's motion for reconsideration was denied on August 17, 2007. Soon thereafter, the Legislature passed and the Governor signed an amendment to N.J.S.A. 17:28-1.1. This amendment, codified as N.J.S.A. 17:28-1.1(f),*fn2 prohibits motor vehicle insurance carriers from furnishing less UM/UIM coverage to employees of an insured company through step-down clauses. In response to this amendment, plaintiff filed a motion to reconsider the dismissal of his complaint, which was granted by order dated February 22, 2008.

Having obtained reinstatement of his complaint against Penn National, plaintiff sought an order declaring that the amendment prohibiting step-down clauses should be applied retroactively. On April 11, 2008, the motion judge declared the 2007 amendment should be applied retroactively and the step-down clause in defendant employer's policy void pursuant to N.J.S.A. 17:28-1.1.(f). Following this decision, the parties agreed that the UM/UIM dispute between plaintiff and Penn National be referred to arbitration, and on May 15, 2008, plaintiff filed a stipulation of dismissal voluntarily dismissing without prejudice all claims against the broker defendants.

On July 22, 2008, a panel of this court released an opinion that holds the 2007 amendment should be applied prospectively only. Olkusz, supra, 401 N.J. Super. at 502-06. Penn National filed a motion to alter or amend the February 22 and April 11, 2008 orders and sought dismissal of plaintiff's complaint. The motion judge held that the prior orders were final rather than interlocutory orders; therefore, the Penn National motion was time barred.

On appeal, Penn National argues that the February and April 2008 orders were interlocutory, that its motion for reconsideration was timely, and its motion for reconsideration should have been granted due to recent precedent on the application of the statutory amendment to this case. Plaintiff responds that the February and April orders became final orders upon the filing of the May 15, 2008 stipulation dismissing all claims against the broker, that Penn National is estopped from re-opening the case because both parties had commenced preparation for arbitration of the UM/UIM claim, and the decision to deny the motion for reconsideration cannot be considered an arbitrary or capricious judicial act.

As a threshold matter, we must examine whether the February and April 2008 orders were final or interlocutory orders. We conclude that both orders were interlocutory; therefore, the motion to alter or amend the earlier orders was timely.

A motion to alter or amend a judgment or order, also commonly referred to as a motion for reconsideration, must be filed no later than twenty days after service of the judgment or order. R. 4:49-2. This rule, however, applies only to final orders or judgments. Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257-58 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). Therefore, a party may file a motion for reconsideration more than twenty days after entry and service of an interlocutory order. Id. at 263. Review of motions to reconsider interlocutory orders is committed to the sound discretion of the motion judge. Ibid. Naturally, the judge's discretion is not unbounded. This discretion is "'guided by the spirit, principles and analogies of the law . . . .'" State v. Madan, 366 N.J. Super. 98, 109 (App. Div. 2004) (quoting Smith v. Smith, 17 N.J. Super. 128, 132 (App. Div. 1951), certif. denied, 9 N.J. 178 (1952)).

Plaintiff argues that the February and April 2008 interlocutory orders became final when he filed the May 15, 2008 stipulation of dismissal of all claims against the broker defendant. We disagree. The May 15 stipulation dismissed the claims against the broker defendant without prejudice. We have held repeatedly that a civil action is not final until all claims against all parties are resolved and a dismissal of some claims without prejudice is not a final resolution of all claims. Grow Co. v. Chokshi, 403 N.J. Super. 443, 460 (App. Div. 2008); Lawler v. Isaac 249 N.J. Super. 11, 17 (App. Div. 1991). Here, plaintiff admitted that he had reserved his claims against the broker defendant under the Consumer Fraud Act. He admitted that he could pursue those claims if his UM/UIM arbitration did not conclude to his satisfaction. The likelihood that plaintiff would pursue this claim does not affect the analysis. While no further action would proceed in this matter in the Law Division once the May 15, 2008 stipulation was filed, plaintiff still could resurrect this action following arbitration of his UM/UIM claims. Therefore, the Penn National motion to alter or amend the prior orders filed on July 31, 2008, was timely.

Having concluded the Penn National motion was timely, we consider whether the judge should have reconsidered his prior orders and dismissed plaintiff's complaint. We hold that he should have done so.

In Olkusz, supra, we applied the well-settled rules of statutory interpretation to determine whether the 2007 amendment should be applied prospectively or retroactively. 401 N.J. Super. at 501. We concluded that the amendment could not be considered curative because "by reversing the Supreme Court's holding in Pinto, the Legislature was not correcting or 'curing' a judicial misinterpretation of an existing statute." Id. at 503. Rather, the amendment "expresses, for the first time, the public policy position of the Legislature on the propriety of step-down clauses . . . ." Ibid. Furthermore, at the time of the accident in Olkusz, this court had upheld the enforceability of step-down clauses. Id. at 505. Therefore, neither party had any expectation that the owner's policy would be a benefit source for an injured employee. Id. at 506. Thus, we held that N.J.S.A. 17:28-1.1(f) should be applied prospectively. Ibid.

If the motion judge had reached the merits of the Penn National motion, there is little doubt that the judge should have granted the motion. The only controlling authority on the issue held that the amendment is to be applied prospectively, and at the time of the accident, the Supreme Court had upheld the enforceability of step-down clauses and neither party had any expectation that plaintiff could obtain UM/UIM benefits beyond the limit of the employee's personal automobile insurance policy.

In the interim, another panel of this court held, as a general matter, the amendment should be applied retroactively. Hand v. Phila. Ins. Co., 408 N.J. Super. 124 (App. Div. 2009). On the other hand, this court also held that the amendment should not be applied retroactively in that case because to do so "would work a manifest injustice to [the insurer]." Id. at 143. We emphasized that based on the prevailing law at the time of the accident, the insurer relied on the enforceability of the step-down provision. Id. at 144. Thus, retroactive application of the amendment would defeat the insurer's reasonable reliance on settled legal principles and its reasonable expectations. Ibid. Furthermore, plaintiff had no reasonable expectation of the greater benefit. Id. at 144-45.

Although we elect to follow the Olkusz rule, we note that the "manifest injustice" reasoning in Hand would also compel dismissal of plaintiff's complaint. As noted, at the time of his accident, neither plaintiff nor Penn National had any reasonable expectation that the step-down provision was unenforceable. Retroactive application of the amendment to plaintiff amounts to a windfall for him and a dramatic alteration of expectations founded in contract for Penn National.

We are also not persuaded that the facts of this case should estop Penn National from seeking reconsideration of earlier orders. See Boritz v. N.J. Mfrs. Ins. Co., 406 N.J. Super. 640, 649-50 (App. Div. 2009) (insurer estopped from invoking step-down provision following confirmation of higher limits and the plaintiff's settlement with tortfeasor). Action in compliance with a court order, as in this case, should not estop the insurer from seeking correction of an erroneous legal ruling.

In summary, we hold that the February and April 2008 orders were interlocutory orders; therefore, the July 31, 2008 motion to alter or amend the prior orders was timely. We also hold that N.J.S.A. 17:28-1.1(f) is to be applied prospectively. We, therefore, reverse the September 26, 2008 order denying defendant's motion to reconsider the February and April 2008 orders, and plaintiff's complaint against Penn National is dismissed.*fn3


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