On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-5404-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves and Grall.
This is an insurance coverage case involving a dispute between Charles F. Heidt, Inc. (Heidt), an insurance agency, and Encompass Insurance Company (Encompass). Pursuant to the terms of an Agency Agreement, Encompass authorized Heidt to bind certain kinds of insurance contracts issued by Encompass. The only issue to be determined at trial was whether Heidt had authority to bind coverage on a three-family, tenant-occupied dwelling in Paterson, New Jersey, which was purchased by Neil and Elizabeth Guthaim (the Guthaims) in May 2003.
The trial began on October 1, 2007. At the close of all the evidence, the court granted Encompass' motion for a directed verdict. The court determined there were no factual disputes for the jury to resolve; Heidt's authority to bind coverage was clearly and unambiguously limited by the Agency Agreement and the underwriting guidelines issued by Encompass; and Heidt exceeded its authority when it attempted to add the three-family house to Guthaims' existing homeowner's policy.
The primary issue on appeal is whether the court erred in granting a directed verdict. Heidt contends the court "usurped the role of the jury [by] making factual determinations about [the] ambiguously worded Encompass underwriting guidelines, deciding the credibility of witnesses, and weighing evidence in dispute, all of which are the proper functions of a jury." After reviewing the record and applicable law in light of the arguments advanced on appeal, we affirm.
This case arises from a personal injury action filed by plaintiff, Susana Traverso, for injuries sustained in a fall that occurred on the Guthaims' three-family property in Paterson on October 29, 2003. In response to plaintiff's complaint, the Guthaims filed an answer and third-party complaint asserting they relied on their insurance agency, Heidt, to procure insurance coverage for the three-family house they purchased. The Guthaims also alleged that if there was no insurance in effect when plaintiff was injured then it was due to the negligence of either Heidt, Encompass, or both. Heidt stated in its answer to the Guthaims' third-party complaint that it had submitted a policy change form to Encompass on May 1, 2003, requesting to add the three-family house to the Guthaims' existing homeowner's policy.*fn1 In addition, Heidt's answer contained a cross-claim against Encompass seeking indemnification and contribution pursuant to the terms of the Agency Agreement.
Heidt's answer to Guthaims' third-party complaint was filed on April 24, 2006, prior to an arbitration hearing on May 5, 2006. Consequently, Heidt was represented by counsel at the arbitration hearing. Encompass was not represented at the hearing, however, because its time for answering the third-party complaint had not yet expired. In its answer filed on May 12, 2005, Encompass acknowledged that it had issued a homeowner's policy to the Guthaims prior to plaintiff's accident, but denied that the policy provided any coverage for the property in Paterson where plaintiff was injured. In addition, Encompass asserted a cross-claim against Heidt for indemnification.
At the arbitration hearing, the arbitrator awarded plaintiff $199,000, which included $49,000 for outstanding medical bills and $150,000 for pain and suffering. The arbitrator apportioned liability as follows: 100 percent to the Guthaims, zero percent to Heidt, and zero percent to plaintiff Traverso. The arbitrator also noted the following: "Encompass has not answered and default has not yet been entered. However, based on evidence presented it is clear that there is coverage on [the] Guthaim property and [Encompass has a] duty to defend and indemnify."
There was no request for a trial de novo, and plaintiff filed a motion to enforce the arbitration award. The Guthaims opposed plaintiff's motion and filed a cross-motion to extend the time to file a demand for a trial de novo, or in the alternative, to set aside the arbitration award. In addition, the Guthaims filed a motion for summary judgment against Heidt and Encompass.
Following oral argument on October 18, 2006, the court affirmed plaintiff's arbitration award against the Guthaims, but vacated the part of the arbitration award that found Heidt had no liability. The court also granted the Guthaims' summary judgment motion, reasoning that "either Encompass or Heidt or some combination thereof" would ultimately be responsible for payment of plaintiff's arbitration award. Accordingly, the coverage dispute was the only issue to be litigated and only Heidt and Encompass participated in the trial.
During the trial, Stephen Puntasecca*fn2 testified he was licensed as an insurance agent in 1979 and owned Heidt, an insurance agency, since 1990. He explained that Heidt had obtained coverage for the Guthaims' automobiles and their home in Hawthorne, New Jersey, through Encompass. That coverage was effective from November 29, 2002, through November 29, 2003, which included the date of plaintiff's accident on October 29, 2003.
Puntasecca also testified that in 2003, the Guthaims asked Heidt to obtain liability insurance for the three-family house they planned to purchase in Paterson. In an effort to obtain coverage, Puntasecca faxed a policy change request form to Encompass on May 1, 2003, requesting that the Paterson property be added to Guthaims' existing policy. Although the policy change request was never approved by Encompass, Puntasecca testified that he "probably" gave the Guthaims a written binder for the property because they "needed a policy for closing." When Puntasecca was asked why he thought he was authorized to bind coverage on the three-family house, he testified:
Well as I started to say before they never disapproved the request. They... never told us that they wouldn't bind it. And my... position on it is... that if you send them something and you tell them to do it, unless they tell you otherwise, you have to make certain assumptions that it's in processing, it's not ...